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Well placed to benefit from renewables

Mytilineos 19 April 2022 Update
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Mytilineos

Well placed to benefit from renewables

Update on renewables

Industrials

19 April 2022

Price

€16.62

Market cap*

€2,375m

*Including share buybacks (not cancelled)

Net debt (€m) at end FY21

803

Number of shares (excluding buybacks)

134.3m

Free float

73.5%

Code

MYTIL

Primary exchange

ASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

18.4

6.1

11.5

Rel (local)

11.2

9.1

9.0

52-week high/low

€16.62

€13.75

Business description

Mytilineos is a leading industrial company with an international presence in all five continents. The company is active in Metallurgy, Power and Gas, Sustainable Engineering Solutions and Renewables & Storage Development, operating via a unique synergistic business model.

Next events

Q122 trading update

4 May 2022

Analyst

James Magness

+44 (0)20 3077 5756

Mytilineos is a research client of Edison Investment Research Limited

Mytilineos is well placed to benefit from a push in the EU to accelerate renewable plans. It has a renewable portfolio of c 7GW and is well funded to support its investment in the energy transition, with financial flexibility of c €1.5bn augmented by strong operating cash flow across all areas of the business. We forecast EPS growth of 28% pa over the period FY21–24, which supports a dividend yield of 6% in FY24e. It trades at a P/E of just 8x (FY22e) and 6x (FY23e). Based on our FY22 net income forecast of €271m, we expect Q1 earnings to be substantially ahead of the €37m reported a year earlier at Q121, and possibly ahead of the strong Q421 (€65m).

Year end

EBITDA
(€m)

EPS
(€)

DPS*
(€)

P/E
(x)

Dividend yield
(%)

12/20

315

0.91

0.38

15.9

2.6

12/21

359

1.32

0.46

10.9

3.2

12/22e

518

2.01

0.70

8.2

4.2

12/23e

642

2.67

0.94

6.3

5.6

12/24e

670

2.77

0.97

6.0

5.8

Note: *Final distributed dividend per share.

Renewables portfolio of c7GW should reap reward

Recent unprecedently high gas prices and an uncertain outlook, combined with an increased focus on energy security, should push EU countries towards accelerating plans for renewables. Mytilineos is well placed to benefit, with renewable assets of nearly c 7GW, including 3.7GW in operation or mature stages of development. Roughly 50% of the assets are in Greece, which has very favourable conditions for solar photovoltaic (PV). Average monthly Greek wholesale prices have been above €200/MWh since October 2021 compared to the most recent (May 2021) renewables auction in Greece, where winning tariffs ranged from c €33/MWh to €51/MWh.

Strong operating cash flow generation

Mytilineos is well funded to support its investment in renewables (and the wider energy transition). It has a strong balance sheet with financial flexibility of c €1.5bn, having raised €500m in ‘green’ bonds in April 2021. This is augmented by strong operating cash flow across all areas of the business. Through its Renewables and Storage Development (RSD) division it undertakes engineering, procurement and construction (EPC) projects for third parties along with its own renewables and energy storage developments, which are higher margin. It has the flexibility to sell its own development projects, opportunistically, at the right price, generating significant cash flow for recycling back into the development portfolio, which includes expanding its renewables operating asset base.

Valuation: Attractive upside

We have updated our forecasts and valuation for movements in commodity and energy prices and the annual report for FY21. Our per-share valuation increases to €27.0 (62% above the current share price), from €24.0 previously. It is based on a 10-year discounted cash flow (DCF) methodology, which reflects Mytilineos’s growth prospects under the energy transition. We cross-check with a sum-of-the-parts (SOTP) peer valuation (€28.5/share).

A favourable environment for renewables

Many EU countries had planned to use gas as a transition fuel to move away from coal-fired power generation, but the recent unprecedently high gas prices and uncertain outlook, combined with an increased focus on energy security, should now push them towards accelerating plans for renewables. The EU currently imports 90% of its gas consumption, with over 40% of this provided by Russia. Russia’s invasion of Ukraine has led to the recognition that the EU must become independent of Russian gas in order to ensure security of gas supply. We believe that high-efficiency existing gas plants (such as those of Mytilineos) will be an important component of the transitional energy mix; however, planned gas plants will increasingly be substituted with renewables.

Exhibit 1: EU wholesale gas price (€/MWh)

Exhibit 2: Greece wholesale electricity price (€/MWh)

Source: Bloomberg. Note: Dutch Title Transfer Facility (TTF) virtual trading point.

Source: Ember. Note: monthly average.

Exhibit 1: EU wholesale gas price (€/MWh)

Source: Bloomberg. Note: Dutch Title Transfer Facility (TTF) virtual trading point.

Exhibit 2: Greece wholesale electricity price (€/MWh)

Source: Ember. Note: monthly average.

In addition, the economics of renewables are very attractive with the backdrop of unprecedently high wholesale electricity prices. For example, in the most recent (May 2021) renewables auction in Greece, winning tariffs ranged from c €33/MWh to €51/MWh. This compares to an average monthly wholesale electricity price of greater than €200/MWh since October 2021. Similar trends are observed elsewhere in Europe. This is driving high demand for renewable energy, including increasing appetite from corporates to secure electricity costs through long-term power purchase agreements.

Mytilineos is well placed to benefit

Mytilineos owns renewable operating and development assets of nearly c 7GW, including 0.3GW of operational assets (mostly wind), almost 3.5GW of mature development assets (mostly solar PV but also some energy storage), and c 3GW in early stages of development. Geographically, almost half of the mature assets and operating portfolio are based in Greece, almost a quarter in other European countries (Italy, Spain, Romania and UK), and the remainder split mostly between Chile and Australia (see Exhibits 3 and 4 below).

Mytilineos has a number of competitive advantages compared with some other renewable developers:

It is well funded to support its investment plans. It has a strong balance sheet with financial flexibility of over €1.4bn, having raised €500m in ‘green’ bonds in April 2021. This is augmented by strong operating cash flow across all areas of the business.

Its RSD division undertakes EPC projects for third parties along with its own renewables and energy storage developments, which are higher margin. It has the flexibility to sell its own development projects, opportunistically, at the right price, generating significant cash flow for recycling back into the development portfolio, which includes expanding its renewables operating asset base.

Generally, Mytilineos plans to develop and keep its renewable assets in Greece and sell its international renewable assets under a build, operate and transfer (BOT) model. However, due to Mytilineos’s financial strength it has the flexibility to keep and operate its BOT assets over the short term to benefit from the current high wholesale electricity prices. Moreover, Mytilineos is able to build these assets using its own balance sheet, without project financiers requiring a power purchase agreement (PPA) in advance before commencing construction of the renewable project. This is highly favourable in the current environment.

As well as its ‘green’ bonds, we believe Mytilineos is well placed to gain cheap financing through the European Recovery fund, with Greece’s allocation expected soon. In addition, again under an EU initiative to help decarbonise high-emitting industries such as the aluminium industry, Mytilineos is expecting cash injections in lieu of carbon costs paid in its aluminium business. The company suggests that for every $1 of carbon emissions cost paid, it could get in return $2–3 in cash as a rebate, equating to over €100m pa of effective capital over the next few years.

Exhibit 3: Mature pipeline and operating portfolio (c 3.7GW) split by geography

Exhibit 4: Mature pipeline and operating portfolio (c 3.7GW) split by stage of project

Source: Edison Investment Research, company data


Source: Edison Investment Research, company data. Note: We assume Greek solar PV projects of 1.5GW comprise 0.3GW under construction, 0.6GW ready to build and 0.6GW in advanced development stages.

Exhibit 3: Mature pipeline and operating portfolio (c 3.7GW) split by geography

Source: Edison Investment Research, company data


Exhibit 4: Mature pipeline and operating portfolio (c 3.7GW) split by stage of project

Source: Edison Investment Research, company data. Note: We assume Greek solar PV projects of 1.5GW comprise 0.3GW under construction, 0.6GW ready to build and 0.6GW in advanced development stages.

Valuation

We use a 10-year DCF analysis (on a SOTP basis), which we feel considers the longer-term impact of the energy transition. We place less emphasis on peer valuation, using it only as a cross-check. Our DCF approach suggests a per-share valuation of €27.0 (rounded), which implies 62% upside to the current share price (€16.62) and is a 13% increase on our last published valuation (in December 2021). The reasons for our increased valuation are set out in the financials section below and valuation changes on a divisional basis are shown in Exhibit 5.

25BDCF

Following the publication of the annual report for FY21, we have rolled forward our forecast model to include the 10 years from FY22–31. The key assumptions and drivers for our cash flow model are as follows:

2% pa inflation applies to forecasts made in real terms over a 10-year explicit cash flow period, except for 2022 where we assume 5% inflation, in line with the European Central Bank’s current outlook.

A 1% terminal growth rate for Metallurgy, Power & Gas (P&G) and Sustainable Engineering Solutions (SES), and 2% for RSD, which is conservative, particularly for businesses that should benefit from strong long-term growth rates associated with the energy transition.

We keep a WACC of 7.0%, based on a beta of 1.0x, a cost of equity of 10.7% and a gross cost of debt of 2.5% (with total debt at an assumed 40% of capital). We believe that pressures on cost of capital from the currently inflationary environment are offset by Mytilineos’s potential access to future capital through the European recovery fund at very attractive interest rates (possibly close to zero).

Terminal capex (included in the terminal cash flow) for the P&G and Metallurgy divisions representing 1.5x depreciation.

RSD and SES are not capex-intensive businesses (although there are significant working capital requirements for RSD); however, we adopt capex assumptions equating to 2.0–2.5x throughout our forecast periods.

We use the number of shares excluding share repurchases (134.3m) in arriving at our value per share of €27. This is consistent with using the number of shares in issue (142.9m), but with adding Mytilineos’s investment in its own shares (c 8.6m shares repurchased) to the equity valuation.

Exhibit 5: DCF-based SOTP valuation

Components

Edison new EV (€m)

Per share
(€)

EBITDA 2022e (€m)

Implied EV/EBITDA (x)

Edison old EV (€m)

Difference old versus new (%)

P&G

1,498

11.2

208

7.2x

1,327

13%

Metallurgy

1,813

13.5

221

8.2x

1,697

7%

RSD

970

7.2

47

20.6x

907

7%

SES

515

3.8

45

11.5x

529

-3%

Other*

(3)

Enterprise value

4,796

35.7

518

9.3x

4,460

8%

Net cash/(debt)**

(818)

(6.1)

(829)

-1%

Other adjustments*

(352)

(2.6)

(370)

-5%

Total equity value

3,626

27.0

3,260

11%

Number of shares (m)

134.3

135.1

-1%

Value per share (€) (rounded)

27.0

24.0

13%

Current share price (€)

16.6

% upside/(downside)

62%

Source: Edison Investment Research. Note: Priced at 13 April 2022. *Includes associates, minority interests, employment benefits liability and an adjustment for c €11m pa of post-tax cash flow (which includes other items of negative €3m pa) not included in divisional forecasts. **Net debt at end of FY21 adjusted for share repurchase payments since the start of FY22; we currently use full year FY22e free cash flow as the first year in our DCF.

Exhibit 6: Sensitivities of DCF valuation to WACC and terminal growth rates

Share valuation (€/share)

WACC

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

0.0%

33.0

29.5

26.5

24.0

21.8

19.9

18.2

0.5%

35.7

31.6

28.2

25.4

22.9

20.9

19.0

1.0%

39.1

34.2

30.3

27.0

24.3

22.0

19.9

Terminal growth rate*

1.5%

43.4

37.4

32.7

29.0

25.8

23.2

21.0

2.0%

49.1

41.6

35.8

31.3

27.7

24.7

22.2

2.5%

57.1

47.1

39.8

34.3

30.0

26.5

23.7

3.0%

69.3

54.7

45.1

38.1

32.9

28.7

25.4

Source: Edison Investment Research. Note: *Stated terminal growth rate (TGR) applies to all divisions, expect RSD; TGR for RSD is stated TGR + 1%.

Peer valuation: Divisional SOTP

We use peer valuation as a cross-check, rather than driving our valuation, as we believe near-term earnings multiples do not accurately reflect Mytilineos’s long-term growth prospects. In our approach, we apply EV/EBITDA multiples (using the current enterprise value (EV)) to peers for each division.

On first impression, the peer valuation suggests €22.5/share, which is €4.5/share below our valuation of €27.0. However, we do not believe the multiples adequately reflect the competitive strengths or the growth prospects of Mytilineos’s divisions versus their peers:

The SES division benefits from superior margins and growth compared to its peer group, with a 2022e EBITDA margin of 10% versus 8% for peers and an EBITDA CAGR of 23% in 2021–24e versus 11% for peers.

The RSD division enjoys significantly higher growth prospects compared to its peers (EBITDA CAGR of 50% in 2021–24e versus 15% for its peers).

The Metallurgy division benefits from superior margins (2022e EBITDA margin of 28% versus 20% for its peers) and is an early mover in the transition to green and sustainable aluminium. Many of its peers are Asian, operating production facilities using captive coal plants; they will need to invest heavily as they come under increasing pressure to decarbonise. It also has favourable growth prospects (EBITDA CAGR of 19% in 2021–24e versus 6% for its peers).

The renewable energy sources (RES) power generation business (within the P&G business unit) has higher long-term growth prospects than its peers, with an EBITDA CAGR of 14% in 2021–24e versus 7% for its peers, and we expect growth beyond 2023 will also be higher than its peers as we estimate that it adds solar capacity of 300MW pa in 2022–26. In addition, margins are higher (2022 EBITDA margin of 77% vs 65% for its peers).

The earnings benefit from the new combined cycle gas turbine (CCGT) plant, which we expect to start ramping up production during H121, is only partially included in our 2022 EBITDA forecast (for CCGT plants) as we expect the plant to ramp up production over H122.

We apply a 20% premium to multiples for each of these divisions/business units. Collectively, this would increase the valuation by c €6.0/share to an adjusted €28.5/share, which is 6% higher than our DCF valuation.

Exhibit 7: Peer group multiple analysis

Implied EV
(€m)

EV/EBITDA (x)
2022e

EBITDA (€m)
2022e*

EBITDA % CAGR
2021–24e

EBITDA % margin
2022e

Comps – median metrics:

 

 

 

 

 

CCGT power generation

5.5

1,331

1%

22%

RES power generation

15.8

347

7%

65%

Supply

4.5

Power & Gas

Metallurgy

6.1

1,162

6%

20%

RSD

14.7

1,294

15%

36%

SES

8.0

515

11%

8%

Mytilineos:

 

 

 

 

 

CCGT power generation

1,069

5.5

193

24%

18%

RES power generation

676

15.8

43

14%

77%

Supply*

54

4.5

12

Power & Gas*

1,798

7.3

248

Metallurgy

1,350

6.1

221

19%

28%

RSD

689

14.7

47

50%

9%

SES

362

8.0

45

23%

10%

4,199

Net debt and other adjustments**

(1,170)

Equity value

3,029

Number of shares (m)

134.3

Value per share (€) (rounded)

22.5

Fair value premium*** (€)

6.0

Adjusted value per share (€)

28.5

Source: Refinitiv, Edison Investment Research. Note: Priced at 13 April 2021. *FY23 EBITDA of €12m used for supply as negative earnings (of €28m) expected in FY22. **Net debt at end of FY21 adjusted for share repurchase payments since the start of FY22; other adjustments include associates, minority interests, employment benefits liability and an adjustment for c €11m pa of post-tax cash flow (which includes other items of negative €3m pa) not included in divisional forecasts. ***20% premium applied to some business areas to reflect fair value (see commentary in the paragraph above the table).

Financials

Please refer to our September outlook report for detailed financials and assumptions by division in conjunction with our December update report (where we made some minor adjustments). Following the publication of the FY21 annual report and further increases in commodity and energy prices, we have made some additional changes to our assumptions. This results in an increase in our earnings forecasts, with net income increasing by 4%, 12% and 28% for FY22, FY23 and FY24 respectively. The most important factors affecting our forecasts are as follows.

Metallurgy: Benefiting from increased aluminium prices

We have increased our aluminium price forecasts to reflect an increase in Bloomberg consensus prices over 2022–24. Our long-term aluminium price (real) assumption increases to $2,400/t (from $2,200/t previously), and we assume $3,000/t, $2,800/t and $2,600/t in 2022–24 respectively, although note that due to hedging/fixed price contracts Mytilineos typically realises these prices with a c 18 month lag, which was not fully appreciated in our previous forecasts.

We assume premiums decrease from 40% of the aluminium price in 2021 and 2022e to 20% of aluminium price from 2025 onwards. As noted in our recent decarbonisation of aluminium themes report we believe that longer-term customers could be increasingly willing to pay an ‘additional’ premium for ‘low carbon’ aluminium. We do not take account of this in our long-term price or premium forecasts at this stage; however, we acknowledge potential upside in the future.

We make some changes to input costs, based on FY21 results and current market conditions. The most notable changes are from FY24 as the company has a fixed-price power purchase agreement, which terminates at the end of 2023. From FY24, we assume power is sourced from the new CCGT plant (c 30%, and mostly overnight when gas prices are cheaper) and low-cost solar (c 70%, a combination of third-party power purchase agreements and the company’s own planned solar plants). This results in an estimated increase in power costs to €50/MWh (real) in FY24 followed by a reduction to €40/MWh (real) from FY25.

The net impact of the above changes is an 11% decrease in our EBITDA forecasts for FY22 and a 3% decrease for FY23, followed by a 25% increase in FY24 normalising at a 5–8% increase by the second half of our 10-year forecast period. This results in an increase to our valuation for Metallurgy.

Power & Gas: Benefiting from favourable clean spark spread

We have increased our wholesale electricity price, gas price and carbon price assumptions to reflect current market conditions. We assume the average wholesale electricity price peaks at €200/MWh (daily average) in 2022, decreasing to €75/MWh from 2025; the average gas price peaks at €80/MWh (daily average) in 2022, decreasing to €30/MWh from 2025; and the average carbon price increases from €70/t in 2022 to €100/t from 2027.

The above price assumptions should have a favourable impact on the clean spark spread for the company over FY22–24, with estimates (real) of €35/MWh, €30/MWh and €25/MWh respectively, and are a consequence of Mytilineos operating the most efficient thermal plant fleet in Greece. This is notably higher than our previous estimates of clean spark spreads of c €19/MWh, €18.5/MWh and €18/MWh respectively, and is the main driver for our earnings increase for the P&G division. Our long-term clean spark spread estimates remain roughly the same at c €17.5/MWh.

FY21 reported capex was €380m, which was €100m below our forecast (c €480m). We therefore assume a six-month delay to own build Greek solar plants resulting in 150MW in FY22, 300MW pa in each of FY23–26, followed by 150MW in FY27. In addition, we assume the 43MW wind farm under construction is fully operational in FY23 (versus FY22 previously). The impact of these changes mildly offsets the increase in our near-term forecasts due to an estimated higher clean spark spread.

We continue to assume the new CCGT plant starts production during H122 and ramps up to full capacity by year-end. We adopt a 30% load factor in FY22 based on our estimated ramp up profile. Once at full capacity (load factor of more than 60%), it will notably enhance the company's thermal fleet efficiency.

RSD: Increasing potential from higher-margin own pipeline projects

To reflect Mytilineos’s growing renewable development pipeline, equating to c 5GW outside of Greece, we increase our forecasts for BOT projects over the period FY22–25e. Cumulatively, we now forecast 1.7GW over the period, up from 1.4GW previously. This compares to a mature (and operating) project pipeline of nearly 2GW (as at end-FY21), thus there could be potential to further increased our volume sales forecasts.

In addition, we forecast continued momentum post-FY25 and therefore also increase our BOT forecasts for the second half of our 10-year forecast period. Our 10-year forecast BOT sales equate to 5.5GW, which compares to the company’s existing international pipeline of 6GW. We do not believe that all projects in the company’s existing pipeline will be successful and therefore implicitly assume that there will be a continued inflow of projects into the pipeline. Due to the capital intensity of BOT projects, we increase our working capital assumptions over FY22–31.

Furthermore, due to favourable market conditions (ie high energy prices), we increase our margin assumptions on BOT projects from 11% to 12% over our entire forecast period. Due to Mytilineos’s strong balance sheet, it has the flexibility to ensure margins are optimised on each project sale. For simplicity, we model the company’s international pipeline as BOT only (and not build to keep), however, we note that keeping, in the short term, some solar plants with exposure to the current high merchant prices could further increase value accretion in RSD. There would of course be near-term working capital implications too.

For EPC sales, the firm and mature project backlog at the end of FY21 was 351MW, down from 589MW; thus, we decrease our EPC forecasts for FY22 and FY23 from 550MW and 700MW respectively to 400MW and 600MW respectively. As we expect an acceleration in renewable projects in the medium term, particularly in Europe, we keep our forecasts the same from FY24 onwards, and note that there could be further upside to these.

The decrease in forecast near-term EPC sales only partially offsets the increase in BOT project sales, thus our earnings forecast and valuation for RSD increases.

SES: Tweaked down near-term margins, volume sales remain unchanged

SES achieved an EBITDA margin of 9% in FY21, which was below our forecast of 11%. We therefore lower our FY22 and FY23 margin assumptions to 10% and 11% respectively (from 12% previously) and keep our long-term EBITDA margin estimate at 12% from FY24. This is in appreciation of the SES business continuing to turn-around and that it consistently achieved an 18–20% EBITDA margin over FY11–18.

Our volumes sales forecasts remain unchanged. The firm order backlog has decreased from €1.0bn at end of FY20 to €0.8bn at end of FY21. However, the mature pipeline (not including firm orders) has increased from €0.5bn to €1.6bn over the same period.

The net impact of the above changes is a decrease of 17% and 8% in our EBITDA forecast for FY22 and FY23 respectively, with FY24 onwards remaining unchanged. This results in an increase to our valuation for Metallurgy.

Exhibit 8: Changes to Edison forecasts

Actual

Edison new

Edison old

Difference (%)

2021

2022e

2023e

2024e

2021e

2022e

2023e

2024e

2021**

2022e

2023e

2024e

Metallurgy

159

221

241

270

165

249

249

216

-4%

-11%

-3%

25%

SES

33

45

55

63

44

54

60

63

-24%

-17%

-8%

0%

RSD

22

47

60

72

23

42

57

64

-7%

13%

6%

13%

P&G

147

208

289

268

118

149

200

221

25%

39%

45%

21%

Other

(3)

(3)

(3)

(3)

(6)

(6)

(6)

(6)

n/m

n/m

n/m

n/m

EBITDA

359

518

642

670

345

488

560

558

4%

6%

15%

20%

Net income*

180

271

359

372

163

261

305

292

11%

4%

18%

28%

EPS*

1.32

2.01

2.67

2.77

1.19

1.92

2.25

2.15

11%

5%

19%

29%

Source: Mytilineos, Edison Investment Research. Note: *Adjusted for minorities; increase in EPS forecasts are higher than net income due to share buybacks. **Reported versus previous forecasts.

Exhibit 9: Financial summary

€m

2018

2019

2020

2021

2022e

2023e

2024e

31 December

PROFIT & LOSS

Revenue

 

 

1,527

2,256

1,899

2,664

4,028

4,694

4,409

Cost of Sales

(1,229)

(1,922)

(1,559)

(2,299)

(3,496)

(4,031)

(3,718)

Gross Profit

297

334

339

365

532

662

691

EBITDA

 

 

283

313

315

359

518

642

670

Operating Profit (before except.)

204

219

225

279

412

522

541

Exceptionals

Operating Profit

204

219

225

279

412

522

541

Other

0

(12)

(34)

1

1

1

1

Net Interest

(38)

(27)

(18)

(41)

(59)

(62)

(63)

Profit Before Tax (norm)

 

166

180

172

239

354

462

480

Profit Before Tax (reported)

 

166

180

172

239

354

462

480

Tax

(23)

(29)

(28)

(41)

(60)

(83)

(91)

Profit After Tax (norm)

143

150

144

198

294

379

389

Profit After Tax (FRS 3)

143

150

144

198

294

379

389

Minority interests

1

(3)

(14)

(18)

(23)

(19)

(16)

Discontinued activities

(4)

(3)

(1)

(1)

(1)

(1)

(1)

Average Number of Shares Outstanding (m)

142.9

142.9

141.2

136.0

134.5

134.3

134.3

EPS - normalised (€)

 

 

1.009

1.033

0.923

1.327

2.017

2.677

2.777

EPS - normalised and fully diluted (€)

1.009

1.033

0.923

1.327

2.017

2.677

2.777

EPS - reported (€)

 

 

0.984

1.014

0.913

1.324

2.013

2.673

2.773

Final distributed dividend per share (€

0.36

0.36

0.38

0.46

0.70

0.94

0.97

Gross Margin (%)

19.5

14.8

17.9

13.7

13.2

14.1

15.7

EBITDA Margin (%)

18.5

13.9

16.6

13.5

12.9

13.7

15.2

Operating Margin (before GW and except.) (%)

13.4

9.7

11.8

10.5

10.2

11.1

12.3

BALANCE SHEET

Fixed Assets

 

 

1,858

1,824

1,881

2,188

2,481

2,685

2,814

Intangible Assets

445

446

446

446

460

472

485

Tangible Assets

1,142

1,121

1,161

1,429

1,708

1,899

2,016

Right of use assets

0

48

45

48

48

48

48

Investments/Other

272

209

227

266

266

266

266

Current Assets

 

 

1,483

2,334

2,111

2,901

3,796

4,322

4,318

Stocks

184

214

290

469

685

798

750

Debtors

1,059

1,405

1,319

1,818

2,497

2,910

2,954

Cash

208

713

493

603

603

603

603

Other

32

1

9

12

12

12

12

Current Liabilities

 

 

(871)

(1,148)

(1,117)

(1,691)

(2,656)

(3,091)

(2,952)

Creditors

(806)

(1,066)

(1,042)

(1,609)

(2,380)

(2,779)

(2,633)

Short term borrowings

(64)

(83)

(76)

(82)

(277)

(311)

(319)

Long Term Liabilities

 

(909)

(1,376)

(1,302)

(1,682)

(1,682)

(1,682)

(1,682)

Long term borrowings

(534)

(1,051)

(955)

(1,324)

(1,324)

(1,324)

(1,324)

Other long term liabilities

(375)

(325)

(348)

(358)

(358)

(358)

(358)

Net Assets (ex minority)

 

1,561

1,634

1,572

1,716

1,938

2,234

2,497

CASH FLOW

Operating Cash Flow

 

211

270

316

276

361

486

502

Net Interest

(18)

(11)

(27)

(23)

(49)

(52)

(52)

Tax

(18)

(2)

(36)

(33)

(41)

(60)

(83)

Capex

(84)

(127)

(155)

(380)

(390)

(314)

(249)

Acquisitions/disposals

19

(4)

(20)

8

0

0

0

Financing

0

0

(56)

(32)

(14)

0

0

Dividends

(46)

(52)

(50)

(52)

(62)

(95)

(126)

Other

114

(110)

(41)

20

0

0

0

Net Cash Flow

178

(37)

(69)

(215)

(194)

(35)

(8)

Opening net debt/(cash)

 

568

390

421

538

803

998

1,033

HP finance leases initiated

0

6

(48)

(51)

0

0

0

Other

(0)

(0)

0

0

(0)

0

(0)

Closing net debt/(cash)

 

390

421

538

803

998

1,033

1,040

General disclaimer and copyright

This report has been commissioned by Mytilineos and prepared and issued by Edison, in consideration of a fee payable by Mytilineos. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

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1185 Avenue of the Americas

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United States of America

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Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Mytilineos and prepared and issued by Edison, in consideration of a fee payable by Mytilineos. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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