Renewi — Q1 trading in line, value upside remains

Renewi (LSE: RWI)

Last close As at 20/04/2024

GBP5.70

2.00 (0.35%)

Market capitalisation

GBP460m

More on this equity

Research: Industrials

Renewi — Q1 trading in line, value upside remains

Renewi is a leader in its chosen waste and recycling sectors and well positioned in the emerging circular economy. The shares trade at a discount to peers and our DCF valuation. A combination of sustained profitability and margins and delivery of the key project portfolio should see this discount eliminated over time.

David Larkam

Written by

David Larkam

Analyst, Industrials

Industrials

Renewi

Q1 trading in line, value upside remains

Company update

Industrial support services

20 July 2022

Price

788p

Market cap

£630m

€1.17/£

Core group ongoing net debt
(€m, ex-PPP/PFI finance and IFRS 16 leases) at end June 2022

321

Shares in issue

80.0m

Free float

98.8%

Code

RWI

Primary exchange

LSE

Secondary exchange

Euronext Amsterdam

Share price performance

%

1m

3m

12m

Abs

10.4

15.3

46.6

Rel (local)

6.6

21.1

42.6

52-week high/low

840p

500p

Business description

Renewi is a leading waste-to-product company in some of the world’s most advanced circular economies, with operations primarily in the Netherlands, Belgium and the UK. Its activities span the collection, processing and resale of industrial, hazardous and municipal waste.

Next events

Q2 pre close trading update

3 October

H123 results

10 November

Analyst

David Larkam

(0207) 3077 5700

Renewi is a research client of Edison Investment Research Limited

Renewi is a leader in its chosen waste and recycling sectors and well positioned in the emerging circular economy. The shares trade at a discount to peers and our DCF valuation. A combination of sustained profitability and margins and delivery of the key project portfolio should see this discount eliminated over time.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/21

1,694

47

45

0.0

20.4

N/A

03/22

1,869

105

98

0.0

9.4

N/A

03/23e

1,906

97

90

5.0

10.2

0.5

03/24e

1,959

103

96

10.0

9.6

1.1

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Q1 trading update: In line with guidance

Group revenue and EBIT for the first quarter were ahead of the prior year and in line with management’s expectations set out with the finals in May. Recyclate prices, a key driver for FY22 profit improvement, have remained resilient although metal prices have softened. Tight cost controls are in place to mitigate inflationary pressure. This suggests another good year in FY23, albeit the end result will be somewhat dependent on recyclate prices, while the benefits of the Innovations programme, Renewi 2.0 and ATM turnaround are still largely to come through. End markets continue to benefit from tightening legislation such as the European waste incineration carbon tax, which will drive waste streams towards Renewi’s recycling offerings. Net debt before leases at 30 June 2022 increased by €18m to €321m (pre the Paro acquisition, which is still expected to complete in August) with leverage remaining below 1.5x net debt to EBITDA.

Forecasts: FY23 re-introduced for another good year

We have re-introduced forecasts, which were on hold post the results. The delta for FY23 from FY22 is expected to come from declining recyclate prices partially offset by an assumed seven months of the Paro acquisition (completion due in August), while management actions offset inflationary pressures. We expect upside from key projects (ATM, Innovations and Renewi 2.0) to start having a meaningful impact from FY24.

Valuation: Discount to peers

Our DCF valuation comes in at 952p (8.0% WACC and 1.5% terminal growth) and our peer group valuation (average of P/E, EV/EBIT and EV/EBITDA) at 900p. This difference, at least in part, is due to the benefit of the projects (Renewi 2.0, Investments and ATM recovery) not being fully reflected in shorter timeframe metrics. Of note is also the implied valuation from recent corporate transactions that comes in at 2,013p.

Trading update and re-initiation of forecasts

Trading update

The Q1 update was in line with management expectations, with no change to the guidance set at the time of the full year results in May. Recyclate prices have remained positive, with the exception of metals where some softness is being seen. This is positive for margins, particularly in the Commercial Waste division (recyclates 16% of revenue in FY22). Tight cost controls are in place to mitigate inflationary pressures, which are inevitably being seen. While there was no comment in the statement on macro issues, these remain somewhat unclear at present, although Renewi’s performance through the pandemic highlighted the resilience of the majority of the group’s end markets.

Forecasts and assumptions

Below we discuss the key assumptions behind our updated forecasts.

Commercial Waste

Inbound revenue accounted for 79% of divisional sales in FY22. Volumes and revenues tend to follow GDP growth, albeit with less cyclicality, as highlighted in Exhibit 1, showing the Netherlands’ and Belgium’s GDP growth and Commercial Waste inbound revenue. Note that Renewi also posted exceptional growth in 2022 from outbound (recyclates).

Exhibit 1: Macro forecasts and recent performance of the Commercial division

2020

2021

2022e

2023e

Netherlands GDP growth

-3.5

+5.0

+3.3

+1.6

Belgium GDP growth

-5.7

+6.2

+2.0

+1.8

Mar 2021

Mar 2022

Inbound revenue growth

-2.2

+4.0

Outbound revenue growth

+3.9

+62.7

Divisional revenue growth

-0.8

+9.7

Source: European Commission, Renewi

For inbound, our assumption is for volume growth to be 2% in FY23 and 1% in FY24 before the benefit of the investment programme, reflecting the GDP growth forecasts for Netherlands and Belgium (source: European Commission). Price inflation is clearly likely to provide additional boost to the top line, reflecting the increase in wages, fuel, etc, being seen. For outbound revenue, management expects recyclate prices to moderate, albeit to remain above historical levels. There is limited evidence of prices declining at present: metals have softened and many, such as plastics, glass and wood, remain positive.

Margins have recovered strongly but will clearly face some challenges, particularly if recyclate prices soften. Renewi will inevitably face pressure on labour and fuel costs as well, although the group is largely hedged on fuel until the end of calendar 2022 and management comments that action is being taken as necessary, suggesting limited downside should be expected. Our assumption is that the recyclate pricing declines will start to be felt in H223 running into H124, when we have assumed a 100bps decline in the Commercial Waste operating margin by FY24.

The Paro acquisition is expected to complete in August, hence we have assumed a conservative seven months’ contribution in FY23 and a full 12 months in FY24.

Mineralz & Water

Key for the Mineralz & Water division continues to be ATM, the soil remediation business. Our prudent assumption is that FY23 will see further progress on permitting, but this will not benefit the financial performance until FY24. Hence, we are anticipating a flattish year in FY23.

Specialities

We have factored in a broadly flat underlying year for the Specialties division, we have assumed lower metal prices and caution on the public private partnerships (PPPs). There will be a benefit from the adoption of IAS37 on provisioning.

Projects

Company guidance for the P&L impact from the investments and turnaround programmes is shown in Exhibit 2. Delays in the installation of equipment for the key investment project, advanced residual waste sorting, suggests there may be some slippage in timing. Of the three listed below, the recovery in ATM is the most difficult to predict given that permitting is clearly outside management’s control. Further disposal of soil is required (700kt of the 1.3mt inventory was sold in FY22) before this can be achieved, hence our assumption is that FY23 will be similar to FY22.

Exhibit 2: P&L impact from projects (€m)

FY22

FY23e

FY24e

FY25e

Renewi 2.0

5

12

20

20

Investments

(2)

2

9

19

ATM recovery

5

20

Source: Renewi

Operational exceptional items

The key exceptional is expected to be the Renewi 2.0 programme costs of €8m in FY23 and FY24, the final year of the programme, against €6.6m in FY22.

Financial

Key aspects to the cash flow are the higher capex, reflecting deferred capex from FY22 in relation to the largest of the investment projects, and spend on provisions (ATM and UK municipals) and delayed tax (Netherlands) of €50m. There will also be the acquisition of Paro. This will lead to a cash outflow for the year, although core net debt/EBITDA is still expected to be below 2.0x for end FY23 (FY22: 1.4x).

Dividend

Renewi last paid a dividend in FY20, an interim dividend before the pandemic, and management has not commented on any firm plans to reinstate a pay-out. Our view is that, provided the outlook at the end of the financial year is robust, the company could pay a final dividend. Note that a 10c dividend would cost the group €8m.

Exhibit 3: Profit & loss

Year to March (€m)

FY20

FY21

FY22

FY23e

FY24e

FY25e

Revenue

– Netherlands

811.7

828.4

896.2

933.4

970.9

1008.9

– Belgium

438.5

412.9

466.9

470.7

479.5

498.3

– intersegment

 

(0.7)

(2.6)

-2.6

-2.7

-2.8

Commercial Waste

1250.2

1240.6

1360.5

1401.5

1447.8

1504.4

Mineralz & Water

151.6

182.8

193.9

189.2

192.2

201.8

Specialities

323.2

300.7

350.1

354.3

358.9

374.7

Disposals

78.4

 

 

Inter-segmental sales

(28.0)

(30.5)

(35.3)

(38.9)

(40.0)

(41.6)

Group turnover

1775.4

1693.6

1869.2

1906.1

1958.9

2039.3

 

 

 

 

 

 

Operating margin

 

 

 

 

 

 

– Netherlands

6.1%

6.5%

10.4%

9.6%

9.6%

9.8%

– Belgium

6.7%

5.6%

9.1%

8.5%

8.5%

8.7%

Commercial Waste

6.3%

6.2%

10.0%

9.2%

9.3%

9.5%

Mineralz & Water

3.7%

0.2%

3.0%

3.5%

6.0%

7.0%

Specialities

-0.4%

0.8%

1.2%

2.7%

3.0%

3.0%

Disposals

15.4%

 

 

Group operating margin

4.9%

4.3%

7.1%

6.8%

7.1%

7.3%

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

– Netherlands

49.4

53.7

93.1

89.6

93.2

98.9

– Belgium

29.2

23.1

42.6

40.0

40.8

43.3

Commercial Waste

78.6

76.8

135.7

129.6

134.0

142.2

Mineralz & Water

5.6

0.3

5.8

6.6

11.5

14.1

Specialities

(1.3)

2.4

4.1

9.6

10.8

11.2

Disposals

12.1

0.0 

0.0 

0.0

0.0

0.0

Central costs

(7.4)

(6.5)

(12.0)

(17.0)

(17.9)

(18.7)

Group operating profit

87.6

73.0

133.6

128.8

138.4

148.8

Associates (PAT)

0.9

1.6

0.5

 

 

 

Acquired intangibles amortisation

(6.4)

(3.3)

(3.4)

(5.0)

(5.5)

(6.0)

 

 

 

 

 

 

Exceptionals

 

 

 

 

 

 

Profit/(loss) on disposal of fixed assets

 

 

0.7

Improvement plan

 

(7.3)

(6.6)

(8.0)

(8.0)

Reorganisation costs

(15.1)

(10.4)

(3.4)

Write downs/Provisions

(35.1)

(15.9)

3.1

Other

(56.9)

 

 

EBIT (reported)

(25.0)

37.7

124.5

115.8

124.9

142.8

 

 

 

Financing charges

(34.4)

(27.2)

(28.9)

(31.6)

(35.0)

(38.0)

Exceptional financing charges

 

0.4

0.1

PBT reported

(59.4)

10.9

95.7

84.2

89.9

104.8

PBT before exceptionals

54.1

47.4

105.2

97.2

103.4

110.8

 

 

 

Tax reported

(1.1)

(5.4)

(20.3)

(21.1)

(22.5)

(26.2)

Tax rate underlying

25%

24%

25%

25%

25%

25%

 

 

 

Reported profit after tax

(60.5)

5.5

75.4

63.2

67.4

78.6

Adjusted profit after tax

40.8

35.8

78.8

72.9

77.5

83.1

 

 

 

Minority interest

(0.1)

(0.1)

(0.9)

(1.0)

(1.0)

(1.0)

 

 

 

Reported profit attributable to shareholders

(60.6)

5.4

74.5

62.2

66.4

77.6

Adjusted profit attributable to shareholders

40.7

35.7

77.9

71.9

76.5

82.1

 

 

 

EPS reported (c)

(97.1)

7

93

78

83

97

EPS adjusted (c)

51

45

98

90

96

103

Source: Renewi accounts, Edison Investment Research


Valuation

We have valued Renewi on an absolute basis, using a discounted cash flow (DCF) model, and a relative basis (to European peers and recent corporate activity in the sector). Note that we have adjusted our valuation for the provisions for site restoration and aftercare and onerous contracts. Along with the group’s stated underlying debt position, we have included the IFRS 16 lease debt but not the non-recourse PPP debt.

A summary of our valuations is shown in Exhibit 4. We note the significant premium that corporate transactions imply versus listed peer group valuations. In addition, we note that the DCF valuation is higher than the peer valuations (based on P/E, EV/EBIT and EV/EBITDA), which, in part, will be due to the benefit of the project portfolio (Renewi 2.0, Investments and ATM recovery) not being fully reflected in shorter time frame metrics.

Exhibit 4: Renewi valuation summary (p/share)

Valuation methodology

Low

High

Average

DCF

879

1,025

952

Peer valuation

864

936

900

Take-out valuation

1,919

2,107

2,013

Source: Edison Investment Research

Discounted cash flow

Our DCF uses a 10-year forecast period followed by a constant growth model. The weighted cost of capital (WACC) calculation assumptions and output used are show in Exhibit 5.

Exhibit 5: WACC assumptions

UK risk-free rate

2.3%

UK risk premium

9.3%

Renewi beta

1.05

Renewi cost of equity

12.0%

Renewi cost of debt

4.0%

Renewi tax rate

25%

Renewi WACC

7.9%

Source: Refinitiv, Edison Investment Research

Exhibit 6 illustrates our DCF valuation relative to variations in the terminal growth rate and cost of capital. The shaded area highlights where we currently see fair value. In line with our WACC calculation noted above and the general premise of waste markets growing below GDP growth (Netherlands 10-year average GDP growth 1.5%) plus price inflation, our value range is 879–1,025p a share.

Exhibit 6: DCF value per share (p)

Terminal growth rate

1.0%

2.0%

3.0%

4.0%

5.0%

Weighted cost of capital

10.0%

539

611

703

826

999

9.5%

609

693

804

954

1,172

9.0%

688

788

921

1,108

1,389

8.5%

777

897

1,060

1,296

1,668

8.0%

879

1,025

1,228

1,532

2,040

7.5%

998

1,176

1,432

1,836

2,562

7.0%

1,137

1,358

1,689

2,241

3,345

6.5%

1,302

1,581

2,019

2,809

4,652

6.0%

1,500

1,860

2,461

3,662

7,267

5.5%

1,743

2,220

3,080

5,086

15,115

Source: Edison Investment Research

Peer valuation

The following table uses European group peers to provide a relative valuation of listed companies using PE, EV/EBIT and EV/EBITDA metrics. Note that US peers are generally more highly valued, a trend seen across the market in general.

Exhibit 7: European peer valuations

EV/EBITDA (x)

EV/EBIT (x)

P/E (x)

FY1

FY2

FY3

FY1

FY2

FY3

FY1

FY2

FY3

Befesa

9.8

8.6

8.5

130.5

11.2

10.6

15.2

12.8

13.1

Biffa

7.4

6.4

6.3

16.6

12.3

12.2

23.4

18.5

17.6

Groupe Pizzorno

7.5

5.1

4.8

18.3

17.4

15.4

21.8

20.9

20.0

Lassila & Tikanoja

6.0

5.7

5.5

14.0

12.1

11.5

13.5

11.7

11.0

Mo-BRUK

5.3

5.0

4.1

5.6

5.2

4.3

Seche

6.0

5.5

5.1

13.4

12.2

10.9

15.3

13.6

11.8

Veolia Environmental

5.5

5.3

4.8

122.2

10.7

9.8

15.5

12.5

10.4

Average

6.8

5.9

5.6

45.8

11.6

10.7

17.4

15.0

14.0

Median

6.0

5.5

5.1

16.6

12.1

10.9

15.4

13.2

12.4

Source: Refinitiv, Edison Investment Research, priced 14 July 2022

Exhibit 8 translates the peer metrics into a valuation for Renewi. Our values range from 864p on a P/E basis to 936p on a combined EV/EBITDA and EV/EBIT basis.

Exhibit 8: Renewi valuation

FY23e

FY24e

FY25e

Average/valuation

EV/EBITDA basis

Peer group multiple

6.0

5.5

5.1

Renewi EBITDA (€m)

256.0

266.8

280.5

Renewi enterprise valuation (€m)

1,542

1,465

1,425

1,477

EV/EBIT

Peer group multiple

16.6

12.1

10.9

Renewi normalised EBIT (€m)

128.8

138.4

148.8

Renewi enterprise valuation (€m)

2,140

1,679

1,627

1,815

Renewi combined valuation

Enterprise value (€m)

1,646

Debt (€m)

(525)

Provisions/pensions (€m)

(237)

Investments (€m)

25

Market capitalisation (€m)

885

Number of shares (m)

80

Value per share (€c)

1,095

Value per share (£p)

936

P/E

Peer group valuation (x)

15.4

13.2

12.4

Renewi eps (€c)

89.9

95.7

102.7

Renewi valuation per share (€c)

1,382

1,261

1,276

1,306

Provisions per share (€c)

(296)

(296)

(296)

(296)

Renewi valuation per share (€c)

1086

965

980

1010

Renewi valuation per share (£p)

928

825

838

864

Source: Edison Investment Research

Corporate transactions

The protracted Veolia/Suez deal has stolen most of the headlines in the sector over the last couple of years, yet there has been significant corporate activity elsewhere. In the following exhibit we use the valuations of these transactions to provide an indication of the potential value of Renewi. Note that the table of deals includes the potential offer for Biffa.

Exhibit 9: Corporate activity

Date

Company

Acquirer

Currency

Deal value (m)

EV/sales (x)

EV/ EBITDA (x)

EV/EBIT (x)

Jul-17

O'Brien

Biffa

UK industrial & commercial collections business

£

35

1.0

5.3

6.6

Aug-17

MWR

EMR

Metal & wate recycling

£

53

0.3

7.5

12.0

Mar-18

Augean AIS

Regen Devco

Waste management broker

£

4

0.5

N/A?

7.6

Aug-18

Weir Waste

Biffa

UK industrial & commercial collections business

£

16

1.0

7.4

14.7

Jun-19

Renewi Canada

Convent Capital

Renewi Canadian operations

72

3.9

15.7

48.0

Oct-19

Advanced Disposal

Waste management Inc

US domestic and industrial waste

$

4,600

2.8

13.0

29.1

Mar-20

Viridor

KKR

UK waste, recycling, waste to energy

£

4,200

4.9

18.6

29.3

Oct-20

Simply Waste

Biffa

UK industrial & commercial collections business

£

35

1.1

6.7

11.3

Oct-20

SUEZ

Veolia

Waste & treatment

24,200

1.4

8.8

19.0

Nov-20

SUEZ Sweden

PreZero

Plastics and hazardous waste in D, NL, POL

357

1.4

10.5

N/A

Jan-21

Spill Tech (S Africa)

Seche

Hazardous spills

70

2.4

8.9

N/A

Apr-21

Suez (NL,POL,D)

PreZero

Recovery/recycling in NL, LUX, D, POL

1,100

1.0

11.0

N/A

May-21

Viridor Collections

Biffa

UK industrial & commercial collections business

£

126

0.9

7.0

N/A

Sep-21

Augean

Eleia

Hazardous waste and North Sea

£

396

5.1

13.7

19.3

Apr-22

Filta

Franchise Brands

Cooking oil recycling

£

46

1.8

14.3

30.4

Jun-22

Biffa

Energy Capital Partners

Waste management

£

1,549

1.5

11.2

35.0

Median

1.4

10.5

19.1

Source: Refinitiv, Edison Investment Research

Translating these metrics to Renewi provides a theoretical take-out price.

Exhibit 10: Renewi implied valuation

Valuation metric

EV/sales

EV/EBITDA

EV/EBIT

Median take-out historical multiple (x)

1.4

10.5

19.1

Renewi FY22 (sales, EBITDA, EBIT) (€m)

1,859

262

134

Implied enterprise value (€m)

2,667

2,746

2,566

Cash/(debt) (€m)

(525)

(525)

(525)

Provisions (€m)

(237)

(237)

(237)

Investments (€m)

25

25

25

Implied market capitalisation (€m)

1,931

2,009

1,830

Minorities (%)

1%

1%

1%

Price per share (c)

2,389

2,487

2,264

Price per share (p)

2,025

2,107

1,919

Source: Edison Investment Research


Exhibit 11: Financial summary

2019

2020

2021

2022

2023e

2024e

2025e

Year to March (€m)

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

1,780.7

1,775.4

1,693.6

1,869.2

1,906.1

1,958.9

2,039.3

Cost of Sales

(1,470.4)

(1,467.5)

(1,408.5)

(1,512.5)

(1,549.6)

(1,590.7)

(1,651.8)

Gross Profit

310.3

307.9

285.1

356.7

356.4

368.3

387.5

EBITDA

182.1

199.3

202.2

261.5

256.0

266.8

280.5

Normalised operating profit

85.5

87.6

73.0

133.6

128.8

138.4

148.8

Amortisation of acquired intangibles

(6.4)

(6.4)

(3.3)

(3.4)

(5.0)

(5.5)

(6.0)

Exceptionals

(145.1)

(107.1)

(33.6)

(6.2)

(8.0)

(8.0)

0.0

Reported operating profit

(66.0)

(25.9)

36.1

124.0

115.8

124.9

142.8

Net Interest

(23.4)

(34.4)

(26.8)

(28.8)

(31.6)

(35.0)

(38.0)

Joint ventures & associates (post tax)

0.4

0.9

1.6

0.5

0.0

0.0

0.0

Profit Before Tax (norm)

62.5

54.1

47.8

105.3

97.2

103.4

110.8

Profit Before Tax (reported)

(89.0)

(59.4)

10.9

95.7

84.2

89.9

104.8

Reported tax

12.4

(1.1)

(5.4)

(20.3)

(21.1)

(22.5)

(26.2)

Profit After Tax (norm)

46.9

40.8

35.8

78.8

72.9

77.5

83.1

Profit After Tax (reported)

(76.6)

(60.5)

5.5

75.4

63.2

67.4

78.6

Minority interests

4.9

(0.1)

(0.1)

(0.9)

(1.0)

(1.0)

(1.0)

Discontinued operations

(21.1)

(16.6)

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

51.8

40.7

35.7

77.9

71.9

76.5

82.1

Net income (reported)

(92.8)

(77.2)

5.4

74.5

62.2

66.4

77.6

Average shares outstanding (m)

79.7

79.5

79.5

79.7

80.0

80.0

80.0

EPS - basic normalised (c)

59

51

45

98

90

96

103

EPS - diluted normalised (c)

59

51

45

98

89

95

102

EPS - basic reported (c)

(90)

(97)

7

93

78

83

97

Dividend (c)

14.5

4.5

0.0

0.0

5.0

10.0

15.0

Revenue growth (%)

1.2

(0.3)

(4.6)

10.4

2.0

2.8

4.1

Gross Margin (%)

17.4

17.3

16.8

19.1

18.7

18.8

19.0

EBITDA Margin (%)

10.2

11.2

11.9

14.0

13.4

13.6

13.8

Normalised Operating Margin

4.8

4.9

4.3

7.1

6.8

7.1

7.3

BALANCE SHEET

Fixed Assets

1,439.6

1,616.8

1,612.3

1,565.9

1,626.4

1,673.1

1,711.5

Intangible Assets

629.1

584.0

594.9

592.8

585.1

577.4

569.7

Tangible and Right-of-use Assets

605.6

817.0

794.5

767.4

835.6

890.0

936.1

Investments & other

204.9

215.8

222.9

205.7

205.7

205.7

205.7

Current Assets

533.3

503.3

355.7

385.9

386.9

401.6

438.0

Stocks

26.0

20.7

20.6

22.5

22.6

23.0

24.0

Debtors

278.8

272.4

247.7

269.3

273.7

288.1

323.5

Cash & cash equivalents

50.4

194.5

68.8

63.6

60.0

60.0

60.0

Other

178.1

15.7

18.6

30.5

30.5

30.5

30.5

Current Liabilities

(758.3)

(635.2)

(646.7)

(732.7)

(686.1)

(693.5)

(711.2)

Creditors

(518.6)

(534.3)

(546.2)

(528.4)

(530.7)

(538.1)

(555.8)

Tax and social security

(17.9)

(16.5)

(13.8)

(24.2)

(24.2)

(24.2)

(24.2)

Short term borrowings

(121.5)

(41.1)

(47.8)

(148.9)

(100.0)

(100.0)

(100.0)

Other

(100.3)

(43.3)

(38.9)

(31.2)

(31.2)

(31.2)

(31.2)

Long Term Liabilities

(895.1)

(1,249.6)

(1,083.7)

(880.9)

(975.9)

(965.1)

(945.9)

Long term borrowings

(576.3)

(903.3)

(689.1)

(518.7)

(663.7)

(697.9)

(698.7)

Other long term liabilities

(318.8)

(346.3)

(394.6)

(362.2)

(312.2)

(267.2)

(247.2)

Net Assets

319.5

235.3

237.6

338.2

351.3

416.1

492.4

Minority interests

(1.0)

(1.4)

(6.1)

(7.0)

(7.0)

(7.0)

(7.0)

Shareholders' equity

318.5

233.9

231.5

331.2

344.3

409.1

485.4

CASH FLOW

Op Cash Flow before WC and tax

182.1

199.3

202.2

261.5

256.0

266.8

280.5

Working capital

(17.7)

14.2

71.4

(65.7)

(52.2)

(52.3)

(38.7)

Exceptional & other

(77.6)

(45.7)

(20.1)

(11.3)

(11.1)

(11.1)

(3.1)

Tax

(13.2)

(10.1)

(14.8)

(7.6)

(24.3)

(29.8)

(30.7)

Net operating cash flow

73.6

157.7

238.7

176.9

168.4

173.6

207.9

Capex

(99.4)

(63.4)

(57.6)

(77.3)

(138.7)

(121.1)

(116.1)

Acquisitions/disposals

24.0

80.4

(2.7)

(3.2)

(60.0)

0.0

0.0

Net interest

(27.0)

(26.4)

(15.9)

(17.2)

(20.3)

(23.7)

(26.7)

Equity financing

(3.4)

0.0

(1.2)

(1.6)

0.0

0.0

0.0

Dividends

27.4

8.6

0.0

0.0

0.0

(9.0)

(12.0)

Net Cash Flow

(4.8)

156.9

161.3

77.6

(50.6)

19.7

53.1

Opening net debt/(cash)

(500.0)

(551.7)

(456.9)

(343.7)

(303.1)

(402.8)

(437.0)

FX

(5.9)

(3.8)

(6.4)

7.6

0.0

0.0

0.0

Other non-cash movements

(41.0)

(58.0)

(41.7)

(44.6)

(49.1)

(54.0)

(54.0)

Closing core net debt/(cash)

(551.7)

(456.9)

(343.7)

(303.1)

(402.8)

(437.0)

(437.8)

Finance Leases (FRS16)

0.0

(211.7)

(236.7)

(221.9)

(221.9)

(221.9)

(221.9)

PPP non-recourse

(95.4)

(81.7)

(87.6)

(79.1)

(79.1)

(79.1)

(79.1)

Closing net debt/(cash)

(647.1)

(750.3)

(668.0)

(604.1)

(703.8)

(738.0)

(738.8)

Source: Renewi accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Renewi and prepared and issued by Edison, in consideration of a fee payable by Renewi. 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

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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

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

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London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

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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 Renewi and prepared and issued by Edison, in consideration of a fee payable by Renewi. 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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