Last close As at 06/08/2026
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Market capitalisation
—
Research: Industrials
A number of visible operational actions taken in December 2017 are consistent with the stated business direction in each of the three divisions concerned and reinforce strong positions in their specialist markets. While there is no change to estimates, this activity confirms that steps are being taken on a broader front to drive group progress in addition to identified merger integration plans.
Written by
Renewi |
Three positive steps |
Corporate developments |
Industrial support services |
3 January 2018 |
Share price performance
Business description
Next events
Analyst
Renewi is a research client of Edison Investment Research Limited |
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A number of visible operational actions taken in December 2017 are consistent with the stated business direction in each of the three divisions concerned and reinforce strong positions in their specialist markets. While there is no change to estimates, this activity confirms that steps are being taken on a broader front to drive group progress in addition to identified merger integration plans.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/16 |
614.8 |
21.6 |
4.3 |
3.1 |
24.0 |
3.0 |
03/17 |
779.2 |
26.0 |
3.7 |
3.1 |
27.8 |
3.0 |
03/18e |
1,531.4 |
51.0 |
4.8 |
3.1 |
21.3 |
3.0 |
03/19e |
1,554.3 |
70.6 |
6.6 |
3.1 |
15.6 |
3.0 |
Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles and exceptional items.
New Canadian facility commissioning underway
Construction phase effects at the new, closed loop Surrey, Canada municipal waste facility distorted H118 divisional trading performance, so it is encouraging to note that the first waste has now been received and processed at this location. It will be producing biomethane gas (to be used as fuel in waste collection vehicles) and compost materials (for agriculture and landscaping uses) under a 25-year PPP contract with the Government of Canada. The facility is expected to become fully operational during the first six months of 2018, with profitability to build gradually. This is consistent with our expectation of a positive aggregate profit contribution from Renewi’s three Canadian municipal facilities in FY19.
Corporate moves consolidate positions
Elsewhere, other developments in Europe serve to consolidate Renewi’s position in two of its specialist markets. Firstly, ATM (soil and waste water treatment operations in its Hazardous division) has acquired further land and waterfront access adjacent to existing facilities. This provides additional storage space and scope for strategic business expansion in due course. Secondly, Renewi has successfully extended its shareholder agreement in Maltha (a leading glass recycler and one of Renewi’s four specialist Monostream businesses and previously part of VGG), retaining the 67:33 JV split with Owens-Illinois. Maltha is fully consolidated in Renewi’s financial results, with a minority deduction reflecting its partner’s share of profits. These two actions are understood to have a negligible impact on group cash flow.
Valuation: Aiming for more of the same
Renewi’s share price is modestly above the level when we last published on 15 November and, hence, on unchanged estimates the P/E profile (ie FY18e 21.3x declining to FY20e’s 12.7x) is similar to previously noted levels. We believe that ongoing sure-footed merger execution supplemented by other positive strategic development actions will support further share price accretion.
Exhibit 1: Financial summary
£m |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018e |
2019e |
2020e |
||||||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||||||
PROFIT & LOSS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
|
717.3 |
750.1 |
614.6 |
633.4 |
601.4 |
614.8 |
779.2 |
1,531.4 |
1,554.3 |
1,588.4 |
||||
Cost of Sales |
|
|
(601.9) |
(622.9) |
(511.6) |
(528.3) |
(506.1) |
(517.8) |
(653.3) |
(1,263.4) |
(1,282.3) |
(1,310.4) |
||||
Gross Profit |
|
|
115.4 |
127.2 |
103.0 |
105.1 |
95.3 |
97.0 |
125.9 |
268.0 |
272.0 |
278.0 |
||||
EBITDA |
|
|
100.0 |
105.0 |
88.4 |
88.5 |
72.6 |
69.2 |
81.6 |
161.2 |
184.8 |
199.8 |
||||
Operating Profit (before GW and except.) |
49.7 |
53.4 |
44.9 |
45.6 |
34.3 |
33.4 |
36.5 |
71.4 |
94.0 |
108.0 |
||||||
Net Interest |
|
|
(14.2) |
(10.8) |
(10.8) |
(12.6) |
(11.4) |
(11.2) |
(10.3) |
(19.9) |
(23.0) |
(21.0) |
||||
Other Finance |
|
|
(0.3) |
(6.4) |
(3.9) |
(2.9) |
(1.5) |
(1.6) |
(2.2) |
(2.6) |
(2.6) |
(2.6) |
||||
JV/Associates |
|
|
0.0 |
0.1 |
0.3 |
0.3 |
0.8 |
1.0 |
2.0 |
2.1 |
2.2 |
2.3 |
||||
Intangible Amortisation |
|
|
(3.9) |
(3.7) |
(2.5) |
(2.3) |
(1.9) |
(1.8) |
(2.1) |
(5.8) |
(5.8) |
(5.8) |
||||
Non-Trading & Exceptional Items |
|
(10.1) |
(2.7) |
(38.1) |
(20.5) |
(40.8) |
(22.3) |
(85.3) |
(30.0) |
(25.9) |
(9.9) |
|||||
Profit Before Tax (norm) |
|
|
35.2 |
36.3 |
30.5 |
30.4 |
22.2 |
21.6 |
26.0 |
51.0 |
70.6 |
86.7 |
||||
Profit Before Tax (FRS 3) |
|
|
21.2 |
29.9 |
(10.1) |
7.6 |
(20.5) |
(2.5) |
(61.4) |
15.2 |
38.9 |
71.0 |
||||
Tax - headline |
|
|
0.7 |
(4.2) |
(1.1) |
(5.8) |
2.3 |
(1.5) |
0.5 |
(11.0) |
(17.7) |
(21.7) |
||||
Profit After Tax (norm) |
|
|
25.9 |
26.6 |
22.8 |
23.2 |
20.5 |
19.3 |
20.1 |
38.3 |
53.0 |
65.0 |
||||
Profit After Tax (FRS 3) |
|
|
21.9 |
25.7 |
(11.2) |
1.8 |
(18.2) |
(4.0) |
(60.9) |
4.3 |
21.3 |
49.3 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average Number of Shares Outstanding (m) |
448.0 |
448.0 |
448.3 |
448.9 |
449.1 |
449.5 |
536.3 |
799.8 |
799.8 |
799.8 |
||||||
EPS - normalised (p) |
|
|
5.8 |
5.9 |
5.1 |
5.1 |
4.5 |
4.3 |
3.7 |
4.8 |
6.6 |
8.1 |
||||
EPS - FRS 3 (p) |
|
|
4.9 |
5.7 |
(7.9) |
(6.3) |
(3.8) |
(0.9) |
(11.4) |
0.6 |
2.6 |
6.1 |
||||
Dividend per share (p) |
|
|
2.88 |
3.05 |
3.05 |
3.05 |
3.05 |
3.05 |
3.05 |
3.05 |
3.05 |
3.45 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross Margin (%) |
|
|
16.1 |
17.0 |
16.8 |
16.6 |
15.9 |
15.8 |
16.2 |
17.5 |
17.5 |
17.5 |
||||
EBITDA Margin (%) |
|
|
13.9 |
14.0 |
14.4 |
14.0 |
12.1 |
11.3 |
10.5 |
10.5 |
11.9 |
12.6 |
||||
Operating Margin (before GW and except.) (%) |
6.9 |
7.1 |
7.3 |
7.2 |
5.7 |
5.4 |
4.7 |
4.7 |
6.0 |
6.8 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed Assets |
|
|
767.9 |
751.6 |
772.1 |
744.4 |
737.3 |
670.4 |
1,420.9 |
1,464.8 |
1,457.7 |
1,451.0 |
||||
Intangible Assets |
|
|
289.6 |
271.4 |
251.8 |
211.1 |
173.8 |
194.5 |
603.3 |
584.6 |
579.0 |
568.4 |
||||
Tangible Assets |
|
|
397.5 |
390.9 |
375.3 |
322.7 |
282.9 |
297.0 |
587.4 |
647.2 |
645.7 |
649.6 |
||||
Investments |
|
|
80.8 |
89.3 |
145.0 |
210.6 |
280.6 |
178.9 |
230.2 |
233.0 |
233.0 |
233.0 |
||||
Current Assets |
|
|
244.1 |
233.6 |
247.3 |
265.1 |
224.0 |
177.0 |
348.2 |
362.1 |
367.2 |
371.9 |
||||
Stocks |
|
|
9.9 |
10.5 |
11.0 |
9.4 |
6.9 |
6.8 |
19.9 |
18.7 |
18.3 |
18.6 |
||||
Debtors |
|
|
179.7 |
163.3 |
160.9 |
151.5 |
156.3 |
135.5 |
253.4 |
270.4 |
275.9 |
280.3 |
||||
Cash |
|
|
54.5 |
59.8 |
75.4 |
104.2 |
60.8 |
34.7 |
74.9 |
73.0 |
73.0 |
73.0 |
||||
Current Liabilities |
|
|
(276.4) |
(238.7) |
(248.9) |
(229.6) |
(277.4) |
(227.2) |
(483.2) |
(465.3) |
(467.5) |
(441.7) |
||||
Creditors |
|
|
(237.1) |
(226.5) |
(230.7) |
(226.3) |
(202.4) |
(224.8) |
(466.8) |
(452.0) |
(452.5) |
(453.8) |
||||
Short term borrowings |
|
|
(39.3) |
(12.2) |
(18.2) |
(3.3) |
(75.0) |
(2.4) |
(16.4) |
(13.3) |
(15.0) |
12.1 |
||||
Long Term Liabilities |
|
|
(338.2) |
(375.9) |
(444.2) |
(504.7) |
(432.5) |
(434.2) |
(845.7) |
(927.4) |
(926.3) |
(925.2) |
||||
Long term borrowings |
|
|
(222.6) |
(253.8) |
(234.5) |
(253.8) |
(140.8) |
(224.9) |
(482.4) |
(555.1) |
(555.1) |
(555.1) |
||||
Other long term liabilities |
|
|
(115.6) |
(122.1) |
(209.7) |
(250.9) |
(291.7) |
(209.3) |
(363.3) |
(372.3) |
(371.2) |
(370.1) |
||||
Net Assets |
|
|
397.4 |
370.6 |
326.3 |
275.2 |
251.4 |
186.0 |
440.2 |
434.2 |
431.1 |
456.0 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Cash Flow |
|
|
99.4 |
109.9 |
67.7 |
78.6 |
55.8 |
72.2 |
27.9 |
98.1 |
150.8 |
183.1 |
||||
Net Interest |
|
|
(9.3) |
(13.4) |
(11.5) |
(13.2) |
(12.8) |
(12.8) |
(19.0) |
(24.0) |
(23.0) |
(21.0) |
||||
Tax |
|
|
(4.1) |
(7.1) |
1.9 |
(1.6) |
(5.7) |
(4.8) |
(5.3) |
(9.0) |
(15.7) |
(19.7) |
||||
Net Capex |
|
|
(67.3) |
(74.8) |
(50.1) |
(27.1) |
(37.2) |
(25.8) |
(41.2) |
(99.0) |
(89.5) |
(90.9) |
||||
Acquisitions/disposals |
|
|
2.5 |
(19.6) |
(59.2) |
(54.1) |
(67.3) |
18.2 |
39.5 |
0.0 |
0.0 |
0.0 |
||||
Equity Financing |
|
|
0.1 |
0.0 |
0.4 |
0.2 |
0.1 |
0.3 |
136.5 |
0.1 |
0.0 |
0.0 |
||||
Dividends |
|
|
(11.9) |
(13.3) |
(13.7) |
(13.7) |
(13.7) |
(13.7) |
(15.1) |
(24.4) |
(24.4) |
(24.4) |
||||
Net Cash Flow |
|
|
9.4 |
(18.3) |
(64.5) |
(30.9) |
(80.8) |
33.6 |
123.3 |
(58.1) |
(1.7) |
27.1 |
||||
Opening core net debt/(cash) |
|
319.7 |
207.4 |
206.2 |
177.3 |
152.9 |
155.0 |
192.6 |
423.9 |
495.4 |
497.1 |
|||||
HP finance leases initiated |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Other |
|
|
102.9 |
19.5 |
93.4 |
55.3 |
78.7 |
(71.2) |
(354.6) |
(13.4) |
(0.0) |
(0.0) |
||||
Closing core net debt/(cash) |
|
|
207.4 |
206.2 |
177.3 |
152.9 |
155.0 |
192.6 |
423.9 |
495.4 |
497.1 |
470.0 |
||||
Closing PPP/PFI non-recourse net debt |
|
0.0 |
52.0 |
100.1 |
151.2 |
222.6 |
91.1 |
87.1 |
84.8 |
84.8 |
84.8 |
|||||
Source: Renewi accounts, Edison Investment Research
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A year end update led to a c 5% reduction in our FY17 PBT expectation. More detail on trading performance will emerge with the FY17 results due on 31 January and we will review our group estimates fully at that time. Investors will look for signs of trading stability and prospective cash generation, while eyeing a dividend yield of c 6%. The search for a new CEO is unlikely to have concluded by then, in our view; the role is being covered in the short term by an experienced existing NED.