Renewi plc
Annual Report and Accounts 2017
Waste
no more
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Our vision is
to be the leading
waste-to-product
company
In February this year, we started something new.
We created one of the world’s leading recycling
companies – Renewi – born from the merger of
two great companies.
things underpin our offer: our
Three
ability
locally; our
to serve customers
unrivalled product range; and our deep
international knowledge and expertise. Our
committed and passionate people deliver
this service. They truly believe in what we
do. They make us diffferent – and better.
Our vision is to be the leading waste-to-
product company. We protect the world by
giving new life to used materials. We play an
important role in the circular economy and
we are a strong force in protecting the world
from contamination. This is something we
feel very proud about.
OUR OFFER
Unrivalled
range of
products and
services
Local
service
International
expertise
Passionate and committed people
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GROUP HIGHLIGHTS 2017*
90% £779m 27%
Total revenues
Increase in total
revenues
£36.5m 9%
Trading profit
Increase in trading
profit
Recycling and recovery
rate
2.1p
Final dividend per share
DIVISIONAL HIGHLIGHTS 2017*
Strategy
Return the division to attractive profitability levels
Drive cost efficiency through structural cost reduction
together with procurement and continuous improvement
initiatives
Invest in optimising our commercial effectiveness
to take advantage of market opportunities
Streamline the portfolio to increase returns
Invest in environmental excellence and increasing
treatment capacity
Expand the range of inputs requiring thermal treatment
Broaden commercial coverage and geographic footprint
Drive further synergies and productivity gains
Deliver sustained operational excellence under our
current contracts
Ramp up operational performance in the BDR and
Wakefield facilities following full service commencement
Successfully commission the Surrey and Derby facilities
Remain alert to opportunities to assist other potential
customers without a current solution to their waste
diversion requirements
Achievements
Commercial waste produced
another strong performance in
the year. Ongoing contributions
from our self-help initiatives
and portfolio management
were reinforced by improving
end markets.
Hazardous waste also delivered
a strong performace, despite
continuing subdued oil and gas
markets. Waterside volumes from
ships and strong throughput
on the soil cleaning line offset
ongoing weakness in higher-priced,
contaminated water volumes and
lower sludge intake.
Municipal had a very difficult
year, primarily as a result of
ongoing, off-take cost pressures.
New managment is now in place
and is making rapid progress
in implementing a clear plan
for recovery.
COMMERCIAL
HAZARDOUS
MUNICIPAL
* The definition and rationale for the use of non-IFRS measures are included on page 189. Operating loss on a statutory basis, after taking account of all non-trading and
exceptional items, was £39.0m (2016: profit of £9.8m).
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Revenue
£m
2017
2016
2015
2014
2013
Underlying profit before tax
£m
Revenue by division
779
615
601
633
612
2017
2016
2015
2014
2013
25.7
21.0
21.7
30.1
30.0
Total
£779m
HAZARDOUS
COMMERCIAL
MUNICIPAL
VGG
Achievements
Financial highlights
€414m
Revenue
€26.9m
Trading profit
+27%
Percentage variance in
trading profit
€191m
Revenue
€23.1m
Trading profit
+9%
Percentage variance in
trading profit
£203m
Revenue
£2.7m
Trading loss
£12m
Fall in profits
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CONTENTS
02 Who we are
We are the leading waste-to-
product company
04 What we believe
We believe waste is an ‘attitude’. It is not
waste in our hands; it is an opportunity
1
2
3
06 What we do
We give new life to used materials
4
10 CEO’s review
Peter Dilnot reports on a year of solid
performance and an exciting future
Lift to see the highlights for
the financial year 2016/17
Other sections
Overview
08 Chairman’s statement
16 Capturing value
18 Integration progress
21 The next 12 months
22 The Executive Committee
24 Focus on the Commercial Division
28 Focus on the Hazardous Waste Division
32 Focus on the Municipal Division
36 Focus on the Monostreams Division
Strategic report
40 CEO’s review (continued)
44 CFO’s review
52 Operating review
60 People: Engaging through integration
65 CSR: Fully aligned and ambitious
68 Risk and uncertainties
Governance
76 Board of Directors
78 Corporate governance:
Chairman’s introduction
79 Corporate governance report
82 Audit Committee report
86 Remuneration Committee:
Chairman’s statement
88 Directors’ remuneration policy
94 Annual remuneration report
102 Other disclosures
105 Directors’ responsibilities statement
106 Auditors’ report
Financial statements
114 Financial statements
More information
190 Shareholder information
191 Company information
192 Glossary
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Annual Report and Accounts 2017
RENEWI plc
1
MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW Who we are
A strong leader in recycling
We are one of the world’s leading
recycling companies. Our vision is to be
the leading waste-to-product company.
This means we serve customers on both
sides of the waste-to-product chain.
Our purpose is to protect the world by
giving new life to used materials. We
provide manufacturers with secondary
raw materials to create new products
and we help our customers to meet their
sustainability goals.
Ultimately, we are a strong force in
preserving the world’s limited resources
and protecting them from contamination.
This is something we feel proud about.
We have more than 7,000 passionate and
committed people working across over
250 sites in nine countries. They truly
believe in what we do.
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Key facts and figures
Environmental achievements
90%
overall recycling
and recovery rate
3m
tonnes of carbon avoidance
through recycling and recovery
15m
tonnes of waste
handled
172bn
watt hours of green electricity produced –
enough to power 40,000 homes
Divisions
Commercial
Hazardous
Municipal
Monostreams
Employees
r
e
v
o
7,000*
4,947
Commercial
958
Hazardous
702
Municipal
470
Monostreams
Geographies
Netherlands
Belgium
UK
Germany
France
Portugal
Canada
Hungary
Luxembourg
* Data based on new merged and refined Renewi definitions, such as on status of fixed-term contract workers and similar.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW What we believe
Waste no more
In a world where resources are limited, the status of waste is
changing. We believe ‘waste’ is an attitude. It is not waste in
our hands: it is a product, an opportunity and a small part of
our planet preserved.
By giving new life to used materials, we play an important role
in the circular economy – an economy that keeps resources in
use for as long as possible through recycling and recovery.
Above all, we are the pragmatic face of sustainability.
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Annual Report and Accounts 2017
RENEWI plc Waste-to-product
Our vision is to be the leading waste-to-product
company – contributing to a sustainable
society for all our key stakeholders: customers,
employees, our local communities and, of
course, our shareholders.
What do we mean by waste-to-product? At
Renewi, we exclusively focus on extracting
value from waste rather than on its disposal
through mass burn incineration or landfill.
Of the 15 million tonnes of waste we
handle a year, 90% is either recycled or
used for energy recovery. We intend to
build on that.
We believe our unique waste-to-product
approach addresses social and regulatory
trends. It also offers the most capital-efficient
solution to the effective recycling and
management of waste.
How it works – some examples by division
INPUT
PRODUCT
OUTCOME
RECYCLED
Commercial
Hazardous
Municipal
Monostreams
Construction
waste
Plastic
waste
Contaminated
soil, water and
waste solvents
Food and
garden waste
Mixed household
waste
Waste glass,
wood and
electricals
Aggregates
Plastic
recyclate
Clean water, soil
and ash
Compost
Refuse-derived
fuels
Secondary
raw materials
New construction
projects
New plastic
products
Healthy land and
waterways
Fertile land
and soil
Energy
production
Consumer
goods
97%
Recycling rate at our
flagship ATM facility
This is is by no means an exhaustive list. See pages 24–39 for more
96%
Recycling and
recovery rate
at our Coolrec
subsidiary
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
What we do
We turn one
person’s waste
into useful
products for
someone else.
Waste no more.
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Annual Report and Accounts 2017
RENEWI plc Our strategy
The merger of Shanks and Van Gansewinkel
has created one of the world’s leading waste-to-
product companies. We now have a combined
workforce of more than 7,000 people,
enhanced geographical coverage and greater
access to other markets. This all adds up to the
scale, capability and resources to drive growth.
Our four divisions – Commercial, Hazardous,
Municipal and Monostreams – provide
customers with an unrivalled range of
recycling technologies and services.
Each division has its own strategy to drive
growth, based on market dynamics,
competition and capital intensity.
In addition, we have four over-arching Group-
wide strategies. These are: drive margin
expansion; invest in infrastructure; actively
manage our portfolio; and deliver the benefits
of the merger. By pursuing a clear strategy
of active management, investment and
expansion across our divisions, our aim is to
be the leading waste-to-product company.
Commercial
Hazardous
Municipal
Monostreams
Drive margin
expansion
Invest in
infrastructure
Actively manage
the portfolio
Deliver merger
benefits
See page 12 for more about our strategy
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
CHAIRMAN’S STATEMENT
WELCOME TO RENEWI
The transformational merger between Shanks and Van Gansewinkel Groep has
resulted in one of the world’s leading recycling companies
Creating Renewi: a transformational
year for our business
Our business took a great step forward in
2016/17, more than doubling in size through
the merger with Van Gansewinkel Groep
(VGG). Bringing the two complementary
companies together is in line with our
strategy, strengthening our position at the
centre of the circular economy. We intend
to use our position as one of the world’s
leading recycling companies to offer a
broad range of high-quality service to our
customers, and by doing so efficiently to
provide a strong return to shareholders.
A transformation on this scale, together with
our ambition to use the combined strengths
to improve our business, warranted a
relaunch of the company with the new
name, Renewi. It signifies our ability to meet
the sustainability needs of our customers,
supplying new materials back into the
manufacturing supply chain.
Our pro forma Group business in the
Benelux, comprising over 80% of our
revenues, performed well, with encouraging
growth in both trading profit and in
margin in the Commercial and Hazardous
Waste Divisions. Very challenging market
conditions and operational challenges
resulted in a poor performance from the
Municipal Division, on which more follows.
A constant focus on value creation
The Board approached the merger with
a sharp focus on building long-term
shareholder value, aware that the risks
inherent in a major transaction require
an appropriate reward. VGG was our key
acquisition target for a number of years,
and we waited patiently for the right
time to acquire the business at a value
which we believe represents a good
deal for shareholders. We were pleased
to construct the transaction such that
the shareholders of VGG could become
shareholders in the new company, aligning
themselves with the shareholders of Shanks
for long-term success. In particular, we
spent time carefully assessing the €40m of
cost synergies that underpin the delivery of
significant shareholder accretion.
An opportunity to move
to the next level
Looking forward, we believe we
must improve every aspect of what we
do in order to win over the longterm.
This includes improving safety, customer
service, environmental performance
and productivity. We believe that the
merged business can do all of these things
better than either could alone, enhancing
our important role in the circular economy.
The businesses are highly complementary:
VGG is specialised in collection, Shanks
in processing; VGG is strong in recycling
of glass and electronic goods, Shanks is
strong in organic and in hazardous waste
treatment; VGG has expertise in logistics
while Shanks has been successfully rolling
out powerful self-help programmes in
the form of commercial effectiveness and
continuous improvement. The Shanks
operating model is all about remaining
close to the customer, while the VGG
operating model brings strong common
platforms and processes on which to
build. The Board therefore believes that
the combined Group has the opportunity
to deliver sustained growth based on
enhanced geographic, product and service
coverage in addition to the benefits arising
from the delivery of the cost synergies.
Building a new leadership platform
The merger has also created the
opportunity to build a new leadership team,
engaging the most talented leaders from
both entities, supplemented by a small
number of new hires to bring fresh talent
from outside our companies and indeed
from outside our industry.
We are delighted that Peter Dilnot will
continue to lead the combined Group,
supported by Toby Woolrych as CFO. The
new Executive Committee represents a
blend of over 130 years of waste experience
combined with broad industrial experience
from blue chip entities such as Danaher and
General Electric. The Board is confident that
the new team has the range of skills and
experience necessary for success.
Addressing the challenges in the
Municipal Division
In an otherwise successful year, the
performance of the Municipal Division was
disappointing. Adverse market dynamics
have placed significant pressure on
operating margins as costs at the back
end of the process have increased sharply
with no contractual ability to pass these
costs on to the municipal customers.
In addition, there have been challenges
in the building and commissioning of
new facilities. The Board and executive
management have acted decisively to
address these challenges, introducing
new divisional management and putting
in place a detailed improvement plan to
mitigate the headwinds and to improve
performance. Although this recovery
plan will take time to deliver in full, the
Board believes that the Division will
deliver an improved performance in
the next year.
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The fully integrated
Renewi business
has a compelling
offering for
customers
Corporate Governance
The Board is committed to the highest
standards of corporate governance. Details
of our processes and approach, including
those relating to the role and effectiveness
of the Board, and compliance with the
UK Governance Code, are set out in the
Governance section on pages 76 to 105.
At our AGM this year we will be seeking
approval of the Directors’ Remuneration
Policy. This remains broadly in line with
that last approved by shareholders in 2014,
details of which are set out in the Directors’
Remuneration Report on pages 86 to 101.
stepping down from the Board and will
not be seeking re-election at the Annual
General Meeting. Both of them have been
on the Board for 10 years and have played
important roles in the evolution of the
business over that time, culminating with
the merger with VGG this year. I thank both
of them for their significant contributions
and wish them well for the future. Eric
will be replaced as Senior Independent
Director by Jacques Petry and as Chairman
of the Remuneration Committee by Allard
Castelein. We expect to recruit one further
non-executive director during the course of
the year and a search is underway.
The Board and its associated committees
have been particularly busy over the past
year, engaging closely with management
in the execution of the merger in order
to ensure good governance is in place.
Examples include the involvement of
the Board in the creation of the Renewi
remuneration policies for the new executive
committee, the selection of senior leaders,
the role of the Audit Committee in reviewing
the approach to the new control and
reporting framework of Renewi and the
management of risk through periodic
review of risk registers.
Board changes
On 3 January 2017, Allard Castelein
was appointed to the Board as a non-
executive director. Allard is currently
Chief Executive of the Port of Rotterdam
and brings to the Board a wealth of
experience as a senior leader in Dutch
industry. He has joined the Remuneration,
Audit and Nomination Committees.
We announced on 25 May 2017 that Eric
van Amerongen and Stephen Riley will be
EPS and dividend
Underlying basic earnings per share for
the year reduced as expected to 3.7 pence
(2016: 4.2 pence as adjusted for the rights
issue) as a result of the 3 for 8 Rights Issue
in November 2016 and the consideration
shares issued on completion of the
merger in February 2017. I am pleased to
confirm that we will be recommending
an unchanged final dividend, adjusted
for the bonus factor of the rights issue, of
2.1 pence per share, payable on 28 July
2017 to shareholders on the register
on 30 June 2017. The Board intends to
maintain this level of dividend through the
integration period until the dividend is back
with the range of 2.0 to 2.5 times cover.
Once this is the case a progressive dividend
policy can be resumed.
Summary and outlook
Looking forward, we believe that the future
for Renewi is exciting. The business is well
positioned at the heart of the emerging
circular economy, a market that is expected
to grow in the coming years with the
support of EU and national government
legislation. The Board has considered the
impact of Brexit and will integrate planning
for it into our future strategy. More detail on
the impact of Brexit is included in the CEO’s
Review, on page 40 of this report.
The fully integrated Renewi business
has a compelling offering for customers,
combining local service, international
expertise and an unrivalled breadth
of products. The full roll out of self-help
capabilities in commercial effectiveness
and continuous improvement will
also boost competitiveness and drive
enhanced margins. The delivery of the
committed cost synergies is additionally
expected to drive strong earnings growth
and cash generation.
On behalf of the Board, I welcome all the
employees of former Shanks and Van
Gansewinkel to Renewi and thank them
for their commitment over the past year
of change.
I also thank our shareholders for
their ongoing support for the Board
and the management team as we set
about reaping the benefits of our
transformational merger.
Colin Matthews
Chairman
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CEO’S REVIEW
A NEW ERA
We expect 2017/18 to be a successful year of transition and integration
and believe that Renewi has an exciting future ahead
INTRODUCTION
A TRANSFORMATIONAL MERGER
It is with great pleasure that we are
reporting on the first set of financial results
for Renewi plc. The creation of Renewi has
brought together two of Europe’s leading
recycling companies, Shanks and Van
Gansewinkel (VGG), resulting in a waste-to-
product business with an unrivalled range
of recycling capabilities for commercial and
municipal customers in its core Benelux
markets and with further operations in
Europe and North America.
The merger of Shanks and VGG has taken
place against a backdrop of modestly
improving markets in the Benelux,
representing over 80% of pro forma
Group revenue, and a strong underlying
performance from the Benelux businesses
of both companies. This underlying
progress in the year ended 31 March
2017 has been offset by very challenging
market conditions and operational
challenges in our Municipal Division,
particularly in the UK. A recovery plan for
this business is being implemented and
key actions are already beginning to
deliver improvements.
Overall, Renewi is well positioned to
deliver sustained growth and attractive
returns going forward.
Compelling strategic and
commercial rationale
The strategic and commercial rationale
for the merger of Shanks and VGG is
compelling. It brings together two
similar businesses with complementary
visions, organisations, product portfolios
and geographic footprints. The merger
will deliver significant synergies, yet is
about more than just cost reduction: the
new Group plays an important role in
the growing circular economy to meet
the increasing needs of its customers,
regulators and society.
Rebranding as Renewi
The rebranding of Shanks and VGG to
Renewi indicates to our stakeholders that
we have completed a merger of equals and
that we intend to create something new
and better, drawing on the heritage and the
strengths of both legacy organisations. The
Renewi brand itself reflects our waste-to-
product business model and our role at the
centre of the circular economy. We have
been encouraged by initial reactions to our
new brand from both the market and from
our people.
Our vision and strategy
Our vision is to be the leading waste-to-
product company, a vision that has been
retained from the former Shanks business.
This differentiates Renewi as a company
that does more than act as a collection
service for waste generators and one
that focuses on extracting value from
waste, rather than on its disposal through
mass burn incineration or landfill. Our
vision positions us higher on the waste
hierarchy in an area that is being driven
by increasing environmental legislation,
particularly in the European Union where
we have the majority of our activities.
We believe that our unique focus both
addresses social and regulatory trends
and offers the most capital-efficient
solution to waste management.
The name Renewi captures our purpose: we
give new life to used materials. The circular
arrows in the logo show how we represent
something new at the centre of the circular
economy. This positioning is important
for society as we protect the world from
contamination and we preserve the world’s
finite raw materials by reintroducing former
waste products into the supply chain. For
us, waste is an attitude and the materials
we receive are an opportunity to create
new value. We are also uniquely placed
for our customers: to help them meet their
sustainability objectives in reducing waste
produced or to provide them with the
materials they need for their production
processes.
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Our new brand
Van Gansewinkel
Shanks
A unique new logo
The logo reflects our position at
the centre of the circular economy.
It captures our vision to bring new life
to used materials.
A new set of colours
Our chosen colours represent the
coming together of two fantastic
companies, both leading names in
recycling and sustainability. The colours
also reference our commitment to
protecting the natural world.
A well-respected strapline
Our “waste no more” strapline comes from Van Gansewinkel. Using it reflects
our commitment to make the most of both businesses. It also represents our
belief that “waste” is an attitude. It is not waste in our hands: it is a product,
an opportunity, and a small part of our planet preserved.
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The new Monostreams Division focuses on specialist markets
that make essential products of value in the circular economy –
here the team is dismantling electrical equipment
The “i” at the end of Renewi represents
our commitment to innovate with new
products, services and technologies. This
will increase the range of products that can
be brought back into economic use. The
colours reflect the merger of the VGG blue
and the Shanks green.
We have retained the “Waste No More”
strapline from VGG as this has strong brand
equity and resonance in our markets. It also
demonstrates continuity from VGG into the
new organisation.
Our strategy has remained consistent,
with the addition of one new division –
Monostreams – and one new overarching
strategic initiative – to deliver the merger
benefits. Each of our four core divisions
have strategies to address opportunities in
the specific markets that they serve. These
divisional strategies are reinforced by four
overarching strategies that apply across the
Group. These are to:
Drive margin expansion across
the Group through self-help
initiatives such as commercial
effectiveness, continuous
improvement and off-take
management
Invest in infrastructure through
the cycle in areas where we are
structurally advantaged and
can deliver superior returns
Manage our portfolio of assets
and businesses, exiting those
that are non-core or under-
performing and redeploying
capital into segments where we
can deliver increased returns
and growth
Deliver merger benefits which
include €40m of annual cost
synergies in 2019/20.
Our compelling offering to the market
The creation of Renewi will improve the
range of products and services we can offer
to our combined customer base. As a result
of the merger we also have an expanded
geographical footprint across the whole
of the Benelux and into new European
countries.
To ensure we retain customer intimacy
while simultaneously gaining the benefits
of our increased scale, we have carefully
designed a target operating model that has
local accountability coupled with strong
divisional capabilities. This divisional
operating model is further reinforced by
Renewi’s broader international expertise,
coordinated Group-wide margin expansion
initiatives, and lean and effective central
support functions.
A new divisional structure
As previously announced, we have created a
new divisional structure that is both market-
facing and customer-focused and which will
allow best access to available synergies and
growth opportunities.
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The positive
energy across the
combined business
has remained after
the successful launch
of the Renewi brand
A NEW DIVISIONAL STRUCTURE
The Commercial Waste Division
The Hazardous Waste Division
63%
The Commercial Waste Division, representing around 63% of
Renewi’s pro forma revenues and operating in the Benelux,
addresses the high volume waste segments of industrial &
commercial, construction & demolition and municipal
collection. The Division broadly comprises the former Shanks
Commercial Division along with the former VGG Collection
Division. This Division operates in markets that are showing
signs of recovery and our focus is on margin expansion and
on delivering the significant cost synergies. For operational
reasons, the Belgian and Dutch Commercial operations are
run separately, with certain common overheads, and we shall
report on the progress of each country within the Commercial
Waste Division going forwards.
12%
The Hazardous Waste Division, representing around
12% of Renewi’s pro forma revenues and operating in
the Netherlands and Germany, is broadly the former
Shanks Hazardous Waste Division with the addition
of Van Gansewinkel Industrial Services (VGIS). The
VGIS industrial cleaning business is approximately
one quarter of the size of Shanks’ Reym industrial
cleaning business and the resulting integration
is already well underway. We have a unique
proposition in the market, providing a full-service
offering to our customers.
The Municipal Division
The new Monostreams Division
14%
The Municipal Division, representing around 14% of
Renewi’s pro forma revenues, is unchanged from the
Shanks Municipal Division and focuses on long-term
contracts providing waste treatment solutions for local
authority customers in the UK and Canada.
11%
Finally, the new Monostreams Division, which operates
in the Benelux, France, Germany, Hungary and Portugal,
includes the three former businesses of the Recycling
Division of VGG (Coolrec, Maltha and Minerals) together
with the Dutch Orgaworld business from Shanks. The
new division represents around 11% of Renewi’s pro forma
revenues and focuses on specialist markets which produce
valuable products for the emerging circular economy such
as glass cullet, plastic chips/granulates and fertilisers.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CEO’S REVIEW CONTINUED
DELIVERING OUR SYNERGY COMMITMENTS
€m
2016/17
2017/18
€4m
€12m
2018/19
€30m
2019/20
€40m
Ensuring focus continues on delivering
performance in a period of integration
Throughout the integration process we are
maintaining a consistent focus: keeping
our people safe, serving our customers
well and delivering our commitments. We
have moved swiftly to ensure that the new
organisation is well positioned to meet its
plans for underlying growth.
Executing our planned integration
We are executing our carefully prepared
integration plans at pace. The positive
energy across the combined business has
remained after the successful launch of
the Renewi brand. We have created a new
Executive Committee, combining talent
and leadership from Shanks and VGG,
reinforced by high quality new leaders from
outside the business. The first phase of
reorganisation has proceeded smoothly,
with the creation of the Monostreams
Division and the transfer of VGG Industrial
Services to Hazardous Waste. We have
also brought the Netherlands and Belgium
Commercial legacy businesses together
under unified Renewi leadership. Our
organisation design based on the new
‘Target Operating Model’ is well underway
and, subject to Works Council advice, we
expect to put in place the next two layers
of organisation beneath the Executive
Committee before the summer. Other
programmes to harmonise our finance and
IT systems are also being developed.
€30m in 2018/19 and €40m in 2019/20.
Over €4m has been secured already and
we are confident that we will meet our
commitments.
During this early period of integration we
have been working on benefiting from
the merger in the form of “quick wins”. We
have made a number of these right across
Renewi and some examples are listed
below:
} In the Netherlands Commercial Division
we have combined our expertise with
large tenders and we are exchanging
containers on routes to improve our
offering;
} In the Belgium Commercial Division we
have swapped outlets for combustible
waste to benefit from lower transport
costs and taxes;
} In Hazardous Waste we are benefiting
from the integration of Van Gansewinkel
Industrial Services (VGIS) through greater
productivity and less outsourcing;
} In Municipal we are using our broader
scale to negotiate better off-take
terms; and
} In our Monostreams Division we
have identified potential benefits for
commercial contracts.
Delivering our synergy commitments
While the strategic rationale for the
merger is both broader and longer term
than simply cost synergies, the delivery
of the committed €40m of synergies
underpins the expected value creation of
the merger and will create a stronger and
more cash generative enlarged business.
We have detailed synergy delivery plans
and are committed to delivering €12m of
cost synergies in 2017/18, increasing to
Addressing the issues in the
Municipal Division
The market conditions and operational
challenges facing the Municipal Division
have had a material impact on the
profitability of the business and the future
profit trajectory of these assets. We have
responded decisively to these challenges
with a recovery programme that will drive
operational performance and increase the
capability of the Division to improve its
fuel off-take costs over time. We have also
appointed experienced and high-calibre
new management with the right skills
and determination to drive the recovery
programme.
The key recovery initiatives are to:
} Implement urgent plans to bring existing
facilities up to full capacity and to
maximise power generation. This will
particularly focus on generating gas
at Wakefield and Westcott Park and
increasing throughput at BDR;
} Adjust our operations to create higher
quality fuels, focusing on Cumbria and
East London (ELWA) where upgrades to
fuel quality can increase access to the
better-priced SRF market;
} Negotiate off-take terms and secure
better priced outlets across all our
facilities for both refuse derived fuel
(RDF), solid recovered fuel (SRF) and
certain recyclates where appropriate;
} Improve productivity and plant up-
time by optimising maintenance
and equipment reliability to reduce
unplanned stoppages;
} Negotiate improvements to local
municipal contracts where possible; and
} Bring the Surrey and Derby facilities into
full operation.
These initiatives are expected to improve
underlying performance, although this
will be offset, inter alia, by a reduced
contribution from the Derby contract.
Overall, the Division is expected to show
a modest net improvement during this
financial year and for this to continue
steadily thereafter.
POSITIVE FUTURE OUTLOOK
Divisional prospects
The Commercial Division is expected to
make underlying commercial progress
next year, albeit offset by some integration-
related disruption which will slow the
delivery of projects as the two business
models are merged. We expect these factors
to balance out and the delivery of the
expected initial cost synergies in 2017/18
to drive overall progress in the year, with
further progress in the following years as the
full synergies are realised.
The Hazardous Waste Division is also
expecting to make progress during 2017/18,
supported by an encouraging pipeline of
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DIVISIONS:
MEASURING FUTURE PERFORMANCE
COMMERCIAL
HAZARDOUS
MUNICIPAL
MONOSTREAMS
To deliver growth through
further implementation of
self-help initiatives and through
capturing market recovery
} Implement new Target Operating
Model across the division and
move towards one way of working
} Deliver synergy commitments
while remaining focused on
external markets and performance
delivery
} Increase margins through extension
of commercial effectiveness
programme.
} Manage volatility in downstream
markets, including wood off-take
GROUP:
To deliver growth through
optimisation of new assets
and waste flows
To deliver recovery plan
optimising assets and improving
off-take costs
To deliver growth through
improving product quality
and optimised operations
GOALS 2017/18
} Secure strong incoming soil
} Commission Surrey and Derby
volumes and maintain current
throughput levels
} Secure new soil off-take options
to de-risk future operations
} Optimise waterside volumes
and seek additional sludges
} Manage Reym productivity
and cost base to meet expected
market demand
projects on time
} Improve operational
performance of BDR
and Wakefield contracts
} Open new off-take contracts and
markets at improved prices
} Address challenges in less profitable
contracts
} Commission powder line at
Dintelmond and continue to
deliver growth through
operational improvement
} Increase margins at Coolrec
through dynamic pricing and
a focus on optimised product
quality
} Secure extension for
Maasvlakte landfill
} Drive growth in Orgaworld
through improving end markets
DRIVING MARGIN EXPANSION
INVESTING IN INFRASTUCTURE
MANAGING THE PORTFOLIO
SYNERGY DELIVERY
GOALS 2017/18
} Roll out Commercial Effectiveness
(CE) programme into former VGG
entities to increase margins
} Maintain current Continuous
Improvement (CI) initiatives
in former Shanks entities and
prepare for broader based roll out
in FY19
} Ensure enlarged Group takes
advantage of scale opportunities
with regard to group-wide
coordinated management of
off-take disposal
} Commission major remaining
Municipal projects and improve
performance of BDR and Wakefield
} Complete expansion of chemical
waste storage shed in Hazardous
and begin renovation of soil
treatment line
} Begin reinvestment in ex-VGG
logistics fleet in a targeted way,
in line with acquisition model
} Complete IT strategic roadmap
to support integration and drive
efficiency in the coming years
} Continue to release value from
under-performing or non-core
assets to recycle capital
} Remain alert for expansion
opportunities through accretive
M&A, exercising capital discipline
} Deliver €12m of synergies in FY18
} Be on track to deliver €30m
of synergies in FY19 and €40m
in FY20
} Drive programmes to secure
revenue synergies from
cross-selling, waste internalisation
and commercial effectiveness
soil and water intake. No material recovery
is expected in the oil and gas markets and
we remain cautious on industrial cleaning
activity levels.
As outlined above, the Municipal Division is
expected to deliver a modest improvement
during 2017/18, reflecting some significant
operational performance uplift from the
recovery plan, offset by the end of the Derby
interim services contract and the non-
recurrence of certain central cost savings.
The Monostreams Division is expected
to make progress during 2017/18, with
growth and operational improvement
opportunities in all four of its operating
businesses.
Overall
Having successfully completed the
merger with VGG, our key priorities for
the year ahead are to integrate our legacy
businesses and to generate growth from
strong underlying trading and successful
synergy delivery. In parallel, we will fix the
Municipal Division and build up momentum
for sustained growth and earnings accretion
in 2018/19. Whilst alert to macroeconomic
developments, the Board remains confident
that 2017/18 will be a year of good progress,
in line with its expectations. Current trading
for the year to date and the initial stages of
the integration process support this view.
the emerging circular economy, a market
that is expected to grow rapidly in the
coming years with the support of European
Union and government legislation.
Moreover, the fully integrated Renewi
has a compelling offering for customers,
combining local service, international
expertise and an unrivalled breadth of
products. This strong positioning, coupled
with synergy delivery and the roll-out of our
proven margin expansion initiatives across
Renewi, will deliver sustainable growth,
enhanced margins and attractive returns.
Looking forward, our growth drivers remain
strong. Renewi plays an important role in
Peter’s review continues on page 40
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
ABOUT THE MERGER
CAPTURING VALUE
The strategic and commercial rationale for the merger of Shanks and Van Gansewinkel is
compelling. The merger will deliver annual recurring synergies of €40 million by the third full
year, yet it is about much more than just cost reduction. Renewi is uniquely positioned at the
heart of the emerging circular economy to meet the growing needs of its customers, regulators
and society. The below shows how we will capture the value from our merger.
1 INTEGRATION MANAGEMENT OFFICE (IMO)
WILL PROVIDE EXPERT SUPPORT
The IMO is a nimble central spine, responsible for
supporting our business leaders by setting the direction,
and for enabling divisional/functional “change”
capabilities with expertise and guidance.
Example:
Creation of Monostreams Division, focused
on specific end markets and led by a dedicated
Managing Director
2 VALUE CAPTURE TEAM DELIVERS COORDINATION,
GOVERNANCE AND COMPLIANCE
Value capture includes cost, revenue and cash synergies.
We are confident that the team we have appointed will
deliver the appropriate support and momentum to
help us to achieve our target of annualised €40m cost
synergies to be delivered in financial year 2019/20.
Examples:
Specialist advisers providing support to IT, Finance
and Procurement
Clear tools and templates to control synergy delivery
with good governance
3 EXECUTION IN THE LINE WITH SYNERGY TARGETS
ALLOCATED INTO BUDGETS FOR ACCOUNTABILITY
Each division has synergy targets within their budget,
and with support from the Integration Management
Office (IMO), are accountable for driving these synergies.
Examples:
Integration managers and teams identified within
core divisions
Divisional kick-off meetings to take ownership
4 VALUE CAPTURE PROCESSES ALIGNED WITH
TARGET OPERATING MODEL (TOM)
Major focus on value capture initially, aligned
with the Target Operating Model (TOM), with close
tracking mechanism throughout organisation.
Example:
New target operating model will reduce cost and
create one way of working
5 PROCESS TO CAPTURE ALL IDEAS
AND DRIVE QUICK WINS
We have started value capture plans at pace across
Renewi. A number of quick wins have been secured
in each division.
Examples:
Commercial Division: Combined expertise for large
industrial customers and large tender offers
Municipal Division: Using Renewi scale to negotiate
improved UK off-take terms
6 SMALL PROJECTS WITH LOCAL IMPACT
We are initially focusing on smaller value capture
projects within the divisions which can have a local
impact on our synergy targets.
Examples:
Integration of VGIS into Hazardous Waste Division
Benefit from lower transport costs and taxes in
Belgium, from swapping combustible waste outlets
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Van Gansewinkel
STRONG IN
RECYCLING OF GLASS
AND ELECTRONIC GOODS
We are the number one provider
of glass recycling and trading
of recycled glass “cullet” in
Europe
SPECIALISED IN
COLLECTION
A large collection fleet
collecting waste across
the Benelux
€40m
We will deliver annualised €40m
cost synergies in financial year
2019/20
EXPERTISE IN
LOGISTICS
In-house logistics
expertise
OPERATING
MODEL
Brings strong common
platforms and processes
on which to build
STRONG IN HAZARDOUS
WASTE TREATMENT AND IN
ORGANICS
Specific expertise in treatment
of hazardous waste such as soil,
contaminated water, paints
and solvents, and in organics, such
as anaerobic digestion (AD)
and composting
250
We now operate at more than
250 sites across nine countries,
including the Benelux and Canada
7,000*
As Renewi, we are now a family of
over 7,000 employees, all dedicated
to ‘waste no more’
SUCCESSFUL
ROLLOUT OF
POWERFUL SELF-HELP
PROGRAMMES
Continuous improvement and
commercial effectiveness
programmes embedded
into majority of
business
SPECIALISED IN
PROCESSING
Deep knowledge of
waste processing and
recycling
OPERATING
MODEL
Local service and
remaining close to
the customer
* Data based on new merged and refined Renewi definitions, such as on status of fixed-term contract workers and similar.
Shanks
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW ABOUT THE MERGER CONTINUED
INTEGRATION PROGRESS
After closing the deal on 28 February 2017, the hard work of integration
began. This process is underpinned by our five guiding merger principles:
FULL INTEGRATION UNDER
A NEW BRAND
We are integrating all businesses
BUILD DEEP AND BROAD
WASTE-TO-PRODUCT
CAPABILITIES
into one single, new, stronger company
with a new brand that showcases our
transformation internally and externally.
Achievements:
New Renewi brand launched on Day 1
Positive reaction from our stakeholders
Brand to be rolled out as part of
integration process
We are creating value and we will achieve
our synergy targets through generating
economies of scale and expanding our
offering to customers.
Achievements:
A number of ‘quick wins’ already
achieved by combining legacy
knowledge and expertise
Geographical footprint and technology
base broadened
GO SLOW TO GO FAST
We are conducting careful forward
planning followed by rapid
implementation; we are not disrupting
business continuity.
Achievements:
Working in close conjunction with
Works Councils with positive
support so far
Decisions made carefully and
implemented at pace
2012
2016
23 June 2016
Brexit: the UK electorate votes
to leave the EU
24 May 2016
News of the merger leaks and shares
in Shanks Group plc are suspended
2012 VGG identified as #1 acquisition
target
June 2013 VGG divest AVR, aligning
it with Shanks’ strategy
H2 2014 VGG undergoes financial
restructuring; aborted sale process
H1 2015 New management in place;
ongoing cultivation
July 2015 VGG financial
restructuring complete; Shanks
CEO meets new shareholders
Q1 2016 Sale process restarted
January 2017
Competition authority
clearance received
from Belgium
£141m
10 November 2016
Shareholder approval
received; £141m equity
raised in London’s
capital markets
7 July 2016
Heads of Terms signed, market
updated and restarted trading
29 September 2016
Deal signed and financing in place.
Former Shanks CEO Peter Dilnot
describes it as a “transformational
deal with a compelling industrial
rationale”
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MOVE TO ONE WAY OF
WORKING, LEARNING FROM
BOTH BUSINESSES
We are leveraging the best of both
legacy businesses.
Achievements:
A number of ‘quick wins’ already achieved
Executive Committee and IMO focused
on moving to one way of working and
learning from both legacy businesses
CULTIVATE A WINNING TEAM
We want to retain the best people
and develop our talent through
culture and a positive employee experience.
Achievements:
Engaging and communicating frequently
with our teams
Executive Committee in place from Day 1
Divisional management teams being
appointed
FEBRUARY
2017
JANUARY
2018
May 2017
Belgium
management team
appointments made
28 February 2017
Completion: Renewi is
born, kicking off a day
of celebration across
the Group
The Executive Committee
(ExCom) is appointed
Monostreams Division
is created
Van Gansewinkel
Industrial Services (VGIS)
is transferred to the
Hazardous Waste Division
30 November 2017
We aim to have the
management layers
below the top two tiers
in place
31 July 2017
We aim to have the top
two levels of divisional
management appointed
31 August 2017
The integration
planning phase
is due to complete
15 February 2017
Final competition authority
clearance received from the
Netherlands, following approval
from Belgium in January
31 May 2017
100 days complete and
associated action plans
delivered
Integration team
established and in place
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW We are executing our
carefully prepared
integration plans at
pace to deliver benefits
of scale and remain
close to our customers
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RENEWI plcAnnual Report and Accounts 2017 ABOUT THE MERGER CONTINUED
THE NEXT 12 MONTHS
We have an important year ahead as we progress through the integration of
our new company. We have five key areas of focus which are detailed below
1
Creation of new
leadership team
} Our new Executive Committee is a
blend of strong leaders with proven
international expertise and clear
customer focus.
} A careful selection process for
leadership roles is underway to
ensure we have the right people
in the right places and with the
right support.
} We will take the very best of
what made Shanks and Van
Gansewinkel great, capturing the
breadth of skills and experience
from across both businesses.
} It will take some months to
complete all layers of our
management and we are working
hard to get the next two layers of
leadership in place by the end
of summer.
Implementation of recovery plan in
Municipal Division
5
} The Municipal Division has been impacted
by very difficult market conditions.
} Difficulties primarily are due to ongoing
off-take cost pressures and operational
ramp up challenges.
} New management is now in place and
making rapid progress in implementing
the clear plan for recovery.
} Operational and commercial
improvements already underway.
2
Delivery of integration plan for new Target
Operating Model (TOM) in Commercial Division
} We are executing our carefully prepared integration plans
at pace.
} As part of these plans, we are implementing a new TOM in
the Commercial Division.
} Our aim is to deliver the benefits of scale whilst remaining
close to our customers.
} Organisation design to create the new TOM is well underway.
3
Delivery of value capture plan
and €12m of cost synergies
} Delivery of the committed
€40m of cost synergies underpins
the expected value creation of
the merger.
} We have detailed synergy delivery
plans and are committed to
delivering €12m of cost synergies
in 2017/18, increasing to €30m by
the end of 2018/19 and €40m by the
end of 2019/20.
} We have validated synergy models,
put governance processes in place
and our Value Capture team is in
detailed ‘phase 2’ planning.
} Over €4m has been secured already
and we are confident that we will
meet our commitments for the
coming year and going forward.
4
First roll-out of commercial effectiveness and
continuous improvement in combined Group
} The commercial effectiveness (CE) and continuous
improvement (CI) programmes have been at the heart
of margin enhancement in the Netherlands.
} Our CE initiative is focused on managing intake margin
at the front end of the business.
} The CI programme is all about “doing tomorrow better
than today”, using lean tools to improve productivity.
} Full roll-out will boost competitiveness, drive enhanced
margins and deliver sustainable growth throughout
Renewi over the short and medium term.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW We have created
a new Executive
Committee
combining talent and
leadership from the
former Shanks and
Van Gansewinkel
businesses, reinforced
by high quality new
leaders from outside
the business.
Peter Dilnot
Chief Executive Officer
Toby Woolrych
Chief Financial Officer
Geert Glimmerveen
Integration Director
Peter has been leading the
business since he joined
in 2012. He has previously
held senior positions at
Danaher Corporation and
Boston Consulting Group
and has also spent time
as an officer in the British
Armed Forces.
Toby has been leading
the finance function since
he joined in 2012. Prior to
this, he has held positions
at a number of blue chip
companies including
Arthur Andersen, Johnson
Matthey and
Consort Medical.
Before the merger, Geert had
been leading the Netherlands
Division at Van Gansewinkel for
two years. He has over 10 years
of experience working for blue
chip companies, with extensive
integration experience and
specialty in strategy, operational
excellence and continuous
improvement. He also has
consulting experience from his
time at McKinsey & Company.
THE EXECUTIVE COMMITTEE
Francis Schröder
HR Director
George Slade
IT Director
Patrick Deprez
Product Sales Director
Gerhardt Vels
Interim General Counsel
Francis has extensive HR
leadership experience from
leading global organisations
including FedEx International,
TNT, TP Vision and Philips.
She holds Masters degrees in
Change Management from Vrije
Universiteit and in Psychological
and Social Science from the
University of Amsterdam. She has
significant integration experience
from the merger between
FedEx and TNT. Francis joins
Renewi on 1 July.
George came from the
Shanks side of the business.
For the last four years he has
been Information Director,
also leading a number
of initiatives such as the
commercial effectiveness and
off-take projects. He has over
25 years of experience in blue
chip companies in addition
to integration experience in a
range of sectors.
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Patrick has been at Van
Gansewinkel since 1998 and has
28 years of experience in the
waste industry. He has actively
merged external companies into
Van Gansewinkel and brings
strategy and market expertise,
and deep knowledge of the
circular economy to the team.
Gerhardt has been working
as General Counsel at Van
Gansewinkel for two years and
has 25 years of experience at a
major law firm. He brings deep
legal knowledge to the team
and he also has integration
experience.
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ABOUT OUR COMPANY
Otto de Bont
Managing Director,
Netherlands Commercial
Wim Geens
Managing Director,
Belgium Commercial
Otto is new to the Renewi team,
joining in May 2017. He has an
impressive background with 26
years of experience at companies
such as IBM, GE and UTC. He has
integrated a number of companies
on an international level. He brings
strong management, strategy and
commercial execution knowledge to
the team.
Wim has been with Van
Gansewinkel for over 11 years,
most recently as Director of
Belgium, Luxembourg and
France. He has integrated over
20 companies in his career. He
brings a wealth of operational
excellence, strategy, coaching and
change management experience
to the team.
Jonny Kappen
Managing Director,
Hazardous Waste
Jonny joined Shanks in 2000
and has 35 years of experience
in Hazardous Waste both in
the Netherlands and the Far
East. He has run the Shanks
Hazardous Waste Division
for five years and brings
operational grip and deep
market, safety and compliance
knowledge to the team.
James Priestley
Managing Director,
Municipal
James joined Shanks in November
2016, following 30 years of
experience in blue chip companies
such as Ford, BA and Tesco – and
more recently in private equity
portfolio companies. He brings
extensive business turnaround and
strategic transformation experience.
Bas Blom
Managing Director,
Monostreams and Continuous
Improvememt
Bas was appointed to Renewi in
February 2017 to lead the newly
formed Monostreams Division. He
has 26 years of experience in blue
chip companies, including GE and
SABIC. He has integrated a number
of companies and brings strategic
growth planning, continuous
improvement and business
operational execution skills
to the team.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
ABOUT OUR COMPANY
COMMERCIAL
The Commercial Division represents around 63% of the revenue of Renewi.
It provides a wide range of waste management solutions
Renewi is market leader in the Benelux
and collects and transports waste from
households and businesses to sorting,
treatment and processing facilities. We
provide customers with cost-efficient waste
management solutions whilst giving waste
a second life as high-quality raw materials
and energy.
The commercial waste market covers the
collection, sorting, treatment and ultimate
disposal of waste materials from a range
of sources. The market can be divided into
three main sources of waste: Construction
and Demolition (C&D), Industrial and
Commercial (I&C), and Domestic. Renewi
deploys part of its own sorting and
recycling operations within this division for,
amongst others things, paper, cardboard,
wood, plastics, metals and C&D waste.
Other specific recycling activities are
clustered within the Monostreams Division.
Our unique business model in this market
is to focus on the value that we can recover
from specific waste and material flows that
we can upgrade during the sorting and
treatment phases of the cycle. This also
means that we apply our knowledge on
material flows to collection methods and
logistics solutions for specific customer
segments and sectors.
We generally collect a large part of our
volumes ourselves to secure waste volumes,
and we dispose only of the residues that
we are unable to convert into a reusable
product or recyclate. In this way, we
‘waste no more’ both environmentally and
economically. Our general business model is
set out in the graphic on page 26.
Our Commercial Division operates in the
Benelux. Our sites have a diverse profile in
terms of the source of waste and customer
segments, which affects its current financial
performance and competitive strategy as
outlined in the following sections.
MARKETS
The Commercial Division serves three main
market segments across the Benelux.
The I&C segment meets the needs of
specific markets, sectors and businesses
including production factories, offices,
hospitals, retail, shops and restaurants.
Waste streams are preferably collected
in a pure form and separated at the
source to ensure quality, such as
segregated paper or plastic, food waste
or glass. Within this sector there still
is a significant flow of mixed waste.
We develop programmes to further
minimise this mixed waste stream
by informing our customers of the
positive impact of separation of waste,
both economical and environmental,
and we even provide communication
programmes to boost our customers’
waste minimisation and separation.
The I&C segment was challenged during
2011-15 by over-capacity in the Dutch
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LEADERSHIP
Otto de Bont
Managing Director,
Netherlands Commercial
Wim Geens
Managing Director,
Belgium Commercial
“We have an exciting opportunity to
bring together two great companies
to become stronger together. The
unique expertise, specialism and
knowledge in each legacy business
has created an unrivalled portfolio.
The industry is changing and we will
adapt with it. We will build a strong
and solid foundation for years to
come, keeping what made both
legacy companies great. We have
good momentum and an exciting
journey ahead. I am proud to lead a
talented and committed team that
is excited for the future.”
“We have a number of opportunities
and possibilities to become the
leading waste-to-product company
and to live our “waste no more”
goals. Our privileged position of
being a market leader gives us the
exciting opportunity to shape, direct
and professionalise the market. As
we integrate our business we will
be prioritising the implementation
of our new TOM and ensuring we
capture value from synergies. We
will create added value for all of
our stakeholders and make our
organisation one which our people
are happy to work for.”
Our unique
business
model
focuses on
the value
that we
can recover
from
specific
waste
Renewi controls the service provision
for a management fee. The municipal
segment is fundamentally different to
the activities of our Municipal Division
because the contracts tend to be much
shorter in duration and for collection only;
in the Netherlands the waste remains the
property of the municipality.
The Commercial Division also operates
in a number of niche segments, many of
which are complementary to the principal
segments outlined above. These include
the collection, separation and aggregation
for treatment of small packed hazardous
waste such as batteries, paint and out-of-
date pharmaceuticals, the collection of
organic waste streams from restaurants,
a wood chip manufacturing segment
and two landfills.
incinerator market and severe pricing
competition. Market conditions have
improved over the past 12-18 months, with
the incinerators full and prices beginning
to rise. These higher prices for incineration
also have a positive effect on recycling
as separation of waste becomes more
financially viable for our customers. The
introduction of dynamic pricing, so that
movements in the value of the products we
make are reflected in the gate fee we charge
to take in waste, has reduced risk to the
business operating model.
The C&D segment is primarily served by the
former Shanks businesses. C&D waste arises
from residential, commercial or infrastructure
construction. The construction market in
the Netherlands, which had hit a 63-year low
in 2014, has continued to recover well since
then, with growth of 6.3% (according to CBS).
Pricing remains relatively weak, with many
of the major customers still experiencing
low margins.
The domestic segment provides “hands
and wheels” services in door-to-door
municipal collection. This can be through
a direct service agreement or through a
form of Public Private Partnership in which
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
FOCUS ON COMMERCIAL
COMMERCIAL BUSINESS MODEL
COLLECT OR RECEIVE
SORT
PRODUCE
DISPOSE
Sorting
lines
Trommels
Optical
sorters
Magnets
Green
waste
Sludges
Shredders
Crushers
Balers
Incineration
Pelletisers
Composting
Landfill
Industrial & commercial
Construction & demolition
Municipal
Food and
supermarket
Industrial
fats
Eddy current
separators
RECYCLATES AND PRODUCTS
Paper
Glass
Solid
recovered
fuel
Compost
Wood
chips
Plastic
Metal
Aggregate ICOPOWER®
pellets
Green
electricity
Customers pay us to
take their waste
Customers purchase
our products
We minimise the cost of disposing
of the residues
STRATEGY
The strategy of the Commercial
Division is to deliver growth through the
implementation of cost and revenue
synergies, the implementation of
self-help initiatives and through capturing
market recovery.
} Increase margins through extension of
the commercial effectiveness programme
across the combined division;
} Roll out continuous improvement (CI)
across additional master plants and
ensure it is embedded in existing sites
through a period of change;
Goals for 2017/18:
} Deliver an effective integration,
} Manage volatility in downstream markets,
including the wood segment; and
bringing both businesses towards a
common way of working in a new Target
Operating Model (TOM) under a new
leadership structure;
} Further improve the overall recycling and
recovery rate of the waste streams we
collect from our customers.
} Deliver cost synergies and optimise
cross-selling and waste internalisation
opportunities;
Our businesses are managed separately
in Belgium and the Netherlands, but work
together closely to preserve synergies.
Our strategy
is to deliver
growth
through,
among other
things,
self-help
initiatives
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SYNERGIES
The Commercial Division is expected to be the
key focus for the delivery of cost synergies as this
is where the vast majority of the business overlap
is found. Value capture can be identified in the
following four key areas:
} Revenue: the internalisation of waste
treatment, the harmonisation of selling
terms, cross-selling of goods and services,
and the roll-out of the former Shanks
commercial effectiveness programme to
former VGG entities;
} Direct cost: the benefit of reduced logistics
cost through optimisation of inbound and
outbound logistics flows, resulting in fewer
trucks and reduced costs of transport.
Additionally, the benefit of a streamlined
footprint of waste sites, eliminating duplicated
sites in certain locations and optimising the
operational efficiency of our processing assets;
} Scale: using the benefits of scale and the
harmonisation of our supplier base
to procure at a reduced cost, including
the disposal of our residual waste and
fuels to incineration and the sale of our
recyclate products; and
} Indirect cost: the benefit of a more streamlined
management and support services structure.
TECHNOLOGIES
Sorting
lines
Trommels
Crushers
Composting
Magnets
Optical
sorters
Eddy current
separators
Balers
PRODUCTS
Paper
Glass
Recovered
fuels
Gas
Plastic
Metal
ICOPOWER
pellets
Digestate/
compost
Wood
chips
PRO FORMA FINANCIALS FY17 (UNAUDITED)
Shanks
VGG Adjustment
Pro forma
NL COMMERCIAL
€m
Revenue
EBITDA
EBITDA %
Trading profit
Trading profit %
BE COMMERCIAL
€m
Revenue
EBITDA
EBITDA %
Trading profit
Trading profit %
270.0
42.6
15.8%
19.1
7.1%
144.2
15.2
10.5%
7.8
5.4%
468.1
36.2
7.7%
11.7
2.5%
278.2
39.7
14.3%
19.7
7.1%
(47.0)
(8.6)
(3.7)
-
-
-
691.1
70.2
10.2%
27.1
3.9%
422.4
54.9
13.0%
27.5
6.5%
Basis of pro forma financials:
} Pro forma information for the year ended 31 March 2017 as if the acquisition had occurred on
1 April 2016
} Shanks represents 12 months to March 2017
} VGG based on 12 months to March 2017 as extracted from management accounts for the year
ended 31 December 2016 and 3 months to 31 March 2017
} Adjustments to reflect the new divisional structure and reporting segments from 1 April 2017:
transfer of Orgaworld to Monostreams and VGIS to Hazardous Waste
} EBITDA and Trading Profit before non-trading and exceptional items
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW ABOUT OUR COMPANY
HAZARDOUS
The Hazardous Waste Division is made up of three businesses:
Reym, Van Gansewinkel Industrial Services (VGIS) and ATM
Reym and VGIS are leading industrial
cleaning companies in the Netherlands,
promoting a Total Care solution (cleaning,
transport and waste management) for heavy
industry, petrochemical sites, oil and gas
production (both on and offshore) and the
food industry. Part of the collected waste
streams are treated at our own ATM facility in
Moerdijk. ATM is one of Europe’s largest sites for
the treatment of contaminated soil and water,
as well as for the disposal of a broad range of
hazardous waste such as waste paints and
solvents. In addition, there is a small specialist
site at CFS Weert, which will also move under
the management of Hazardous Waste in
due course. CFS is a specialised chemical
physical separation unit that can handle
highly contaminated waters and sludges. The
combination of both treatment sites gives the
Hazardous Waste Division a leading position in
the market. The business model is shown in the
graphic on the opposite page.
Reym and VGIS’s highly-experienced and
trained cleaning teams use specialist
equipment to deliver a reliable, cost-
effective and above all safe cleaning
process in a market where the cost of
safety and quality is of paramount importance.
ATM is a leader in water and soil treatment
because of: the cost advantages provided by its
fully integrated plant processes; its waterside
location for the cleaning of ships; and its
excellent record of compliance with the many
environmental controls and permits required in
the hazardous waste market. Smaller watery
waste streams or more complex streams
are treated by CFS.
MARKETS
The core market drivers for the Hazardous
Waste Division are industrial activity in
the Benelux, particularly in the oil and gas
sectors and in the Rotterdam and Moerdijk
region, coupled with construction and site
remediation activity across Europe. We are
a trusted party for the processing industry
in complex and highly-intensive ‘stop and
maintenance’ projects.
The oil and gas sector represents over
half of the revenues of the Hazardous
Waste Division. As reported in the CEO’s
review, the oil and gas market stabilised
at low levels of activity following the
declines of the previous year. This
has maintained pressure on the
productivity and profitability of the
Reym and VGIS cleaning divisions, on
sludge volumes into ATM and on the
value of waste oils produced during
treatment. Reductions in gas production
in the northern Netherlands have
exacerbated this. Actions taken in
2015/16 to rationalise capacity to
meet the expected lower levels of
demand proved to be effective.
On a longer-term basis, activity in the
Benelux has stabilised in the last year and
Rotterdam has continued to remain busy
with growth in waterside waste volumes
during the year.
Continued on page 30
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LEADERSHIP
Jonny Kappen
Managing Director,
Hazardous Waste
“By integrating the new Hazardous
Waste Division we have an even
stronger team to help maximise
opportunities and solve challenges.
We are focused on operational grip,
full compliance and on broadening
and enhancing our Total Care
concept. We are doing this in a
changing environment, both in
terms of the market and internally
as we progress through integration.
Delivering value for our customers
and the circular economy is our
top priority as well as having happy
customers and happy people!”
W
E
I
V
R
E
V
O
T
R
O
P
E
R
C
I
G
E
T
A
R
T
S
E
C
N
A
N
R
E
V
O
G
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
I
F
N
O
I
T
A
M
R
O
F
N
I
E
R
O
M
HAZARDOUS WASTE BUSINESS MODEL
CUSTOMER
CLEAN
TRANSPORT
PRODUCE
DISPOSE
Industrial
cleaning
generates
contaminated
water
Heavy industry (Petrochemical)
Industry & Shipping
Industry & Government
Construction & Government
Contaminated
water
Paint & solvent
waste
Bio water
treatment
Pyrolysis
Cleaned water
Inert ash
Contaminated
soil
Gasification
Thermal
treatment
Clean soil
GROWING REGULATION
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FOCUS ON HAZARDOUS
The new site in Rotterdam that opened
mid 2015, provides a perfect base for the
Total Care solutions that we provide to
our established customer base in this
important industrial area.
The volume of contaminated soil requiring
treatment in Europe has continued to be
affected by the budgetary constraints of
governments. This results in a continued
downward pressure on volumes available
and hence on pricing. However, our
long-term pipeline remains sound, with
many sites earmarked for brownfield
redevelopment. Short-term decreases in
the volume of soil available are offset by
increased volumes of tar-containing asphalt
grit (TAG) as a result of a successful industry
lobbying campaign to have this material,
produced during road surface replacement,
treated within the Netherlands, rather than
being exported.
We have also opened up new market
opportunities and technologies, such as the
use of ultrasonic cleaning which has seen a
strong level of demand in the past year.
STRATEGY
VALUE CAPTURE
The strategy of the Hazardous Waste
Division is to continue to grow in target
markets while retaining current levels of
returns. Specifically, the strategy is to:
} Invest in environmental excellence and
increasing treatment capacity;
} Expand the range of inputs requiring
thermal treatment;
} Broaden commercial coverage and
geographic footprint;
} Integrate VGIS into Reym in a planned
and efficient manner;
} Drive further synergies, rationalise and
optimise fleet and drive productivity
gains; and
} Optimise the use of specific technology
from ATM and CFS.
Value capture in the Hazardous Waste
Division will primarily come through the
integration of VGIS into Reym. Productivity
is key in the industrial cleaning segment so
the increased size and scope of the cleaning
activities will allow for optimised capacity
planning and reduced sub-contracting of
labour and plant. In addition, a number of
the Reym and VGIS sites are very closely
located across the Netherlands. Over time
we intend to consolidate the sites to reduce
cost without affecting the geographic
footprint of the division.
Our Reym industrial cleaning business has
highly experienced and trained cleaning
teams who use specialist equipment
PRO FORMA FINANCIALS FY17 (UNAUDITED)
HAZARDOUS
€m
Revenue
EBITDA
EBITDA %
Trading profit
Trading profit %
Shanks
VGG Adjustment
Pro forma
191.2
35.6
18.6%
23.1
12.1%
-
-
-
27.1
2.0
7.4%
0.8
3.0%
218.3
37.6
17.2%
23.9
10.9%
Basis of pro forma financials:
} Pro forma information for the year ended 31 March 2017 as if the acquisition had occurred on
1 April 2016
} Shanks represents 12 months to March 2017
} VGG based on 12 months to March 2017 as extracted from management accounts for the year
ended 31 December 2016 and 3 months to 31 March 2017
} Adjustments to reflect the new divisional structure and reporting segments from 1 April 2017:
transfer of VGIS from VGG Commercial Netherlands
} EBITDA and Trading Profit before non-trading and exceptional items
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TECHNOLOGIES
Thermal
treatment
High
pressure
Ultrasonic
Scrubbing
Vacuum
Chemical
Gasification
Biological
Detonation
Separation
PRODUCTS
Cleaned
water
Clean soil
Inert ash
We are a trusted party for the
processing industry in complex
and highly-intensive stop and
maintenance projects
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW MUNICIPAL
The Municipal Division operates waste treatment facilities
for UK and Canadian city and county councils under long-term
contracts, typically 25 years. Such contracts are established
primarily to divert waste from landfill in a cost-effective and
sustainable way
In the UK, the capital cost of the
infrastructure we operate is financed with
non-recourse bank debt and in the case of
PFI contracts, is also supported by central
government funding. Both PFI and PPP
contracts are underpinned by guaranteed
revenues and tonnages from the associated
council. The business model is shown in the
graphic opposite.
In a typical PFI or PPP contract, a special
purpose vehicle (SPV) is created to finance
the construction of the treatment assets
and a club of banks provides the funding.
During the build phase Renewi may or may
not be the main construction contractor.
On completion and commissioning of the
assets, Renewi will generally inject up to
20% of the invested capital of the SPV in
the form of subordinated debt, which then
earns a return of around 12% pre-tax.
Once operational, there are two potential
income streams from the PFI or PPP
contract. The first is the income for
treatment of the waste under the operating
contract, which is signed with the Municipal
Division as the supplier. The operating
contract provides guaranteed volumes
under agreed terms, typically with some
form of price indexation. However, the
contracts are not linked to the variable cost
of the disposal of processed off-take and
changes in this market have resulted in
severe margin pressure as described on
the following pages.
The second income stream is the interest
from the subordinated debt and ultimately
a dividend stream from the SPV.
Continues on page 35
The Municipal
Division
secures
its input
waste under
long-term
contracts
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ABOUT OUR COMPANY LEADERSHIP
James Priestley
Managing Director,
Municipal
“The potential for improvement in
our division excites me – our main
challenge is the breadth of what we
have to do. Our focus is to motivate our
empowered and accountable teams to
deliver our commitments. I am looking
forward to our business turnaround,
especially our people feeling proud of
what they have achieved and being
able to celebrate their success.”
MUNICIPAL BUSINESS MODEL
COLLECT OR RECEIVE
SORT
PRODUCE
DISPOSE
Sorting
lines
Trommels
Shredding
In-vessel
composting
Local Authorities
in UK and Canada
Magnets
Optical
sorters
Anaerobic
digestion
Mechanical
biological
INPUT
RECYCLATES
PRODUCTS
Incineration
Landfill
Black bag
waste
Dry
recyclate
Paper
Glass
Solid recovered
fuel
Green
electricity
Green
waste
Food
waste
Plastic
Metal
Refuse
derived fuel
Digestate/
compost
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The picking line at our Wakefield facility
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35
The Municipal Division has historically
sold the majority of its interest in its SPVs,
following commissioning, to a third party; so
this is currently a minor part of our income.
However, we maintain an open stance on
our ownership of current and future
SPV stakes.
In Canada, the facilities are generally
funded from our own balance sheet,
supported by long-term contracts.
In some cases, the customer may
provide some funding support.
MARKETS
The bidding and building process for major
waste treatment PFI/PPP opportunities
in the UK is largely complete, with only
our Derby project still under construction.
However, some councils are still seeking
a solution to their waste diversion needs,
quite possibly through contracting spare
capacity in existing PFI/PPP assets.
The Canadian market is still in a growth
phase, with many municipalities yet to
invest in the infrastructure required to
divert waste, especially organic waste,
from landfill. Renewi has a good overview
of the pipeline of potential opportunities
in Canada and into parts of the US but
is not currently actively bidding on new
contracts. We are currently completing
the construction of a flagship organic
processing plant in Surrey (Vancouver).
This facility will convert food waste
into bio-fuel to power the city’s fleet of
waste collection vehicles. We expect to
commission the plant in this financial year.
The Municipal Division, having secured
its input waste under long-term contract,
then competes in a number of downstream
markets, in particular with regard to
the provision of solid recovered fuels
(SRF) to cement manufacturers and
refuse derived fuels (RDF) to energy from
waste companies. A proportion of these
disposal routes is secured under long-
term agreements. However, the older
contracts have generally not fully secured
their disposal and the current market has
become very challenging. The demand
for SRF derived from municipal waste has
declined sharply, while the cost of disposing
of RDF has increased very significantly from
a low of around €40 per tonne to a current
market price of around €80 per tonne, with
additional costs of around £11 per tonne
to provide baled rather than loose product.
The decline of Sterling against the Euro
from around €1.45 to €1.17 has also further
significantly increased the cost of disposal
for the Municipal Division (although this
is more than offset by the increased value
in Sterling of the Group’s overwhelmingly
Euro-denominated profits).
The Municipal Division also operates two
commercial Anaerobic Digestion (AD)
facilities – one accounted for as a joint
venture. The Westcott Park facility in
Oxfordshire, which is wholly owned, has
experienced difficulties in securing organic
waste streams with an over-capacity of AD
facilities in the area. On the other hand, the
Zero Waste Scotland initiative has resulted
in a sharp increase in the supply of source
segregated organic waste in the Edinburgh/
Glasgow area resulting in positive results for
our Energen Biogas joint venture.
STRATEGY
The core strategy of the Municipal Division
is to deliver an urgent and detailed recovery
plan, including to:
} Deliver sustained operational excellence
at full capacity under our current
contracts;
} Ramp up operational performance in the
BDR and Wakefield facilities following full
service commencement;
} Negotiate off-take terms and find new
outlets;
} Improve productivity and plant uptime;
} Successfully commission the Surrey and
Derby facilities; and
} Renegotiate local municipal contracts
for mutual benefit, where possible.
TECHNOLOGIES
Sorting
lines
Trommels
Shredding
In-vessel
composting
Magnets
Optical
sorters
Anaerobic
digestion
Mechanical
biological
PRODUCTS
Paper
Glass
Solid recovered
fuel
Green
electricity
Plastic
Metal
Refuse
derived fuel
Digestate/
compost
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ABOUT OUR COMPANY
MONOSTREAMS
The Monostreams Division
was created when the
merger of Shanks and Van
Gansewinkel completed in
February 2017. The division
comprises four businesses:
Coolrec, Minerals, Orgaworld
and Maltha
These businesses produce materials
from waste streams in specific end
markets such as glass, electrical and
electronic equipment, organics and
minerals. Our resulting products are used
in markets such as food and beverage
packaging, electrical and electronics,
healthcare, energy, soil fertiliser, and
building and construction in Europe.
Coolrec is a recycler of electrical and
electronic equipment, including segregating
plastics and both ferrous and non-ferrous
materials. It has eight sites across Belgium,
Netherlands, Germany and France with
the majority of customers on long-term
MONOSTREAMS BUSINESS MODEL
INPUT
OUTPUT
Coolrec
Fridges
Washing
machines
Electronics
Plastics
Plastics
Metals
Minerals
Soil
Ashes
Clean
soil
Aggregate
Landfill
locations
Orgaworld
Food
waste
Green
waste
Digestate/
compost
Green
electricity
Maltha
Car
windscreens
Bottles
Windows
Glass
cullet
Sheet
glass
Isolation
materials
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The
Monostreams
Division
produces
materials
from waste
streams in
specific end
markets
supplier contracts. Coolrec has innovative
partnerships with OEMs like Philips and
Miele to bring used products back into the
value chain and has introduced dynamic
pricing to mitigate raw material price
volatility.
The Minerals business provides unique landfill
services to manage specialist waste streams
such as NORM waste. We are expanding the
Minerals business further to create building
materials from bottom ash (the ash left
over after incineration of waste) and have
partnerships with producers of building
materials to turn cleaned materials into
products like concrete tiles.
The Orgaworld business has transferred
from the Netherlands Commercial Division.
Orgaworld is an innovative leader in organic
waste treatment and is a producer of green
electricity and soil enhancing materials. It
had five facilities in the Netherlands, primarily
based on composting and anaerobic
digestion technology.
Maltha is a glass recycling specialist,
focused primarily on recycling flat and
container glass into “cullet” and glass
powder for reuse in the glass industry.
LEADERSHIP
Bas Blom
Managing Director,
Monostreams
“The Monostreams Division is at
the centre of our purpose – giving
new life to used materials. Our
division is unique as we make
such a diverse range of products
to help our customers to achieve
their sustainability goals and to
fuel the circular economy. We are
aiming to use self-help initiatives
such as continuous improvement to
deliver operational excellence and
accelerate growth this year. Safety
will always be our top priority – it
is important that we all get home
safely at the end of each day.”
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW FOCUS ON MONOSTREAMS
The Minerals business partially
generates revenues from
sustainable mineral raw material
made from the bottom ash released
in waste-to-energy plants
33% of the Maltha group is owned
by Owens-Illinois, a world leader in
packaging glass. Maltha has sites in the
Netherlands, Belgium, France, Portugal
and Hungary.
MARKETS
Each of our distinct end markets in the
Monostreams Division has its own market
drivers, making it a diverse division.
The Coolrec business processes end-of-
life electrical and electronic goods. Input
volumes have been relatively stable over
the past years and the business can benefit
from changes in environmental legislation
and incentive schemes to drive additional
recycling, and also from technology
changes which affect the content of
inbound used materials. The business
is highly exposed to the value of the
materials that it recycles, particularly
non-ferrous metals, many of which are at
historic lows in the cycle and which may
recover with time.
The Minerals business partially generates
revenues from specialist materials
requiring landfill. These materials have
few other disposal options and so
input volumes are secure, so long as
there is landfill capacity and permits in
place. The building materials from the
bottom ashes business has good growth
prospects as many bottom ashes from
incinerators are not yet being recycled.
Indeed, the Dutch government has
signed a green deal with the sector to
recover 50% of bottom ashes in 2017 and
100% in 2020.
Inbound volumes in Orgaworld are
relatively mature and are secured on long-
term contracts, many of which have been
recently renewed. Legislation changes
have caused us to stop processing used
nappies. Capacity has been replaced by a
Our distinct end markets
in Monostreams make it
a diverse division
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new input of sludges, which has helped to
improve profitability. Capacity changes in
the food waste treatment market have seen
input pricing improve for the sourcing of
food waste, to the benefit of the Orgaworld
Amsterdam (Greenmills) anaerobic
digestion facility.
Our Maltha glass recycling business
sources waste flat and container glass
across Europe. Supply has been stable,
although pricing has been under
pressure. The cullet and powders
produced are sold to leading glass
manufacturers, including our partner
Owens-Illinois, where demand is
currently relatively strong for high
purity products.
STRATEGY
The core strategy of the Monostreams
Division is to deliver profitable growth from
the existing businesses and operational
footprint. This will include driving
operational improvement and commercial
gains. Longer term we will assess
opportunities to develop returns from up
or downstream extensions, geographical
expansions and additions of other in- and/
or outbound products.
Goals for 2017/18:
} Extend the Minerals Maasvlakte landfill
operating permit;
} Deliver operational recovery plan in
Coolrec to restore margins;
} Deliver operational recovery in Maltha,
particularly in Heijningen;
} Sustain Orgaworld returns, while further
expanding volumes and margins;
} Create an integrated operating model for
Monostreams Division to capture strategic
opportunities and improve efficiency; and
} Create growth with projects using
innovation as competitive advantage,
based on a strategic external focus.
VALUE CAPTURE
Synergy opportunities in the Monostreams
Division are relatively limited due to the
specialist nature of these standalone
businesses. Opportunities for best practice
and technology sharing, efficient overhead
deployment and cross-selling of services
as well as value stream alignment with
the broader Renewi family are expected to
deliver modest gains.
TECHNOLOGIES AND PRODUCTS
Glass recycling: waste
glass back into cullet
WEEE recycling into
metals and plastics
Anaerobic
digestion
Forz: a safe and clean
secondary raw material as
filler for concrete
Composting
PRO FORMA FINANCIALS FY17 (UNAUDITED)
VGG
Shanks
Pro forma
Coolrec
Minerals
Maltha
Orgaworld
MONOSTREAMS
€m
Revenue
EBITDA
EBITDA %
Trading profit
Trading profit %
77.8
6.9
8.9%
3.9
5.0%
46.7
10.5
48.8
5.8
22.5%
11.9%
6.4
13.7%
1.5
3.1%
19.9
6.6
33.2%
2.9
14.6%
193.2
29.8
15.4%
14.7
7.6%
Basis of pro forma financials:
} Pro forma information for the year ended 31 March 2017 as if the acquisition had occurred on
1 April 2016
} Shanks represents 12 months to March 2017
} VGG based on 12 months to March 2017 as extracted from management accounts for the year
ended 31 December 2016 and 3 months to 31 March 2017
} EBITDA and Trading Profit before non-trading and exceptional items
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CEO’S REVIEW CONTINUED
Peter’s statement continued from p15
A SOLID PERFORMANCE
We delivered a robust performance during
a transformational year
ACTIVELY MANAGING THROUGH
MARKET UNCERTAINTIES
Market and macroeconomic background
The Brexit vote and significant weakening
of Sterling during the year resulted in
a material positive translation of our
Euro-denominated earnings, slightly
offset by a negative profit impact on
the Municipal Division.
More generally, Renewi experienced stable
or modestly improving market volumes,
pricing and recyclate income across
its Benelux businesses during 2016/17.
However, some of these positive trends for
our Commercial Division had a negative
impact on our Municipal Division.
The Belgian and Dutch economies both
grew modestly during the year, with
small increases in waste volumes. There
was stronger growth in our key Dutch
construction market, where mixed C&D
waste volumes increased 11.3% in a second
consecutive year of growth, again driven
primarily by a recovery in the challenged
residential sector.
Dutch and neighbouring German
incinerators continued to be largely full
in 2016/17, with limited spot capacity
available and generally higher prices for
contract renewals or extensions. This
trend is expected to continue for the next
two or three years, with waste flows from
neighbouring European Union countries,
as well as from the UK, making up shortfalls
in the domestic supply of waste. The rising
incinerator prices have underpinned
improved inbound waste pricing for
recyclers in the Dutch market, supporting
modest price recovery in the Commercial
Division. However, the same price
increases, exacerbated by the weakening
of Sterling, have had a material negative
impact on the profitability of our smaller
Municipal Division.
The global commodities markets also
stabilised and showed some recovery
after the sharp falls in the second half of
2015/16. Metal prices increased steadily
in the second half of 2016/17 and paper
prices were also particularly strong. In
contrast, supply/demand imbalance in
the wood market has caused the income
received on sale of wood chips to fall
sharply, even becoming a cost at times, with
corresponding pressure on profits from this
waste stream. Energy prices also showed
some recovery with increased revenue for
the Group from electricity derived from our
bio-gas production plants.
As expected, the oil and gas market
remained subdued through most of
2016/17. Demand for industrial cleaning
services and the consequent supply of
highly contaminated waters and sludges
for treatment at our ATM facility remained
at low levels.
The PFI sector in the UK has continued
to face significant challenges for market
participants. An increasing number of PFI
contracts across the country have come
under pressure as a result of austerity
measures, poor performance or because
the contracts are inappropriate in the
current market environment. Within this
unfavourable market background, our
Municipal Division’s portfolio of assets has
been vulnerable contractually to the volatile
recovered fuel markets, rising incinerator
gate fees and the weakness of Sterling.
The unexpected outcome of the Brexit
vote on 23 June 2016 has created some
uncertainties in the waste market. The
short-term impact has been limited to the
flow through of a weakened Sterling on our
results, both transactional and reported.
Through the Brexit process, we expect the
export of waste from the UK to continue for
some time, as there is a strong economic
incentive for both the Netherlands and
the UK to do so. Longer term, we believe
the impact on the Dutch market is likely to
remain limited. This is because an ultimate
reduction in UK imports was already
expected due to the commissioning of
incinerator capacity in the UK and also new
waste imports into the Dutch incinerators
Peter Dilnot
Chief Executive Officer
are being identified to take up any vacated
capacity. Providing that there is no
significant degradation in Dutch incinerator
utilisation and pricing, the impact of Brexit
on our Benelux Divisions is therefore likely
to be limited. We also believe that the
UK Government will continue to drive
environmental policies that will encourage
recycling after the exit from the European
Union. We further expect the impact on our
Municipal Division to reduce progressively
as we are de-risking the operating model
by seeking to agree longer term contracts
for the fuels that we produce.
TRADING IN 2016/17: DELIVERING
OUR COMMITMENTS
Group performance
As previously announced, we have reported
the combined business of VGG as one
business unit for the purposes of the
2016/17 financial year, given that we owned
the business for just one month. Going
forward, Renewi will report in the new four
division structure as set out on page 7.
Total underlying revenues grew by 27%
to £779m at reported currency or 14% at
constant currency. On a like-for-like basis
excluding VGG, revenue growth was 15%
at reported currency. Trading profit at
£36.5m was up by 9% on the prior year at
reported currency or down 9% at constant
currency. On a like-for-like basis excluding
VGG, trading profit fell by 2% at reported
currency. Underlying earnings per share
fell by 12% to 3.7p (2016: 4.2p as adjusted
for the bonus factor) as a result of a higher
taxation rate as the prior year benefits
do not repeat. Exceptional items totalled
£87.1m (2016: £23.5m) as previously
advised, reflecting the transaction and
initial synergy delivery costs of the merger
in addition to charges reflecting the market
and operational challenges in Municipal.
Commercial Waste produced another
strong performance in the year, growing
Some of the team celebrating
Day 1 of Renewi
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trading profit by 27% at constant currency
to €26.9m on revenues that grew by 2%
to €414m. Margins increased by 130bps
to 6.5%. The Netherlands increased
trading profit strongly by 39% to €19.1m,
while Belgium also grew profits for the
first time in five years, increasing by 5%
to €7.8m. Ongoing contributions from
our successful self-help initiatives and
portfolio management were reinforced by
improving end markets.
Hazardous Waste also delivered a
strong performance despite continuing
subdued oil and gas markets. Revenues
increased by 3% at constant currency
to €191m and trading profit increased
by 9% to €23.1m. Margins increased by
70bps to 12.1%. Waterside volumes from
ships and strong throughput on the soil
cleaning line offset ongoing weakness
in higher-priced contaminated water
volumes and lower sludge intake.
As previously reported, Municipal, which
operates in the UK and Canada, had a
difficult year. Revenue grew by 8% at
constant currency to £203m as a result of
the full year effect of commissioning the
Wakefield and Barnsley, Doncaster and
Rotherham (BDR) facilities and
construction activity in Surrey, Canada.
However, the Division recorded a trading loss
for the year of £2.7m at constant currency
(2016: profit of £9.4m), primarily as a result of
ongoing off-take cost pressures as outlined
in the market section above. There were
also operational challenges getting to full
optimisation with the two new sites. The
second half showed a deterioration on the
first half, primarily as a result of recovered
fuel pricing and mix and a number of
exceptional charges have been recorded.
New management are in place and making
rapid progress in implementing the plan for
recovery, with operational and commercial
improvements already being secured.
27%
Commercial Waste produced a strong
performance in the year, growing
trading profit by 27% to €26.9m
€7.8m
Our Commercial Waste Division in
Belgium grew profits for the first time
in five years, by 5% to €7.8m
€23.1m
Hazardous Waste delivered a strong
performance, increasing profit by 9%
to €23.1m
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CEO’S REVIEW CONTINUED
25%
Our green electricity
production is up by more
than 25%
€84m
During the one month of ownership
in March, VGG delivered revenues of
€84m, up 16% on the prior year
Our Commercial Waste Division performed strongly in the year
During our one month of ownership in
March 2017, VGG delivered revenues of
€84m, up 16% on the prior year, and trading
profit of €4.5m which was significantly
up on the same period last year. As
previously reported, VGG turned around
its performance during 2016, delivering a
strong improvement of 23% in EBITDA to
€91m for the 12 months to December 2016
on the back of commercial effectiveness
and cost reduction activities.
Strong cash management has continued
through the year. We delivered an
underlying free cash flow of £23.1m
(2016: £56.8m) which was down on the
prior year due to increased spend on
replacement capital and the non-repeat
of favourable inflows from the sale of
receivables in Netherlands and Belgium
last year. Our core net debt at 31 March
2017 was better than expected at £424m,
representing a multiple of 2.8 times pro
forma EBITDA, comfortably within our
covenant level of 3.5x.
Implementing our strategy
We have three overarching strategic
self-help initiatives, the success of which
has been an important part of the strong
performance in our Commercial and
Hazardous Waste divisions.
These three initiatives drive margin
expansion by addressing the key areas of
our business model: intake, processing and
disposal. Our progress offsets inflationary
cost pressures and other headwinds and
allows us to maximise opportunities to
increase margins where possible.
Our commercial effectiveness initiative is
focused on managing intake margin at the
front end of the business, particularly in our
Commercial Division. Our sales force has
shifted its emphasis towards margin from
volume, focusing on profitable segments and
exiting from loss-making contracts. New tools
for managing both pricing and sales force
activity have allowed us to more effectively
manage market changes, such as new taxes or
movements in recyclate prices.
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Sustainability
and CSR are at
the heart of
our vision
Our continuous improvement (CI)
programme made good progress in
2016/17, despite some inevitable merger
related activities. The roll-out of ‘lean
conversion’ has continued to include Icova,
Van Vliet Contrans, Mont St Guibert and
Seraing (Liege) with potential annualised
savings of around €3m being identified.
The introduction of CI at our ATM facility is
planned for 2017/18, and, in advance of that,
targeted progress was made with underlying
operational improvement programmes, such
as the reduction of chemical usage during
treatment. The ATM facility has also secured
the highest level BRZO standard to ensure
operations meet stringent quality and safety
standards.
Our off-take initiative has continued to
ensure that we optimise the flows and
the revenues arising from our recyclates,
recovered fuels and other products across
the Group. Successes have included
co-ordinated management of a volatile
market for waste wood to minimise negative
impacts on the Group and the opening
up of Belgian solid recovered fuel (SRF)
opportunities for our Municipal Division.
Looking forward, Renewi will build on the
strong capabilities from Van Gansewinkel
in this area and will have a Product Sales
Department with leadership reporting into
the Chief Executive Officer as a member of
the Executive Committee.
Focus on commissioning new assets
As reported last year, our focus for the
deployment of capital into infrastructure
has been shifting from the construction of
large new sites to the commissioning of
the sites already underway. The focus for
future investment is also primarily in new or
improved production capabilities in existing
facilities (to increase capacity or quality and to
reduce cost) rather than building new sites.
The new Vliko facility for Commercial
Waste Netherlands was commissioned on
time and on budget in October 2016 and
is performing well. In the Hazardous Waste
Division we are expanding our storage
capacity for packed chemical waste, a
project that is on track for completion
in quarter two of 2018. The Theemsweg
facility in Hazardous Waste also performed
strongly in its first year, exceeding our
expectations. In contrast, and as previously
reported, the first full year in production
of our Wakefield and BDR facilities in the
UK was challenging from an operational
perspective and the related recovery plan
is detailed below.
We have two remaining greenfield sites
under construction. Construction of our
new bio-gas facility in Surrey, Canada
is largely complete, we have started
commissioning and we are working
through completion matters with the
constructors with a view to receiving
first waste later this year, slightly behind
schedule. This is a flagship project for
the City of Surrey under which bio-gas
extracted from the city’s organic waste
will be used to operate the city’s waste
collection fleet in a closed loop. The
Derby PPP facility has experienced major
challenges, as previously reported, as a
result of the insolvency during 2016 of
a core technology supplier to the EPC
contractor Interserve plc. Interserve is
working hard to implement a recovery
plan but there has been an unavoidable
consequent delay to the project and
the facility is not expected to be fully
operational until late in 2017/18. As the
operator, rather than the constructor,
the financial consequences for Renewi
are limited and appropriate provisions for
incremental costs have been taken as an
exceptional item this year.
Portfolio management for
improved returns
In addition to the merger with VGG, we have
continued to invest in growth opportunities
and to exit those activities which are non-
core or where we are unable to generate
acceptable returns. During 2016/17, we
sold our low margin Smink Groundworks
business to a local operator, while we
acquired and integrated the commercial
waste activities of the City of Leiden into
our Vliko facility.
Delivering responsibly
Sustainability and corporate social
responsibility (CSR) are at the heart of our
vision to be a leading waste-to-product
company. In 2015 Shanks laid out a five
year programme for CSR with a broad
range of targets. Van Gansewinkel had
also set itself stretching CSR targets. In
many areas these targets are compatible,
and where possible we have already set
ourselves merged objectives to 2020. As
our performance shows, we are making
progress. Our lost time accident frequency
has improved by more than 5% over the
year, our green electricity production is up
by more than 25% and our total carbon
avoidance exceeds 3 million tonnes. This is
only the beginning and Renewi will launch
a full set of CSR targets during 2017 to
reflect the ambitions and capabilities of the
combined Group.
Peter Dilnot
Chief Executive Officer
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
CFO’S REVIEW
GROWING FROM A
STRONG FOUNDATION
The strength of our combined Group, and our plans for growth
through synergy gains and investment, will help to build on
increases in underlying revenue and trading profit
Toby Woolrych
Chief Financial Officer
Overall Group underlying revenue
increased by 27% in 2016/17 to £779.2m.
Excluding the one month of trading from
Van Gansewinkel Groep (VGG), revenue
increased by 4% at constant currency to
£715.4m. Trading profit on continuing
businesses, before non-trading and
exceptional items, increased by 9% to
£36.5m at reported rates (9% decrease at
constant currency). For the post-merger
period of March 2017, VGG generated a
trading profit of £3.9m on revenue
of £71.5m.
Non-trading and exceptional items
excluded from pre-tax underlying profits
Deal-related
} Merger related transaction and
To enable a better understanding of
underlying performance, certain items are
excluded from trading profit and underlying
profit due to their size, nature or incidence.
Total non-trading and exceptional items
from continuing operations amounted to
£87.1m (2016: £23.5m). These items are
explained further in note 4 to the financial
statements and include:
integration costs of £38.2m (2016: £0.8m)
which include all deal related fees and
the costs of the arrangement of the new
financing facility
} Amortisation of intangible assets
acquired in business combinations
of £2.1m which has increased due to
the VGG merger and the identification
of intangibles as part of the fair value
exercise (2016: £1.8m)
GROUP SUMMARY
REVENUE YEAR ENDED
TRADING PROFIT YEAR ENDED
Continuing operations
Mar 17
£m
Mar 16
£m
Variance
reported %
Variance %
CER
Mar 17
£m
Mar 16
£m
Variance
reported %
Variance %
CER*
Commercial
Hazardous
Municipal
Group central services
347.6
160.2
207.6
–
297.3
136.2
187.7
–
17%
18%
11%
715.4
621.2
15%
2%
3%
8%
4%
VGG
Inter-segment revenue
71.5
(7.7)
–
(6.4)
Total
779.2
614.8
27%
14%
*CER= at constant exchange rate
Revenue in 2016 excludes the impact of the non-trading item of £1.0m
22.6
19.3
(2.6)
(6.7)
32.6
3.9
–
36.5
47%
24%
N/A
4%
-2%
27%
9%
N/A
4%
-19%
15.4
15.6
9.4
(7.0)
33.4
–
–
33.4
9%
-9%
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For the post-merger
period of March 2017,
Van Gansewinkel
generated a trading
profit of £3.9m on
revenue of £71.5m
Trading profit margins1
£m
2017
2016
2015
2014
2013
4.5
5.4
5.7
7.2
6.2
Return on operating assets1
%
2017
2016
2015
2014
2013
10.9
12.0
12.2
15.1
11.4
1 All values quoted are for Shanks legacy
businesses only
Municipal–related
} As previously advised, Municipal UK
onerous contract provisions of £28.2m
(2016: £5.0m) include increases relating
to Cumbria and D&G contracts given
market changes in the year and new
provisions against Barnsley, Doncaster
and Rotherham (BDR), Wakefield and
Derby commissioning
} Impairment of assets of £9.2m (2016:
£nil), principally plant and equipment
at the Westcott Park anaerobic digestion
facility and other UK Municipal
intangible assets
} Other items of £6.9m (2016: £4.9m)
including contractual issues in Municipal
UK caused by delays at the Derby
contract due to the insolvency of a
major contractor, incremental third party
and waste disposal costs at Wakefield
following on from the subcontractor
insolvency in the prior year and
incremental costs relating to the East
London fire in 2014 that could not be
claimed from the insurers
Other
} Restructuring charges and associated
costs of £2.4m (2016: £2.4m) relating to
the previously announced close out of
structural cost reduction programmes
started in the prior year;
} Portfolio management activity net loss of
£0.1m (2016: £8.7m) following the sale of
the groundworks business in Netherlands
and the Industrial Cleaning business in
Wallonia along with disposals of surplus
land and other assets; and
} Financing fair value measurements of £nil
(2016: credit of £0.1m).
The operating loss on a statutory basis,
after taking account of all non-trading and
exceptional items, was £39.0m (2016: profit
of £9.8m).
Net finance costs
Net finance costs, excluding the change in
the fair value of derivatives and exceptional
deal related finance charges, were £0.6m
lower year on year at £12.8m. Given the
equity fundraising early in the second half
of the year and the delayed completion of
the merger, lower borrowing levels have
resulted in reduced interest charges. The
decline in finance income is driven by
the disposal of 49.99% of the equity in
the Wakefield SPV in March 2016 which
has resulted in equity accounting for our
remaining interest as a joint venture.
There is a corresponding reduction in the
level of interest charge for PFI/PPP non-
recourse net debt.
Share of results from associates and
joint ventures
The significant increase year on year is
attributable to the strong performance
from our joint venture in the anaerobic
digestion facility in Scotland following
recent investments and positive operational
performance.
Loss before tax
Loss before tax from continuing operations
on a statutory basis, including the impact
of non-trading and exceptional items, was
£61.4m (2016: £2.5m).
Taxation
Taxation for the year on continuing
operations was a credit of £0.5m (2016:
charge of £1.5m). The effective tax rate on
underlying profits has increased to 23.0%,
as a result of the change in mix of profits
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CFO’S REVIEW CONTINUED
with higher profits in the Netherlands
and Belgium. It should be noted that
the underlying tax charge in the prior
year included a £2.2m credit from the
recognition of tax losses in Belgium as
a result of greater certainty of utilisation
following the restructuring completed as
part of the sale of the Industrial Cleaning
business. Excluding this credit the effective
tax rate on underlying profits was 21.4% in
the prior year. There is a tax credit of £6.4m
arising on the non-trading and exceptional
items of £87.1m as a significant proportion
of these are non-taxable.
Looking forward, we anticipate an
underlying tax rate of around 25%,
reflecting increasing profits in regions
with relatively higher tax rates.
The Group statutory loss after tax and
including all discontinued and exceptional
items was £61.4m (2016: £3.9m).
Earnings per share (EPS)
Underlying EPS from continuing operations,
which excludes the effect of non-trading
and exceptional items, decreased by 12%
to 3.7p per share (2016: 4.2p as adjusted
for the equity raise). As noted above,
the tax charge in the prior year benefited
from increased deferred tax recognition in
Belgium which has not been repeated this
year. Basic EPS from continuing operations
was a loss of 11.3p per share compared to
a loss of 0.9p per share (as adjusted) in the
prior year.
Dividend
The Board is recommending a final dividend
per share of 2.1p. This final dividend and
the total dividend for the year of 3.05p
represent an unchanged dividend after
adjusting for the bonus factor of the rights
issue. Subject to shareholder approval,
the final dividend will be paid on 28 July
2017 to shareholders on the register
on 30 June 2017. Total dividend cover,
based on earnings before non-trading
and exceptional items from continuing
operations, is 1.2 times (2016: 1.3 times).
Discontinued operations
The loss from discontinued operations of
£0.5m (2016: profit of £0.1m) relates to the
UK solid waste activities.
Cash flow performance
A summary of the total cash flows in relation
to core funding is shown in the table below.
CASH FLOW
March 17
£m
March 16
£m
EBITDA
Working capital movement and other
Net replacement capital expenditure
Interest and tax
Underlying free cash flow
Growth capital expenditure
UK PFI funding
Canada Municipal funding
VGG acquisition:
Net cash out
Deal related fees
Other acquisitions and disposals
Equity raise (net of costs)
Dividends paid
Restructuring spend
Other
Net core cash flow
Free cash flow conversion
80.4
(4.3)
(38.2)
(14.8)
23.1
(4.2)
(20.1)
(19.6)
(277.9)
(19.2)
(3.3)
136.4
(15.1)
(1.9)
(17.8)
(213.0)
63%
68.2
24.8
(18.6)
(17.6)
56.8
(9.9)
(53.9)
(10.3)
–
–
27.8
–
(13.7)
2.6
(15.2)
(21.0)
172%
All numbers above include both continuing and discontinued operations.
Free cash flow conversion is underlying free cash flow as a percentage of trading profit.
Net core cash flow reconciles to the movement in net debt of £227.3m in note 30 to the financial statements after taking
into account movements in PFI/PPP non-recourse net debt, amortisation of loan fees and foreign exchange
The Board is
recommending
a final
dividend per
share of 2.1p
Free cash flow conversion decreased year
on year as a result of the higher level of
replacement capital spend and the non-
repeat of the working capital benefit from the
sale of certain trade receivables in Belgium
and Hazardous Waste in the prior year.
Replacement capital spend included the final
build out of the Vliko relocation project and a
number of compliance and catch up projects
across all Divisions. The ratio of replacement
capital spend to depreciation increased from
52% last year to 85% this year, as the prior
year was favourably impacted by the receipt
of proceeds from the sale of the old Vliko
site with the cash being spent in this
financial year.
The growth capital expenditure of £4.2m
related to spend on operator enhancements
for Municipal contracts and which is
classified as an intangible asset. This
included investment in balers to enable
the business to access broader recovered
fuel markets. The scheduled £17.5m
subordinated debt funding into the Derby
project was made on 31 March 2017.
The Canada Municipal funding reflects the
construction spend on the Surrey facility.
The VGG acquisition net outflow includes
the total monies paid to the vendors
including the settlement of vendor
funding together with the finance leases
and cash acquired. The other acquisition
and disposal spend includes the deferred
consideration from the March 2016 sale of
49.99% of the equity in the Wakefield SPV
completed in August and other disposals
net of the acquisition in August of the
commercial waste activities of the City of
Leiden. The prior year inflow reflected the
Wakefield PFI sub-debt divestment.
The “Other” category includes the funding
for the closed UK defined benefit pension
scheme, the onerous contract provision
spend in UK Municipal and other non-
trading cash flows.
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Our Renewi employees celebrate
Day 1 in the Netherlands
SOURCES AND
USES OF FUNDS
Sources
Net rights issue and
placing funds
Equity issued to vendors
Increase in debt financing
Uses
Equity issued to vendors
Consideration paid
to vendors
Repayment of VGG
Syndicated loan
€m
156
212
212
580
212
29
339
580
THE VGG MERGER
Sources and uses of funds
The transaction was valued at €440m on a
cash-free debt-free basis when the deal was
agreed in principle in May 2016, although
this increased with our share price to
€488m at close on 28 February 2017.
Inclusive of the cash acquired in VGG, the
total transaction cost was €580m.
Future reporting units
As noted in the CEO’s Statement, we will
report from 1 April 2017 on four trading
divisions: Commercial Waste (disclosing
Belgium and Netherlands operations
separately), Hazardous Waste, Municipal
(disclosing UK and Canada operations
separately) and Monostreams (disclosing
the four main business units separately).
Value capture targets
Value capture includes cost, revenue and cash
synergies of which we have only quantified cost
as it is separable and reportable.
We remain confident we can deliver €40m
of ongoing cost synergies over the first three
full years of ownership. We expect to deliver
€12m in 2017/18 increasing to €30m in
2018/19 and €40m in 2019/20. Cash costs to
achieve the €40m synergies are expected to be
approximately €50m. Non-cash costs arising
from site closures, for example, have not yet
been calculated.
} €12m from direct savings such as site
closures and route optimisation;
} €8m from scale savings such as improved
procurement costs; and
} €20m from indirect cost savings in
management and overheads.
In addition, we believe there is an
opportunity for revenue synergies in
the form of cross-selling of services,
internalisation of waste treatment and
the deployment of our commercial
effectiveness initiative into VGG. The
benefits from these activities will be hard
to distinguish from underlying trading
and so will not be reported on separately
as a synergy.
Cash synergies will include better effective
utilisation of trucks, thereby postponing
capital investment, and optimised
treasury operations.
Transaction and integration costs
We have grouped the costs relating to the
transaction into three segments:
} Transaction costs: relating to the
acquisition and related financing;
} Value capture costs: relating to the
delivery of the €40m cost synergies; and
} Integration costs: relating to the
The cost synergies are expected to arise
from three main areas:
successful merger and integration of the
two businesses.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CFO’S REVIEW CONTINUED
Transaction costs have been incurred in
full and amount to £35.6m. These include
advisers’ fees, financing costs and other
deal related expenditure. The total costs
are slightly higher than originally expected
primarily due to the length of time taken
to complete the transaction and the
complexity of the anti-trust filings. Costs of
£5.1m have been taken to equity as they
were directly attributable to the equity raise
with the balance of £30.5m accounted for
as non-trading and exceptional items in
the appropriate line items of the Income
Statement.
Value capture costs include the costs of
site closures, redundancies and other
reorganisation costs. They are forecast
to total €50m and will be accounted for
in the year incurred as non-trading and
exceptional items. £4.5m (€5.3m) was
incurred in 2016/17 and we expect the
split of future costs to be approximately
€20m in 2017/18, €20m in 2018/19 and
€5m in 2019/20.
Integration costs include advisers’ fees,
the transitional costs arising from merging
the two organisations and certain IT and
rebranding costs that cannot be capitalised.
These are expected to total €22m, with £2.9m
(€3.4m) incurred in 2016/17 and we expect
approximately a further €11m in 2017/18,
€6m in 2018/19 and €2m in 2019/20.
Both value capture and integration costs will
be reported as non-trading and exceptional
costs in subsequent periods.
Finally, we expect to incur some integration-
related capital investment. This is expected
to include investment in rebranding of
around €12m over two years (signage, truck
respraying, etc.), up to €45m over three
years in truck replacements within the
relatively older VGG fleet, and an investment
in new IT platforms for growth for the
merged business.
Purchase price accounting
The merger has been accounted for in
accordance with IFRS 3 (Revised) Business
Combinations which requires a full fair
value exercise for the assets and liabilities
acquired as at 28 February 2017. This
exercise is provisional at this stage as
permitted under accounting standards.
The review has resulted in a step down in
value of trucks and other tangible assets of
over €20m, the recognition of acquisition
intangibles of €52m, alignment of discount
rates for long-term landfill provisioning and
the recognition of appropriate legal and
tax provisions. Given that the completion
date fell so close to the year end, we have
not been able to undertake a full valuation
of all real estate assets acquired and these
have been included at their original book
value in the acquired balance sheet. A full
valuation exercise will be performed in
the coming months and any adjustment
reported as part of the September 2017
reporting. The step down in the value of
property, plant and equipment will result
in reduced depreciation charges in VGG of
c€2m which is mostly attributable to the
Netherlands operations.
INVESTMENT ACTIVITIES AND
PERFORMANCE
Investment programme
The Group has a stated strategy of investing
in sustainable waste management
infrastructure with a target pre-tax trading
profit return of 15–20% on fully operational
assets (post-tax return of 12–15%). At 31
March 2017, the fully operational proportion
of the investment portfolio delivered a
pre-tax return of 17.4% (2016: 19.5%).
The portfolio as a whole delivered a pre-
tax return of 13.1% (2016: 16.1%). Going
forward we shall cease reporting on this
metric which related to legacy Shanks only.
The investment in the Municipal
programme has continued with progress
in construction at the Canadian plant
in Surrey and delays at Derby following
the insolvency of a principal contractor.
For the year ended 31 March 2017, the
PFI financial assets increased by £20.2m
to £178.8m due to further construction
spend in Surrey net of repayments on
other contracts.
There will be further modest investments
in the Surrey plant in the new financial
year. Construction is largely complete and
we have started commissioning and are
working through completion matters with
the constructors with a view to receiving
first waste later this year, slightly behind
schedule. The investment on the Derby
contract is not reflected in financial assets
as we hold our interest in this contract in
a joint venture.
Continues on page 50
We believe
that there is
opportunity
for revenue
synergies in
the form of
cross-selling
of services
Our Commercial Waste Division
provides secondary raw materials for
the circular economy
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CFO’S REVIEW CONTINUED
The Group’s underlying expectation for
replacement capital remains around 75-
80% of depreciation, however 2017/18 is a
year of catch up and the ratio is expected
to be c90%. This level may from time to
time be supplemented with larger scale
replacement projects. Over the next two
to three years we expect to spend €5m on
a new stone crushing line near Rotterdam,
€2m to complete a new packed chemicals
warehouse in Hazardous Waste, €15m to
replace and upgrade major components of
Hazardous Waste’s soil treatment line and
€2m for the digestate dryer at Roeselare.
As noted earlier in this report, we also
expect some rebranding capital investment
and some additional catch-up investment
in trucks. Growth capital expenditure is
likely to be limited to around £5m, being
investments in Hazardous Waste.
Group return on assets
For the legacy Shanks businesses only, the
Group return on operating assets (excluding
debt, tax and goodwill) from continuing
operations decreased from 12.0% at 31
March 2016 to 10.9% at 31 March 2017. The
Group post-tax return on capital employed
was 5.5% compared with 6.3% at 31 March
2016 for the legacy Shanks businesses only.
TREASURY AND CASH MANAGEMENT
Core net debt and gearing ratios
The net core cash outflow of £213.0m
along with an adverse exchange effect of
£16.5m on the translation into Sterling
of the Group’s Euro and Canadian
Dollar denominated debt and loan fee
amortisation has resulted in a core net debt
increase to £423.9m which was slightly
lower than expected due to the timing of
transaction related payments and despite
the £17.5m scheduled equity injection into
the Derby project at the end of March. This
represents a covenant leverage ratio of 2.8
times net debt:EBITDA which is well within
our banking limits of 3.5x.
Debt structure and strategy
At the time of the announcement of the
merger on 29 September 2016, the Group
entered into a new five year €600m multi-
currency facility with a syndicate of banks,
comprising both a term and revolving
credit facility. Some €575m of the facility,
including the whole term loan and part of
the revolving credit facility mature in five
years on 29 September 2021 (in each case
subject to two one year extension options).
The remaining €25m of the revolving
credit facility matures in two years on 29
September 2018. At the end of March 2017,
£279.2m was drawn at an initial margin
of 2.15%. The new facility has been hedged
with a €125m interest rate cap and two
cross currency swaps totalling £75.0m at
fixed Euro interest rates of 2.2%. The Group
also has two retail bonds each of €100m
due for repayment in July 2019 and June
2022 with an annual coupon of 4.23% and
3.65% respectively. Following the merger
the Group has £45.2m of finance leases and
£216.4m of guarantees.
Debt borrowed in the special purpose
vehicles (SPVs) created for the financing of
UK PFI/PPP programmes is separate from
the Group core debt and is secured over
the assets of the SPVs with no recourse
to the Group as a whole. Interest rates
are fixed by means of interest rate swaps
at contract inception. At 31 March 2017
this debt amounted to £87.1m (31 March
2016: £91.1m).
Directors’ valuation of PFI/PPP portfolio
The Directors’ PFI/PPP valuation was
established a number of years ago to
demonstrate the value primarily from
assets not yet built or commissioned. It
comprised a valuation of the UK Municipal
Division’s operating contracts, which can be
seen in the divisional trading performance
upon commissioning, and also the value
of financial investments in the SPVs used
to fund the contracts and into which the
company has often invested in the form of
subordinated debt and equity.
The Directors consider that with almost
all assets now commissioned there is no
benefit to continuing to provide a valuation
of the operating contracts, a valuation
which is in any case subject to volatility in
the current market environment. However,
there is still a purpose in providing a
valuation of the financial assets, the
benefits of which are not easily assessed
from the financial statements. As at 31
March 2017 the Directors believed that
these amounted to £45m (2016: £30m).
The Group
has a stated
strategy of
investing in
sustainable
waste
management
infrastructure
Retirement benefits
The Group operates a defined benefit
pension scheme for certain UK
employees which is closed to new
entrants. At 31 March 2017, the net
retirement benefit deficit relating to the
UK scheme was £15.5m compared with
£8.8m at 31 March 2016. The increase in
the deficit reflected the fall in the yield
on corporate bonds which resulted in
a lower discount rate of 2.6% at March
2017 compared to 3.5% at March 2016.
The most recent actuarial valuation of
the scheme was carried out at 5 April
2015 and a funding plan of £3.1m per
annum for a further five years has been
agreed with the trustees. VGG also
operates a number of defined benefit
pension schemes for employees in the
Netherlands and Belgium which had a
net retirement benefit deficit of £6.1m
at 31 March 2017.
Toby Woolrych
Chief Financial Officer
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MEASURING OUR PERFORMANCE
2016/17
We have defined key performance metrics based on delivering our divisional strategies.
Trading margins
%
Return on operating assets
%
2017
2016
2015
2014
2013
Project hours at Reym
Hours M
2017
2016
2015
2014
2013
Revenue1
£M
2017
2016
2015
2014
2013
6.5
5.2
4.5
6.4
5.4
1.2
1.5
1.6
1.6
1.5
186.8
173.9
156.6
152.6
131.9
2017
2016
2015
2014
2013
ATM soil volumes
Tonnes M
2017
2016
2015
2014
2013
Margin1
%
2017
2016
2015
2014
2013
12.8
9.6
7.2
9.5
7.3
1.2
1.2
1.0
0.9
0.8
-1.8
5.1
7.2
7.3
9.6
Commercial
Hazardous
Municipal
1 Excluding Surrey construction
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW OPERATING REVIEW
We delivered a strong performance across our divisions
during 2016/17 except for Municipal. The division had a more
challenging time and robust recovery plans are being executed
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RENEWI plcAnnual Report and Accounts 2017 The Minerals business continued to trade
well in line with expectations. Progress
towards the extension of the permit at the
key Maasvlakte landfill continues to be
encouraging. Coolrec, a leading recycler
of electrical and electronic goods, also
traded well and has shown growth on the
prior year. Stronger volumes of fridges
were supported by recovering metal prices
which are an important source of income
for the business.
Performance for year ended
31 March 2017
The following table sets out pro forma
VGG revenue and EBITDA for the 12-month
period to March 2017 and 2016 for the
historic VGG operating segments.
The significant year on year increase in
the Collections Division reflects the sharp
focus on margin improvement and the
top line revitalisation initiatives, recovery
in recyclate and materials prices and the
benefits of ongoing cost management with
improvements across both Netherlands and
Belgium. It should be noted that up to €7m
of this profit improvement is believed to
include one-off items that will not recur in
2017/18. In the Recycling Division, Maltha,
the glass recycling business, sales and
operational activities increased following
the rebuild of the Heijningen facility.
OPERATING REVIEW
FOR THE YEAR
ENDED 31 MARCH
2017
As noted earlier, the performance of the
acquired Van Gansewinkel Groep (VGG)
business is reported as a single operating
unit for 2016/17 given that the business
was only owned for the month of March.
In 2017/18 the Group will report the four
division structure as previously announced
and set out above.
VGG
Performance in the month of March 2017
VGG delivered a strong performance in
the first month following completion of
the merger. Revenues in March were up
by 16% on the prior year to €83.7m, with
a significant growth in trading profit to
€4.5m. The Collection Division, now part
of the Renewi Commercial Division, had a
strong month, significantly boosted by two
additional working days compared to the
prior year.
At Maltha, the glass recycling business,
underlying profitability is showing signs
of recovery. A new glass powder
production line is being installed at the
key Heijningen facility and is expected
to drive future growth.
VGG FINANCIAL PERFORMANCE
REVENUE (UNAUDITED) YEAR ENDED
EBITDA (UNAUDITED) YEAR ENDED
Mar 17
Mar 16
Variance
Variance %
Mar 17
Mar 16
Variance
Variance %
746.3
173.3
(17.9)
901.7
716.1
158.1
(16.9)
857.3
30.2
15.2
(1.0)
44.4
4%
10%
5%
75.9
23.2
(6.7)
92.4
59.8
21.3
(6.6)
74.5
16.1
1.9
(0.1)
17.9
27%
9%
24%
EBITDA MARGIN
10.2%
13.4%
10.2%
8.4%
13.5%
8.7%
Collections
Recycling
Others
Total €m
Collections
Recycling
Total
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EBITDA is shown as this was the measure used by VGG prior to acquisition. The results above have been extracted from management accounts for the years ended 31 December 2015
and 2016 and the three months ended 31 March 2017.
MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW COMMERCIAL
WASTE
Divisional strategy
The Commercial Division’s strategy
is to restore profitability to attractive
levels, primarily through the active
implementation of operational self-help
initiatives, supplemented by targeted
investments and portfolio management.
Financial performance
The Commercial Division again performed
strongly in 2016/17, delivering 27% trading
profit growth to €26.9m on revenues, up by
2% to €414.2m. Trading margin increased by
130bps to 6.5% and the return on operating
assets rose to 12.8%.
Revenues in the Netherlands grew by
6% to €270.0m and trading profit by 39%
to €19.1m. Trading margins improved
by 170bps to 7.1%. Return on operating
assets increased by 320bps to 10.7%,
bringing the tax-adjusted return above the
company’s WACC for the first time since
2012. All regions showed both revenue
and profit growth, with a second year
of strong performance in the Northern
Region and a profit increase of 86% from
the Organics segment. Volumes were up
by an encouraging 11%, although this
included a large one-off bulk contract for
soil & sludges. Underlying construction
waste volumes were up by around 10% and
commercial waste volumes by around 6%.
Recyclate revenues were also broadly flat
over the year, with a weak first half offset by
recovering prices in the second half.
Belgium revenues fell by 6% to €144.2m
and trading profit grew by 5% to €7.8m in
line with expectations. In achieving this
performance, the business managed to
offset over €2.5m in lost trading profit as
a result of the closure of its major wood
dust customer. The core collection and
treatment business performed well and
the Ghent plant delivered significantly
increased volumes of solid recovered fuel
(SRF) into the local market. Profitability
of the landfill continued to decline as
expected, with volumes being reduced to
extend its remaining life into 2019.
€12m
The key investment in the year was
the €12m Vliko and Kluivers depot at
Zoeterwoude in the Netherlands
€414m
The Commercial Division performed
strongly in 2016/17, delivering
revenues up by 2% to €414m
COMMERCIAL FINANCIAL PERFORMANCE
REVENUE YEAR ENDED
TRADING PROFIT YEAR ENDED
Mar 17
Mar 16
Variance
Variance %
Mar 17
Mar 16
Variance
Variance %
Netherlands Commercial Waste
Belgium Commercial Waste
Total €m
Total £m (at average rate)
270.0
144.2
414.2
347.6
253.6
152.8
406.4
297.3
16.4
(8.6)
7.8
50.3
6%
-6%
2%
17%
19.1
7.8
26.9
22.6
13.7
7.4
21.1
15.4
5.4
0.4
5.8
7.2
39%
5%
27%
47%
TRADING MARGIN
Netherlands Commercial Waste
Belgium Commercial Waste
Total
7.1%
5.4%
6.5%
5.4%
4.8%
5.2%
The return on operating assets for Belgium excludes all landfill related provisions.
RETURN ON
OPERATING ASSETS
10.7%
24.6%
12.8%
7.5%
19.8%
9.6%
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OPERATING REVIEW CONTINUED Our Commercial Division at work
Operational review
The Commercial Waste Division delivered
this strong financial performance due to
a further year of delivery of core strategic
programmes, coupled with strong local
operational management. The commercial
effectiveness programme was at the heart
of the further margin enhancement in the
Netherlands. The division again managed to
ensure that a dynamic pricing environment,
with volatile recyclate prices and increasing
incinerator gate fees, resulted in margins
that were preserved and, where possible,
enhanced through exiting loss-making
contracts and a determined focus
on profitable segments. Commercial
effectiveness was also important in Belgium
where a new national organisation structure
was able to increase the co-ordination of
commercial activities across the business.
Continuous improvement (CI) was also
important in both the Netherlands and
Belgium. The CI programme in our Dutch
Commercial Division has been further rolled
out in 2016/17. We have implemented
lean tools in 60% of our sites to help the
business to optimise their processes. The
targeted savings have been realised; for
example, we achieved between 10% and
20% efficiency improvement on certain
targeted processes and between 2% and
5% on the logistics activities. We still
see further potential here and continue
to roll-out CI throughout our combined
business in 2017/18. In Belgium, we
introduced lean management techniques
to Mont St Guibert and Seraing (Liege),
identifying up to €3m of potential benefits
across Belgium. With increasing volumes,
but pricing still highly competitive, CI is
important to improve productivity and to
ensure that assets are maximised.
The organics segment in the Netherlands
provides a good example of the
combination of commercial and operational
effectiveness. A change in regulations
meant that the front end composition
of some of the waste taken in needed to
change. New waste inputs were sourced
and adjusted operation of the composting
tunnels resulted in an improvement in
profitability. Additionally, the Greenmills AD
facility in Amsterdam generated increased
returns on the back of improved process up-
time and improving electricity prices.
Capital investment in the Commercial
Division remained tightly controlled
during 2016/17, with some additional
investments planned for 2017/18 as a
result of the improving market conditions.
The key investment in the year was the
commissioning on time and on budget of
the new €12m Vliko and Kluivers depot at
Zoeterwoude in the Netherlands. It was
built to replace a site at Leiderdorp that was
badly damaged by fire in 2014. The facility
has been built using the latest sustainability
techniques and with lean operations in
mind from the outset. The combination
of rerouting waste streams and logistics
savings from the relocation will result in
an attractive return on the net investment.
Additional investment was completed in the
renovation of the Biocel AD facility and the
installation of a new food depackaging line.
Small scale portfolio management also
continued despite the merger. In June 2016
we sold our non-core Smink Groundworks
business to a local operator along with a
parcel of un-needed land. In August 2016
we acquired the commercial waste activities
of the City of Leiden; the 1,500 customers
acquired were integrated with our new Vliko
site within weeks of the acquisition, with a
retention rate greater than 90%.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW HAZARDOUS WASTE
Divisional strategy
The Hazardous Waste Division’s strategy is
to grow through increasing capacity to treat
additional volumes that will be sourced
through market growth, and expanding both
geographically and the range of products
that can be treated through our assets.
Financial performance
Hazardous Waste delivered a strong
performance in 2016/17 given the relative
weakness of the core oil and gas market.
Revenues increased by 3% to €191.2m and
trading profit by 9% to €23.1m. Margins
increased by 70bps to 12.1%, and the return
on assets increased by 360bps to 26.3%.
Reym saw revenues remain flat during the
year in a tough market, with growth in Total
Care contract services replacing higher
margin cleaning revenues. Nevertheless,
careful capacity management enabled the
business to deliver trading profit growth
despite the weaker input mix.
Revenues at ATM increased by 6%,
with strong soil, water and packed
chemical waste throughput and no
material recurrence of the operational
contamination that impacted the prior year.
Operational review
ATM, our hazardous waste treatment site,
has an advantaged location and cost
position with regard to its soil and water
treatment processes, which has therefore
Our ATM facility in the Netherlands
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OPERATING REVIEW CONTINUED HAZARDOUS FINANCIAL PERFORMANCE
REVENUE YEAR ENDED
TRADING PROFIT YEAR ENDED
Mar 17
Mar 16
Variance
Variance %
Mar 17
Mar 16
Variance
Variance %
Total €m
Total £m (at average rate)
191.2
160.2
185.9
136.2
5.3
24.0
3%
18%
23.1
19.3
21.2
15.6
1.9
3.7
9%
24%
TRADING MARGIN
RETURN ON
OPERATING ASSETS
Total
12.1%
11.4%
26.3%
22.7%
€15m
During 2017/18 ATM is expected to start
a three-year €15m refurbishment and
upgrade of the TRI soil processing line
€23.1m
Hazardous Waste delivered a strong
performance, increasing trading profit
by 9% to €23.1m
been the focus of investment to increase
capacity and capability. End markets
remained subdued during the year but
were in line with our expectations and
we were able to operate the plant at
close to capacity.
plant so during the year we entered into a
joint venture with local partners to source
a large shared storage facility for salt water
so that increased volumes can be taken
in according to customer demand and
processed over time.
The soil processing line operated well
during the course of the year. Supply
of TAG (tar-containing asphalt grit) was
strong and imports of relatively high priced
European soil offset ongoing weakness in
domestic soil availability. The market to
dispose of the cleaned soil has become
more challenging during the year and
contains a potential risk to future margins.
Management has a range of projects
underway to ensure that multiple disposal
options remain available.
The waterside also delivered a strong year
with increased volumes and a better mix
driving improved average pricing. Record
numbers of ships were cleaned at the
jetty in March 2017 following investment
in additional capacity during the previous
year. Supply of sludges and heavily
contaminated waters remained subdued
as a result of the oil and gas market, but
there was strong growth in the supply of
salt water for treatment. The ATM facility
can only process a certain proportion of salt
water along with fresh water through the
The packed chemical waste, or pyro,
line at ATM also had a strong year with
encouraging volume growth at stable prices.
A new storage shed is under construction
that will increase capacity after it is
completed late in 2017/18.
The Reym business performed well in the
face of an ongoing trough in the oil and gas
market and customer demand remained
both subdued, especially offshore and
in the northern region, and volatile,
impacting productivity. Management
had anticipated a challenging year as oil
prices fell during 2015/16 and had reduced
capacity to face a contracting market. This
capacity management, along with a strong
focus on cost control, allowed the business
to deliver a recovery in profitability despite
the conditions.
During 2017/18, ATM is expected to
start a three-year €15m programme of
refurbishment and upgrading of the TRI soil
processing line to maintain capacity and
meet tightening emission requirements.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
Baled paper ready for
recycling in Wakefield
MUNICIPAL
Divisional strategy
The Municipal Division’s strategy is to deliver
a recovery plan to restore profitability, lost
as a result of adverse market dynamics, and
to ensure the successful completion and
commissioning to full operational capability
of its new assets both under construction or
recently commissioned.
Financial performance
Municipal revenues grew by 8% at constant
currency to £203.2m and the business
reported a trading loss of £2.7m at constant
currency (2016: profit of £9.4m).
The UK business reported revenues up
by 7% to £174.8m, mainly due to annual
RPI increases and a full year from the
Barnsley, Doncaster and Rotherham
(BDR) contract which started late in the
first quarter last year. The UK business
made a trading loss of £4.2m (2016: profit
of £7.8m). The key drivers of the decline
in trading profit, as previously reported,
were margin pressure in the recovered
fuels market, the sensitivity of the legacy
business model to market shifts, and
specific operational optimisation issues.
The older PFI contracts, ELWA, Cumbria
and D&G, have a legacy structure of being
exposed, at the back end of the business,
to material changes in the costs of disposal
of the recovered fuels SRF and RDF or to
income made from recovered recyclates.
As described in the Chief Executive’s
Statement, both the solid recovered fuel
(SRF) and refuse derived fuel (RDF) markets
have experienced significant challenges
over the past year and these worsened
rather than improved in the second
half. The cost of some RDF contracts
has doubled from a lowest point of €40
per tonne to current rates of around
€80 per tonne, at an exchange rate
that has moved adversely by over 20%
during the past 18 months. The business
additionally has to incur material
further costs of baling and transporting
waste in order to open up alternative
disposal options. Market challenges have
additionally impacted the Westcott Park
anaerobic digestion (AD) facility which
has experienced a severe lack of available
organic feedstock. Challenges getting to
full optimisation have been experienced
at the two new facilities of BDR and
Wakefield, the latter largely in the area
of the AD segment of the site where, as
previously reported, a key contractor
became insolvent during the final months
of construction during 2015/16.
and a number of improvement initiatives
have been implemented to partially offset
these challenges. New management has
been put in place, including James Priestley
as the Managing Director for the Municipal
Division. A detailed improvement plan has
been prepared and is being implemented,
comprising the following key elements:
} Plans to get to full capacity and power
generation at pace;
} Shift operations to create higher quality
fuels and recyclates;
} Negotiate off-take terms and find new
outlets;
} Improve productivity and plant uptime; and
} Renegotiate local municipal contracts
where possible.
The Canadian business reported revenues
up by 17% at constant currency to £28.4m
which is all attributable to increased
construction revenue relating to the
Surrey contract. Trading profit was
down by 15% at constant currency to
£1.7m. Underlying performance in the
Canada business was relatively robust for
most of the year. However, the London
plant experienced operational difficulties
during the last quarter that had a negative
impact on trading profit of around
£0.5m. The plant has returned to normal
operation as at the start of the new
financial year.
At ELWA, the refinement hall at its flagship
Frog Island facility was recommissioned in the
second quarter following an extensive rebuild
as a result of a fire in August 2014. However, the
market for the SRF produced by Frog Island
remained subdued and shipments are not
expected to resume until 2017/18. ELWA has
also been particularly exposed to the changing
RDF prices and the currency impact of
exporting to continental Europe. An investment
in significant baling capacity will open up
new markets over time. Challenges in the
SRF market also impacted D&G and Cumbria
during the year, although both are accounted
for as onerous contracts.
Operational review – UK
The UK business was significantly impacted
by a broad range of challenges during 2016/17
The new Wakefield and BDR facilities
continued to experience challenges
getting to full optimisation during the
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OPERATING REVIEW CONTINUED The bio-fuel facility in Surrey, Canada,
has made good construction progress
year. The Wakefield anaerobic digestion
(AD) facility has ongoing issues where we
had to step in at a late stage last year due
to the insolvency of the main contractor.
These challenges mean that the facility is
not yet producing electricity from bio-
gas, which has a significant impact on the
operating economics of the plant. A detailed
improvement plan is underway with full
gas production expected by the middle of
2017/18. The new BDR facility, the largest of
the mechanical biological treatment (MBT)
plants built to date, has also experienced
challenges getting to full optimisation in its
first full year of operation. These have been
addressed in a systematic fashion, including
a brief closure in December to address a
latent defect and upgrade certain areas of
the facility. As noted in the Chief Financial
Officer’s Review, charges for onerous
contract provisions have been recorded.
The anaerobic digestion market has
continued to show a wide disparity of
performance based on geographic and
regulatory factors. Energen Biogas, our
50% joint venture in Scotland, delivered
another year of strong revenue and profit
growth based on good availability of
volumes due to the Zero Waste Scotland
policy. Investments in the past two years to
increase capacity and provide a gas-to-grid
capability are generating strong returns.
In contrast, our Westcott Park facility in
Oxfordshire is operating in an area of food
waste scarcity with low prices and a lack of
available volumes to maintain full capacity.
Operationally the facility is performing
well and a shift in market dynamics
through government policy or competitor
withdrawals would transform performance.
As a result of current market conditions,
we have revised our future expectations
of trading performance which has led to
an impairment of the carrying value of the
asset by £6m.
The Derby facility has been impacted by
the previously reported insolvency of a
major contractor and technology supplier
to Interserve plc, the EPC contractor for the
Derby project. This insolvency has caused
a material delay of up to a year to the
project which had been due to commission
in March 2017. Most other aspects of the
construction are on time and on budget and
we have been working with Interserve to
commission the plant as soon as possible.
The financial impact of the delay has been
limited to £1.7m liquidated damages,
as previously disclosed, plus a further
£1.7m of exceptional costs relating to
the commissioning of the plant now an
onerous contract as a result of the delay.
Some £17.5m of subordinated debt was
injected into the SPV on schedule on 31
March 2017.
Operational review – Canada
Our Ottawa and London plants delivered
consistently through the year until the final
quarter when the London plant experienced
operational issues relating to the bacteria
in the composting process. The reduced
throughput impacted profitability by around
£0.5m but is resolved and all tunnels are
in full production. The innovative bio-fuel
facility in Surrey, Canada has made good
construction progress during the year
and is largely complete. We have started
commissioning and we are working through
completion matters with the constructors
with a view to receiving first waste later this
year, slightly behind schedule.
MUNICIPAL FINANCIAL PERFORMANCE
REVENUE YEAR ENDED
TRADING PROFIT YEAR ENDED
Mar 17
Mar 16
Variance
Variance %
Mar 17
Mar 16
Variance
Variance %
11.3
4.2
–
15.5
19.9
7%
17%
8%
11%
(4.2)
1.7
(0.2)
(2.7)
(2.6)
7.8
2.0
(0.4)
9.4
9.4
(12.0)
(0.3)
0.2
(12.1)
(12.0)
N/A
-15%
N/A
N/A
UK Municipal
Canada Municipal
Bid costs
Total £m (at constant currency)
Total £m (at average rate)
UK Municipal
Canada Municipal*
Total*
174.8
28.4
–
203.2
207.6
163.5
24.2
–
187.7
187.7
TRADING MARGIN
-2.4%
9.5%
-1.8%
4.8%
14.4%
5.1%
*For comparability, the Canadian trading margin excludes Surrey construction revenue and profits
All numbers for Canada are shown at a constant exchange rate
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW PEOPLE
ENGAGING
THROUGH
INTEGRATION
Our people are at the heart of both the
successes at Shanks and the turnaround
at Van Gansewinkel. Our goal now is to
engage them through our integration,
building a winning team at Renewi
Maintaining focus during
the transaction
Earlier this year, Shanks merged with Van
Gansewinkel to create Renewi. Whilst the deal
did not complete until the end of February
2017, news of the potential merger leaked
in May 2016. Due to this, we simultaneously
communicated the merger news internally.
Whilst the prospect of a large-scale merger
was an exciting project for the majority
of our people, it did pose a significant
risk of distraction and even loss of key
people. Effective, frequent and informative
communication was key to maintain
engagement and focus.
Prior to the deal being formally signed, on
29 September 2016, we communicated with
our people via internal announcements
and manager briefings. We were able to tell
people what we knew and also advise when
we expected to be able to communicate
further. After the deal signing it became
apparent that a more frequent channel
of communication was required. In October
we launched the first in a series of bi-weekly
merger bulletins. The one-page updates
provided information in an easily digestible
manner and meant that we were able
to keep our people updated with progress
about the merger.
We provided meetings with our leaders with
the opportunity for them to suggest their
ideas on integration, ask questions and raise
concerns. We also provided our leaders
with training to understand how to manage
change. Each form of communication,
whether written or verbal, always contained
three key messages – to stay safe, focus on
our customers and deliver our results.
The outcome of our approach was meeting
our expectations, high levels of energy,
positive feedback and retaining our leaders.
Delivering a complex
integration programme
Bringing together Shanks and Van
Gansewinkel is an integration which
predominantly involves our people based in
the Benelux. Due to the size and scale of the
merger, as well as the involvement of the
Works Councils, it has been paramount to
plan and execute carefully.
We started discussions with relevant
Works Councils, in the Netherlands and
Belgium, long before the deal closed. Early
and constructive engagement with both
Works Councils and Unions has been very
important throughout the process to deliver
any required organisational changes in a
smooth and negotiated manner and in full
compliance with good employment practice.
In the Netherlands, the Works Councils
have strong rights regarding corporate
activities and restructuring plans. We
received positive Works Council advice
for the transaction itself, its financing and
for our top team structure, plus we were
also able to agree a new Social Plan. The
Works Councils from ex-Shanks and ex-Van
Gansewinkel agreed to create a single
temporary Central Works Council to make
engagement easier and the process more
efficient.
Detailed organisation design is well
underway to create a team aligned with the
new Target Operating Model (TOM). We aim
to engage and involve the people affected
to help refine this design.
Maintaining engagement
through change
Change is inevitable after a large-scale
merger and it has been a priority to ensure
that we recognise the uncertainty that
change can bring. It has been important for
us to strike a balance between planning our
integration carefully and ensuring we bring
our people on the journey with us.
We have created a five-step approach to
maintain engagement throughout the
period of change:
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1
ENGAGING OUR TEAMS
People don’t resist change: they
resist being changed. We engage our
leaders and people in change processes
so they can help to shape the new
organisation. This has included listening
sessions, leadership team calls and
training for our leaders.
2
OVER-COMMUNICATING
Communicate, communicate,
communicate! Silence can create rumours
and unsettle people. We communicate
frequently through a variety of channels:
screens in the workplace, videos, merger
bulletins and face to face. Even when
there is not much new to say, we keep
communicating so that people feel they are
up to date with progress.
5
TRAINING OUR LEADERS TO
MANAGE CHANGE
We have started and will continue to help
our leaders understand the emotional
and practical impacts of a changing
environment – on themselves and their
people. Training in this area has helped
them to lead their teams effectively and
in a positive and supportive way.
MAINTAINING
ENGAGEMENT
THROUGH
CHANGE
4
BEING OPEN AND TRANSPARENT
Through open and honest dialogue, we
build trust that we are acting and will act with
integrity and fairness as we undertake this
merger of equals. We have used this approach
in all of our communications, no matter the
audience or the channel.
3
CONTROLLING THE CONTROLLABLES
We encourage our people to
concentrate on what they can control –
keeping people safe, delivering our results
and focusing on our customers. This
approach brings a sense of control when
other decisions are outside of scope. Keeping
this new “business as usual” approach also
keeps our focus on our core business.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW GENDER DIVERSITY
15%
of our workforce
is female
13%
of our Board
members are
female
We benefit enormously
from our diverse workforce;
we all learn from each other
Building a winning team
From the outset, we have promoted our
merger as a “merger of equals” and it has
been a key integration principle throughout
the transaction. This means that we have
always planned to take the very best of what
made Shanks and Van Gansewinkel great
and leverage it at Renewi. The two legacy
businesses are highly complementary and
it has been important for us to capture the
breadth of skills and experience from across
both businesses.
Our new Executive Committee is a blend
of strong leaders with proven international
expertise and clear customer focus. There
is a mix of Shanks and Van Gansewinkel
leaders, together with some newly
recruited leaders with impressive blue-chip
experience. This mix means we are able to
capitalise on the knowledge and skillsets
from both leadership teams.
We have a clearly defined vision to be
the “leading waste-to-product company”
and a strong purpose to “give new life
to used materials”. These statements,
underpinned by our “waste no more”
strapline, provide a solid foundation and a
clear path for our business.
We have defined a set of leadership
characteristics and aim to lead our people
with an open mindset. This means that our
leaders listen and learn from others around
them, are positive and engaged, committed
to great teamwork and operate with high
levels of integrity.
A careful selection process is underway to
ensure we have the right people in the right
places and with the right support. It will
take some months to complete all layers
of our management and we are working
hard to get our new teams in place. We are
following our integration principles and are
aiming for our first two layers of divisional
managment to be in place by the end of
the summer.
We will work together closely as a combined
team to deliver the benefits of the merger.
There are so many opportunities for us
to be “better together”! For example, we
are already processing more combined
volumes, sharing transport routes and
selling services together. We have also
started an important initiative to improve
machinery safety, especially ‘lock-off’
processes, right across all Renewi sites.
Our ethics
Renewi is an equal opportunities employer
and full and fair consideration is given
to applications from, the continuing
employment of, and career development
and training of disabled people. This
report does not contain information about
any policies of the business in relation to
human rights, since it is not considered
necessary for an understanding of the
development, performance or position
of Renewi’s activities.
We benefit enormously from our diverse
workforce. Our people come with different
backgrounds and from a wide range of
cultures, creating a vibrant workforce where
we can all learn from one another. The
importance of diversity, equality and non-
discrimination is highlighted in our Code of
Conduct.
Around 15% of our workforce is female, with
approximately 1,029 women employed. We
currently have one female on our Board.
During the year Renewi reviewed its policies
concerned with combating the possibility of
human trafficking and slavery in any of its
businesses or supply chains. In compliance
with the Modern Slavery Act 2015, Renewi
plc’s statement on this matter is considered
and approved by the Board on an annual
basis and can be found on the website.
WWW.RENEWI.COM/MODERN-SLAVERY-STATEMENT
We are working hard to get our new teams in place
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PEOPLE CONTINUED Our values
We appreciate the importance of values – they should
outline what matters most to us, how we operate and
what differentiates us from our competitors.
Our new values will come to life and grow as we work
together. We want to ensure that our values are owned
and felt throughout the organisation, rather than being
created in the boardroom.
In the coming months, our newly formed leadership
team will craft our values together with input from
the broader Renewi workforce. Once they have been
determined, we will communicate them clearly and
ensure they continue to guide us in the way we
manage our business and engage with each other and
our customers.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CASE STUDY
DAY 1: A DAY TO REMEMBER!
On the 28 February 2017, Van
Gansewinkel and Shanks joined
forces to create something
new: Renewi.
We had one chance to get Day
1 right and give all of our 7,000
employees a great first day at
Renewi. The primary objective was
to generate excitement, engage
people with the new brand and
embed our vision to be “the leading
waste-to-product company”.
After months of planning and
detailed logistics, we launched
Day 1 using a range of channels.
Each site was given the flexibility
to celebrate the day in their own
way, using the materials and
framework provided.
Our leaders gave their teams
a presentation about our new
company and what to expect in
the future. Every employee was
given a welcome pack with some
branded keepsakes and a brochure
introducing our new company.
Legacy branded flags were removed
and new Renewi flags were raised
in flag raising ceremonies across
our estate. Our teams were even
able to enjoy a branded cupcake
and a drink out of limited edition
Renewi mugs!
The new Executive Committee team
toured our flagship sites to meet
our teams and support local leaders
in delivering the presentations and
answering questions. What they saw
made us all proud and confident
that we are now, better together!
Footage of the celebrations
is captured here:
renewi.com/video-gallery
The start of something new: Pictures from our Day 1 celebrations across Renewi sites
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PEOPLE CONTINUED CORPORATE SOCIAL RESPONSIBILITY (CSR)
FULLY ALIGNED
AND AMBITIOUS
Strong CSR cultures at Shanks and Van Gansewinkel have
allowed us to maximise our CSR performance at Renewi
As merger partners, Shanks and Van
Gansewinkel were fully aligned in
their ambitions to be sustainable companies.
We reported on the same sustainability
indicators and set comparable sustainability
targets independently. Our in-house CSR
experts from both businesses also realised
quickly that their data collection systems were
compatible and that we could obtain accurate
and complete information from existing
processes. This is why it has been possible,
so early post-merger, to produce a set of fully
merged key CSR performance indicators.
Our CSR activities focus on three key areas:
care for the environment, the health and
safety of our people; and building strong
relationships with our host communities.
ALIGNED WITH SUSTAINABILITY
Care for the environment forms a large part
of our CSR activities. Our vision is to be the
leading waste-to-product company. This
means we focus exclusively on extracting
value from waste rather than on its disposal
through mass burn incineration or landfill.
We believe our unique approach helps to
improve the environmental footprint of our
customers and addresses demands from
regulators and society at large for a cleaner,
greener, more sustainable way of living.
Our waste-to-product philosophy is a
reflection of our belief that ‘waste’ is a state
of mind. It is not waste in our hands; it is a
product, an opportunity and a small part of
our planet preserved.
Our waste management activities
contribute to sustainability in three
key ways:
} Last year, we recycled or recovered 90%
of the 15 million tonnes of waste that our
sites handled. By giving new life to used
materials, we limit the environmental
damage caused by the production of
virgin raw material and contribute to
solutions for climate change through our
secondary raw materials
} We produced more than 172 billion watt
hours of green electricity in 2016/17 –
enough to power 40,000 homes. Through
the production of waste-derived fuels to
generate green electricity, we are helping
to reduce the use of fossil fuels
} Our recycling and recovery activities
result in more than 3 million tonnes
of carbon avoidance a year
90%
Recycling and recovery rate,
up from 74% in 2010
172bn
watt hours of green electricity
generated – enough to
power 40,000 homes
OUR RECYCLING AND RECOVERY PERFORMANCE
2015/16
2016/17
Total waste handled at sites (million tonnes)
Amount of materials recycled (million tonnes)1
Amount of materials recovered for energy
production from waste (million tonnes)2
Total materials recycled and recovered for
energy production (million tonnes)
Recycling as % of total waste handled
Recycling and recovery as % of total waste handled
14.28
9.69
3.16
12.85
68%
90%
14.78
10.25
3.07
13.31
69%
90%
1. Recycling is materials given a ‘second life’ for reprocessing into new goods/materials. Recovery is waste used for energy
production such as production of waste derived fuels, bio-mass, etc.
2. Includes water recovery and moisture loss during treatment for some technologies employed.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CORPORATE SOCIAL RESPONSIBILITY CONTINUED
Alongside our commitment
to sustainability, we take our
responsibility to our people
and society very seriously
EMISSIONS FROM OUR ACTIVITIES
(CO2 equivalent ‘000 tonnes)1
Process based emissions
Emissions from anaerobic digestion and composting
Emissions from hazardous waste treatment
Emissions from landfill
Emissions from mechanical biological treatment (MBT)
Transport based emissions
Fuel used by waste transport vehicles
Business travel (cars, trains, flights etc)
Energy use emissions
Electricity used on sites and in offices
Gas used on sites and in offices
Fuel used on sites for plant and equipment/heating
Total emissions from significant sources
2015/16
2016/17
105
295
97
24
126
8
96
15
30
796
109
304
93
22
120
8
103
17
28
805
OUR CARBON AVOIDANCE PERFORMANCE
2015/16
2016/17
(CO2 equivalent ‘000 tonnes)1
Renewable energy generated
Waste derived fuels produced and sold
Materials separated for re-use/recycling
Energy from waste used on site as a fuel
Total potential avoided emissions
49
848
1,656
334
2,887
63
874
1,788
349
3,075
1. Figures rounded to nearest 1,000 tonnes – totals may reflect rounding. Some data based on carbon ‘factors’. These vary from
country to country and are periodically updated, such as by Government agencies
GREENHOUSE GAS EMISSIONS AND
AVOIDANCE INTENSITY RATIOS
Amount greenhouse gases emitted
(CO2 equivalent ’000 tonnes)
per unit of revenue (£m)
Amount greenhouse gases avoided by our activities
(CO2 equivalent ’000 tonnes)
per unit of revenue (£m)
2015/16
2016/17
0.61
2.22
0.56
2.16
RESPONSIBLE IN OUR ACTIONS
Alongside our commitment to
environmental sustainability, we take
our responsibility towards our people
and society seriously.
Our people are crucial to the success of
Renewi. Their dedication and commitment
to our ‘waste no more’ ethos is one of the
key reasons why our customers choose to
work with us. This is why the health, safety,
wellbeing and engagement of our people
are top priorities for Renewi. This starts with
making sure our people go home safely
every day.
Shanks and Van Gansewinkel both brought
strong safety cultures to Renewi, which is why
we performed well on our safety objectives
for 2016/17, despite focus being diverted to
the merger. Our lost time injury frequency
improved by 5% over the year. The number of
near misses raised by our employees rose by
20% during the same period and the rate we
closed these out at improved by 26%. For us,
safety is a way of life.
BEING GOOD NEIGHBOURS
Our relationship with society is also critical,
both at a macro and micro level. In terms
of the big picture, our commitment to
recycling and recovering waste contributes
to society’s quest for a more sustainable
future. To carry out this work, we need the
support of our customers and our host
communities. That support needs to be
earned: from customers, by providing a
high standard of service at all times; and
from communities, by being a good and
considerate neighbour.
For Renewi, building and sharing our
expertise in sustainability is a key part of
building good relations with society. We do
this by investing in innovation. In 2016/17,
we focused on building our expertise in
gasification technologies – a green way of
converting waste into synthetic gas, which
can then be used to generate electricity.
Our new plant in Derby will make use of this
technology and we are also participating
in a Netherlands-based project that is
exploring ways of using gasification to
convert waste into methanol. (You can
read more about these initiatives in our
CSR Report, available at renewi.com/
our-responsibilities.)
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CSR OBJECTIVES TO 2020:
DEVELOPMENT FOLLOWING THE MERGER
ENVIRONMENT
PEOPLE
SOCIETY
Waste no
more
Carbon
Energy
Safety
Employees
Inclusive
employer
Community
Customers
Recycling
and recovery
rate
Carbon
prevention
Operation
energy
efficiency
>3 day
accident
rate
Employee
engagement
Female
employees
Improve
feedback
Customer
satisfaction
95%
+10%
Recycling
rate
Green
electricity
production
Transport
energy
efficiency
75%
+60%
?
?
-25%
Lost time
injury
frequency
Sickness
absence
-25%
?
?
?
25%
Disadvantaged
jobseekers
Local
initiatives
Net promoter
score
?
?
Sharing
expertise
Number of
innovation
projects
?
?
20
Stakeholder
dialogues
?
KEY AREAS FOR OBJECTIVES
Data and definitions exist already in ex-
VGG and ex-Shanks which are compatible,
and objectives compatible. Proposed objectives
for publication in 2017 CSR Report are shown
based on ex-VGG and ex-Shanks previous
objectives.
Data exists already in ex-VGG and ex-
Shanks which are compatible. However
either definition requires some work and/or a
decision needs to be made whether or at what
level an objective can be set for publication in
2017 CSR Report.
Work needs to be done on data and/
or definitions. As a result setting an
objective for publication in 2017 CSR Report is
not feasible. But, an objective could be set for
publication in 2018 CSR Report if required.
SETTING OUR CSR OBJECTIVES
To ensure we live up to our sustainability
ambitions and our responsibilities, both to
our people and to society, we set ourselves
objectives and measure our progress
towards achieving them.
Shanks and Van Gansewinkel had set CSR
objectives, to be achieved by 2020. The
data and definitions that exist for many
of these objectives are compatible and,
in these instances, we are committed to
pursuing those objectives to 2020. These
objectives include increasing our recycling
and recovery of the waste we handle by 5%
to 95%, reducing our accident rate by 25%
and increasing the number of innovation
projects we participate in by 20.
Other objectives are equally important and
need to be set. However, differences in the
way Shanks and Van Ganswinkel defined
and collected data on these objectives
need to be reconciled before we can set
meaningful targets. Areas affected by this
process include achieving greater transport
energy efficiency, helping disadvantaged
jobseekers and improving dialogue with
our stakeholders.
We want to ensure the objectives we set are
stretching and realistic. For this reason, as
we move through the merger integration
process, we will spend time defining and
collecting data on these areas and aim to
have a clearer set of objectives to state and
work towards in 2018/19.
The graphic above outlines our desired
CSR objectives and highlights which
ones we will work towards achieving in
2017/18 and which ones will require further
development.
CONSISTENT ACROSS OUR SCOPE
Our commitment to the environment, our
people and society extends across all of
our countries of operation and throughout
all of our divisions. This means the CSR
objectives we set for ourselves apply to all
our activities, no matter where they are.
Read more about our CSR
performance and goals in our
CSR report, available on
www.renewi.com
KEY FACTS AND FIGURES
Belgium
Canada
France
Germany
Hungary
Luxembourg Netherlands
Portugal
UK
Number of operating sites1
Operating sites with
recycling/recovery2
Operational landfill sites
Number collection and
transport trucks
46
20
2
702
2
2
-
-
5
5
-
-
2
1
-
15
1
1
-
-
1
1
-
3
114
53
3
1,888
1
1
-
-
36
36
2
23
1. Active operating sites. Does not include offices and other non-operational sites
2. Some sites include more than one operation, such as a landfill with an in-vessel composting plant on it. In these cases the site is noted as having recycling/recovery
Renewi
Total
208
120
7
2,631
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
RISK AND UNCERTAINTIES
We have made good progress against our 2016/17 objectives on day-to-day risk management,
with an additional focus on our recent merger
INTEGRATED RISK MANAGEMENT
Change brings risk, and it also brings
opportunity. Good risk management is
critical to ensuring that the risks associated
with change are mitigated, and that the
opportunities presented can be taken.
Since our last annual report, we have
doubled in size as a company, significantly
expanded our geographical reach and
added substantially to our portfolio
of sustainable waste management
technologies. Our recent merger has
therefore been a major focus for additional
risk management review.
We have responded by clearly segregating
duties so that most executives focus on
normal business. We have also maintained
our detailed monthly review processes,
unaltered by the transaction.
Environmental regulation continues to
tighten in some of the countries we operate
in, resulting in growth opportunities but
also an increased focus on management
and reporting, coupled with a need
for investment to meet more stringent
standards. Our teams of experienced and
knowledgeable internal specialists are key
to good risk management in these areas.
The property and business interruption
insurance market for waste management
facilities continues to harden, posing
premium and capacity pressures. We
have made, and continue to make,
improvements in our fire risk management
to mitigate these pressures.
The challenges being faced by our UK PFI
operations illustrate that whilst our recent
merger was one major risk management
event during the year, material risks can
emerge within our existing operations as
well as from change. We are reviewing
the lessons to be learnt from our UK PFI
operations and will use them to improve
our risk management.
Our challenge now is to integrate our
new merged businesses, deliver the
committed value capture upsides, target
the opportunities presented, and grow
our new merged company. Integrated and
good quality risk management will be
critical to achieving this.
Extensive due diligence was undertaken
prior to our merger, comprising our internal
dedicated due diligence team, supported
by extensive skilled external advice.
Risks from a wide range of areas were
investigated, from contractual risks and
commercial issues to environmental permit
risks and liabilities. Each was quantified
and the results of due diligence fed into
the transaction process, and used as
preparation for integration. Where practical
direct mitigation measures were put in
place, and where not practical indirect
mitigation such as insurance and other risk
transfer mechanisms were used.
Our focus now is to exercise good risk
management during integration to ensure
we deliver the value capture and other
benefits of integration. The extensive risk
management we undertook throughout
the due diligence and transaction stages
in our merger provide a firm foundation on
which to build.
One key risk identified early in our merger
process was a loss of focus on our day-to-
day business. We continue to face volatile
economic and market conditions. The
continuing reduction in oil prices affects
our ability to sell recovered oil waste,
and commodity market fluctuations can
result in less demand for our recycled and
recovered products. Economic conditions
have also historically affected the volume
of waste being collected and treated,
although there are signs of improvement.
OUR RISK FRAMEWORK
Our merger presents wider risks and
opportunities. However, the practice of
good risk management remains constant.
The core elements of our risk management
framework remain, although they will be
developed throughout our integration
journey, and include:
} Our schedule of matters reserved for the
Board and our strict adherence to it. This
ensures that all significant issues affecting
strategy, structure, viability and financing
are properly managed by the Directors;
} Our risk management framework. This
ensures that each of our businesses
identifies the risks it faces and their
importance, designs and implements
effective mitigations to control key risks and
that these mitigations are monitored and
remain effective. The output of this process
is a summary of all our significant strategic,
operational, financial and compliance risks,
our mitigating controls and the action plans
necessary to reduce risks to a level aligned
with our risk appetite. These are reviewed
by both divisional management, our Risk
Committee, Audit Committee and the
Board to ensure the appropriateness of the
risks identified and the effectiveness of the
controls and actions reported;
} Embedded risk management systems
that are part of our day-to-day operations.
These underpin the effectiveness of our
risk management processes by involving
a wide audience in risk systems, such as
divisional registers, to ensure all risks are
considered and ranked appropriately and
that mitigations are informed and practical;
} Enhanced risk assessment for all major
capital requests. This ensures we allocate
funds in a risk aware manner to maximise
the value of our investments and minimise
the risk of under-performance; and
} Review of key risks at each divisional
review meeting which ensures that we
monitor our key risks and mitigations at
an appropriate level. It also supports risk
management as an embedded feature of
our decision-making process.
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Five objectives of our risk
management framework:
Identify and evaluate our
universe of potential risks
to allow the creation and
management of registers of
risks faced by the Group.
Know what risks
we face
Maintain and improve
a system of internal
controls to manage risks in
decision making, contract
management and
financial transactions.
Control
systemic risk
Know what
risk we want
to accept
Manage a risk strategy
in which the tolerance
and appetite of the
Group for differing
levels and types of risk
is clearly understood.
Ensure that
management is
trained in the effective
identification,
assessment and
management of risk.
Train our
people
in risk
management
Manage
or mitigate
our risks
Ensure that all
identified key risks
are effectively mitigated
or, where appropriate,
transfer risks through
insurance.
OUR RISK RESPONSIBILITIES
AND ARCHITECTURE
Our operating divisions and business unit
management have responsibility for the
assessment and management of risk. This
applies equally to both of our merged
companies. Our Risk Committee supports
how we manage risk through information,
frameworks, policy, strategy and processes.
Reporting through our Audit Committee
and Executive Committee ensures the
identification and communication of critical
risks, and that key risks are brought to the
attention of the Board. The decisions of the
Board and their risk appetite are cascaded
back through our risk architecture to ensure
that the approach to risk appetite and
tolerance are aligned and consistent across
all of our activities.
Risk management responsibilities
RENEWI PLC BOARD
Independent
review
Audit Committee
Executive Committee
Risk
reporting
Risk Committee
Risk:
} Information
} Audit
} Architecture
Operating divisions
Business unit
management
Risk:
} Assessment
} Management
} Responsibility
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW RISK AND UNCERTAINTIES CONTINUED
OUR PROGRESS AGAINST 2016 OBJECTIVES AND THE FUTURE
In our 2016 Annual Report we outlined a series of improvements we had already made in our risk management processes. We also
committed to further actions in 2016/17. Despite the resources and effort we have devoted to risk management and our recent merger,
progress has still been made on our day-to-day risk management. A synopsis of this progress is shown below.
What we said we would do in 2016/17
How we did
What we plan to do in 2017/18
Use our new web-based risk tool to
provide coherent reporting of performance
and mitigation progress, including to
the highest levels in our divisions and at
Group-level
Implement routine guest spots into
our Risk Committee agenda for senior
divisional management to present on their
key risks, allowing our Risk Committee to
comment on these and share knowledge
across the Group
Roll out the business continuity plan
framework across our smaller sites
Divisional risk registers were uploaded to
our web-based risk tool in 2016
Through our new integrated Risk
Committee, produce revised and new
divisional risk registers aligned with our
new company, and upload these to our
web-based risk tool
Guest spots at our Risk Committee
commenced in 2016, and included
presentations from our UK operations
director and external insurance brokers
Continue the approach of guest spots to
ensure we consider the whole of our risk
universe with input from both internal and
external sources
Business continuity framework rolled
out across all Shanks operations and
completed in late 2016
Review quality of business continuity
planning across our larger company
Continue to upgrade our fire systems
at additional key sites, in co-operation
with our insurers to ensure high standards
are met
Upgrades in fire systems being progressed
at 11 key sites, with a projected spend
estimated at some £11m over three years,
with further improvements being planned
Integrate existing fire system standards
into one high-quality package for our
larger company
Investigate how our risk management
ConnectUs community can be adapted
to provide an induction for employees
in risk management
Key risk policies and guidance uploaded
during 2016 to our ConnectUs risk
management community to allow easy
access by all employees
Monitor the level of retained risk
associated with our property and business
interruption insurance ready to be
implemented as required
Retained property and business
interruption insurance risk level
maintained in 2016/17
The tool is being tested to collate audit
outcomes
Integrate existing risk management
policies, incorporating the best from
both merged companies to provide high
quality policies and processes in our larger
company. Ensure easy access to these
policies by all employees
Conduct series of deep-dive studies of
key insurance covers during 2017 to
ensure best risk approach for our larger
merged company at 2018 insurance
renewals. Investigate alternative retained
risk mechanisms
Investigate use of web-based risk tool as
an audit tracking and reporting package
across our larger company
Make enhanced use of our web-based risk
tool, entering audit outcomes into it and
tracking audit action progress across the
Group and reporting on progress
Allocate divisional ‘leaders and
administrators’ for our new web-based risk
tool to allow our divisions full access and
use of the tool
Develop and enhance this risk
management community on ConnectUs,
adding to its content and accessibility
Divisional leaders and administrators for
our web-based risk tool were allocated in
2016 and given access to the system
Reallocate leaders in line with new and
revised divisional risk registers reflecting
our new merged divisional structure
Our risk management ConnectUs
community was opened to all employees
during 2016, and additional information
included
Investigate options for risk management
knowledge sharing via ICT systems in our
larger company
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KEY RISKS AND MITIGATIONS
Our key risks are outlined in the heat diagram on
the right and in the table on the following pages.
For 2017 our key risks have been discussed in detail
by both our newly reformed Risk Committee and
senior leaders, and include revisions to risk rating and
additions as a result of our recent merger. The heat
diagram has been commented on by our
Audit Committee. The final version has been approved
by the Board.
t
c
a
p
m
I
Key risks
1 Input volumes
2 Input pricing competition
3 Output pricing
4 Output recyclate/recovered product volumes
5 Investment and growth – cash risk
6 Investment and growth – financing risk
7 Environmental permit risk
8 Health and safety risk
9 ICT failure
10 Talent development/leadership
11 Long-term contracts
12 Fire and business continuity
13 Operational failure
14 Project execution
15 Changes in law and policy
16 Integration risks
A description of each risk can be found in the table below.
6
7
4
15
1
9
13
16
8
14
5
10
2
11
3
12
Likelihood
Overarching key risks
All risk levels shown in the heat diagram are with the current level of mitigation. In previous annual
reports we have shown risk direction. For this year we have revised our key risk register in line with our
larger estate, and will recommence indicating risk direction for our 2018 report.
SUMMARY OF KEY RISKS
Reference numbers are consistent with those used in the heat diagram (above)
Key risk
Key mitigation
Commentary
1 Input volumes
That incoming waste volumes in
the market may fall
2 Input pricing competition
That market pricing may put pressure on
our margins
• Strong reporting of incoming waste
volumes across the Group for rapid
response to market changes
• Continued investment to secure new
waste streams and volumes
• Market-facing customer-focused
organisation
• Major capital deployed only if backed by
long-term contracts
• Constant reporting and monitoring of price
via operational systems
• Cost management, both structural and
operational, to deliver cost leadership in
core markets
• Use of long-term contracts, where
appropriate
• Effective commercial organisations to
maximise margins
• Targeted price increases
Our larger company handles in excess
of 14 million tonnes of waste a year. Our
wider geographical spread provides access
to more markets. Our combined waste
management technology offering gives us
greater client attractiveness.
Value capture from our recent merger
provides an opportunity to reduce costs
and increase price competitiveness. Set
against this, macro-economic pressures
remain, although in some markets is
improving.
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Key risk
Key mitigation
Commentary
3 Output pricing
That the value we receive for recycled and
recovered product falls
4 Output recyclate/recovered
product volumes
That the volumes of products we place to
market falls
5 Investment and growth
– cash risk
That funding sources are available, but
that cash generation is insufficient to allow
access to funding
6 Investment and growth
– financing risk
That funding is not available
7 Environmental permit risk
That our environmental permits to operate
are restricted or removed
8 Health and safety risk
That we incur reputational loss, or civil and
criminal costs
• Focus on improving product quality
• Maximise off-take pricing leverage, where
appropriate
• Cost control to offset impact of lost
revenue
• Sustainable technologies used align
with market needs and international and
national policy
• Renegotiation of long-term and fixed price
off-take contracts where appropriate
• Investment in technologies which fit with
market needs for products
• Experienced employees dedicated to
product off-take markets
• Diversity of product off-takers to
spread risk
• Quality control systems in place to ensure
quality of products is as required
• Continuous improvement of cash control
• Continuing portfolio management
• Reinvest only where profitable
• Good budget control on capital projects
• Good balance of leased and owned assets
• Diverse range of financing options and
timings
• Good quality external advice
• Strong relations with investors
• Good management reputation and
planning
• Effective management of all environmental
matters arising
• Environment management systems and
regular inspections and audits in place
• Monthly environmental issues reporting
across all levels of organisation
• Experienced and competent
environmental specialist employees
in place
• Community environmental engagement
performance in place as key business
objective
• Top agenda item on all management
meetings
• Corporate Health and Safety Manager and
competent internal specialists in place
• Defined and tracked health and safety
priorities plan in place
• Active engagement with regulators
• Safety leadership programme in place
• Coherent targets in place for accident,
near-miss and other key safety
performance parameters
Pressure from commodity markets remains,
with falling or stagnant prices for some
recyclates and recovered products. Set
against this our larger company allows
better access to some markets, such as for
recovered waste fuels, which we are already
starting to exploit.
As for output pricing, commodity market
pressure has increased over the year. Our
larger company presents the opportunity to
offset this risk with wider market access and
diversity.
Value capture and efficiencies from
merger present the opportunity to
maximise cash generation. Strict control
of integration costs is part of planning and
implementation of our merger.
Market confidence in our merger is high.
Critical ongoing mitigation is to deliver on
our commitments to value capture and
effective integration.
Pressure on environmental permits through
increasingly strict regulation has grown
over recent years. Internal management
of compliance through competent
specialists is recognised as key in both
merged companies. The wider scale of our
combined Group reduces potential impact
at individual sites by ability to move wastes
across more operations.
Both merged companies have competent
internal specialists in place. A merged
Renewi safety priorities plan has been
produced, and initiatives such as on
machinery safety have already commenced.
Combined reporting of performance is in
place and sharing of best practice across
our wider estate has commenced.
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Key risk
Key mitigation
Commentary
9 ICT failure
That ICT failure causes business
interruption or loss
10 Talent development/leadership
That we lack the required management
capabilities
11 Long-term contracts
That we enter into long-term contracts
at disadvantageous terms or we rely on a
small number of large contracts
12 Fire and business continuity
planning
Business interruption and other costs as the
result of a disaster such as fire
13 Operational failure
Operational failure at a key facility leading
to business interruption and other costs
• Business continuity planning in place for
ICT and tested
• Assessment of ICT resilience conducted by
insurers with high-quality result
• IT Director in place to deliver ICT
leadership
• Development of greater centralisation
of ICT systems to allow common risk
approach
• Continued investment in upgraded
systems and infrastructure
• Performance appraisal process in place
• First-class talent mapping and
development process
• Leadership programmes in place
• HR Director and divisional teams to ensure
good HR leadership
• Engagement surveys in place
• Key objectives set for absence
management and employee development
• Strict Board controls on entering into
major contracts
• Selective bidding on contracts
• Detailed risk assessment and due diligence
on contracts
• Tight controls and reviews on build
programmes to ensure on track
• Effective insurance programmes
supported by experienced brokers
• Improvements in fire control through fire
control standards
• Fire risk survey process in place including
engagement with insurers, and with
competent external advice
• Business continuity planning in place at all
major sites
• Mechanical breakdown insurance in place
for at-risk facilities and reviewed on a
regular basis for adequacy
• Highly-experienced operational teams
with in-depth knowledge of processes
• Regular annual and other shutdowns at
key facilities to ensure they remain well
invested and maintained
• Business continuity planning includes
breakdown risk and mitigation measures
ICT was a key focus during due diligence
pre-merger, with structured planning
for integration in place. The merging of
both companies’ systems presents the
opportunity to upgrade and implement
best practice as a critical underpinning
to gaining value capture and effective
integration.
Effective and considered integration
processes to ensure leakage of talent
minimised are in place, with a clear road
map towards our new operating model. A
planned and structured approach to Works
Councils to ensure smooth integration is
in place. Opportunities are presented by
the larger potential talent pool in our wider
merged company.
Developments and performance in UK
PFI operations have underscored the
importance of this risk. A strict authorisation
matrix was put in place from day one of our
merger, including contract authorisation. A
review of failings in UK PFIs underway, with
learnings to be spread across the company.
Waste management continues to be
an unpopular sector with property and
business interruption insurers, resulting in
premium and capacity pressures. Planned
upgrades in fire systems at key sites are
underway, with an estimated spend in
excess of £11m over three years. Our larger
company allows the opportunity to explore
alternative risk retention mechanisms.
Resilience at our major unique facilities
remains our concentration, with high-
quality maintenance and lifecycle
programmes in place. Across our general
recycling and recovery plants, our larger
company provides greater flexibility to
divert wastes and retain value internally in
the event of breakdown.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW RISK AND UNCERTAINTIES CONTINUED
Key risk
Key mitigation
Commentary
14 Project execution
That we fail to deliver our investment and
cost reduction programmes
15 Changes in law and policy
Adverse impacts from changes in law and
policy, including environmental, tax and
similar legal and policy regimes
16 Integration risks
That integration of the two companies is
ineffective and/or fails to deliver anticipated
synergies
• Strong financial oversight of project
costs and effective capital authorisation
processes
• Strong due diligence of potential
opportunities to ensure returns
• Regular senior management review of all
programmes including post-investment
reviews
• Use of skilled and trained project
management teams
• Fixing of contractual costs, where possible
• Horizon scanning by competent internal
specialist to ensure adverse changes
planned for and managed, and potential
opportunities captured
• Alignment of business model with national
and international policy and law towards
more sustainable waste management
practices
• Comprehensive and in-depth due
diligence prior to merger
• Use of competent external advisors where
required
• Clear integration plan with road map to
successful integration in place
• Dedicated Integration Director in place,
with competent internal team
• Clear targets in place for integration
performance communicated to all key staff
A clear and strict authorisation matrix,
including projects, was put in place
from day one of our merger. Continuing
oversight of current major projects through
the integration process via allocation
of resources is in place. Delivery of our
integration project to achieve projected
value capture is key (see integration
risks below).
Our business model is in line with society’s
needs for sustainable waste management.
Many changes in law and policy provide
opportunities for Renewi. Potentially
adverse changes are planned for and
managed. The potential impacts of a
disparate approach in the UK, in particular
in environmental policy, following Brexit is
being tracked.
We have a clear vision of where value
capture from our merger lies, and a clear
plan to achieve it. Our new dedicated
Integration Director sits on our Executive
Committee to allow direct involvement in
decision making at top level. Clear reporting
for value capture performance and tracking
against integration plan is in place.
Fraud risk
To mitigate the exposure to losses arising
from fraud committed on the Group or by
Group employees, robust internal controls
and financial procedures are reviewed and
tested regularly.
FINANCIAL RISKS
The Group takes action to insure or hedge
against the most material financial risks.
Details of our key policies for control of
financial risks are:
Interest rate risk
The Group has continued to limit its
exposure to interest rate risk by entering
into fixed rate retail bonds and interest
rate swaps for PFI/PPP projects that fix a
substantial proportion of floating rate debt.
At the end of March 2017, circa 78% of core
borrowings were on fixed terms. For all
long-term PFI contracts, interest rate swaps
for the duration of the contracts are entered
into as part of financial close of the project.
Foreign exchange risk
The Group is exposed to foreign exchange
risk for movements between the Euro,
Canadian Dollar and Sterling. The majority
of the Group’s subsidiaries conduct their
business in their respective functional
currencies. Hedging agreements, such as
forward exchange contracts, are in place
to minimise known currency transactional
exposures. The Group does not hedge
its foreign currency exposures on the
translation of profits into Sterling. Assets
denominated in Euros and Canadian
Dollars are hedged by borrowings in the
same currency to manage translational
exposure.
Trade credit risk
Trade credit risk is the risk of financial
loss where counterparties are not able
to meet their obligations. The Group has
implemented the setting and monitoring of
appropriate customer credit limits. Credit
limits and outstanding receivables are
reviewed monthly. The Group has a policy
to ensure that any surplus cash balances
are held by financial institutions, meeting
minimum acceptable credit ratings.
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Integrating our Risk Committee
Our Risk Committee is a critical component of our risk
management architecture. The Committee produces and
proposes risk management processes and policies for
consideration and approval by our Audit Committee, creates
the frameworks through which our operations can exercise
practical risk management, and is the focal point for
activities such as divisional and top-level key risk registers.
Within two weeks of our merger we reconstituted our Risk
Committee to include our larger company. Within three
weeks our new Risk Committee began merging and refining
both companies’ existing top-line key risks registers, adding
key risks from integration and exploring the wider risk
universe we face. At its first formal meeting in early April our
new Committee refined and reviewed this top-line key risks
register for our Audit Committee to review. A summary of
this combined Group register is given in the heat diagram
and table starting on page 71.
Our Risk Committee continues to consist of internal senior
people from a wide spectrum of specialisms from finance
and operations to environmental permitting, insurance
and health and safety disciplines. This broad composition
ensures we capture all of our potential risks and can rank
them effectively no matter what risk area they fall into.
Future tasks for our integrated new Risk Committee
include the merging of existing risk policies, frameworks
and processes to ensure good practice from both merged
companies is captured, developing our divisional key
risks registers so they are aligned with our new operating
structure and activities, and producing the structures which
will allow us to practise effective risk management in our
larger merged company.
Toby Woolrych
Risk Committee Chair
The Risk Committee
creates the frameworks
through which our
operations can
exercise practical risk
management
VIABILITY STATEMENT
In accordance with provision C.2.2
of the 2014 UK Corporate Governance
Code, the Board has assessed the
prospects of the Group over a longer
period than 12 months and has
adopted a period of three years
for the assessment. The scenario
modelling has been based on the
combined Group following the merger.
The Board’s strategic planning horizon
is five years. However, the first three
years of the plan were selected for
the testing given that this horizon is
key for integration following the
recent merger with VGG and the
delivery of merger benefits.
The Board assessed the principal risks to
the business as set out in the preceding
pages and agreed that a total of seven
severe but plausible risk scenarios should
be explicitly modelled. The scenario
modelling included further deterioration
in the macro-economic environment,
underperformance on a major contract,
the impact of Brexit, and slower and
more costly delivery of merger benefits.
For each scenario the Group identified
the appropriate mitigation steps it would
take to reduce the risk. These mitigations
include the identification of structural
cost programmes, business continuity
and commercial effectiveness plans.
The Group’s liquidity and financial
headroom have all been assessed and
incorporated within the risk scenario
modelling. Based on the consolidated
financial impact of the sensitivity analysis
and associated mitigating actions that are
either in place or could be implemented,
it has been demonstrated that the Group
maintained adequate headroom during
the different scenarios.
Based on the results of this analysis, the
Directors confirm they have a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the period
of assessment.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW THE BOARD OF DIRECTORS
The Board is committed to maintaining a sound governance framework through which the
strategy and objectives of the Group are set and monitored. The non-executive directors bring
considerable international experience to the Board across a number of sectors and play a full
role in constructively challenging and developing strategic proposals
Colin Matthews CBE, FREng
Chairman
Eric van Amerongen
Senior Independent Director
Jacques Petry, MBA
Non-Executive Director
Stephen Riley, B.Eng, PhD
Non-Executive Director
Appointed: March 2016 and
appointed as Chairman in April
2016. He is also Chairman of
the Nomination Committee
and a member of the
Remuneration Committee.
Skills and experience: Colin
currently chairs Highways
England Company Limited,
formerly the Highways Agency.
In his executive career he has
been Chief Executive Officer
of Heathrow Airport, Hays plc
and Severn Trent plc. He has
also been Managing Director
of Transco and Engineering
Director of British Airways.
Earlier he worked in the motor
industry in Japan and the UK,
in strategy consulting and for
General Electric in the UK,
France and Canada. He has
also served as a Non-Executive
Director for Mondi plc and
Severn Trent plc. Colin is a
Fellow of the Royal Academy of
Engineering and was awarded
the CBE in 2014 for his services
to aviation. Colin is a Non-
Executive Director of Johnson
Matthey plc.
Appointed: February 2007
and appointed as Senior
Independent Director in July
2007. He is also Chairman of
the Remuneration Committee
and a member of the Audit and
Nomination Committees. Eric
will be retiring as a Director of
the Company at the conclusion
of the 2017 AGM.
Skills and experience: Eric
has wide-ranging European
business experience, including
in the telecoms, defence and
publishing sectors. He holds
a number of non-executive
and advisory positions. Until
January 2008 Eric was a Non-
Executive Director of Corus
Group plc, a position he held
for seven years. Eric is Vice
Chairman of the Supervisory
Boards of BT Nederland BV and
Thales Nederlands BV and also
a Supervisory Board Member
of ANWB BV, Royal Wegener
NV and Essent NV. Eric was
appointed as Chairman of the
Supervisory Board of Shanks
Netherlands Holdings BV in
October 2016.
Colin is considered by the Board
to be independent.
Eric is considered by the Board
to be independent.
Appointed: September 2010
and will be appointed as
Senior Independent Director
at the conclusion of the AGM.
He is also a member of the
Audit, Remuneration and
Nomination Committees.
Appointed: March 2007. He
is a member of the Audit,
Remuneration and Nomination
Committees. Stephen will be
retiring as a Director of the
Company at the conclusion of
the 2017 AGM.
Skills and experience:
Jacques is currently Chairman
of energy provider Albioma,
having held the position of
both Chairman and CEO until
1 June 2016. He was Chairman
and Chief Executive of SITA
and its parent company, Suez
Environnement. In 2005 he was
appointed Chief Executive of
Sodexo Continental Europe
and South America. Since
2007 he has advised corporate
and financial sponsors,
specialising in Infrastructure
and Environmental Services
investments worldwide. He has
extensive global non-executive
and executive experience.
Jacques is considered by the
Board to be independent.
Skills and experience:
Stephen is a chartered engineer,
having graduated with a
First-Class Honours degree
in Mechanical Engineering
from Liverpool University
before completing a PhD. He
joined International Power
in 1985, going on to hold
senior positions in two UK
power stations and becoming
Managing Director of their
Australian operations. From
2004 to 2011 he was a Director
of International Power plc,
resigning from that Board
following the amalgamation of
International Power and GDF
SUEZ, now ENGIE. Stephen
remained as CEO and President
of GDF SUEZ Energy UK-Turkey
until his retirement at the end
of 2015. In January 2017 he
was appointed to the Board of
Cubico Sustainable Investments
Holdings Limited.
Stephen is considered by the
Board to be independent.
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Marina Wyatt, MA, FCA
Non-Executive Director
Allard Castelein, MD
Non-Executive Director
Peter Dilnot, B.Eng
Chief Executive Officer
Toby Woolrych, MA, ACA
Chief Financial Officer
Appointed: February 2012.
Appointed: August 2012.
Skills and experience: Toby
began his career at Arthur
Andersen where he qualified as
a chartered accountant before
becoming Finance Director of
Medicom International Ltd, a
medical publishing company, in
1992. He then joined Johnson
Matthey plc as Corporate
Development Manager in 1997,
going on to become Divisional
Finance Director and then
Managing Director of one of
Johnson Matthey’s global
speciality chemicals business
units. From 2005 to 2008, he
was the Chief Financial Officer
and Chief Operating Officer at
Acta SpA, a renewable energy
company, before joining
Consort Medical plc as Group
Finance Director.
Skills and experience: Prior
to joining Renewi, Peter was
a senior executive at Danaher
Corporation, a leading global
industrial business listed on
the NYSE. He held a number
of progressive general
management roles including
President Danaher Middle East,
Group President Emerging
Markets, and President
EMEA and Asia of its Gilbarco
Veeder-Root subsidiary. Before
Danaher, Peter spent seven
years at the Boston Consulting
Group (BCG) in London and
Chicago, working with industrial
and pharmaceutical clients
and was a leader in BCG’s
global Sales & Marketing
Practice. Peter’s earlier career,
after graduating from RMA
Sandhurst, was spent as an
officer in the British Armed
Forces. He originally trained as
an Army helicopter pilot and
saw active service with both
NATO and the UN.
Appointed: April 2013. Chair
of the Audit Committee and a
member of the Remuneration
and Nomination Committees.
Skills and experience: Marina
is a Fellow of the Institute of
Chartered Accountants and is
currently the Chief Financial
Officer at UBM plc. Following
nine years with Arthur Andersen
in London and the US, she then
joined Psion plc as its Group
Controller and became Group
Finance Director in 1996. In
2002 she was appointed Chief
Financial Officer of Colt Telecom
plc and joined TomTom as
its Chief Financial Officer in
September 2005, where she
remained until taking up her
current position at UBM plc
in September 2015. Marina is
a Member of the Supervisory
Board at Lucas Bols N.V.
Marina is considered by the
Board to be independent.
Appointed: January 2017.
Allard will become Chairman of
the Remuneration Committee
from the conclusion of the AGM.
He is also a member of the Audit
and Nomination Committees.
Skills and experience: Allard
is currently President and Chief
Executive Officer of the Port
of Rotterdam, having been
appointed in 2014. He qualified
as a medical doctor before
pursuing a career in the Energy
sector, holding a number of
senior positions at Shell. Over
more than 25 years he amassed
extensive experience within
the industry, culminating in
becoming the Vice President
Environment for Royal Dutch
Shell in 2009. Allard also holds
a number of Supervisory Board
positions including those at Isala
Klinieken, Rotterdam Partners,
Sohar Industrial Port Company
and the Ronald McDonald House
Sophia Rotterdam. He is a senior
member of several Dutch trade
organisations including Logistiek
Nederland, Economische
Programmaraad Zuidvleugel
and the General Council of the
Confederation of Netherlands
Industry and Employers.
Allard is considered by the
Board to be independent.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW CORPORATE GOVERNANCE REPORT
CHAIRMAN’S
INTRODUCTION
We remain committed to achieving the highest standards
of legal compliance, environmental protection and safety
Colin Matthews
Chairman
On behalf of the Board, I am pleased to
present our Corporate Governance Report
and confirm our compliance with the UK
Corporate Governance Code for the year
ended 31 March 2017. We believe that
both the Board collectively and directors
individually have a responsibility to set
and demonstrate high standards of
corporate governance. The following pages
outline the structures, processes and
procedures by which the Board ensures
that these high standards are maintained
throughout the Group.
The non-executive directors, all of whom
the Company regard as independent, bring
considerable international experience to
the Board across a number of sectors. They
play a full role in constructively challenging
and developing strategic proposals, as
well as chairing and being members of
Board committees. The executive directors
implement Board strategy, with a view
to driving margin expansion, investing
in infrastructure and actively managing
the portfolio of businesses, all to deliver
profitable growth and increased returns. In
particular the Board ensures that the Group
as a whole remains committed to achieving
the highest standards of legal compliance,
environmental protection and safety.
The Board is required to confirm that the
Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable
and provides the information necessary
for shareholders to assess the Group’s
performance, business model and strategy.
The Audit Committee has again assisted the
Board in this regard throughout the year.
This Committee has also provided support
and guidance in connection with the
viability statement disclosure requirements
of the UK Corporate Governance Code.
At this year’s AGM we will be seeking
approval of the Directors’ Remuneration
Policy, it being three years since the
policy was last approved by shareholders.
Though broadly in line with the 2014 policy,
there are some changes which, following
consultation with our largest shareholders
and institutional bodies, are set out in the
Directors’ Remuneration Report on pages
86 to 101.
We were very pleased in November 2016
to win two awards in the capital markets
space. After several years as a nominee,
we were winner of Best Use of Digital in
the Small Cap segment at the IR Society
Awards. Specific mention was made of our
use of the website to update investors on
the Van Gansewinkel merger process. We
were also winners of the Golden Bridge
award for Anglo-Belgian trade. These
prestigious awards are sponsored by KBC
Bank and the Chamber of Commerce to
recognise and stimulate business between
the UK and Belgium.
Colin Matthews
Chairman
OUR CORPORATE GOVERNANCE REPORTING MANAGEMENT FRAMEWORK
RENEWI PLC BOARD
Principal Board Committees
AUDIT
REMUNERATION
NOMINATION
Executive Management
Specialist Committees
RISK
Divisional Management
EXECUTIVE
COMMITTEE
OPERATING
DIVISIONS
SAFETY, HEALTH AND
ENVIRONMENT COMMITTEE*
*Additional reporting line to Renewi plc Board
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CORPORATE GOVERNANCE REPORT
Renewi continues to comply fully with the UK Corporate Governance Code
The Board fully supports the principles of
good corporate governance. This report,
together with the Directors’ Remuneration
Report on pages 86 to 101, explains how
the Group has applied and complied fully
with the provisions of the UK Corporate
Governance Code in force for the year to
31 March 2017.
The Board
The Board comprises the Chairman, a
further five independent non-executive
directors, the Chief Executive Officer and
Chief Financial Officer.
The Chairman, who is independent,
has primary responsibility for running
the Board. The Chief Executive Officer
is responsible for the operations of the
Group and for the development of strategic
plans and initiatives for consideration
by the Board. The formal division of
responsibilities between the Chairman and
the Chief Executive Officer has been agreed
by the Board and documented, a copy of
which is available on the Group’s website.
The non-executive directors bring a wide
range of experience to the Group and are
considered by the Board to be independent
of management and free from any
business or other relationship which could
materially interfere with the exercise of their
independent judgement.
The non-executive directors make a
significant contribution to the functioning
of the Board, thereby ensuring that no
individual or group dominates the decision-
making process. Non-executive directors
are not eligible to participate in any of
the Company’s share option or pension
schemes. The Chairman also meets and
communicates regularly with the non-
executive directors without the presence
of the executive directors.
Jacques Petry will take over as Senior
Independent Director from Eric van
Amerongen, who will be retiring at the
2017 Annual General Meeting. The Senior
Independent Director will be available to
shareholders should they have concerns
which contact through the normal channels
of Chairman, Chief Executive Officer or Chief
Financial Officer has failed to resolve or
where such contact is inappropriate.
The table on the right details the number of
formal Board meetings held in the year and
the attendance record of each director.
The calendar of meetings of the Board
and its committees for 2016/17 is shown
in the table below.
Board governance
There is a formal schedule of matters
reserved specifically for the Board’s
decision. These include approval of
financial statements, strategic policy,
acquisitions and disposals, capital projects
over defined limits, annual budgets and
new borrowing facilities. The Board meets
Director
Board meetings
Colin Matthews
(Chairman)
Allard Castelein
Peter Dilnot
Jacques Petry
Stephen Riley
Eric van Amerongen
Toby Woolrych
Marina Wyatt
11 (11)
1 (3)
11 (11)
11 (11)
8 (11)
11(11)
11 (11)
11 (11)
Bracketed figures indicate maximum potential attendance
of each director.
Allard Castelein was appointed to the Board on
3 January 2017.
regularly, having met 16 times during the
year inclusive of an additional five meetings
held to consider the merger with Van
Gansewinkel Groep BV to create Renewi plc.
The Board is provided with appropriate
information in a timely manner to enable
it to discharge its duties effectively. All
directors have access to the Company
Secretary, whose role includes ensuring
that Board procedures and regulations
are followed. In addition, directors are
entitled, if necessary, to seek independent
professional advice in connection with their
duties at the Company’s expense.
THE CALENDAR OF MEETINGS OF THE BOARD AND ITS COMMITTEES FOR 2016/17
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Board
Audit Committee
Remuneration Committee
Nomination Committee
Shareholder (AGM/EGM)
In addition, 27 duly authorised Board Committee meetings, comprising at least two directors, were held during the year, ten of which were held in connection with the Van Gansewinkel transaction.
Scheduled Board meeting Additional Board meeting in connection with the Van Gansewinkel transaction.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
CORPORATE GOVERNANCE REPORT CONTINUED
In recognition of the importance of
their stewardship responsibilities,
the first standing item of business at
every scheduled Board meeting is the
consideration of the Safety, Health and
Environmental report. Other regular reports
include those from the Chief Executive
Officer and Chief Financial Officer covering
business performance, markets and
competition, investor and analyst updates
as well as progress against strategic
objectives and capital expenditure projects.
All directors are required to notify the
Company on an ongoing basis of any
other commitments and, through the
Company Secretary, there are procedures
for ensuring that the Board’s powers for
authorising directors’ conflicts of interest
are operated effectively.
The work of the Board is further supported
by three formal Committees (Audit,
Remuneration and Nomination). In
addition, while not a Committee with
specific powers of its own delegated by
the Board, the Chief Executive Officer is
assisted in the performance of his duties by
the Executive Committee. This Committee
meets monthly and comprises the Chief
Executive Officer and Chief Financial Officer,
the Divisional Managing Directors and
Corporate Function Directors. In addition
there are specialist committees covering
Risk, Safety, Health and Environment.
In reviewing the Group’s overall corporate
governance arrangements, the Board
continues to give due consideration to
balancing the interests of customers,
shareholders, employees and the wider
communities in which the Group operates.
Board induction and professional
development
On appointment, directors are given an
introduction to the Group’s operations,
including visits to principal sites and
meetings with operational management.
Specific training requirements of directors
are met either directly or by the Company
through legal/regulatory updates. Non-
executive directors also have access to
PricewaterhouseCoopers’ non-executive
database and course programme. There
is a rolling programme of holding Board
meetings at different Group locations in
order to review local operations, with a
focus on health and safety during site visits.
Board evaluation
Performance evaluation of the Board,
its Committees and directors during the
year was accomplished by structured
meetings conducted by the Chairman with
individual directors. The evaluation of
the Chairman was undertaken by the
non-executive directors, led by the Senior
Independent Director. The process was
designed to cover the key aspects of Board
and Board Committee effectiveness and
directors’ performance.
Given the dynamic circumstances
associated with the merger, the Board
determined that it was inappropriate
to undertake an externally facilitated
evaluation during the year but that
consideration would now be given to
such an exercise in recognition of best
practice and Corporate Governance Code
compliance for FTSE 250 companies. The
Board identified three specific areas upon
which to focus in the coming year:
} further strategic analysis of the market
and technology drivers of the circular
ecomony, specifically in the Benelux
markets in which Renewi operates;
} greater exposure for members of the
Executive Committee to the Board
through formal presentations and site
visit opportunities; and
} refreshing talent reviews and succession
plans for senior executives throughout
the combined business.
As part of the evaluation it was also
determined that the Board and its
Committees continued to operate effectively
during the year and that each director
continued to demonstrate commitment to
their role and perform effectively. The Board
was therefore able to recommend the election
and re-election of the directors standing at the
forthcoming AGM.
Nomination Committee
The Nomination Committee is chaired
by Colin Matthews. The Committee also
comprised throughout the year of the non-
executive directors: Eric van Amerongen,
Stephen Riley, Jacques Petry, Marina Wyatt
and Allard Castelein. The Committee is
formally constituted with written terms of
reference which are available on the Group’s
website. It met three times in 2016/17 and is
responsible for making recommendations
to the Board on the appointment of
Directors and succession planning. It also
reviews organisation and resourcing plans
for the purpose of providing assurance that
appropriate processes are in place to ensure
a sufficient supply of competent executive
and senior management.
BALANCE OF NON-
EXECUTIVE AND
EXECUTIVE DIRECTORS
1
5
2
NON-EXECUTIVE CHAIRMAN
EXECUTIVE DIRECTORS
INDEPENDENT NON-EXECUTIVE DIRECTORS
LENGTH OF TENURE OF
CHAIRMAN AND NON-
EXECUTIVE DIRECTORS
2
1
3
0-4 YEARS
5-7 YEARS
8-10 YEARS
BACKGROUND/
EXPERIENCE OF
CHAIRMAN AND NON-
EXECUTIVE DIRECTORS
1
2
2
1
TRANSPORT
ENERGY
WATER/WASTE
TELECOMS/MARKETING
80
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During the year, the Committee worked
closely with recruitment consultants to
undertake a search for a Benelux-based
non-executive director with requisite skills
and experience to supplement those
already covered by existing Board members,
culminating in the appointment of Allard
Castelein in January 2017. It is expected
that one further non-executive director will
be appointed during the year.
Any new director appointed to the Board is
subject to election by shareholders at the
first opportunity after their appointment.
All non-executive directors are required
under the Company’s Articles of Association
to stand for re-election at each AGM. In
accordance with best corporate governance
practice, the executive directors also stand
for re-election at each AGM.
The Committee at the current time has
not determined to set a specific female
Board member quota. Appointments
to the Board and throughout the Group
continue to be based on the diversity of
contribution and required competencies,
irrespective of gender, age, nationality or
any other personal characteristic. However,
in recognition of both the Lord Davies and
Hampton-Alexander Reviews on female
representation, the Board continue to
closely monitor all aspects of diversity in
recruitment and promotions across the
workforce. Statistical employment data for
the Group can be found in the Corporate
Social Responsibility Report available on the
Group website and summary details in the
People section on page 60.
Appointments to the Board
continue to be based on the
diversity of contribution
solely comprised of non-executive directors:
Eric van Amerongen, Colin Matthews,
Stephen Riley, Jacques Petry, Marina Wyatt
and Allard Castelein. The Committee, which
is chaired by Eric van Amerongen, formulates
the Company’s Remuneration Policy and
the individual remuneration packages
for executive directors. The Committee
also determines the remuneration of the
Group’s senior management and that of the
Chairman.
During the year, the Committee was
involved in the development of the new
Remuneration Policy, set out on pages
88 to 93. The new Policy will replace that
approved at the 2014 AGM and will be put
forward for shareholder approval at the
2017 AGM.
The Committee recommends the
remuneration of the non-executive directors
for determination by the Board. In exercising
its responsibilities, the Committee has
access to professional advice, both
internally and externally, and may consult
the Chief Executive Officer about its
proposals. The Directors’ Remuneration
Report on pages 86 to 101 contains
particulars of Directors’ remuneration and
their interests in the Company’s shares.
the Group’s website. The Committee is
solely comprised of non-executive directors:
Stephen Riley, Jacques Petry, Eric van
Amerongen, Allard Castelein and Marina
Wyatt who chairs the Committee. As required
under the UK Corporate Governance Code,
Marina Wyatt has current and relevant
financial experience. She is a chartered
accountant and currently holds the position
of Chief Financial Officer at UBM Plc. In
addition, the Board consider that the Audit
Committee as a whole has competence
relevant to the waste-to-product sector.
The Chairman, the executive directors
and representatives from the external
auditors PricewaterhouseCoopers LLP are
regularly invited to attend meetings. The
Committee also has access to the external
auditors’ advice without the presence of the
executive directors.
The Audit Committee Report on pages 82 to
85 sets out the role of the Committee and its
main activities during the year.
Other information
Other information, necessary to fulfil the
requirements of the Corporate Governance
Statement, relating to the Company’s share
capital structure and the appointment and
powers of the directors, can be found in the
Other Disclosures section on pages 102 to
104.
Remuneration Committee
The Remuneration Committee met six times
in the year and is formally constituted with
written terms of reference which are available
on the Group’s website. The Committee is
Audit Committee
The Audit Committee met four times in the
year and is formally constituted with written
terms of reference which are available on
Audit
Committee meetings
Remuneration
Committee meetings
Nomination
Committee meetings
Director
Director
Director
Marina Wyatt (Chair)
Allard Castelein
Jacques Petry
Stephen Riley
Eric van Amerongen
4 (4)
1 (2)
3 (4)
3 (4)
4 (4)
Eric van Amerongen (Chair)
Allard Castelein
Colin Matthews
Jacques Petry
Stephen Riley
Marina Wyatt
6 (6)
1 (2)
6 (6)
5 (6)
6 (6)
5 (6)
Colin Matthews (Chair)
Allard Castelein
Jacques Petry
Stephen Riley
Eric van Amerongen
Marina Wyatt
3 (3)
0 (1)
3 (3)
2 (3)
3 (3)
3 (3)
Bracketed figures indicate maximum potential attendance of each director.
Allard Castelein was appointed to the Board and the above Committees on 3 January 2017.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW AUDIT COMMITTEE REPORT
On behalf of the Board I am pleased to present the Audit Committee
Report for the year ended 31 March 2017
The primary objective of the Audit Committee is to assist the
Board in fulfilling its corporate governance responsibilities
relating to the Group’s corporate reporting, risk management
and internal controls and any other matters referred to it by
the Board. This covers:
Monitoring the integrity of the financial statements
including annual and half yearly reports
Reviewing and challenging the consistency of and changes
to significant accounting policies, the methods used
to account for significant or unusual transactions and
appropriate estimates and judgements
Keeping under review the adequacy and effectiveness
of internal financial controls and internal control and
risk management systems
Reviewing the adequacy of procedures for detecting
fraud and ensuring that appropriate arrangements are in
place to allow for company employees to raise concerns,
in confidence, about possible wrongdoing in financial
reporting or other matters
Monitoring and review of the effectiveness of the internal
audit function in the context of the overall risk management
system
The appointment, terms of engagement, effectiveness,
objectivity and independence of the external auditors and
the nature and scope of the audit
The development and implementation of policy on the
engagement of the external auditor to supply non-audit
services
Committee Chair
Marina Wyatt
Committee Members
Jacques Petry, Stephen Riley, Eric van Amerongen, Allard
Castelein (appointed 3 January 2017)
Terms of Reference
www.renewi.com/audit
At their May 2016 meeting, the Committee
considered corporate governance
compliance, taxation and the 2016 financial
statements. The November meeting was
concerned primarily with the interim
results and a review of internal control
developments. An extra meeting was held
in February 2017, prior to the completion
of the VGG merger, to consider all matters
relating to the merger including planning
for the year end audit, the purchase price
accounting exercise, accounting policy
alignment topics, the process for the risk
framework for the combined Group and
the scenario planning for the viability
statement. The March 2017 meeting
considered all other year end accounting
matters and treatments, the external audit
plan and preparation of the 2017 financial
statements along with the review of
updated authority levels and treasury policy
for the combined Group.
During the year the Committee was also
responsible for agreeing the approach
and framework to assist the Board in their
preparation of the viability statement
as required by provision C.2.2 of the UK
Corporate Governance Code. This included
reviewing the Company’s principal risks
and the methodology for stress testing
those risks against modelled scenarios.
The Group’s viability statement on page
75 confirms the Board’s reasonable
expectation that the Company and the
Group will be able to continue in operation
and meet its liabilities as they fall due over
the three year period ending 31 March 2020.
Accounting policies and issues
In carrying out its duties, the Committee
reviewed and made recommendations in
respect of the full year and interim financial
statements with a particular focus on the
appropriateness of the Group’s accounting
policies and practices, material areas in
which significant judgements have been
applied and compliance with financial
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Marina Wyatt
Chair of the
Audit Committee
reporting standards and relevant financial
and governance reporting requirements.
The significant accounting issues
considered by the Committee during
the year were:
Acquisition accounting. Following the
acquisition of VGG on 28 February 2017
a full purchase price allocation review has
been undertaken to assess the fair value
of assets and liabilities acquired including
any separately identifiable intangible
assets and goodwill. For the assessment
of intangibles a number of assumptions
and estimates have been made in
preparing the future cash flows, including
customer attrition rates and growth rates
for existing customer revenues.
We engaged KPMG to assist us with these
processes. In addition the review also
considered the alignment of accounting
policies across the combined Group. The
Committee has reviewed the papers and
supporting documentation prepared
by management and concluded that
the provisional fair value is appropriate.
Given the timing of the acquisition, it
was determined that the real estate
value should be stated at book value
and an external market appraisal will be
undertaken in the new financial year.
Revenue recognition. In particular, the
Committee has continued to assess
revenue recognition with regard to long-
term municipal contracts and also in our
principal Hazardous Waste activity where
revenue is recognised as processing
occurs. The enhanced controls and
processes introduced last year following
on from the revenue recognition error
have been re-confirmed.
Impairment. A number of significant
assumptions have to be made when
preparing cash flow projections including
long-term growth rates, discount
rates and future profitability. The
Committee has reviewed the papers and
supporting documentation prepared by
management and concluded that the
only significant impairment required
this year relates to the Westcott Park
anaerobic digestion plant as a result
of market impacts and lower volumes.
With regard to goodwill balances the
appropriate level of disclosures for
any reasonably possible changes in
assumptions have been included in
the financial statements.
Presentation of non-trading and
exceptional items. The Group discloses
non-trading and exceptional items
separately due to their size or incidence
to enable a better understanding of
performance. This is a key judgemental
area which has been subject to recent
pronouncements on quantum and
presentation from the Financial Reporting
Council. Based on a review of the
supporting papers and calculations
from management, the Committee
considers that these items have been
appropriately classified.
Landfill and other liability provisioning.
Landfill provisions due to their nature
are judgemental as they are subject to a
number of factors including changes in
legislation and uncertainty over timing
of payments. The acquisition of VGG
included significant landfill-related
provisions, with a different estimate of
the period of liability and discount rate.
The Committee has reviewed the papers
submitted by management and has
determined that the closing balances
were appropriate.
Accounting for onerous contracts in
Municipal. Given the long-term nature
of these contracts, these provisions
are judgemental. The Committee has
discussed and reviewed management
papers and has concluded that the
appropriate level of provisions were
reflected in the balance sheet as at 31
March 2017.
Accounting for various tax related matters
including the level of provisions. The
most significant judgements in 2016/17
related to the inclusion of tax balances
relating to the merger and the recognition
of deferred tax assets. The Committee
received verbal and written reports from
senior management and the external
auditors, and the balances recognised at
March 2017 were considered appropriate.
The Committee is satisfied that the
judgements made by management
are reasonable and the appropriate
disclosures in relation to key judgements
and estimates have been included in the
financial statements.
Fair, balanced and understandable
The Committee has assisted the Board
in their consideration as to whether the
Annual Report and Accounts are fair,
balanced and understandable, such
that shareholders are provided with the
necessary information to assess the Group’s
performance, business model and strategy.
Having reviewed the results of the year end
internal verification and approval processes
at their meeting in May 2017, the Committee
was able to confirm this to be the case.
External audit
PricewaterhouseCoopers LLP (PwC) were
appointed as the Company’s external auditors
by shareholders at the AGM in 1994. The
Committee expects to schedule an external
audit tender process by no later than 2020.
The Committee continues to review the
performance, effectiveness and independence
of the auditors on an annual basis.
PwC rotate their lead audit engagement
partner as a minimum at least every five
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years, as required by their own rules and
by regulatory bodies. Rotation ensures a
fresh look without sacrificing institutional
knowledge. The rotation of lead audit
partners, other partners including specialist
partners and senior engagement personnel
is reviewed on a regular basis by the lead
audit engagement partner in consultation
with the Committee. PwC’s rotation rules
require the lead audit partner and key
partners involved in the audit to rotate every
five years (previously seven for key audit
partners), and other partners and senior staff
members every seven or ten years.
The Committee’s responsibility to
monitor and review the objectivity and
independence of the external auditor is
supported by a non-audit services policy.
Specified services may be provided by the
external auditor subject to a competitive
bid process other than in situations where
it is determined by the Committee, that the
work is closely related to the audit or when
a significant benefit can be obtained from
work previously conducted by the external
auditor. While the CFO may approve any
new engagement up to the value of £25,000,
anything in excess requires Committee
approval up to an agreed annual
aggregate limit of 50% of the prior year’s
audit fee. In exceptional circumstances,
this limit may be exceeded with the
approval of the Board.
In determining whether or not to engage
the external auditor to provide any non-
audit services, consideration will be given
to whether this would create a threat to
their independence. Similarly, the external
auditor will not be permitted to undertake
any advocacy role for the Group such that
their objectivity may be compromised. The
external auditor may not provide services
involving the preparation of accounting
records or financial statements, the
design, implementation and operation
of financial information systems, actuarial
and internal control functions or the
management of internal audits.
During the year £3.2m of non-audit services
were provided by PwC, while their total
audit fees, as disclosed in note 5 of the
financial statements, amounted to £1.2m.
The significant increase this year is due to the
appointment of PwC as reporting accountant
for the capital markets work relating to the
VGG merger. PwC was selected on the basis
that their knowledge of the Group would
make reporting on various workstreams
more efficient and that they would remain
independent and objective.
A resolution will be put to shareholders at
the forthcoming AGM proposing PwC’s re-
appointment as Group auditors.
As part of the external audit process, the
Committee discusses and agrees the scope of
the audit which is based around a structured
methodology to help ensure quality and rigour
as well as regulatory compliance. The 2016/17
audit process was based on PwC’s acceptance
and independence procedures reflecting their
understanding of the business and focusing on
scoped areas determined to be of highest risk.
During the year, tax and other professional
services relating to the transaction have
also been provided to the Group by audit
firms KPMG, Deloitte and EY.
Internal audit
The Committee’s oversight of the internal
audit function during the year is supported
by the work of a dedicated Group Internal
Audit and Reporting executive. During the
year internal audit activities included a
programme of internal cross-divisional peer
reviews designed to bring the benefits of:
wider spread of specialist knowledge
during audits;
enhanced operational and business model
knowledge input to internal audits;
better ability to share knowledge across
the Group on audit outcomes and
improvements; and
independent assessment as divisional
auditors do not audit their own divisions.
The Group Internal Audit and Reporting
executive co-ordinates the process to
ensure consistency, quality of reporting
and close-out of improvement actions and
reports up to the Committee. Internal audit
services from suitably qualified external
providers were also engaged during the
year. KPMG performed a control review
which covered UK invoicing procedures.
The detailed findings from all reviews
were presented to and considered by the
Committee. Any necessary actions including
improvements from both the internal and
external reviews are acted upon by local
divisional teams with regular follow up at
monthly business review meetings.
Accountability and audit
The responsibilities of the directors and
the auditors in relation to the financial
statements are set out on pages 105 to 113.
Risk management
The Group risk management framework,
major risks and the steps taken to manage
these risks are outlined on pages 68 to
75. As set out on these pages a detailed
review of the Group risk register has
been undertaken post the VGG merger in
February.
Internal control responsibility
The system of internal control is based
on a continuous process of identifying,
evaluating and managing risks including
the risk management processes outlined
on pages 68 to 75. The Board of directors
has overall responsibility for the Group’s
system of internal control and for reviewing
its effectiveness. The Board recognises that
internal control systems are designed to
manage rather than eliminate the risk of
failure to achieve business objectives and
can therefore only provide reasonable and
not absolute assurance against material
misstatements, losses and the breach of
laws and regulations.
Annual assessment of the effectiveness
of the risk management and internal
control systems
In addition to the Board’s ongoing internal
control monitoring process, it has also
conducted an annual effectiveness review
of the Group’s risk management and
internal control systems in compliance
with provision C.2.1 of the UK Corporate
Governance Code and Turnbull guidance.
This covered risk management systems
and all significant material controls
including financial, operational and
compliance controls.
Specifically, the Board’s review included
consideration of changes in the risk
universe and the Group’s ability to respond
to these through its review of business risk
registers controls and improvement action
plans. It also reviewed the six-monthly
certification by divisional management to
ensure that appropriate internal controls
are in place as well as reports by internal
audit and external auditors.
The main elements of the internal control
framework which contribute towards its
continuous monitoring are as follows:
a defined schedule of matters for
decision by the Board;
a Group finance manual setting out
financial and accounting policies, minimum
internal financial control standards and
the delegation of authority matrix over
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Anti-bribery
policies are
in place that
are applicable
throughout
the combined
Group
items such as capital expenditure, pricing
strategy and contract authorisation;
process and the preparation of the annual
consolidated financial statements. The
main control aspects are as follows:
formal written financial policies and
procedures applicable to all business
units;
a detailed reporting calendar including
the submission of detailed monthly
accounts for each business unit in
addition to the year end and interim
reporting process;
detailed management review to Board
level of both monthly management
accounts and year end and interim
accounts;
consideration by the Board of whether
the Annual Report is fair, balanced and
understandable;
bi-annual certification by divisional
managing and finance directors and
executive directors on compliance with
appropriate policies and accuracy of
financial information; and
the Committee also receives regular
reports from the Group Tax Manager on
the Group’s tax policy, tax management
and compliance.
Anti-bribery and corruption
Anti-bribery policies are in place which are
applicable to all business units throughout
the combined Group. For the former Shanks
businesses a 24-hour/seven-days-a-week
confidential reporting, ‘whistle-blowing’
service has been in operation throughout
the year with all notifications being reported
to and considered by the Committee. VGG
have developed an Integrity Management
framework supported by two dedicated
Integrity Managers to whom employees
may confidentially report any concerns for
advice and investigation as necessary.
a comprehensive planning and budgeting
exercise. Performance is measured
monthly against plan and prior year
results and explanations sought for
significant variances. Key performance
indicators are also extensively used to
help management of the business and
to provide early warning of potential
additional risk factors;
monthly meetings and visits to key
operating locations by the executive
directors and most senior managers to
discuss performance and plans;
appointment and retention of
appropriately experienced and qualified
staff to help achieve business objectives;
an annual risk-based internal audit plan
approved by the Committee. Summaries
of audit findings and the status of action
plans to remedy significant failings are
discussed at Group Board and Committee
meetings on a regular basis;
a range of quality assurance, safety and
environmental management systems in
use across the Group. Where appropriate
these are independently certified to
internationally recognised standards and
subject to regular independent auditing;
a minimum of three scheduled
Committee meetings each year, to
consider all key aspects of the risk
management and internal control
systems; and
prompt review by the Committee of any
fraudulent activity or whistle-blowing
reports with appropriate rectifying action.
Where weaknesses in the internal control
system have been identified through the
monitoring processes outlined above,
plans for strengthening them are put in
place and action plans regularly monitored
until complete. The Board confirms that no
material weaknesses were identified during
the year and therefore no remedial action is
required in relation to them.
Financial reporting
In addition to the general risk management
and internal control processes described
above, the Group has implemented internal
controls specific to the financial reporting
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW DIRECTORS’ REMUNERATION REPORT
The Remuneration Committee is focused on designing and implementing a Remuneration
Policy that promotes the long-term success of the Company by enabling the Company to
hire and retain the most appropriate people, aligning their financial interests with those
of shareholders
This Report, prepared by the
Remuneration Committee on behalf
of the Board, takes full account of
the UK Corporate Governance Code
and the latest Investment Association
(IA) Principles of Remuneration and
the Pensions and Lifetime Savings
Association (PLSA) guidelines, and
has been prepared in accordance
with the provisions of the Companies
Act 2006, the Listing Rules of the
Financial Conduct Authority and the
Large and Medium-Sized Companies
and Groups (Accounts and Reports)
(Amendment) Regulations 2013. The
Act requires the Auditor to report
to the Group’s shareholders on the
audited information within this Report
and to state whether in their opinion
those parts of the Report have been
prepared in accordance with the Act.
The Auditor’s opinion in this regard is
set out on page 113 and those aspects
of the Report which have been subject
to audit are clearly marked.
CONTENTS
86 Section 1: The Annual Statement
88 Section 2: Remuneration Policy
Details the Remuneration Policy
which will, subject to shareholder
approval, apply from the 2017 AGM.
94 Section 3: Annual Report on
Remuneration
Details how the Remuneration
Policy was implemented during
the year ended 31 March 2017
and how the Committee intends
the Policy to apply for the year
ending 31 March 2018.
1. REMUNERATION COMMITTEE CHAIRMAN’S ANNUAL STATEMENT
On behalf of the Board, I am pleased to
present the Directors’ Remuneration Report
for the year ended 31 March 2017.
I have summarised below the key decisions
the Committee has taken during the year
and provided explanation of the context in
which they were made.
2016/17 PERFORMANCE,
DECISIONS AND REWARD OUTCOMES
2016/17 Annual bonus
Largely as a result of difficulties faced
by the Municipal Division, the Group did
not achieve the threshold profit target.
However, the Committee has determined
that the cash-flow targets, representing 25%
of maximum bonus opportunity, was met.
The result of this financial performance in
combination with the Executive Directors
overall performance against their personal
objectives has meant that bonuses of 48%
and 47% of the maximum will be paid to
the Chief Executive Officer and the Chief
Financial Officer respectively. Further details
are set out on page 96.
2014 LTIP vesting in 2017 based
on three-year performance to
31 March 2017
The Long Term Incentive Plan (LTIP) granted
in May 2014 was designed to incentivise
and reward the achievement of financial
and share price performance over the
three-year period concluding at the end
of 2016/17 financial year. Though the
company has made steady progress over
this period, the stretching targets set for
EPS, share price growth and ROCE have
not been met. The 2014 LTIP awards have
therefore lapsed in full.
Remuneration Policy Review
As a result of the policy reaching the end
of its three-year duration in 2017, the
Committee undertook a review of the
Remuneration Policy in light of the Group’s
strategy, performance and the completion
of the Van Gansewinkel Groep BV (VGG)
acquisition and the developing views of
our major investors. Following the review,
the Committee decided that, with certain
changes to reflect developments in best
practice, the existing policy continues to
be appropriate for the time being. The
Committee therefore intends to submit the
existing policy for shareholder approval at
the 2017 AGM with the following changes:
Shareholding guidelines for Executive
Directors will be increased from 100% to
200% of salary. Executive Directors will be
required to retain at least 50% of shares,
net of tax, which vest under the Long
Term Incentive Plan (LTIP) and Deferred
Annual Bonus (DAB) until the guideline
is met;
A two-year, post-vesting holding period
will be introduced to LTIP awards granted
to Executive Directors from the 2017 AGM
onwards. This will replace the current
phased approach whereby 50% of LTIP
awards are released after three years from
grant, 25% after four years and 25% after
five years; and
Consistent with the Remuneration
Committee’s intention, the relevant plan
rules and practice under the LTIP, the
policy has been clarified in respect of
the payment of dividend equivalents on
DAB awards, starting with the first such
awards granted in 2015, to the extent that
awards vest.
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Eric van Amerongen
Chairman of the
Remuneration Committee
The new Directors’ Remuneration Policy
will be put to a binding shareholder vote
at the AGM on 13 July 2017 and, subject to
receiving majority shareholder support, the
Policy will apply from the date of approval.
The Policy is intended to remain in place
for a maximum of three years although the
Committee intends to review the policy
in the next 12 to 24 months to ensure it
remains aligned with business needs and
our strategic priorities as the integration of
our recent merger progresses.
Implementing the Remuneration Policy
for 2017/18
The Remuneration Committee intends
to operate the Remuneration Policy for
Executive Directors for 2017/18 as follows:
Executive Director basic salaries were
increased from 1 April 2017 (the normal
salary review date). Reflecting the
importance of retaining the Executive
Directors through the current period
during which the value of the VGG merger
is to be realised, the Chief Executive
Officer’s basic salary was increased
from £452,285 to £500,000 whilst the
Chief Financial Officer’s basic salary was
increased from £296,160 to £345,000.
Further rationale for the increases is set
out on page 94. No changes have been
made to pension provision;
Annual bonus provision will remain at
150% of salary and targets will continue
to measure profit before tax, free cashflow
and personal objectives. Targets will
reflect the enlarged Group. No changes
will be made to the deferral, whereby two
thirds of any bonus is payable in cash
and one third will be deferred in shares,
vesting 50% after three years, 25% vesting
after four years and 25% vesting after five
years; and
LTIP awards will be granted in 2017 at
150% of salary for the Chief Executive
Officer and 120% for the Chief Financial
Officer. Targets will continue to measure
EPS, share price and ROCE.
In addition, a two year post-vesting holding
period will apply to LTIP awards granted
from the 2017 AGM onwards.
Looking forward
At the 2016 AGM, our Annual Report on
Remuneration received the support of just
over 94% of all votes cast. The Committee
thanks shareholders for their continued
support and asks that they support the 2017
AGM resolutions.
Resolutions seeking the approval of the
Annual Statement and Annual Report on
Remuneration for the year ended 31 March
2017 and the Remuneration Policy will be
put to shareholders at the 2017 AGM.
Eric van Amerongen
Chairman of the Remuneration Committee
25 May 2017
The role of the
Committee is to:
• Determine the Group’s policy on
remuneration and monitor its
careful implementation;
• Review and set performance
targets for incentive plans;
• Set the remuneration of the
Group’s senior management;
• Approve the specific remuneration
package for each of the Executive
Directors;
• Determine the remuneration of
the Chairman;
• Determine the terms on which LTIP
and Sharesave awards are made to
employees; and
• Determine the policy for and scope
of pension arrangements for the
Executive Directors.
The Remuneration Committee met
six times during the year and details
of members’ attendance at meetings
are provided in the Corporate
Governance section on page 81.
Committee Chairman:
Eric van Amerongen
Committee members:
Colin Matthews, Jacques Petry,
Stephen Riley, Marina Wyatt , Allard
Castelein (appointed 3 January 2017)
Terms of Reference:
www.renewi.com/remco
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW 2. DIRECTORS’ REMUNERATION POLICY
The principal objective of the Remuneration
Committee is to design and implement a
Remuneration Policy that promotes the
long-term success of the Company. The
Committee seeks to ensure that the senior
executives are fairly rewarded in light of the
Group’s performance, taking into account
all elements of their remuneration package.
A significant proportion of executive
remuneration is performance related,
comprising an annual bonus and a Long
Term Incentive Plan (LTIP). The fixed portion
of remuneration comprises basic salary,
benefits and a payment in lieu of pension.
Policy scope
The Policy applies to the Chairman, Executive
Directors and Non-Executive Directors.
Policy duration
The new Directors’ Remuneration Policy
Report will be put to a binding shareholder
vote at the AGM on 13 July 2017 and,
subject to receiving majority shareholder
support, the Policy will apply from the
date of approval for a maximum of three
years. It is intended however to revisit
the Policy over the next 12 to 24 months
to ensure that it remains aligned with
business needs and strategic priorities
during the next stage of the Company’s
development.
Changes from 2014 Remuneration Policy
The main changes from the 2014
Remuneration Policy are summarised below:
Shareholding guidelines for Executive
Directors will be increased from 100% to
200% of salary. Executive Directors will
be required to retain at least 50% of the
shares, net of tax, which vest under the
LTIP and DAB until the guideline is met;
A two year post-vesting holding period
will be introduced to LTIP awards granted
to Executive Directors from the 2017 AGM
onwards. This will replace the current
phased approach whereby 50% of LTIP
awards are released after three years from
grant, 25% after four years and 25% after
five years; and
Consistent with the Remuneration
Committee’s intention and practice
under the LTIP, the policy has been
clarified in respect of the payment of
dividend equivalents on DAB awards,
starting with the first such awards granted
in 2015, to the extent that awards vest.
To facilitate its operation, a number of
minor changes have also been made to
the wording of the Remuneration Policy
where appropriate.
POLICY TABLE
BASE SALARY: To pay a competitive basic salary to attract, retain and motivate the talent required to operate and develop the
Group’s businesses
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
Base salaries are generally reviewed on
an annual basis or following a significant
change in responsibilities.
Salary levels are reviewed by reference to
FTSE-listed companies of similar size and
complexity. The Committee also has regard
to individual and Group performance and
changes to pay levels across the Group.
Any basic salary increases are applied in line with the outcome
of the review.
None.
For Executive Directors, it is anticipated that salary increases will
normally be in line with those of salaried employees as a whole. In
exceptional circumstances (including, but not limited to, a material
increase in job size or complexity or a material market misalignment),
the Committee has discretion to make appropriate adjustments to
salary levels to ensure they remain market competitive.
PENSION: To provide an opportunity for executives to build up a provision for income on retirement
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
Executive Directors receive a cash pension
allowance in lieu of company pension
scheme contributions.
Executive Directors may receive a cash allowance of up to 25%
of salary.
None.
BENEFITS: To provide market-competitive benefits
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
Benefits include life assurance, medical
insurance, income protection and
car/travel allowances.
Benefits may vary by role. However, the total cost of taxable benefits
will not normally exceed 10% of salary.
None.
The Committee retains discretion to approve a higher cost in
exceptional circumstances (e.g. relocation or ex-patriation) or in
circumstances where factors outside the Group’s control have changed
(e.g. increases in market insurance premia).
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DIRECTORS’ REMUNERATION REPORT CONTINUED POLICY TABLE continued
ALL EMPLOYEE SHARE SCHEMES: To encourage Group-wide share ownership
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
Executive Directors may participate in all-employee share
arrangements on the same terms offered to employees.
The maximum opportunity
will not exceed the relevant
HMRC limits, where applicable.
None.
ANNUAL BONUS: To motivate senior executives to maximise short-term performance and help drive initiatives which support long-term
value creation
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
For Executive Directors, the
maximum annual bonus
opportunity is 150% of salary.
For threshold performance,
the bonus earned is generally
25% of maximum and for on-
target performance, 80%
of maximum.
Performance measures, targets and weightings are set at the
start of the year. The maximum bonus is payable only if all
performance targets are met in full.
At least one third of any annual bonus award is deferred into
shares for at least three years, subject to continued employment.
The Group’s current policy is for 50% of the bonus to vest after
three years, 25% to vest after four years, and 25% to vest after
five years.
Deferred bonus awards are in the form of Renewi plc ordinary
shares. Dividend equivalents may accrue over the relevant vesting
periods but would be paid only on shares that vest.
MALUS & CLAWBACK:
Malus provisions exist which entitle the Committee, at its
discretion, to reduce the final award or deem it to have lapsed
(to the extent it has not yet vested) in exceptional circumstances,
e.g. material financial misstatement or gross misconduct.
The bonus is also subject to clawback, i.e. recovery of paid
amounts for material financial misstatement or conduct justifying
summary dismissal.
Executive Director performance is assessed
by the Committee on an annual basis by
reference to Group financial performance
such as profit or cashflow measures (majority
weighting) and the achievement of personal
or strategic objectives (minority weighting).
Bonus targets are generally calibrated with
reference to the Group’s budget for the year.
The Committee has the discretion to adjust
the formulaic bonus outcomes both upwards
(within the plan limits) and downwards, to
ensure that payments are a true reflection of
performance over the performance period,
e.g. in the event of unforeseen circumstances
outside management control.
Details of the measures, weightings and
targets applicable for the financial year under
review are provided in the Annual Report
on Remuneration.
LONG TERM INCENTIVE PLAN (LTIP): To motivate and retain senior executives and managers to deliver the Group’s strategy and long-term
goals and to help align executive and shareholder interests
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
The maximum award limit in
normal circumstances under
the 2011 Long Term Incentive
Plan will be 150% of salary
(up to 200% in exceptional
circumstances).
Threshold performance will
result in vesting of no more
than 25% of maximum under
each element.
Vesting of LTIP awards will be subject to
continued employment and financial and/
or share price-related performance targets
measured over a period of at least three years.
In addition to the Group achieving the
financial/share price targets, the Committee
must satisfy itself that the recorded outcome is
a fair reflection of the underlying performance
of the Group. The Committee has discretion
(within the limits of the scheme) to adjust
the formulaic performance outcomes to
ensure that payments fairly reflect underlying
performance over the period. Adjustments
may be upwards or downwards. Details of
LTIP targets are included in the Annual Report
on Remuneration.
Executive Directors and senior employees may be granted awards
annually, as determined by the Committee. The vesting of these
awards is subject to the attainment of performance conditions.
Awards are in the form of Renewi plc ordinary shares. Dividend
equivalents may accrue over the vesting period but would be paid
only on shares that vest.
Awards made under the LTIP have a performance and vesting period
of at least three years. If no entitlement has been earned at the end
of the relevant performance period, then the awards will lapse. Once
vested awards may, at the discretion of the Committee, be subject
to further holding in whole, or in part, for a period of up to two years
following the end of the performance period.
A two year post-vesting holding period will apply to LTIP awards
granted to Executive Directors following the 2017 AGM.
MALUS & CLAWBACK:
Malus provisions exist which entitle the Committee to reduce the
final award or deem it to have lapsed during the period between
the granting and end of the later of the vesting or holding period,
if there has been material misstatement, gross misconduct or
something which causes significant reputational damage to
the Group.
LTIP awards (from 2015 onwards) are also be subject to clawback,
i.e. recovery of vested awards for material financial misstatement
or conduct justifying summary dismissal.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW Notes to the policy table
Payments from existing awards
The Group will honour any commitment
entered into, and Executive Directors will
be eligible to receive payment from any
award made, prior to the approval and
implementation of the Remuneration Policy
detailed in this report, including previous
share awards and associated dividend
equivalent payments under the LTIP and
deferred share bonus plan. Details of any
such awards are disclosed in the Annual
Report on Remuneration.
Use of discretion
The Committee may apply discretion as
detailed below. Under each element of
remuneration, a full description of how
discretion can be applied is set out in line
with UK reporting requirements.
To ensure fairness and align executive
remuneration with individual and
underlying company performance the
Committee may adjust up or down the
outcome of the annual bonus and LTIP
or the performance measures of inflight
awards under either plan. Any adjustments
in light of ‘non-regular events’ (including,
but not limited to, corporate events
(including Rights Issues), changes in the
Group’s accounting policies, minor or
administrative matters, internal promotions,
external recruitment and terminations of
employment) are expected to be made on
a ‘neutral’ basis – i.e. adjustments will be
designed so that the event is not expected
to be to the benefit or the detriment of
participants. Adjustments to incentives to
ensure that outcomes reflect underlying
performance may be made in exceptional
circumstances to help ensure outcomes are
fair to shareholders and participants.
Performance measurement selection
The measures used in the annual bonus
are selected annually to reflect the Group’s
main business priorities for the year, and
capture both financial and non-financial
objectives. Group financial performance
targets relating to the annual bonus plan
are based around the Group’s annual
budget, which is reviewed and approved by
the Board prior to the start of each financial
year. Underlying profit before tax and
underlying free cash flow are typically used
as the key financial performance measures
in the annual bonus plan because they are
clear and well-understood measures of
Group performance.
Performance targets are reviewed annually
and set to be stretching and achievable,
taking into account the Group’s resources,
strategic priorities and the economic
environment in which the Group operates.
Targets are set taking into account a range
of internal and external reference points,
including the Group’s strategic plan and
broker forecasts for both the Group and
sector peers. The Committee believes that
the performance targets are stretching,
and that to achieve maximum outcomes
requires truly outstanding performance.
The Committee considers the combination
of three-year EPS growth, ROCE
improvement and share price growth
currently operated for the LTIP to be key
indicators of success for the Group. These
measures are transparent, visible and
motivational to participants, balance growth
and returns, and provide good line-of-
sight for executives and alignment with
shareholders.
Remuneration policy for our
senior leaders
The Group’s approach to annual salary
reviews is broadly consistent across the
Group, with consideration given to the
scope of the role, level of experience,
responsibility, individual performance
and pay levels for comparable roles in
comparable companies. The broader
Remuneration Policy across the Group
is also consistent with that set out in this
report for the Executive Directors. For
example, remuneration is linked to Group
and individual performance in a way that is
ultimately aimed at reinforcing the delivery
of shareholder value.
Senior employees generally participate
in an annual bonus scheme with a
similar structure to that described for the
Executive Directors. Opportunities and
specific performance conditions vary
by organisational level, with business
area-specific metrics incorporated where
appropriate.
Members of the Executive Committee and
other senior managers may participate in
the LTIP on a similar basis to, but at lower
levels than, Executive Directors. Such
awards may be on the same terms as those
granted to Executive Directors or they may
differ in respect of vesting periods, holding
periods and performance targets (i.e. the
targets used and/or whether performance
targets apply for some or all of the awards).
All UK employees are eligible to participate
in the Sharesave Scheme on the same
terms although other all-employee share
arrangements may be introduced if
considered appropriate.
Share ownership guidelines
The Committee recognises the importance
of Executive Directors aligning their interests
with shareholders through building up
significant shareholdings in the Group.
Share ownership guidelines will, subject
to shareholder approval, increase from the
2017 AGM, requiring Executive Directors to
acquire a holding equivalent to 200% of their
salaries. Executive Directors will be required
to retain 50% of any LTIP and deferred bonus
shares acquired on vesting (net of tax) until
they reach their ownership guideline.
APPROACH TO
RECRUITMENT REMUNERATION
External appointments
In the cases of hiring or appointing a new
Executive Director, the Committee may
make use of any of the existing components
of remuneration, as described in the Policy
Table on pages 88 and 89. The maximum
limits for variable pay (excluding buy-outs)
will be as for existing Executive Directors.
In determining the appropriate
remuneration for a new Executive Director,
the Committee will take into consideration
all relevant factors (including the overall
quantum and nature of remuneration, and
the jurisdiction from which the candidate
is being recruited) to ensure that all such
arrangements are in the best interests of
Renewi and its shareholders.
The Committee may also make an award in
respect of a new appointment to buy-out
incentive arrangements forgone on leaving
a previous employer on a like-for-like
basis, in addition to providing the normal
remuneration elements.
In constructing a buy-out, the Committee
will consider all relevant factors including
time to vesting, any performance conditions
attached to awards, and the likelihood of
those conditions being met. Any such buy-
out awards will typically be made under the
existing annual bonus and LTIP schemes,
although in exceptional circumstances the
Committee may exercise the discretion
available under the FCA Listing Rule 9.4.2 R
to make awards using a different structure.
Any buy-out awards would have a fair value
no higher than that of the awards forgone.
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DIRECTORS’ REMUNERATION REPORT CONTINUED Internal appointments
In cases of appointing a new Executive
Director by way of internal promotion, the
Committee will determine remuneration in
line with the policy for external appointees.
Where an individual has contractual
commitments made prior to promotion
to the Board, the Group will continue to
honour these. Incentive opportunities for
below Board employees are typically no
higher than for Executive Directors, but
measures may vary to ensure they are
relevant to the role.
Non-Executive Director recruitment
In recruiting a new Non-Executive Director,
the Committee will use the policy as set
out in the table on page 93. A base fee
in line with the prevailing rate for Board
membership would be payable, with
additional fees payable for acting as Senior
Independent Director or Chairman of a
Committee, as appropriate.
PROPORTION OF FIXED AND VARIABLE
REMUNERATION FOR 2017/18
Chief Executive Officer
£’000
Maximum
30%
35%
35%
£2,152
On-target
47%
40%
13%
Minimum
100%
Chief Financial Officer
Maximum
32%
38%
30%
On-target
47%
42%
11%
£1,402
£652
£’000
£1,366
£926
£435
PAY SCENARIO CHARTS
Minimum
100%
The following charts provide an
estimate of the potential future reward
opportunities for the Executive Directors,
and the potential split between the different
elements of remuneration under three
different performance scenarios: ‘Minimum’,
‘On-target’ and ‘Maximum’.
Potential reward opportunities are based on
the Remuneration Policy, applied to basic
salaries as at 1 April 2017. Note that the
projected values exclude the impact of any
share price movements and dividends.
The ‘Minimum’ scenario shows basic salary,
pension and estimated benefits (i.e. fixed
remuneration). These are the only elements
of the Executive Directors’ remuneration
packages which are not at risk.
The ‘on-target’ scenario reflects fixed
remuneration as above, plus a target bonus
of up to 80% of maximum and threshold
LTIP vesting of 25%.
The ‘Maximum’ scenario reflects fixed
remuneration plus full pay-out of all
incentives, excluding any share price
appreciation and dividends (as per the
regulations).
SALARY, PENSION AND BENEFITS
ANNUAL BONUS
LONG-TERM INCENTIVES
SERVICE CONTRACTS
AND EXIT PAYMENT POLICY
Executive Director service contracts,
including arrangements for early
termination, are carefully considered by
the Committee. The Committee has agreed
that the policy with regard to the notice
period for Executive Directors is one year’s
written notice from the Group and from
the individual. The contracts provide for an
obligation to pay salary plus contractual
benefits for any portion of the notice period
waived by the Group. The Group has the
ability to pay such sums in instalments,
requiring the Director to mitigate loss (for
example, by gaining new employment) over
the relevant period.
Executive Director
Date of service contract
Peter Dilnot
1 February 2012
Toby Woolrych
27 August 2012
If employment is terminated by the Group,
the departing Executive Director may
have a legal entitlement (under statute
or otherwise) to certain payments, which
would be met. In addition, the Committee
retains discretion to settle any other
amounts reasonably due to the Executive
Director, for example to meet the legal
fees incurred by the Executive Director
in connection with the termination of
employment, where the Group wishes
to enter into a settlement agreement (as
provided for below), and the individual
must seek independent legal advice.
In certain circumstances, the Committee
may approve new contractual arrangements
with departing Executive Directors
including (but not limited to) settlement,
confidentiality, restrictive covenants and/
or consultancy arrangements. These will be
used sparingly and only entered into where
the Committee believes that it is in the best
interests of the Group and its shareholders
to do so.
When considering exit payments, the
Committee reviews all potential incentive
outcomes to ensure they are fair to both
shareholders and participants. The table on
page 92 summarises how the awards under
the annual bonus and LTIP are typically
treated in different circumstances, with the
final treatment remaining subject to the
Committee’s discretion.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW TREATMENT OF AWARDS ON EXIT
SCENARIO
TIMING OF VESTING
TREATMENT OF AWARDS
ANNUAL CASH BONUS
Ill-health, disability, death, retirement
(with Group consent) or any other reasons
the Committee may determine in its
absolute discretion.
Normal payment date, although the
Committee has discretion to accelerate.
Change of control.
Immediately.
Cash bonuses will only be paid to the extent that Group
and personal objectives set at the beginning of the year
have been achieved. Any resulting bonus will generally be
pro-rated for time served during the year.
Performance against targets will be assessed at the
point of change of control and any resulting bonus will
generally be pro-rated for time served.
Any other reason.
Not applicable.
No bonus is paid.
DEFERRED ANNUAL BONUS (DAB)
Ill-health, disability, death, retirement
(with Group consent) or any other reasons
the Committee may determine in its
absolute discretion.
Normal payment date, although the
Committee has discretion to accelerate.
Any outstanding DAB awards will generally be pro-rated
for time served.
Change of control.
Immediately.
Any outstanding DAB awards will generally be pro-rated
for time served.
Any other reason.
Not applicable.
Awards lapse.
LONG TERM INCENTIVE PLAN (LTIP)
Ill-health, disability, death, retirement
(with Group consent) or any other reasons
the Committee may determine in its
absolute discretion.
Normal vesting date, although the
Committee has discretion to accelerate.
Any outstanding LTIP awards will generally be pro-rated
for time served and performance.
Change of control.
Immediately.
Any outstanding LTIP awards will generally be
pro-rated for time served and performance, subject to the
Committee’s discretion.
In the event of a change of control, awards may
alternatively be exchanged for new equivalent awards in
the acquirer where appropriate.
Any other reason.
Not applicable.
Awards lapse.
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors do not
have service contracts as their terms
of engagement are governed by letters
of appointment. These letters and the
Company’s Articles of Association make
provision for annual renewal at each AGM.
Details of the Non-Executive Directors’
terms of appointment are shown in the
table on the right. The appointment and
re-appointment and the remuneration
of Non-Executive Directors are matters
reserved for the full Board.
The Non-Executive Directors are not eligible
to participate in the Group’s performance-
related incentive plans and do not receive
any pension contributions.
Non-Executive Director
Initial agreement date
Renewal date
Colin Matthews (Chairman)
Allard Castelein
Jacques Petry
Stephen Riley
Eric van Amerongen
Marina Wyatt
7 March 2016
10 November 2016
30 September 2010
31 July 2017
31 July 2017
31 July 2017
29 March 2007
Retiring at 2017 AGM
9 February 2007
Retiring at 2017 AGM
2 April 2013
31 July 2017
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DIRECTORS’ REMUNERATION REPORT CONTINUED Shareholder approval is being sought at the AGM to increase the cap on Non-Executive Directors’ fees in the Company’s Articles of
Association from £400K to £750K, this last having been increased in 2005.
Details of policy on fees paid to Non-Executive Directors are set out in the table below:
OBJECTIVE
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
To attract and retain Non-
Executive Directors of
the highest calibre with
broad commercial and
other experience relevant
to the Group.
Fee levels are reviewed annually, with any
adjustments effective 1 April each year.
The fee paid to the Chairman is determined
by the Committee and fees to Non-
Executive Directors are determined by
the Board.
Non-Executive Director fee increases
are applied in line with the outcome
of the review. Fees in respect of the
year under review, and for the following
year, are disclosed in the Annual Report
on Remuneration.
None.
Additional fees are payable for acting
as Senior Independent Director and as
Chairman of the Board’s Committees and
subsidiary company Supervisory Boards.
Fee levels are reviewed by reference to
FTSE-listed companies of similar size and
complexity. The required time commitment
and responsibilities are taken into account
when reviewing fee levels.
Non-Executive Directors may recieve
benefits (including travel and office support,
together with any associated tax liability
that may arise).
It is expected that any increases to Non-
Executive Director fees will normally be
in line with those for salaried employees.
However, in the event that there is a
material misalignment with the market or
a change in the complexity, responsibility
or time commitment required to fulfil a
Non-Executive Director role, the Board
has discretion to make an appropriate
adjustment to the fee level.
EXTERNAL APPOINTMENTS
The Committee acknowledges that
Executive Directors may be invited to
become Non-Executive Directors of other
quoted companies which have no business
relationship with the Group and that these
duties can broaden their experience and
knowledge to the benefit of the Group.
Executive Directors are limited to holding
one such position, and the policy is that
fees may be retained by the Director,
reflecting the personal risk assumed
in such appointments. No external
appointments were held by the Executive
Directors during the year.
CONSIDERATION OF CONDITIONS
ELSEWHERE IN THE GROUP
Although the Committee does not consult
directly with employees on executive
Remuneration Policy, the Committee
does consider general basic salary
increases across the Group, remuneration
arrangements and employment conditions
for the broader employee population when
determining Remuneration Policy for the
Executive Directors.
CONSIDERATION OF
SHAREHOLDER VIEWS
When determining executives’
remuneration, the Committee takes into
account views of shareholders and best
practice guidelines issued by institutional
shareholder bodies. The Committee is
always open to feedback from shareholders
on Remuneration Policy and arrangements,
and commits to undergoing shareholder
consultation in advance of any significant
Remuneration Policy changes.
The Committee will continue to monitor
trends and developments in corporate
governance and market practice to
ensure that the structure of the executive
remuneration remains appropriate.
Further details of the votes received in
relation to last year’s Annual Report on
Remuneration and the Remuneration
Policy approved in 2014 are provided
below:
2015/16 ANNUAL REPORT ON REMUNERATION
AGM ON 14 JULY 2016
REMUNERATION POLICY
AGM ON 25 JULY 2014
Total number of votes
% of votes cast
Total number of votes
% of votes cast
For (including discretionary)
Against
Total votes cast (excluding withheld votes)
Votes withheld
300,065,259
19,002,556
319,067,815
69,956
94.04%
5.96%
100%
280,656,244
6,030,596
286,686,840
10,225,806
97.9%
2.1%
100%
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW 3. ANNUAL REPORT ON REMUNERATION
The following section provides details of how our Remuneration Policy will be implemented during the year ending 31 March 2018 and how
it was implemented during the financial year ended 31 March 2017.
IMPLEMENTATION OF REMUNERATION POLICY FOR 2017/18
Basic salary
Executive Director basic salaries were
increased from 1 April 2017 (the normal
salary review date). The Chief Executive
Officer’s basic salary was increased
from £452,285 to £500,000 whilst the
Chief Financial Officer’s basic salary was
increased from £296,160 to £345,000. In
determining the revised salary levels, the
Committee considered: (i) the performance
of both the Group and the individuals
concerned; (ii) the successful completion of
the transformational VGG transaction, which
has significantly increased the size of the
roles, responsibility levels and time spent
outside of the UK in the Benelux region for
the two Executive Directors; (iii) the fact that
both temporary and permanent relocation
costs have been avoided; and (iv) the
critical importance of retaining the existing
Executive Directors for the post acquisition,
integration phase of the VGG merger.
Executive Director
Basic salary at
1 April 2016
Basic salary from
1 April 2017
Percentage
increase
Peter Dilnot
Toby Woolrych
£452,285
£296,160
£500,000
£345,000
10.5%
16.5%
Pension
The Chief Executive Officer and Chief
Financial Officer will continue to receive
a cash supplement in lieu of pension of
25% and 20% of salary, respectively, or an
equivalent pension contribution.
Annual bonus
The maximum annual bonus opportunity
for Executive Directors in 2017/18 will
remain unchanged at 150% of salary, with
one third of any bonus pay-out deferred into
shares vesting 50% after three years, 25%
after four years and 25% after five years. Pay-
out for achievement of target performance
will be 75% of maximum.
Bonuses will be based 50% on underlying
profit before tax, 25% on underlying free
cash flow and 25% on personal objectives.
Proposed target levels have been set to
be challenging relative to the 2017/18
business plan. The specific targets are
currently deemed to be commercially
sensitive, however we will disclose them
retrospectively in the 2017/18 Annual Report.
LTIP
The Committee intends that LTIP awards
granted in 2017 will be granted on the
same terms as the awards granted in 2016.
The performance conditions will therefore
remain EPS, share price growth and ROCE
weighted 50%, 25% and 25% respectively.
Further details on the measures, targets
and vesting schedule can be found on
page 97. LTIP opportunities will remain
at 150% of salary for the Chief Executive
Officer and 120% of salary for the Chief
Financial Officer. For any shares to vest,
the Committee will also need to satisfy
itself that the recorded outcome is a fair
reflection of the overall performance of the
Company over the period. Furthermore,
half of any shares earned will be subject
to an additional holding period, delivered
to the individual in equal tranches after
a further one and two years, subject to
continued employment.
A two year post-vesting holding period will
be introduced to LTIP awards for Executive
Directors granted after the 2017 AGM. This
will replace the current phased approach
whereby 50% of LTIP awards are released
after three years from grant, 25% after four
years and 25% after five years.
Chairman and Non-Executive Director fees
Chairman and Non-Executive Director fees, effective from 1 April 2017, are set out in the table below.
Base fees
Chairman
Non-Executive Director
Additional fees
Audit Committee Chair
Remuneration Committee Chair
Senior Independent Director
Basic fee at
1 April 2016
Basic fee from
1 April 2017
£150,000
£39,780
£7,140
£7,140
£5,100
£150,000
£48,000
£8,500
£8,500
£6,000
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DIRECTORS’ REMUNERATION REPORT CONTINUED SINGLE TOTAL FIGURE OF REMUNERATION FOR EXECUTIVE DIRECTORS (AUDITED)
The table below sets out a single figure for the total remuneration received by each Executive Director for the year ended 31 March 2017 and
the prior year.
Basic salary
Taxable benefits1
Pension2
Single-year variable3
Multiple-year variable4
Other5
Total
PETER DILNOT
TOBY WOOLRYCH
2015/16
£000
2016/17
£000
2015/16
£000
2016/17
£000
452
27
113
465
–
6
1,063
452
27
113
326
–
3
921
296
21
59
305
–
5
686
296
21
59
209
–
2
587
1 Taxable benefits comprise car allowance and medical insurance.
2 During the year, Peter Dilnot and Toby Woolrych received cash supplements in lieu of pension contribution of 25% and 20% of salary respectively.
3 Payment for performance during the year under the annual bonus including any deferred annual bonus. (See following sections for further details.)
4 Includes any LTIP awards based on the value at vesting of shares vesting on performance over the three-year period ending 31 March 2017 for 2016/17, and for shares vesting on performance
over the three-year period ending 31 March 2016 for 2015/16.
5 Includes Sharesave awards, valued based on embedded gain at grant, life assurance and income protection
SINGLE TOTAL FIGURE OF REMUNERATION FOR NON-EXECUTIVE DIRECTORS (AUDITED)
The table below sets out a single figure for the total remuneration received by each Non-Executive Director for the year ended 31 March
2017 and the prior year.
BASE FEE
ADDITIONAL FEES
TOTAL
2015/16
£000
2016/17
£000
2015/16
£000
2016/17
£000
2015/16
£000
2016/17
£000
13
–
40
40
40
40
118
150
10
40
40
40
40
–
–
–
–
–
12
7
–
–
–
–
–
25
7
–
13
–
40
40
52
47
118
150
10
40
40
65
47
–
Colin Matthews (Chairman)1
Allard Castelein2
Jacques Petry
Stephen Riley
Eric van Amerongen3
Marina Wyatt4
Former Directors5
1 Colin Matthews was appointed Chairman Designate on 7 March 2016 and succeeded Adrian Auer as Chairman on 1 April 2016.
2 Allard Castelein was appointed to the Board on 3 January 2017.
3 Eric van Amerongen’s additional fees comprise amounts for his role as the Senior Independent Director and for his role as the Chair of the Remuneration Committee. His fees are set in
Sterling and paid in Euros each month at the prevailing monthly exchange rate. From October 2016 he also received a fee of €30K pa for his Chairmanship of the Supervisory Board of Shanks
Netherlands Holdings BV. This fee for the year is stated in Sterling at an exchange rate of £1: €1.1918
4 Marina Wyatt’s additional fee is in respect of her role as the Chair of the Audit Committee.
5 Adrian Auer retired as Chairman and from the Board on 31 March 2016.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
INCENTIVE OUTCOMES FOR THE YEAR ENDED 31 MARCH 2017
Performance-related annual bonus in respect of 2016/17 performance
The annual bonus was measured against underlying profit before tax (50% weighting), underlying free cash flow (25% weighting) and the
achievement of personal objectives (25% weighting). Actual performance against the targets set for each of these elements is shown below.
Financial element outcomes
The financial targets and corresponding outcomes for the 2016/17 annual bonus are shown below.
Measure
Weighting
2016/17
Final outcome
Threshold
Max
Underlying profit before tax
Underlying free cash flow
50%
25%
£19.0m
£21.9m
£26.7m
£13.4m
£6.1m adjusted
£6.1m adjusted
Bonus payout
(% of max)
0%
100%
Both the underlying profit before tax and underlying free cash flow are set based on the Group’s expected budget outcome for the year with
all values for the divisions converted to Sterling at the budgeted rates of exchange. Actual performance is also measured at this constant
exchange rate.
Profit performance for the Group was below threshold as a result of the challenges faced in the Municipal Division.
The cash flow targets were set at the start of the financial year based on a number of operating assumptions which became inconsistent
with the refinancing required to complete the VGG acquisition. As a result and so as not to penalise management for undertaking the
important strategic development of the VGG acquisition, the Committee adjusted the originally set underlying free cash flow targets.
The Committee is comfortable that these adjustments are fair and reasonable in the circumstances and are aligned to shareholder
interests, particularly noting that the original targets would have been met in full had the VGG acquisition not taken place and also that
the Company’s cash position following the refinancing is in a materially better position than it would have been had the transformational
acquisition not taken place.
Personal element outcomes
The personal performance measures were based on individual objectives, as detailed below.
Personal objectives during the year
Committee’s assessment
of performance
Bonus payout
(% of max)
Peter
Dilnot
1. Assess and capture strategic transformational opportunities whilst
applying robust capital discipline
2. Refine Group growth strategy and produce implementation road map
3. Deliver commercial effectiveness gains
4. Develop senior leadership team
5. Continue to maintain and build investor relations
6. Continue to drive environmental, health and safety improvements
across the Group
Toby
Woolrych
1. Assess and capture strategic transformational opportunities whilst applying robust
capital discipline
2. Define and implement a strategy to protect and strengthen the Group balance sheet
3. Strengthen finance in respect of organisational design and structure
4. Standardise and harmonise finance functions and prepare for system upgrades
5. Drive cost savings and sustain Group investment programme returns
6. Continue to drive environmental, health and safety improvements across the Group
7. Continue to maintain and build investor relations
The Committee was satisfied
that objectives 1 to 5 were met
or exceeded. While progress
was made in respect of objective
6 and noting the impact of the
VGG acquisition, the Committee
considers that further
improvements could be made.
The Committee was satisfied
that objectives 1, 2, 3, 5 and 7
were met or exceeded. The
Committee determined that
objective 4 was partially met
and that progress was made
in respect of objective 6 (as
noted above).
92%
88%
Overall bonus outcomes
Executive Director
Peter Dilnot
Toby Woolrych
Financial element bonus outcome
(% of salary)
Personal element bonus outcome
(% of salary)
Overall bonus outcome
(% of salary/£)
37.5%
37.5%
34.5%
33.0%
72% / £325,645
70.5% / £208,793
One third of the bonus will be awarded in shares, which will vest in the proportion 50%, 25% and 25% on the third, fourth and fifth
anniversary of the date of grant, respectively.
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DIRECTORS’ REMUNERATION REPORT CONTINUED 2014 LTIP vesting in 2017
Peter Dilnot and Toby Woolrych were granted LTIP awards in 2014 over shares equal to the value of circa 150% and 120% of salary
respectively which would vest in 2017 based on three-year performance to 31 March 2017. Vesting was dependent on three-year adjusted
underlying EPS, share price performance and ROCE. The vesting schedules, targets and the performance against targets are set out below:
Measure
Weighting
Targets
Actual performance
Vesting outcome (%
of maximum)
EPS CAGR
Share price CAGR
Improvement in ROCE
Total vesting
50%
25%
25%
0% vesting below 5% p.a.
25% vesting for 5% p.a.
50% vesting for 10% p.a.
100% vesting for 15% p.a.
Straight-line vesting between these points
0% vesting below 9% p.a.
25% vesting for 9% p.a.
50% vesting for 13% p.a.
100% vesting for 17% p.a.
Straight-line vesting between these points
0% vesting below +0.5%
25% vesting for +0.5%
100% vesting for +2.0%
Straight-line vesting between these points
<5%
<9%
<+0.5%
0%
0%
0%
0%
Share price growth was calculated using three-month average share prices immediately prior to the start and end of the performance period.
SHARE AWARDS GRANTED IN 2016/17 (AUDITED)
The normal annual LTIP and deferred share bonus award grant date had been scheduled for late May 2016 but trading in the Company’s
shares was suspended on 24 May 2016 at the Company’s instigation as a result of press speculation concerning a possible transaction with
Van Gansewinkel Groep. It was agreed by the Committee that awards would be made as soon as the Company entered an open period
which, due to successful negotiations, Prospectus publication, Rights Issue and shareholder approvals, was achieved some six months
later, after the publication of the Interim Results on 17 November 2016. So as to ensure that participants were no better or worse off as
a result of the delayed grant date (both in respect of the deferred bonus and LTIP awards), the number of shares that were granted in
November 2016 was based on those that would have been granted at the end of May 2016 (and subsequently adjusted for the 3 for 8 Rights
Issue), to ensure that individuals receiving awards were kept whole.
LONG-TERM INCENTIVE PLANS
Peter Dilnot and Toby Woolrych were granted awards under the Renewi plc 2011 Long Term Incentive Plan in November 2016 as follows:
Executive Director
Date of grant
Base salary
Basis of award
Share price
Face value2
Number of
shares2
Post rights
issue adj3
Peter Dilnot
23 November 20161
£452,285
150% of salary
Toby Woolrych
23 November 20161
£296,160
120% of salary
81p
81p
£678,428
£355,392
837,565
438,756
963,000
504,000
1 As a result of the Company being within a prohibited share dealing period, the 2016 LTIP award grant date was delayed from the end of May 2016 until 23 November 2016.
2 Based on the three-day average dealing price prior to the temporary suspension of the Company’s shares on 24 May 2016 (i.e. based on the average share price just prior to the intended grant date).
3 The number of shares intended to be granted in May 2016 based on a share price of 81p adjusted using the theoretical ex-rights price formula and rounded down to the nearest 1,000 shares.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
Details of the performance targets are as follows:
Measure
Weighting
Targets
EPS CAGR
Share price CAGR
Improvement in ROCE
50%
25%
25%
0% vesting below 5% p.a.
25% vesting for 5% p.a.
50% vesting for 10% p.a.
100% vesting for 15% p.a.
Straight-line vesting between these points
0% vesting below 9% p.a.
25% vesting for 9% p.a.
50% vesting for 13% p.a.
100% vesting for 17% p.a.
Straight-line vesting between these points
0% vesting below +0.5%
25% vesting for +0.5%
100% vesting for +2.0%
Straight-line vesting between these points
For any shares to vest, the Committee will also need to satisfy itself that the recorded outcome is a fair reflection of the overall performance of the Group over the period. Awards will vest on
the third anniversary of grant. Half of any amounts earned will be released in November 2019 (i.e. three years from grant) and, reflecting the delayed grant date, the remaining portion will be
delivered to the individuals in two equal tranches in May 2020 and May 2021 respectively (i.e. four and five years from the intended May 2016 grant date).
DEFERRED ANNUAL BONUS (DAB)
Peter Dilnot and Toby Woolrych were granted awards under the Renewi plc Deferred Annual Bonus Plan in November 2016 as follows:
Executive Director
Date of grant
2015/16
annual bonus
Basis of
deferred award
Share price2
Face value of
bonus deferred
Number of
shares3
Post rights
issue adj3
Peter Dilnot
23 November 20161
£465,042
1/3rd of bonus
Toby Woolrych
23 November 20161
£304,514
1/3rd of bonus
81p
81p
£155,014
£101,505
191,375
125,315
220,189
144,183
1 As a result of Company being within a prohibited share dealing period, the 2016 DAB award grant date was delayed from the end of May 2016 until 23 November 2016.
2 Based on the three-day average dealing price prior to the temporary suspension of the Company’s shares on 24 May 2016 (i.e. based on the average share price just prior to the intended grant date).
3 The number of shares intended to be granted in May 2016 based on a share price of 81p adjusted using the theoretical ex-rights price formula.
50% of the awards will vest on the third anniversary of grant and, rather than the 4 and 5 year deferral typically operated for the remainder,
25% of awards will vest after 3 years and 6 months and 25% will vest after 4 years and 6 months, subject to continued employment. The
shortened vesting periods reflect the delayed grant date from May 2016 to November 2016.
EXIT PAYMENTS AND PAYMENTS MADE TO PAST DIRECTORS MADE IN THE YEAR (AUDITED)
No exit payments or payments to past Directors were made in the year.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table shows the percentage change in total employee pay expenditure and shareholder distributions (i.e. dividends and share buy-
backs) from the financial year ended 31 March 2016 to the financial year ended 31 March 2017. The Directors are proposing a final dividend
for the year ended 31 March 2017 of 2.1 pence per share (2016: 2.35p).
Distribution to shareholders
Employee remuneration
2015/16
£m
13.7
144.1
2016/17
£m
15.1
178.2
% change
10%
24%
The increase in distribution to shareholders is attributable to the equity raise in October and November 2016.
Employee remuneration is significantly higher than the prior year as the values for 2016/17 include one month of costs for the Van Gansewinkel businesses.
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DIRECTORS’ REMUNERATION REPORT CONTINUED
PAY FOR PERFORMANCE
The graph shows the total shareholder
return (TSR) of the Group over the eight-year
period to 31 March 2017. While there is no
comparator index or group of companies
that truly reflects the activities of the Group,
the FTSE Support Services sector has been
selected as a comparator index as it is the
sector in which Renewi is classified and
tends to be the index against which analysts
judge the performance of the Group. The
Group is also a member of the FTSE all-share
index. The table below the graph details
the Chief Executive Officer’s single figure
remuneration and actual variable pay
outcomes over the same period.
Historical TSR Performance
Growth in value over eight years
of a hypothetical £100 invested
at 31 March 2009.
RENEWI PLC
FTSE ALL-SHARE SUPPORT
SERVICES INDEX
FTSE ALL-SHARE INDEX
400
350
300
250
200
150
100
50
0
31 MAR 10
31 MAR 11
31 MAR 12
31 MAR 13
31 MAR 14
31 MAR 15
31 MAR 16
31 MAR 17
Chief Executive Officer’s single figure of remuneration over the eight year period to 31 March 2017
2009/10
2010/11
2011/12
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
TOM DRURY1
PETER DILNOT2
Chief Executive Officer single
figure of remuneration (£’000)
Annual bonus outcome
(% of maximum)
LTIP vesting outcome
(% of maximum)
663
840
284
157
657
860
902
1,063
921
38%
69%
0%
0%
0%
0%
87%
19%
66%
47%
69%
48%
–
0%
0%
0%
0%
0%
1 Tom Drury resigned as Chief Executive on 30 September 2011.
2 Peter Dilnot was appointed as Chief Executive on 1 February 2012.
PERCENTAGE CHANGE IN CHIEF EXECUTIVE OFFICER’S REMUNERATION
The table below shows the percentage
change in the Chief Executive Officer’s
remuneration from the prior year compared
to the average percentage change in
remuneration for all UK-based employees.
This group was selected because the
Committee believes it provides a sufficiently
large comparator group to give a reasonable
understanding of underlying increases that
are based on similar incentive structures,
while on the other hand reducing any
distortion arising from including all of the
geographies in which the Group
operates, with their different economic
conditions. To provide a meaningful
comparison, the analysis includes all
UK based employees and is based on
a consistent set of employees.
Salary
Taxable benefits
Single-year variable
CHIEF EXECUTIVE OFFICER
OTHER EMPLOYEES
2015/16
£’000
452
27
465
2016/17
£’000
452
27
326
%
Change
0%
0%
-30%
%
Change
2%
0%
-7%
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW DIRECTORS’ INTERESTS
(AUDITED)
The interests of the Directors and
persons closely associated in the
ordinary shares of the Group during
the year and as at 25 May 2017 were as
shown on the right. Details of Directors’
interests in shares and options under
the long-term share schemes are set
out in the sections below.
Colin Matthews (Chairman)
Eric van Amerongen
Allard Castelein
(appointed January 2017)
Peter Dilnot
Jacques Petry
Stephen Riley
Toby Woolrych
Marina Wyatt
Ordinary shares at
1 April 2016
Ordinary shares at
31 March 2017 and 25 May 2017
–
–
–
95,538
–
20,000
39,821
–
137,500
–
–
131,364
–
27,500
54,753
–
DIRECTORS’ SHAREHOLDING (AUDITED)
The table below shows the shareholding of each Executive Director, against their respective shareholding requirement as at 31 March 2017:
SHARES HELD
OPTIONS HELD
Owned
outright
or vested
Unvested
but subject
to holding
period
Unvested and
subject to
performance
conditions
Vested but
not exercised
Exercised
during
the year
Unvested and
subject to
continuous
employment
Shareholding
requirement1
(% salary)
Current
shareholding2
(% salary)
Requirement
met?
Peter Dilnot
131,364
330,261
1,678,650
Toby Woolrych
54,753
216,260
879,083
–
–
–
–
26,133
26,133
100%
100%
28%
18%
On track
On track
1 Share ownership guideline to be increased from 100% of salary to 200% of salary from the 2017 AGM (subject to shareholder approval).
2 Shareholdings were calculated using the mid-market price at 31 March 2017 of 95.5 pence and salary as at 31 March 2017.
DIRECTORS’ INTERESTS IN SHARES OPTIONS AND SHARES IN THE DEFERRED
ANNUAL BONUS PLAN, LONG TERM INCENTIVE PLAN AND ALL-EMPLOYEE PLANS (AUDITED)
The Executive Directors have been made awards under the Group’s Deferred Annual Bonus Plan:
Outstanding
awards at 31
March 2016
Awards
made during
the year
Rights issue
adj1
Awards
lapsed during
the year
Awards
exercised
during the
year
Outstanding
awards at 31
March 2017
Date of award
Share price on
date of award
(pence)
Restricted
period end2
Peter Dilnot
Toby Woolrych
95,668
–
14,404
–
220,189
–
62,645
–
9,432
–
144,183
–
–
–
–
–
–
–
–
–
110,072
29.05.15
108.92
29.05.20
220,189
23.11.16
93.5
23.11.21
72,077
29.05.15
108.92
29.05.20
144,183
23.11.16
93.5
23.11.21
1 Awards granted prior to the November 2016 Rights Issue were adjusted based on the standard theoretical ex-rights price formula.
2 50% of the awards will be released three years after the date of award, 25% after four years and the remaining 25% after five years.
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DIRECTORS’ REMUNERATION REPORT CONTINUED The Executive Directors have been made notional allocations of shares under the Group’s Long Term Incentive Plan:
Outstanding
awards at
31 March
2016
Awards
made
during
the year
Rights issue
adj1
Awards
lapsed
during the
year2
Awards
exercised
during the
year
Outstanding
awards at
31 March
20173
Date of
award
Share price
on date
of award
(pence)
Performance
period end
Restricted
period end4
Peter Dilnot
652,000
622,000
–
–
98,167
750,167
–
963,000
–
341,000
Toby Woolrych
326,000
–
–
51,342
392,342
93,650
49,083
–
504,000
–
–
–
–
–
–
–
–
–
–
–
–
29.05.14
102.00
31.03.17
29.05.17
715,650
29.05.15
108.92
31.03.18
29.05.18
963,000
23.11.16
93.5
31.03.19
23.11.19
–
29.05.14
102.00
31.03.17
29.05.17
375,083
29.05.15
108.92
31.03.18
29.05.18
504,000
23.11.16
93.5
31.03.19
23.11.19
1 Awards granted prior to the November 2016 Rights Issue were adjusted based on the standard theoretical ex-rights price formula.
2 Awards lapse to the extent the performance conditions are not met.
3 The performance conditions relating to the vesting of outstanding awards are shown on page 98.
4 For LTIP awards made in 2014 to 2016, half of the awards will be released following the end of the performance period, with the remaining portion delivered in two equal tranches after a
further one and two years respectively.
The Executive Directors held options to subscribe for ordinary shares under the Group’s Sharesave Schemes:
Date of
grant
Normal
exercise
dates from
Normal
exercise
dates to
Option
price
(pence)1
Rights
Issue adj
(pence)2
Number at
1 April
2016
Granted
in year
Rights issue
adj3
Lapsed
in year
Exercised
in year
Peter
Dilnot
Toby
Woolrych
25.09.14
01.11.17
30.04.18
24.09.15
01.11.18
30.04.19
25.09.14
01.11.17
30.04.18
24.09.15
01.11.18
30.04.19
84.0
75.0
84.0
75.0
73.01
65.18
73.01
65.18
10,714
12,000
10,714
12,000
–
–
–
–
1,613
1,806
1,613
1,806
–
–
–
–
–
–
–
–
Number at
31 March
2017
12,327
13,806
12,327
13,806
1 The option price is the price at which the option was granted. The price is set by the Remuneration Committee but is not less than 80% of the average market price of the shares over the last
three dealing days immediately preceding the date of the invitation to subscribe.
2 The option price was adjusted during the year for the November 2016 Rights Issue based on the standard theoretical ex-rights price formula.
3 Awards were adjusted during the year for the November 2016 Rights Issue based on the standard theoretical ex-rights price formula.
The highest closing mid-market price of the
ordinary shares of Renewi plc during the
year was 99.52 pence and the lowest closing
mid-market price during the year was 67.79
pence. The mid-market price at the close of
business on 31 March 2017 was 95.5 pence.
OTHER INTERESTS
None of the Directors had an interest in
the shares of any subsidiary undertaking
of the Group or in any significant contracts
of the Group.
The Committee periodically undertakes due
diligence to ensure that the Remuneration
Committee advisers remain independent
of the Group and that the advice provided
is impartial and objective. The Committee
is satisfied that the advice provided is
independent.
By order of the Board
Eric van Amerongen
Chairman of the Remuneration Committee
25 May 2017
ADVICE PROVIDED TO THE
COMMITTEE DURING THE YEAR
FIT Remuneration Consultants LLP (‘FIT’)
was appointed by the Remuneration
Committee during the year to provide
independent advice on Committee matters.
In 2016/17, FIT provided independent
advice on executive remuneration including
remuneration benchmarking data and
market and best practice updates. FIT
reports directly to the Chairman of the
Committee. Their total fees for the provision
of remuneration services to the Committee
in 2016/17 were £27,341 charged on a time
and materials basis. FIT provides no other
services to the Group. Prior to this, Deloitte
LLP was the appointed independent adviser
to the Committee. Deloitte’s fees to the
Committee for 2016/17 were £59,200.
Both FIT and Deloitte are members of
the Remuneration Consultants Group
and are signatories to the Code of
Conduct for Remuneration Committees
consultants which can be found at www.
remunerationconsultantsgroup.com.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW OTHER DISCLOSURES
Change of Company name
Following shareholder and regulatory
approvals the merger of Shanks Group
plc and Van Gansewinkel Groep BV was
completed on 28 February 2017 and the
combined company was renamed Renewi
plc by Board resolution, as provided for in
the Articles of Association.
The Company’s Articles of Association
Many of the matters described below are
governed by the Company’s Articles of
Association as well as by current legislation
and regulations. The Company will be
seeking a small number of amendments
to the Articles at the 2017 Annual General
Meeting, details of which are set out in
the Notice of Meeting. The proposed
amendments to the Articles can be viewed
on the Company website at www.renewi.
com/agm2017.
Strategic report
The Overview and Strategic Report
sections set out on pages 2 to 75 provide
a fair review of the Group’s business for
the year ended 31 March 2017. They also
explain the objectives and strategy of the
Group, its competition and the markets in
which it operates, the principal risks and
uncertainties it faces, the Group’s financial
position, key performance indicators and
likely future developments of the business.
The Overview and Strategic Report were
approved by a duly authorised committee
of the Board on 25 May 2017 and signed on
its behalf by the Company Secretary.
Directors’ report
The Directors’ Report comprises pages 76 to
105. The Directors’ Report was approved by
a duly authorised committee of the Board
on 25 May 2017 and signed on its behalf by
the Company Secretary.
Other information
Apart from the details of the Company’s Long
Term Incentive Plans, as set out in the Directors’
Remuneration Report on pages 86 to 101, no
further information requires disclosure for
the purposes of complying with the Financial
Conduct Authority’s Listing Rule 9.8.4C.
Directors
The composition of the Board at the date
of this Report, together with directors’
biographical details, are shown on pages76
and 77. All served on the Board throughout
the financial year under review with the
exception of Allard Castelein. Eric van
Amerongen and Stephen Riley will be
retiring from the Board at the conclusion of
the 2017 AGM. Following his appointment
in January 2017, Allard Castelein will be
standing for election by shareholders at the
2017 AGM. In accordance with governance
best practice, all remaining directors will
be offering themselves for re-election at
the 2017 AGM.
Appointment and replacement
of directors
The Company’s minimum requirement
is to appoint at least two directors. The
appointment and replacement of directors
may be made as follows:
the Company’s members may, by
ordinary resolution, appoint any person
who is willing to act to be a director;
(the Act), the directors of a company are,
with certain exceptions, unable to allot
any equity securities without express
authorisation, which may be contained
in a company’s Articles or given by its
shareholders in general meeting. In
addition, under the Act, the Company
may not allot shares for cash (otherwise
than pursuant to an employees share
scheme) without first making an offer to
existing shareholders to allot such shares
to them on the same or more favourable
terms in proportion to their respective
shareholdings, unless this requirement
is waived by a special resolution of the
Company’s shareholders. The Company
received authority at the last AGM to allot
shares for cash on a non pre-emptive basis up
to a maximum nominal amount of £3,982,052.
This authority lasts until the earlier of the AGM
in 2017 or 30 September 2017;
the Board may appoint any person who is
repurchase of shares – subject to
willing to act to be a director. Any director so
appointed shall hold office only until the next
AGM and shall then be eligible for election;
each director shall retire from office at
every AGM but may be re-appointed by
ordinary resolution if eligible and willing;
the Company may, by special resolution,
remove any director before the expiry
of his or her period of office or may, by
ordinary resolution, remove a director
where special notice has been given and
the necessary statutory procedures are
complied with; and
a director must vacate their office if any
of the circumstances in Article 100 of the
Articles of the Company arise.
Powers of directors
The business of the Company is managed
by the Board which may exercise all the
powers of the Company, whether relating
to the management of the business
of the Company or not. This power is
subject to any limitations imposed on the
Company by legislation. It is also limited
by the provisions of the Articles and by
any directions given by special resolution
of the members of the Company. Specific
provisions relevant to the exercise of powers
by the directors include the following:
pre-emptive rights and new issues of
shares – under the Companies Act 2006,
authorisation by shareholder resolution,
the Company may purchase all or any of
its own shares in accordance with the Act
and the Listing Rules. Any shares which
have been bought back may be held as
treasury shares or, if not so held, must be
cancelled immediately upon completion
of the purchase, thereby reducing the
amount of the Company’s issued share
capital. The Company received authority
at the last AGM to purchase up to
39,802,523 ordinary shares. This authority
lasts until the earlier of the AGM in 2017 or
30 September 2017; and
borrowing powers – the directors are
empowered to exercise all the powers
of the Company to borrow money and
to mortgage or charge all or any part
of the Company’s assets, provided that
the aggregate amount of borrowings
of the Group outstanding at any time
does not exceed the limit set out in the
Articles, unless sanctioned by an ordinary
resolution of the Company’s shareholders.
Directors’ indemnities
As at the date of this Report, the Company
has granted indemnities to the extent
permitted by law, in respect of certain
liabilities incurred as a result of carrying
out the role of a director of the Company.
The indemnities are qualifying third party
indemnity provisions for the purposes of
the Companies Act 2006. In respect of those
liabilities for which the directors may not
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be indemnified, the Company maintained
a Directors’ and Officers’ liability insurance
policy throughout the financial year and has
renewed that policy.
Corporate governance
The Board is fully committed to high
standards of corporate governance. Details
relating to the Company’s compliance with
the UK Corporate Governance Code for the
financial year are given in the Corporate
Governance and Directors’ Remuneration
Reports on pages 78 to 101.
Corporate Social Responsibility
Renewi plc is a leading international waste-to-
product company. Information on Corporate
Social Responsibility (CSR) matters, including
those on environment, social, community and
employment policies and health and safety
are set out in the CSR section on pages 65
to 67, and in the People section on pages 60
to 64 of the Strategic Report. These include
disclosures on greenhouse gas emissions
reporting as well as human rights and gender
diversity policies. Further details on the
Company’s approach to carbon avoidance
and the benefits of sustainable waste
management can also be found in the Group
CSR Report and CSR Policy, both of which are
available on the company’s website.
Results and dividends
The Group’s Consolidated Income
Statement, which appears on page 114 and
note 3 to the financial statements, shows
the contribution to revenue and profits
made by the different segments of the
Group’s business. The Group’s loss for the
year was £61.4m (2016: loss of £3.9m).
The directors recommend a final dividend
of 2.1 pence (2016: 2.35 pence) per share be
paid on 28 July 2017 to ordinary shareholders
on the register of members at the close of
business on 30 June 2017. This dividend, if
approved by shareholders, together with
the interim dividend of 0.95 pence (2016: 1.1
pence) per share already paid on 6 January
2017, will make a total dividend for the year
of 3.05 pence per share (2016: 3.45 pence).
After adjusting for the bonus factor of the
Rights Issue, 3.05p represents an unchanged
dividend on the previous year.
Group have adequate resources to continue
to operate and that the Group’s business is a
going concern. For this reason the directors
continue to adopt the going concern basis in
preparing the financial statements.
Taking account also of the Company’s
current position and principal risks, the
Board set out on page 75 how they have
assessed the prospects of the Company
and, in compliance with UK Corporate
Governance Code provision C.2.2, confirm
that they have a reasonable expectation
that the Company and the Group will be
able to continue in operation and meet its
liabilities as they fall due over the three year
period ending 31 March 2020.
Share capital
The Company’s share capital comprises
ordinary shares of 10 pence each par
value. As at 31 March 2017 and as at the
date of this Report there were 799,812,223
and 799,825,845 ordinary shares in issue
respectively. During the year ended 31
March 2017, in addition to ordinary shares
issued in respect of the exercise of options
or awards under the Company’s share
schemes, the following ordinary shares
were issued in relation to the merger with
van Gansewinkel Groep BV: 45,000,000
Firm Placing shares, 166,201,962 Rights
Issue shares and 190,187,502 Consideration
shares, details of which are given in note 28
to the financial statements.
Principal rights and obligations
attaching to shares
Dividend rights – the Company may, by
ordinary resolution, declare dividends
but may not declare dividends in excess
of the amount recommended by the
directors. The directors may also pay
interim dividends. No dividend may be
paid other than out of profits available for
distribution. Payment or satisfaction of a
dividend may be made wholly or partly
by distribution of assets, including fully
paid shares or debentures of any other
company. The directors may deduct from
any dividend payable to a member all
sums of money (if any) payable by such
member to the Company in respect of
their ordinary shares.
Going concern and viability
After making enquiries, the directors have
formed the view, at the time of approving the
financial statements, that the Company and
Voting rights – on a poll, every
shareholder who is present in person or
by proxy or represented by a corporate
representative has one vote for every share
held by that shareholder. In the case of joint
holders of an ordinary share, the vote of the
senior who tenders a vote shall be accepted
to the exclusion of the votes of the other
joint holders. Seniority is determined by
the order in which the names of the joint
holders appear in the Company’s register
of members in respect of the joint holding.
The deadline for appointing proxies
to exercise voting rights at any general
meeting is set out in the notice convening
the relevant meeting. The Company is not
aware of any agreements between holders
of its shares that may result in restrictions
on voting rights.
Return of capital – in the event of
the liquidation of the Company,
after payment of all liabilities and
deductions taking priority, the balance
of assets available for distribution
will be distributed among the holders
of ordinary shares according to the
amounts paid up on the shares held
by them. A liquidator may, with the
sanction of a special resolution of the
shareholders and any other sanction
required by law, divide among the
shareholders in kind the whole or any
part of the Company’s assets or vest the
Company’s assets, but no shareholder
may be compelled to accept any assets
upon which there is any liability.
Share restrictions
There are no limitations under the
Company’s Articles of Association that
restrict the rights of members to hold the
Company’s shares. Certain restrictions
may from time to time be imposed on the
transfer of the Company’s shares by laws
and regulations such as insider trading
laws. In limited situations, as permitted by
the Articles, the Board may also decline
to register a transfer. The Company is not
aware of any agreements between holders
of its shares that may result in restrictions
on the transfer of securities.
Employee share schemes –
control rights
The Company operates a number of
employee share schemes. Under one of
those schemes, ordinary shares may be
held by trustees on behalf of employees.
Employees are not entitled to exercise
directly any voting or other control rights in
respect of any shares held by such trustees.
The trustees have full discretion to vote or
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW OTHER DISCLOSURES CONTINUED
abstain from voting at general meetings of
the Company in respect of such shares.
Notifiable interests
The Company has been notified of direct
and indirect interests in voting rights equal
to or exceeding 3% of the ordinary share
capital of the Company as set out in the
table below.
Retail bonds
As at 31 March 2017 the Company had in
issue two Retail Bonds: the first, comprising
€100m 4.23% guaranteed notes due 30
July 2019; and the second, comprising
€100m 3.65% guaranteed notes due 16
June 2022. There are no restrictions under
the instruments governing these notes that
restrict the rights of investors to hold or
transfer them. The Company is not aware
of any agreements between the holders of
the notes that may result in restrictions on
their transfer.
Change of control – significant
agreements
The Group’s principal financing instrument
at 31 March 2017, a €600m multi-currency
revolving credit facility and term loan with
six major banks, contains an option for
those banks to declare by notice that all
sums outstanding under that agreement
are repayable immediately in the event of
a change of control of the Company. Any
such notice may take effect no earlier than
30 days from the change of control and,
if exercised at 31 March 2017, would have
required the repayment of £279.6m (2016:
£61.3m) in principal and interest.
The Group’s Retail Bonds issued in July
2013 and in June 2015 require notice to
be given to bondholders within seven
business days of a change of control
following which the holders have an option
to seek repayment at a 1% premium, within
60 days of that notice. Such repayment
must be made within ten business days of
the expiry of the option period. If exercised
at 31 March 2017, repayment of £177.6m
(2016: £164.7m) in principal and interest
would have been required.
The rules of the Company’s employee share
plans provide that awards and options may
vest and become exercisable on a change of
control of the Company.
Research and development
The Group spent £44,000 (2016: £86,000)
on research and development during the
year. This related to the development of
technologies for mapping landfill sites,
optimising waste decomposition processes
and the recovery of energy and materials
through excavation techniques and waste
pre-treatment.
NOTIFIABLE INTERESTS
Political donations
No donations were made by the Group for
political purposes during the financial year
(2016: £nil).
Annual General Meeting
Notice of the AGM of the Company to be
held at the offices of Ashurst LLP, Broadwalk
House, 5 Appold Street, London EC2A 2HA
on Thursday, 13 July 2017 at 11.00am will be
made available to shareholders, together
with a form of proxy, and will also be
available on the Company website at www.
renewi.com. The directors consider that all
the AGM resolutions are in the best interests
of the Company and they recommend
unanimously that all shareholders vote in
favour, as they intend to do in respect of
their own shareholdings.
Investor relations
Renewi has an active investor relations
programme to engage with institutional
investors, analysts, press and other
stakeholders. The Company uses a
number of channels to do this including
its AGM, face-to-face meetings, roadshows,
analyst workshops, videos, presentations,
reports and its corporate website. During
the year the Remuneration Committee
undertook a consultation exercise with
the 20 largest shareholders in connection
with the triennial review of the Directors’
Remuneration Policy. Following on from
the completion of the merger with Van
Gansewinkel and in support of the year-end
trading update announced on 31 March
2017, the Company also hosted a workshop
session with analysts, slides from which are
available on the Company website.
NOTIFICATIONS RECEIVED UP TO 25 MAY 2017
By order of the Board
Number of shares
Issued share capital %
Kabouter Management LLC
FMR LLC
FIL Limited
Paradice Investment Management LLC
Cross Ocean Partners
Neptune Investment Management
Limited
Notz, Stucki Europe SA
72,364,207
41,620,714
40,281,457
38,660,040
34,079,882
29,925,720
25,925,000
Philip Griffin-Smith
Company Secretary
25 May 2017
Renewi plc
Registered in Scotland no. SC077438
9.05
5.20
5.03
4.80
4.26
3.74
3.24
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the Overview and Strategic Report
include a fair review of the development
and performance of the business and
the position of the Group and parent
company, together with a description
of the principal risks and uncertainties
that it faces;
there is no relevant audit information of
which the Group and parent company’s
auditors are unaware; and
they have taken all the steps that they
ought to have taken as a director in order
to make themselves aware of any relevant
audit information and to establish that
the Group and parent company’s auditors
are aware of that information.
By order of the Board
Philip Griffin-Smith
Company Secretary
25 May 2017
Renewi plc
Registered in Scotland no. SC077438
DIRECTORS’
RESPONSIBILITIES
STATEMENT
The directors are responsible for preparing
the Annual Report, the Directors’
Remuneration Report and the financial
statements in accordance with applicable
law and regulations.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law the
directors have prepared the Group and
Parent Company financial statements in
accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union.
Under company law, the directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and parent company and of the loss of the
Group and parent company for that period.
In preparing the financial statements, the
directors are required to:
select suitable accounting policies and
then apply them consistently;
state whether applicable IFRSs as
adopted by the European Union have
been followed for the Group and Parent
Company financial statements, subject
to any material departures disclosed and
explained in the financial statements;
make judgements and accounting
estimates that are reasonable and
prudent; and
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and parent company will
continue in business.
The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group
and parent company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the Group
and parent company and enable them
to ensure that the financial statements
and the Directors’ Remuneration Report
comply with the Companies Act 2006 and,
as regards the Group financial statements,
Article 4 of the IAS Regulation.
The directors are also responsible for
safeguarding the assets of the Group and
parent company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the
maintenance and integrity of the parent
company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of financial statements
may differ from legislation in other
jurisdictions.
The directors consider that the annual
report and accounts, taken as a whole, is
fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group and
parent company’s performance, business
model and strategy.
Each of the directors whose names and
functions are listed on pages 76 and 77 of
the Annual Report confirm that, to the best
of their knowledge:
the parent company financial statements,
which have been prepared in accordance
with IFRSs as adopted by the European
Union, give a true and fair view of the
assets, liabilities, financial position and
loss of the company;
the Group financial statements, which
have been prepared in accordance
with IFRSs as adopted by the European
Union, give a true and fair view of the
assets, liabilities, financial position
and loss of the Group;
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW
INDEPENDENT
INDEPENDENT
AUDITORS’ REPORT
AUDITORS’ REPORT
TO THE MEMBERS
TO THE MEMBERS
OF RENEWI PLC
OF RENEWI PLC
Report on the financial statements
analytical review and specified audit
procedures were performed over
the remaining two reporting units,
being Netherlands Organics and
Canada Municipal.
We obtained coverage of approximately
79% of the Group’s revenue and 87% of
the Group’s underlying profit before tax
from the audit procedures performed on
full scope components.
Areas of focus
Acquisition of VGG.
OUR OPINION
the Consolidated Statement of Changes
Goodwill, intangible and tangible asset
in Equity for the year then ended;
impairment.
In our opinion:
Renewi plc’s Group financial statements
and Parent Company financial statements
(the “financial statements”) give a true
and fair view of the state of the Group’s
and of the Parent Company’s affairs as at
31 March 2017 and of the Group’s loss and
the Group’s and the Parent Company’s
cash flows for the year then ended;
the Group financial statements have
been properly prepared in accordance
with International Financial Reporting
Standards (“IFRSs”) as adopted by the
European Union;
the Parent Company Statement of
Changes in Equity for the year then
ended;
the Consolidated Statement of Cash
Flows for the year then ended;
Presentation of non-trading and
exceptional items.
Accounting for provisions.
Accounting for taxation.
the Parent Company Statement of Cash
Accounting for PFI/PPP contracts.
Flows for the year then ended; and
Revenue recognition on contracts where
the notes to the financial statements,
performance occurs over time.
which include a summary of significant
accounting policies and other
explanatory information.
THE SCOPE OF OUR AUDIT
AND OUR AREAS OF FOCUS
the Parent Company financial statements
have been properly prepared in
accordance with IFRSs as adopted by
the European Union and as applied in
accordance with the provisions of the
Companies Act 2006; and
Certain required disclosures have been
presented elsewhere in the Annual Report,
rather than in the notes to the financial
statements. These are cross-referenced
from the financial statements and are
identified as audited.
the financial statements have been
prepared in accordance with the
requirements of the Companies
Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS
Regulation.
WHAT WE HAVE AUDITED
The financial statements, included within
the Annual Report and Accounts (the
“Annual Report”), comprise:
the Consolidated Balance Sheet as at 31
March 2017;
the Parent Company Balance Sheet as at
31 March 2017;
the Consolidated Income Statement
and Consolidated Statement of
Comprehensive Income for the year
then ended;
The financial reporting framework that
has been applied in the preparation of the
financial statements is IFRSs as adopted
by the European Union and, as regards the
Parent Company financial statements, as
applied in accordance with the provisions of
the Companies Act 2006, and applicable law.
OUR AUDIT APPROACH - OVERVIEW
Materiality
Overall Group materiality: £3.9 million
which represents 0.5% of revenue.
Audit scope
We performed an audit of the complete
financial information of five out of the
eight reporting units being the Hazardous
Waste, Netherlands Commercial
(excluding Netherlands Organics),
Belgium Commercial, UK Municipal and
Group Central Services divisions, and
an audit of certain balance sheet items
for the VGG reporting unit. Additional
We conducted our audit in accordance with
International Standards on Auditing (UK
and Ireland) (“ISAs (UK & Ireland)”).
We designed our audit by determining
materiality and assessing the risks of material
misstatement in the financial statements. In
particular, we looked at where the directors
made subjective judgements, for example in
respect of significant accounting estimates
that involved making assumptions and
considering future events that are inherently
uncertain. As in all of our audits we also
addressed the risk of management override
of internal controls, including evaluating
whether there was evidence of bias by the
directors that represented a risk of material
misstatement due to fraud.
The risks of material misstatement that had
the greatest effect on our audit, including
the allocation of our resources and effort,
are identified as “areas of focus” in the table
opposite. We have also set out how we
tailored our audit to address these specific
areas in order to provide an opinion on
the financial statements as a whole, and
any comments we make on the results
of our procedures should be read in this
context. This is not a complete list of all risks
identified by our audit.
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AREA OF FOCUS
HOW OUR AUDIT ADDRESSED
THE AREA OF FOCUS
Acquisition of VGG
The Group acquired VGG on 28 February 2017 for consideration
of £205.6m as described in note 17.
We evaluated the process used by management to identify and value
the assets and liabilities acquired against the requirements of IFRS 3.
IFRS 3 “Business combinations” (“IFRS 3”) requires that all assets
and liabilities acquired in the business combination are recorded
at fair value on acquisition. We focused on the acquisition
accounting as judgment is required in identifying and valuing all
the assets and liabilities acquired, in particular intangible assets.
Management engaged an external expert to support them
with quantifying the fair values of identified intangible and
tangible assets.
Intangible assets of £44.0m were identified relating to customer
contracts, environmental permits, and licenses. The key
judgments were in determining an appropriate methodology to
value the assets and in the underlying assumptions including
future cash flows, growth rates for existing customer revenues
and a risk adjusted weighted average cost of capital.
Given the timing of the acquisition being shortly before the year-
end, the acquisition date fair values of acquired assets
and liabilities have been presented as provisional.
Goodwill, intangible and tangible asset impairment
At 31 March 2017, the Group had £603.3m of goodwill and
intangible assets and £578.4m of tangible assets on the
Group balance sheet. See notes 13 and 14 to the financial
statements respectively.
The Group is required to annually assess the carrying value
of goodwill by calculating the recoverable amount based on
the future cash flow estimates of the relevant cash generating
unit (CGU). As a result of performing value in use calculations,
no goodwill impairment charges have been recorded by the
Group for the year ended 31 March 2017. We focused on this area
because the value in use calculations include key assumptions
and judgements in the calculation of the recoverable amounts,
namely forecast revenue growth rates, trading margin, the long
term growth rate and discount rate assumptions.
Separate to the consideration of the carrying value of goodwill,
the Group must also consider whether any indicators of
impairment have been identified in relation to other intangible
assets subject to amortisation and tangible assets subject to
depreciation in CGUs without goodwill.
Accordingly, we focused on this area because the consideration
of whether indicators of impairment exist in CGUs without
goodwill is judgemental.
We used our firm’s valuation experts in assessing the appropriateness
of methodologies, and the reasonableness of key assumptions and
judgements made by management in relation to the valuation of
assets required.
In relation to the valuation model inputs, we:
compared cash flow forecasts and revenue growth rates with
historical patterns in the business to verify that assumptions
were reasonable;
ascertained the life of operating licenses and assessed whether
the cash flows appropriately reflected the term of these licenses;
agreed the tax rates used in the models to those enacted in
the prospective markets; and
benchmarked the discount rate to comparable companies.
We were satisfied that the methodologies and assumptions applied
in determining the fair values of the intangible assets were materially
consistent with our independent expectations and analysis.
We tested the treatment of the other assets and liabilities
acquired and the fair value adjustments applied by tracing
these to supporting information.
For all CGUs, we obtained the discounted cash flow forecasts prepared
by management. Details of the key assumptions included in the cash
flow forecasts prepared by the Group are included in notes 13 and 14.
We evaluated the reasonability of the future cash flow forecasts
by comparing them with the latest Board approved budgets and
considering the historic accuracy of management’s forecasts by
comparing prior year forecasts to actual outturn.
Further, we challenged management on:
Forecast revenue growth rates and trading margins for the CGUs over
the period of the forecasts;
The key assumptions for long term growth rates in the forecasts by
comparing them with historical results and economic and industry
forecasts; and
The discount rate used. Specifically, we recalculated the Group’s
weighted average cost of capital using market comparable
information and compared it to the rate calculated by management.
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AREA OF FOCUS
HOW OUR AUDIT ADDRESSED
THE AREA OF FOCUS
Goodwill, intangible and tangible asset impairment continued
Impairment reviews were performed for certain of the Group’s
CGUs without goodwill as a result of deterioration in the markets
in which these CGUs are located. As a result of this analysis, an
impairment charge of £6.0m was recognised against plant and
equipment at a UK Municipal facility.
We focused on this area to verify whether the assumptions
used in determining the quantum of the asset impairments were
appropriate.
Presentation of non-trading and exceptional items
The Group presents two measures of performance in the Income
Statement; statutory and trading/underlying, the latter after
adjusting for certain items of income or expense as management
believes these measures provide additional useful information on
the underlying trends, performance and position of the Group.
The determination of which items of income or expense are
classified as exceptional or non-trading is subject to judgement
and therefore users of the accounts could be misled if amounts
are not classified appropriately.
A description of the amounts presented as non-trading or
exceptional is included in note 4 to the financial statements.
Accounting for provisions
The Group operates in different jurisdictions and in an industry
that is heavily regulated and subject to change. Non-compliance
with laws and regulations has the potential to lead to litigation
and associated financial or reputational damage.
As disclosed in note 26 to the financial statements, the Group has
long term landfill provisions for site restoration and aftercare of
£115.2m at 31 March 2017.
We also performed sensitivity analysis on the discounted cash flow
forecasts and on the ability of the Group to generate the forecast
cash flows. Having ascertained the extent of change in those
assumptions that either individually or collectively would be required
for the goodwill, intangible and/or tangible assets to be impaired,
we considered the likelihood of such a movement in those key
assumptions arising and whether this would impact the assessment
that no impairment is recognised for the year ended 31 March 2017.
For all CGUs with goodwill, we were satisfied that the carrying value of
goodwill was supported by the value in use calculations.
In the CGUs without goodwill, we considered whether any indicators
of impairment existed in specific CGUs identified by management.
We compared actual performance of the relevant CGUs with
budget/forecast and, where performance was below budget/
forecast, investigated the underlying causes. Having performed
these procedures, and those on the cash flow forecasts prepared by
management above, we concluded that the assumptions used by
the Group in tangible asset impairments were reasonable and that
the quantum of these impairments were within a reasonable range of
outcomes.
We considered the appropriateness of the amounts classified as
non-trading and exceptional. In order to do this we considered:
The Group’s accounting policy on exceptional and non-trading items;
and
Pronouncements by the Financial Reporting Council on this matter.
We challenged management on the appropriateness of the
classification of such items being mindful that classification should be
even handed between gains and losses, the basis for the classification
clearly disclosed, and applied consistently from one year to the next.
Our work highlighted certain items that management had classified
as exceptional which were judgemental. Having considered the
nature and quantum of these items, overall we are satisfied that the
presentation of non-trading and exceptional items in the financial
statements for the year ended 31 March 2017 is appropriate.
Our audit work on provisions focused on:
Understanding the processes and controls in place to ensure
compliance and a discussion of any instances of non-compliance in
the year with management;
Reading significant contracts entered into by the Group to determine
whether any other contracts, other than those identified by
management, are onerous;
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INDEPENDENT AUDITORS’ REPORT CONTINUED AREA OF FOCUS
HOW OUR AUDIT ADDRESSED
THE AREA OF FOCUS
Accounting for provisions continued
Separately the Group has onerous contract provisions
of £40.6m principally in the Municipal division and other
provisions of £32.4m principally comprising restructuring
obligations,dilapidations long-service employee awards, lifecycle
expenditure obligations, legal claims, warranties
and indemnities.
Due to their nature, these provisions are judgmental. Changes to
the environment in which the Group operates can impact both
the amounts required to settle the provision and the period over
which the provision is recognised.
Accounting for taxation
The Group has recognised £15.0m of a total potential deferred tax
assets of £61.2m in respect of historic losses as at 31 March 2017.
See note 18 to the financial statements.
The amount of deferred tax assets recognised is judgemental
and is determined by reference to future forecasts of taxable
profits. In the current year the Group has increased the level of
deferred tax assets recognised to represent a greater expected
future utilisation of brought forward losses and temporary
differences. This reflects greater certainty over interest income
streams in the UK and restructuring of certain Belgian legal
entities during the year.
Accounting for PFI/PPP contracts
The Group has the operating contracts for seven PFI contracts
in the UK – A&B, D&G, Derby, ELWA, Cumbria, Derbyshire, BDR
and Wakefield. Separately, the Group is the primary obligor
in connection with the construction and delivery of a waste
management facility in Surrey Canada. The key accounting
judgements and estimates that management have applied in
accounting for PFI/PPP contracts are disclosed in note 2.
Reading board minutes to identify any relevant matters reported to
the Board;
Meeting with in-house legal counsel to determine the status of
known claims against the Group and assess the appropriateness
of the associated provisions held; and
Discussions with management to understand the basis of the
calculation of the provision.
In addition to the procedures above, for the Group’s long term landfill
and onerous contract provisions we specifically:
Considered the estimation accuracy of the forecast spend on which
the provision is based on our knowledge of the industry, the sites
and contracts involved;
Considered the reasonableness of the provisions for future losses on
onerous contracts in light of actual outturn in the year compared to
previous estimates; and
Considered the appropriateness of the discount rates applied to the
forecast future cash flows in light of market risk free rates and the
nature of the risks in the future cash flows.
Having performed the procedures above we found that the key
assumptions applied to each provision, which differed depending
on the nature of and duration of the provision, were appropriately
supported.
As part of our work on deferred tax, we have considered the
appropriateness of management’s assumptions and estimates in
relation to the likelihood of generating suitable future taxable profits to
support the recognition of deferred tax assets.
Specifically we assessed:
Board approved budgets and forecasts against historic performace
by legal entity;
Whether taxable differences result in taxable amounts against which
unused tax losses can be utilised; and
The historic level of utilisation of deferred tax assets.
Having performed the procedures above we consider that the
assumptions applied in the recognition of deferred tax assets at
31 March 2017 were reasonable.
We have considered the appropriateness of the revenue and margin
recognised on the Surrey Canada contract by considering the specific
contractual arrangements and the requirements of IFRIC 12 which
states that the total consideration receivable from the grantor is split
between the fair value of construction services delivered and the fair
value of operating services. This included evaluating the amount of
revenue and margin recognised by reference to the proportion of costs
incurred at 31 March 2017 compared to the total costs expected to
be incurred.
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MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEW AREA OF FOCUS
HOW OUR AUDIT ADDRESSED
THE AREA OF FOCUS
Accounting for PFI/PPP contracts continued
In addition to these estimates and judgements, during the year
there have been a number of operational issues which have
financial and accounting consequences including the recognition
of provisions arising in connection with the construction of the
facilities and commissioning obligations, and impairment of
intangible assets associated with the operating agreements.
We re-performed the calculation of revenue recognised based on
this information to confirm that an appropriate amount of revenue
and margin has been recognised in the year ended 31 March 2017. On
the basis of our work we consider the amount of revenue and margin
recognised to be appropriate.
We reviewed the reasonableness of management’s models which were
used to estimate the expected returns on the operating agreements.
We did this by considering the estimation accuracy of management’s
forecasts in light of actual outturn in the year and our knowledge
of current market conditions. Where such estimates gave rise to
provisions and / or impairments we considered the appropriateness
of the discount rates applied to the forecast future cash flows in light
of market risk free rates and the nature of the risks in the future cash
flows. Based on this work, we concluded that management’s forecasts
were reasonable and that where provisions and/or impairment charges
were recognised, these had been calculated on an appropriate basis.
Revenue recognition on contracts where performance occurs over time
The nature of the Group’s performance obligations under revenue
contracts varies from business to business and from customer
to customer. In the Netherlands Commercial and VGG divisions,
a number of contracts give rise to an obligation to process waste
received. In the Hazardous Waste division the majority of the
contracts give rise to an obligation to process waste received.
Where such obligations exist revenue is deferred when invoices
to customers are raised in advance of processing the waste. The
calculation of deferred revenue in the Hazardous Waste division is
based on a number of assumptions and judgments, principally in
relation to the quantity of unprocessed material on site at the year
end, which impact the quantum of revenue recognised in the year.
We assessed the accuracy of management’s calculation of deferred
revenue, which is calculated based on waste tonnages and pricing, by:
attending year-end inventory counts of unprocessed waste at three
sites to test the existence and completeness of waste tonnages at
year-end;
considering the reasonableness of management’s assumptions
included in the calculation of deferred revenue by benchmarking
data points used by management to external sources of information;
performing substantive tests of detail on the pricing of individual
waste components by tracing to invoices raised to customers; and
At 31 March 2017 the Group has £28.4m of deferred revenue on its
balance sheet. See note 25 to the financial statements.
re-performing management’s calculation of deferred revenue at
year-end.
Due to the varying nature of the Group’s contractual obligations
and the judgemental nature of the amount of unprocessed
material on site at the year-end we have focused effort on this
area to address the risk of undetected material errors in the
recording of revenue and deferred revenue.
Having performed the procedures above we were satisfied that the
assumptions and judgments taken by management in calculating
quantities of unprocessed waste at year-end were supportable and
that appropriate prices had been used to calculate the deferred
revenue balance.
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work to
be able to give an opinion on the financial
statements as a whole, taking into account
the geographic structure of the Group, the
accounting processes and controls, and the
industry in which the Group operates.
The Group’s accounting function is
structured into local or regional finance
centres for each of the territories in which
the Group operates. These functions
maintain their own accounting records
and controls and report to the head office
finance team in Milton Keynes UK through
an integrated consolidation system.
The Group financial statements are a
consolidation of seven reporting units
being Netherlands Commercial (excluding
Netherlands Organics), Netherlands
Organics, Belgium Commercial, Hazardous
Waste, UK Municipal, Canada Municipal,
VGG and Group Central Services. Of
the Group’s seven reporting units, we
identified Netherlands Commercial
(excluding Netherlands Organics),
Belgium Commercial, Hazardous Waste,
UK Municipal and Group Central Services
which, in our view, required an audit of their
complete financial information due to their
size compared to the Group.
Given the timing of the acquisition of VGG,
the contribution of this segment to the
Group income statement for the year ending
31 March 2017 is not significant from an
audit perspective. Therefore we did not
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INDEPENDENT AUDITORS’ REPORT CONTINUED perform a full scope audit on VGG for the
current year. However, in order to obtain
sufficient coverage over the enlarged Group
balance sheet we audited specific balance
sheet line items for VGG at 31 March 2017.
This, together with additional procedures
performed at the Group level, gave us the
evidence we needed for our opinion on the
Group financial statements as a whole.
Additional procedures were performed over
non-reporting components, specifically
Netherlands Organics and Municipal
Canada, which included specified
procedures and analytical review.
In establishing the overall approach to
the Group audit, we determined the type
of work that needed to be performed at
the reporting units by us, as the Group
engagement team (who were also
responsible for the audit of the Municipal
reporting unit), or component auditors
from other PwC network firms operating
under our instruction. Where the work was
performed by our component audit teams
we determined the level of involvement
we needed to have in the audit work at
those reporting units to be able to conclude
whether sufficient appropriate audit
evidence had been obtained as a basis
for our opinion on the Group financial
statements as a whole. This included
attendance at a planning day held through
video conference with the component
teams, a separate planning meeting with
the VGG component team, attendance
by the Group engagement team at the
clearance meetings held for the Netherlands
Commercial (excluding Organics), Belgium
Commercial, Hazardous Waste and VGG
reporting units and a review of the audit
working papers of our component teams by
the Group engagement team.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality
How we determined it
Rationale for benchmark applied
Component materiality
£3.9m (2016: £1.1m).
0.5% of revenue (2016: 5% of underlying profit before tax).
Given the growth of the Group through the acquisition of VGG, we considered that the
benchmark applied in 2016 did not adequately reflect the scale of the enlarged Group’s
operations. In determining materiality for 2017, we considered a range of materiality
benchmarks, including materiality based on underlying profit before tax, EBITDA and
revenue. Having considered this range of materiality benchmarks, we selected an overall
materiality level of £3.9m, being 0.5% revenue for the year which was neither at the
upper nor lower end of the range.
For each component in our audit scope, we allocated a materiality that is less than our
overall Group materiality. The range of materiality allocated across components was
between £1.7m and £3.5m. Certain components were audited to a local statutory audit
materiality that was also less than our overall Group materiality.
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We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.2m (2016: £0.1m) as
well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to
review the directors’ statement, set out on
page 103, in relation to going concern. We
have nothing to report having performed
our review.
Under ISAs (UK & Ireland) we are required
to report to you if we have anything
material to add or to draw attention to in
relation to the directors’ statement about
whether they considered it appropriate
to adopt the going concern basis in
preparing the financial statements.
We have nothing material to add
or to draw attention to.
As noted in the directors’ statement,
the directors have concluded that it is
appropriate to adopt the going concern
basis in preparing the financial statements.
The going concern basis presumes that the
Group and Parent Company have adequate
resources to remain in operation, and that
the directors intend them to do so, for at
least one year from the date the financial
statements were signed. As part of our audit
we have concluded that the directors’ use
of the going concern basis is appropriate.
However, because not all future events
or conditions can be predicted, these
statements are not a guarantee as to the
Group’s and Parent Company’s ability to
continue as a going concern.
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MORE INFORMATIONGOVERNANCESTRATEGIC REPORTOVERVIEW
OTHER REQUIRED REPORTING
CONSISTENCY OF OTHER INFORMATION AND COMPLIANCE WITH APPLICABLE REQUIREMENTS
Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In addition, in light of the knowledge and understanding of the Group, the Parent Company and their environment obtained in the course
of the audit, we are required to report if we have identified any material misstatements in the Strategic Report and the Directors’ Report.
We have nothing to report in this respect.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
information in the Annual Report is:
We have no exceptions to report.
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of
the Group and Parent Company acquired in the course of performing our audit; or
• otherwise misleading.
the statement given by the directors on page 105, in accordance with provision C.1.1 of
the UK Corporate Governance Code (the “Code”), that they consider the Annual Report
taken as a whole to be fair, balanced and understandable and provides the information
necessary for members to assess the group’s and parent company’s position and
performance, business model and strategy is materially inconsistent with our knowledge of
the group and parent company acquired in the course of performing our audit.
the section of the Annual Report on page 82, as required by provision C.3.8 of the Code,
describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
We have no exceptions to report.
We have no exceptions to report.
THE DIRECTORS’ ASSESSMENT OF THE PROSPECTS OF THE GROUP AND OF THE
PRINCIPAL RISKS THAT WOULD THREATEN THE SOLVENCY OR LIQUIDITY OF THE GROUP
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:
the directors’ confirmation on page 75 of the Annual Report, in accordance with provision
We have nothing material to add or to draw
attention to.
C.2.1 of the Code, that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business model, future
performance, solvency or liquidity.
the disclosures in the Annual Report that describe those risks and explain how they are
being managed or mitigated.
the directors’ explanation on page 75 of the Annual Report, in accordance with provision
C.2.2 of the Code, as to how they have assessed the prospects of the Group, over what
period they have done so and why they consider that period to be appropriate, and
their statement as to whether they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over the period of
their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We have nothing material to add or to draw
attention to.
We have nothing material to add or to draw
attention to.
Under the Listing Rules we are required to review the directors’ statement that they have carried out a robust assessment of the principal
risks facing the Group and the directors’ statement in relation to the longer-term viability of the Group. Our review was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statements; checking
that the statements are in alignment with the relevant provisions of the Code; and considering whether the statements are consistent with
the knowledge acquired by us in the course of performing our audit. We have nothing to report having performed our review.
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INDEPENDENT AUDITORS’ REPORT CONTINUED
ADEQUACY OF ACCOUNTING
RECORDS AND INFORMATION AND
EXPLANATIONS RECEIVED
RESPONSIBILITIES FOR
THE FINANCIAL STATEMENTS
AND THE AUDIT
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
we have not received all the information
and explanations we require for our audit;
or
adequate accounting records have not
been kept by the Parent Company, or
returns adequate for our audit have not
been received from branches not visited
by us; or
the Parent Company financial
statements and the part of the Directors’
Remuneration Report to be audited are
not in agreement with the accounting
records and returns.
We have no exceptions to report arising
from this responsibility.
DIRECTORS’ REMUNERATION
Directors’ Remuneration Report -
Companies Act 2006 opinion
In our opinion, the part of the Directors’
Remuneration Report to be audited has
been properly prepared in accordance with
the Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we
are required to report to you if, in our
opinion, certain disclosures of directors’
remuneration specified by law are not
made. We have no exceptions to report
arising from this responsibility.
CORPORATE GOVERNANCE
STATEMENT
Under the Listing Rules we are required
to review the part of the Corporate
Governance Statement relating to ten
further provisions of the Code. We have
nothing to report having performed our
review.
Our responsibilities and those of the
directors
As explained more fully in the Directors’
Responsibilities Statement set out on page
105, the directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view.
Our responsibility is to audit and express
an opinion on the financial statements in
accordance with applicable law and ISAs
(UK & Ireland). Those standards require
us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
This report, including the opinions,
has been prepared for and only for the
Parent Company’s members as a body
in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no
other purpose. We do not, in giving these
opinions, accept or assume responsibility
for any other purpose or to any other person
to whom this report is shown or into whose
hands it may come save where expressly
agreed by our prior consent in writing.
What an audit of financial statements
involves
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are
free from material misstatement, whether
caused by fraud or error. This includes an
assessment of:
whether the accounting policies are
appropriate to the Group’s and the Parent
Company’s circumstances and have been
consistently applied and adequately
disclosed;
the reasonableness of significant
accounting estimates made by the
directors; and
the overall presentation of the financial
statements.
We primarily focus our work in these areas
by assessing the directors’ judgements
against available evidence, forming our own
judgements, and evaluating the disclosures
in the financial statements.
We test and examine information, using
sampling and other auditing techniques,
to the extent we consider necessary to
provide a reasonable basis for us to draw
conclusions. We obtain audit evidence
through testing the effectiveness of controls,
substantive procedures or a combination
of both.
In addition, we read all the financial and
non-financial information in the Annual
Report to identify material inconsistencies
with the audited financial statements and to
identify any information that is apparently
materially incorrect based on, or materially
inconsistent with, the knowledge acquired
by us in the course of performing the
audit. If we become aware of any apparent
material misstatements or inconsistencies
we consider the implications for our report.
With respect to the Strategic Report and
Directors’ Report, we consider whether
those reports include the disclosures
required by applicable legal requirements.
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Matthew Mullins
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditors
London
25 May 2017
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MORE INFORMATIONGOVERNANCESTRATEGIC REPORTOVERVIEW
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2017
2017
Non
trading &
exceptional
items
£m
–
(43.3)
(43.3)
(32.2)
(75.5)
–
(11.6)
–
(87.1)
6.4
(80.7)
Trading
£m
779.2
(653.3)
125.9
(89.4)
36.5
10.3
(23.1)
2.0
25.7
(5.9)
19.8
Total
£m
779.2
(696.6)
82.6
(121.6)
(39.0)
10.3
(34.7)
2.0
(61.4)
0.5
(60.9)
2016
Non
trading &
exceptional
items
£m
(1.0)
(0.6)
(1.6)
(22.0)
(23.6)
0.1
–
–
(23.5)
0.8
(22.7)
Trading
£m
614.8
(517.8)
97.0
(63.6)
33.4
16.6
(30.0)
1.0
21.0
(2.3)
18.7
–
19.8
(0.5)
(81.2)
(0.5)
(61.4)
(0.3)
18.4
0.4
(22.3)
20.1
(0.3)
19.8
(81.2)
–
(81.2)
(61.1)
(0.3)
(61.4)
(11.3)
(0.1)
(11.4)
(11.3)
(0.1)
(11.4)
18.4
–
18.4
4.2
(0.1)
4.1
4.2
(0.1)
4.1
(22.3)
–
(22.3)
(5.1)
0.1
(5.0)
(5.1)
0.1
(5.0)
Total
£m
613.8
(518.4)
95.4
(85.6)
9.8
16.7
(30.0)
1.0
(2.5)
(1.5)
(4.0)
0.1
(3.9)
(3.9)
–
(3.9)
(0.9)
–
(0.9)
(0.9)
–
(0.9)
Revenue
Cost of sales
Gross profit (loss)
Administrative expenses
Operating profit (loss)
Finance income
Finance charges
Share of results from associates and joint ventures
Profit (loss) before taxation
Taxation
Profit (loss) for the year from continuing operations
Discontinued operations
(Loss) profit for the year from discontinued operations
Profit (loss) for the year
Attributable to:
Owners of the parent
Non-controlling interest
Note
3,4
4
4
3,4,5
8
4,8
4,15
3
4,9
4,10
34
Basic earnings (loss) per share attributable to owners of the parent (pence per share)*
Continuing operations
Discontinued operations
12
12
3.7
–
3.7
(15.0)
(0.1)
(15.1)
Diluted earnings (loss) per share attributable to owners of the parent (pence per share)*
(15.0)
Continuing operations
(0.1)
Discontinued operations
3.7
–
12
12
*Earnings (loss) per share for 2016 has been restated to reflect the bonus factor within the 2017 equity raise.
3.7
(15.1)
The notes on pages 119 to 175 are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2017
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign subsidiaries
Fair value movement on cash flow hedges
Deferred tax on fair value movement on cash flow hedges
Share of other comprehensive income of investments accounted for using the equity method
Items that will not be reclassified to profit or loss:
Actuarial (loss) gain on defined benefit pension schemes
Deferred tax on actuarial (loss) gain on defined benefit pension schemes
Note
16
18
15
27
18
Other comprehensive income for the year, net of tax
Loss for the year
Total comprehensive (loss) income for the year
Attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive (loss) income for the year
Total comprehensive (loss) income attributable to owners of the parent arising from:
Continuing operations
Discontinued operations
The notes on pages 119 to 175 are an integral part of these consolidated financial statements.
2017
£m
14.7
1.3
(0.7)
0.3
15.6
(10.7)
1.7
(9.0)
6.6
(61.4)
(54.8)
(54.3)
(0.5)
(54.8)
(53.8)
(0.5)
(54.3)
2016
£m
13.0
(4.8)
0.2
0.1
8.5
3.2
(0.9)
2.3
10.8
(3.9)
6.9
7.1
(0.2)
6.9
7.0
0.1
7.1
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CONSOLIDATED BALANCE SHEET
As at 31 March 2017
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Loans to associates and joint ventures
Financial assets relating to PFI/PPP contracts
Trade and other receivables
Derivative financial instruments
Deferred tax assets
Current assets
Inventories
Loans to associates and joint ventures
Financial assets relating to PFI/PPP contracts
Trade and other receivables
Derivative financial instruments
Current tax receivable
Cash and cash equivalents
Assets classified as held for sale
Total assets
Liabilities
Non-current liabilities
Borrowings – PFI/PPP non-recourse net debt
Borrowings – Other
Derivative financial instruments
Other non-current liabilities
Deferred tax liabilities
Provisions
Defined benefit pension schemes deficit
Current liabilities
Borrowings – PFI/PPP non-recourse net debt
Borrowings – Other
Derivative financial instruments
Trade and other payables
Current tax payable
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Exchange reserve
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Total equity
31 March
2017
£m
31 March
2016
£m
Note
13
14
15
15
20
21
16
18
19
15
20
21
16
22
23
24
24
16
25
18
26
27
24
24
16
25
26
28
28
34
603.3
587.4
15.8
14.2
165.5
3.1
0.3
31.3
1,420.9
19.9
5.7
13.3
234.0
–
0.1
74.9
347.9
0.3
348.2
1,769.1
(85.0)
(482.4)
(30.0)
(5.1)
(73.6)
(142.7)
(26.9)
(845.7)
(2.1)
(16.4)
(0.8)
(409.3)
(11.2)
(45.5)
(485.3)
(1,331.0)
438.1
79.9
377.2
39.1
(63.3)
432.9
5.2
438.1
194.5
297.0
10.8
1.3
145.8
1.1
–
19.9
670.4
6.8
–
12.8
122.4
0.3
–
34.7
177.0
–
177.0
847.4
(87.9)
(224.9)
(28.8)
(6.4)
(31.6)
(43.9)
(10.7)
(434.2)
(3.2)
(2.4)
(2.4)
(203.3)
(6.1)
(13.0)
(230.4)
(664.6)
182.8
39.8
100.2
24.4
20.4
184.8
(2.0)
182.8
The notes on pages 119 to 175 are an integral part of these consolidated financial statements.
The Financial Statements on pages 114 to 175 were approved by the Board of Directors and authorised for issue on 25 May 2017. They were
signed on its behalf by:
Colin Matthews
Toby Woolrych
Chairman
Chief Financial Officer
116
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2017
Balance at 1 April 2016
Loss for the year
Other comprehensive income (loss):
Exchange gain on translation of foreign subsidiaries
Fair value movement on cash flow hedges
Actuarial loss on defined benefit pension scheme
Tax in respect of other comprehensive income items
Share of other comprehensive income of investments
accounted for using the equity method
Total comprehensive income (loss) for the year
Transactions with owners in their capacity as owners:
Share-based compensation
Movement on tax arising on share-based compensation
Proceeds from share issues, net of transaction costs
Issue of ordinary shares in consideration for a
business combination
Proceeds from exercise of employee options
Non-controlling interest on acquisition of a subsidiary
Dividends
Balance as at 31 March 2017
Balance at 1 April 2015
Loss for the year
Other comprehensive income (loss):
Exchange gain on translation of foreign subsidiaries
Fair value movement on cash flow hedges
Actuarial gain on defined benefit pension scheme
Tax in respect of other comprehensive income items
Share of other comprehensive income of investments
accounted for using the equity method
Total comprehensive income (loss) for the year
Transactions with owners in their capacity as owners:
Share-based compensation
Movement on tax arising on share-based compensation
Proceeds from exercise of employee options
Dividends
Balance as at 31 March 2016
Note
16
27
18
15
7
18
28
17,28
28
17
11
16
27
18
7
18
28
11
Share
capital
£m
39.8
–
Share
premium
£m
100.2
–
Exchange
reserve
£m
24.4
–
Retained
earnings
£m
20.4
(61.1)
Non-
controlling
interest
£m
(2.0)
(0.3)
–
–
–
–
–
–
–
–
21.1
19.0
–
–
–
79.9
39.8
–
–
–
–
–
–
–
–
–
–
–
39.8
–
–
–
–
–
–
–
–
115.2
161.7
0.1
–
–
377.2
100.0
–
–
–
–
–
–
–
–
–
0.2
–
100.2
14.7
–
–
–
–
14.7
–
–
–
–
–
–
–
39.1
11.4
–
13.0
–
–
–
–
13.0
–
–
–
–
24.4
–
1.5
(10.7)
1.0
0.3
(69.0)
0.5
(0.1)
–
–
–
–
(15.1)
(63.3)
39.7
(3.9)
–
(4.6)
3.2
(0.7)
0.1
(5.9)
0.5
(0.2)
–
(13.7)
20.4
–
(0.2)
–
–
–
(0.5)
–
–
–
–
–
7.7
–
5.2
(1.8)
–
–
(0.2)
–
–
–
(0.2)
–
–
–
–
(2.0)
Total
equity
£m
182.8
(61.4)
14.7
1.3
(10.7)
1.0
0.3
(54.8)
0.5
(0.1)
136.3
180.7
0.1
7.7
(15.1)
438.1
189.1
(3.9)
13.0
(4.8)
3.2
(0.7)
0.1
6.9
0.5
(0.2)
0.2
(13.7)
182.8
The exchange reserve comprises all foreign exchange differences arising since 1 April 2005 from the translation of the financial statements of foreign
operations as well as from the translation of liabilities that hedge the Group’s net investment in foreign operations.
The notes on pages 119 to 175 are an integral part of these consolidated financial statements.
.
117
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2017
Cash flows from operating activities
Income tax paid
Net cash inflow from operating activities
Investing activities
Purchases of intangible assets
Purchases of property, plant and equipment
Disposals of property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Acquisition of business assets
Proceeds from disposal of subsidiary
Proceeds from sale of subordinated debt and on loss of control of subsidiary
Proceeds from discontinued assets
Outflow from disposal of subsidiaries
Receipt of deferred consideration
Payment of deferred consideration
Investment in joint venture
Dividends received from associates and joint ventures
Loans granted to joint ventures
Outflows in respect of PFI/PPP arrangements under the financial asset model
Capital received in respect of PFI/PPP financial assets
Finance income
Net cash inflow from investing activities
Financing activities
Finance charges and loan fees paid
Proceeds from share issues
Costs in relation to share issues
Dividends paid
Proceeds from issuance of retail bonds
Repayment of the VGG loan and derivatives acquired as part of the business combination
Repayment of retail bonds
Repayment of senior notes
Proceeds from bank borrowings
Proceeds from PFI/PPP net debt
Repayment of PFI/PPP net debt
Repayments of obligations under finance leases
Net cash inflow (outflow) from financing activities
Net increase (decrease) in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The notes on pages 119 to 175 are an integral part of these consolidated financial statements.
Note
30
17
17
17
15
15
15
28
28
11
22
2017
£m
27.9
(5.3)
22.6
(7.0)
(37.0)
2.8
53.3
(1.1)
1.1
–
–
–
4.6
(1.3)
–
0.1
(18.5)
(2.1)
3.5
9.9
8.3
(28.9)
141.5
(5.1)
(15.1)
–
(289.5)
–
–
211.2
0.4
(4.4)
(3.2)
6.9
37.8
2.4
34.7
74.9
2016
£m
72.2
(4.8)
67.4
(4.9)
(29.5)
6.2
–
(0.2)
0.4
25.8
2.4
(1.4)
0.9
(0.1)
(0.7)
0.1
–
(29.3)
22.8
12.6
5.1
(25.4)
0.2
–
(13.7)
71.4
–
(73.5)
(28.5)
25.1
9.2
(63.4)
(2.8)
(101.4)
(28.9)
2.8
60.8
34.7
118
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
General information
Renewi plc (previously Shanks Group plc) is a public limited company listed on the London Stock Exchange and is incorporated and domiciled
in Scotland under the Companies Act 2006, registered number SC077438. The address of the registered office is given on page 191. The nature
of the Group’s operations and its principal activities are set out in note 3.
Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments, share-based
payments and assets classified as held for sale, which are stated at fair value. The policies set out below have been consistently applied. The
Group has applied all accounting standards and interpretations issued relevant to its operations and effective for accounting periods beginning
on 1 April 2016. The consolidated financial statements are presented in pounds sterling and all amounts are rounded to the nearest £0.1m
unless otherwise stated.
Changes in presentation
Loans to joint ventures and associates were previously disclosed within investments on the balance sheet and have been presented separately
in the current year to more accurately reflect the nature of these assets. The 2016 comparatives have been amended to reflect this change.
Going concern
Having assessed the principal risks and other matters in connection with the viability statement, the Directors consider it appropriate to adopt
the going concern basis of accounting in preparing these financial statements.
Statement of compliance
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and related interpretations issued
by the IFRS Interpretations Committee (IFRS IC) adopted by the European Union (EU) and therefore comply with Article 4 of the EU IAS
Regulation and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Adoption of new and revised accounting standards and interpretations
There were no new standards, amendments to standards or interpretations adopted for the first time for the Group’s financial year beginning
1 April 2016 that had a significant impact on these financial statements.
New standards and interpretations not yet adopted
Standards and interpretations issued by the International Accounting Standards Board (IASB) are only applicable if endorsed by the
European Union.
At the date of approval of these financial statements, the following standards and interpretations were in issue but not yet effective:
IFRS 9 Financial Instruments, effective for annual periods beginning on or after 1 January 2018. This standard addresses the classification,
measurement and recognition approaches for financial assets and liabilities and requires additional disclosures in relation to hedging
activities. The Group is yet to assess the full effect of the standard, however it is not expected to have a significant impact on the recognition
and measurement of its financial instruments.
IFRS 15 Revenue from contracts with customers, effective for annual periods beginning on or after 1 January 2018. The standard addresses
revenue recognition and establishes principles for reporting information about the nature, timing and uncertainty of revenue and cash flows
arising from an entity’s contracts with customers. Following the recent acquisition of Van Gansewinkel Groep (VGG) the Group is working
on the impact of this new standard on the Group’s financial statements. The Group will make an assessment of the impact over the next
twelve months.
IFRS 16 Leases, effective for annual periods beginning on or after 1 January 2019, subject to EU endorsement. The standard is expected to have
a material impact for the Group as it requires almost all operating leases to be recognised as a liability together with a corresponding “right of
use asset”. The Group has not yet quantified the impact given the recent acquisition as it will depend on leases held in the future. The current
level of operating leases held by the Group is disclosed in note 32.
There are no other IFRSs or IFRS IC interpretations not yet effective that would be expected to have a material impact on the Group and there
were no new IFRSs or IFRS IC interpretations which were early adopted by the Group.
119
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies continued
Basis of consolidation
The consolidated financial statements incorporate the financial statements of Renewi plc and all its subsidiary undertakings (subsidiaries).
Subsidiaries are entities which are directly or indirectly controlled by the Group. Control exists where the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Where there is
a non-controlling interest this is identified separately from the Group’s equity. Accounting policies of subsidiaries have been adjusted where
necessary to ensure consistency with those used by the Group. The results of subsidiaries acquired or sold during the year are included in the
consolidated financial statements from, or up to the date control passes. All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the
arrangement. An associate is an entity, other than a subsidiary or joint venture, over which the Group has significant influence. Significant influence
is the power to participate in the financial and operating decisions of an entity but is not in control or joint control over those policies. Investments
in associates and joint ventures are accounted for using the equity method of accounting and are initially recognised at cost or, in the case of a
disposal of the majority shareholding, at fair value. The cumulative post-acquisition profits or losses and movements in other comprehensive
income are adjusted against the carrying amount of the investment. When the Group’s share of losses exceeds the carrying amount of the joint
venture or associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the joint venture or associate. Accounting policies of associates and joint
ventures have been adjusted where necessary to ensure consistency with the policies of the Group.
Where the Group is party to a jointly-controlled operation, the Group proportionately accounts for its share of the income and expenditure,
assets and liabilities and cash flows on a line-by-line basis in the consolidated financial statements.
Equity investments in entities that are neither associates, joint ventures nor subsidiaries are held at cost, less any provision for impairment.
Business combinations
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of the
subsidiary is the fair value of assets transferred, liabilities incurred or assumed including the equity interests issued by the Group. Identifiable
assets acquired and liabilities and contingent liabilities assumed, meeting the conditions for recognition under IFRS 3, are recognised at their
fair value at the acquisition date. The fair value of businesses acquired may include waste permits, licences and customer relationships with the
value calculated by discounting the future attributable revenue streams, which are recognised as intangible assets and amortised. The Group
recognises any non-controlling interest in the acquired entity on an acquisition by acquisition basis either at fair value or at the non-controlling
interest’s proportionate share of the acquired entity’s net identifiable assets. The excess of the cost of acquisition over the fair value of the
Group’s share of the identifiable net assets acquired is recorded as goodwill. The costs of acquisition are charged to the Income Statement in
the year in which they are incurred.
Revenue recognition
Revenue
Revenue represents the fair value of consideration received or receivable, including landfill tax but excluding sales taxes, discounts and inter-
company sales, for goods and services provided in the normal course of business. Revenue is recognised when it can be reliably measured and
when it is probable that future economic benefits will flow to the entity.
Revenue recognition criteria for the key types of transaction are as follows:
Waste collection services – revenue is recognised once the waste is delivered to the transfer station or processing facility.
Waste processing services – where the Group’s revenue contracts include an obligation to process waste, revenue is recognised
as processing occurs.
Hazardous waste industrial cleaning – revenue is recognised by reference to the stage of completion based on services performed to date.
Sales of recyclate materials and products from waste – revenue is based on contractually agreed prices and is recognised when the risks and
rewards have passed to the buyer.
Income from power generated from gas produced by processes at anaerobic digestion facilities and landfill sites is recognised at the time of
supply based on the volumes of energy produced and an estimation of the amount to be received.
Construction services under the Canada Municipal service concession arrangement – revenue is recognised based on the stage
of completion of the work performed.
120
1. Accounting policies continued
Accrued income
Accrued income at the balance sheet date is recognised at the fair value based on services provided and contractually agreed prices. It is
subsequently invoiced and accounted for as a trade receivable.
Unprocessed waste
Unprocessed waste may give rise to deferred revenue, where invoices to customers are raised in advance of performance obligations being
completed, or require an accrual for the costs of disposing of residual waste to be created once the Group has an obligation for its disposal.
These amounts are shown in deferred revenue or accruals in the financial statements as appropriate.
PFI/PPP contracts
The Group’s PFI/PPP contracts are waste management contracts which require the building of new infrastructure and all rights to the
infrastructure pass to the local authority at the termination or expiry of the contract. The Group applies IFRIC 12 (Service Concession
Arrangements) which specifies the accounting treatment applied by concession operators. Under IFRIC 12, the operator’s rights over
infrastructure operated under concession arrangements should be accounted for based on having considered the extent to which the grantor
(the local authority) controls the assets, over what services the operator must provide with the infrastructure, to whom it must provide them
and at what price. Having considered these factors the Group applies the ‘financial asset’ model to account for the infrastructure as it has an
unconditional right to receive cash. The Group splits the local authority payment between a service element as revenue and a repayment
element that is deducted from the financial asset. Interest receivable is added to the financial asset based on the rate implied in the contract
payments. Reviews are undertaken regularly to ensure that the financial asset will be recovered over the contract life. Borrowing costs relating
to contract specific external borrowings are expensed in the Income Statement.
Income and costs relating to specific rights and obligations within the contracts are transferred to deferred revenue or other receivables and
released or charged to the Income Statement over the period of delivery. Under the terms of these contracts, the Group is required to maintain
the infrastructure such that it is handed over to the local authority in good working order. Where such expenditure required to fulfil these
obligations constitutes major refurbishments and renewals (lifecycle expenditure) a provision is recorded for the best estimate of these costs as
the facility is used.
Intangible assets
Goodwill
Goodwill represents the excess of the purchase consideration over the fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary at the date of acquisition and is measured at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to those cash generating units (CGUs) or groups of CGUs that are expected to
benefit from the synergies of the business combination. Goodwill is tested annually for impairment or more frequently if events or changes in
circumstances indicate a potential impairment. Any impairment is charged immediately to the Income Statement and is not reversed in a
subsequent period.
Goodwill arising on acquisitions prior to the date of transition to IFRS (31 March 2004) has been retained at the previous UK GAAP net book
value following impairment tests.
Landfill void
Landfill void represents the acquisition of a landfill operation in the Netherlands, the landfill void was capitalised based on the fair value of the
void acquired. This asset is amortised over its estimated useful life on a void usage basis and measured at cost less accumulated amortisation.
The estimated remaining useful life is 18 years.
121
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies continued
Other intangibles
Other intangible assets are capitalised on the basis of the fair value of the assets acquired or on the basis of costs incurred to purchase and
bring the assets into use. They are subsequently measured at cost less accumulated amortisation. They are amortised over the estimated
useful life on a straight-line basis, as follows:
Contract right relating to leasehold land
Contract right relating to PFI/PPP contracts in Municipal
Computer software
Acquisition related intangibles:
Waste permits and licences
Customer relationships
Term of the lease
Term of the contract
1 to 5 years
5 to 20 years
Up to 14 years
Property, plant and equipment
Property, plant and equipment, except for freehold land and assets under construction, is stated at cost less accumulated depreciation and
provision for impairment. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working
condition for its intended use. Freehold land and assets under construction are not depreciated. The asset’s residual values and useful lives are
reviewed and adjusted if appropriate at the end of each reporting period.
Assets other than goodwill are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value. An impairment loss is recognised immediately as an operating expense and at each subsequent reporting
date the impairment is reviewed for possible reversal.
Buildings, plant and machinery
Depreciation is provided on these assets to write off their cost (less the expected residual value) on a straight line basis over the expected useful
economic lives as follows:
Buildings
Fixtures and fittings
Plant
Cars and service vehicles
Heavy goods vehicles
Other items of plant and machinery
Computer equipment
Up to 30 years
10 years
5 to 10 years
5 to 10 years
10 years
5 to 15 years
3 to 5 years
Landfill sites
Site development costs including engineering works are written off over the operational life of each site up to 30 years.
Leased assets
Finance leases
Where the Group has substantially all the risks and rewards of ownership of a leased asset, the lease is treated as a finance lease. Leased assets
are included in property, plant and equipment at the total of the capital elements of the payments during the lease term and the corresponding
obligation is included in borrowings. Depreciation is provided to write down the assets over the shorter of the expected useful economic life
and the lease term, unless there is reasonable certainty that the Group will obtain ownership of the asset by the end of the lease term, in which
case it is depreciated over its useful economic life.
122
1. Accounting policies continued
Operating leases
All leases other than finance leases are treated as operating leases. Rentals payable under operating leases are charged to the Income
Statement on a straight-line basis over the term of the relevant lease. The future aggregate minimum lease payments for operating leases are
shown in note 32.
Inventories
Inventories are stated at the lower of cost and net realisable value and are measured on a first in first out basis.
Provisions
Provisions are recognised where there is a present legal or constructive obligation as a result of a past event and it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the effect of the time value of money is material the value of a provision is the present value of the expenditures expected to
be required to settle the obligation. The discount rates are reviewed at each year end with consideration given to appropriate market rates and
the risk in relation to each provision. The unwinding of the discount to present value is included within finance costs.
The Group’s policies on provisions for specific areas are:
Site restoration provision
Full provision is made for the net present value (NPV) of the Group’s unavoidable costs in relation to restoration liabilities at its landfill sites.
In addition, the Group continues to provide for the NPV of intermediate restoration costs over the life of its landfill sites and mineral extraction
sites, based on the quantity of waste deposited or mineral extracted in the year.
Aftercare provision
Provision is made for the NPV of post closure costs at the Group’s landfill sites based on the quantity of waste deposited in the year.
Onerous contact provisions
Onerous contract provisions are recognised when under a contract the unavoidable costs of meeting the obligation exceed the economic
benefits expected to be received.
Restructuring provision
Provision for restructuring costs is recognised when a detailed formal plan exists and those affected by that plan have a valid expectation that
the restructuring will be carried out.
Employee benefits
Retirement benefits
The Group accounts for pensions and similar benefits under IAS 19 (revised) Employee Benefits. For defined benefit plans, obligations are
measured at discounted present value whilst plan assets are recorded at fair value. The operating and financing costs of the plans are
recognised separately in the Income Statement. Interest is calculated by applying the discount rate to the net defined pension liability.
Actuarial gains and losses are recognised in full through the Statement of Comprehensive Income; surpluses are recognised only to the extent
that they are recoverable. Movements in irrecoverable surpluses are recognised immediately in the Statement of Comprehensive Income.
Payments to defined contribution schemes are charged to the Income Statement as they become due. The Group participates in several multi-
employer schemes in the Netherlands and Belgium. With the exception of certain schemes in Belgium, these are accounted for as defined
contribution plans as it is not possible to split the assets and liabilities of the schemes between participating companies, and the Group has
been informed by the schemes that it has no obligation to make additional contributions in the event that the schemes have an overall deficit.
Share-based payments
The Group issues equity-settled share-based awards to certain employees. The fair value of share-based awards is determined at the date of
grant and expensed on a straight-line basis over the vesting period with a corresponding increase in equity based on the Group’s estimate of
the shares that will eventually vest. At each balance sheet date the Group revises its estimates of the number of options that are expected to
vest based on service and non-market performance conditions. The amount expensed is adjusted over the vesting period for changes in the
estimate of the number of shares that will eventually vest, except for changes resulting from any market-related performance conditions.
123
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies continued
Taxation
Current tax
Current tax is based on taxable profit or loss for the year. Taxable profit differs from profit before tax in the Income Statement because it
excludes items of income or expense that are taxable or deductible in other years or that are never taxable or deductible. The asset or liability
for current tax is calculated using tax rates that have been enacted, or substantively enacted, at the balance sheet date.
Deferred tax
Deferred tax is recognised in full where the carrying value of assets and liabilities in the financial statements is different to the corresponding tax
bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that the taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax is calculated at the tax rates that have been enacted, or substantively enacted, at the balance sheet
date.
Deferred tax is charged or credited in the Income Statement, except where it relates to items charged or credited directly to equity in which
case the deferred tax is also dealt with in equity.
Deferred income tax liabilities are not provided on taxable temporary differences arising from investments in subsidiaries, associates and joint
arrangements as the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities,
when they relate to income taxes levied by the same taxation authority.
Foreign currencies
The financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which
the entity operates (the functional currency). The consolidated financial statements are presented in Sterling, which is the Group’s
presentation currency.
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are
translated into the presentation currency of the Group as follows:
assets and liabilities at each balance sheet date are translated into Sterling at the closing year end exchange rate;
income and expenses in each Income Statement are translated into Sterling at the average rate of exchange for the year; and
the resulting exchange differences are recognised in the exchange reserve in other comprehensive income.
Cumulative exchange differences are recognised in the Income Statement in the year in which an overseas subsidiary undertaking is disposed of.
The most significant currencies for the Group were translated at the following exchange rates:
Value of £1
Euro
Canadian Dollar
31 March
2017
1.17
1.67
Closing rates
31 March
2016
1.26
1.86
Change
(7.3)%
(10.3)%
31 March
2017
1.19
1.79
Average rates
31 March
2016
1.37
1.97
Change
(12.8)%
(9.5)%
The Group applies the hedge accounting principles of IAS 39 Financial Instruments: Recognition and Measurement relating to net investment
hedging to offset the exchange differences arising on foreign currency denominated borrowings with the translation of foreign operations. Net
investment hedges are accounted for by recognising exchange rate movements in the exchange reserve, with any hedge ineffectiveness being
charged to the Income Statement in the period the ineffectiveness arises.
124
1. Accounting policies continued
Deferred consideration
Deferred consideration is provided for at the NPV of the Group’s expected cost or receipt at the date of acquisition or disposal. The likelihood
of payment or receipt for deferred consideration where conditional on meeting certain performance targets is considered on acquisition or
disposal. For acquisitions after 1 April 2010, any differences between consideration accrued and consideration paid or received are charged
or released to the Income Statement and before this date any differences are adjusted through goodwill.
Financial instruments
Trade receivables
Trade receivables do not carry interest and are recognised initially at their fair value and are subsequently measured at amortised cost less
provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not
be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the
asset’s carrying value and the value of estimated future cash flows. Subsequent recoveries of amounts previously written off are credited in the
Income Statement.
Trade receivables are derecognised when the Group’s rights to receive cash flows and substantially all the risks and rewards of ownership have
been transferred. In transactions where substantially all the risks and rewards of ownership have neither been transferred nor retained and
control has not been passed to the transferee, the Group continues to recognise the trade receivable to the extent of its continuing involvement
which is determined by the extent to which it remains exposed to changes in the value of the transferred asset.
Financial assets relating to PFI/PPP contracts
Financial assets relating to PFI/PPP contracts are classified as loans and receivables and are initially recognised at fair value of consideration
receivable and subsequently at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with a maturity of three months or less. Where the Group has a legal right
to offset with a financial institution and the intention to settle net, then bank overdrafts are offset against the cash balances.
External borrowings
Interest bearing loans and retail bonds are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Income Statement using the effective
interest rate method.
When the Group exchanges with an existing lender one debt instrument for another one with substantially different terms, such exchange is
accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly the Group accounts
for substantial modifications of the terms of an existing liability or part of it as an extinguishment of the original financial liability and the
recognition of a new liability. The terms are considered to be substantially different if the discounted present value of the cash flows under the
new terms, including any fees paid and discounted using the original effective rate, is at least 10% different from the discounted present value
of the remaining cash flows of the original financial liability. Any gain or loss on extinguishment is recognised in the Income Statement.
Trade payables
Trade payables are not interest bearing and are stated initially at fair value and subsequently held at amortised cost.
Other receivables and other payables
Other receivables and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest rate method.
Derivative financial instruments and hedging activities
In accordance with its treasury policy, the Group only holds derivative financial instruments to manage the Group’s exposure to financial risk.
The Group does not hold derivative financial instruments for trading or speculative purposes.
Such financial risk includes:
Interest risk and foreign exchange risk on the Group’s variable rate borrowings;
Commodity risk in relation to diesel consumption; and
Foreign exchange risk on the Group’s off-take contacts in the UK Municipal business.
125
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies continued
The Group manages these risks through a range of derivative financial instruments, including interest rate swaps, interest rate caps, cross-
currency interest rate swaps, forward foreign exchange contracts and fuel derivatives.
Derivative financial instruments are considered to be used for hedging purposes when they alter the risk profile of an underlying exposure of the
Group in line with the Group’s risk management policies. At the inception of the hedge relationship, the Group formally designates and
documents the relationship between the hedging instrument and hedged item, along with its risk management objectives and its strategy for
undertaking various hedge transactions. Such hedges are expected at inception to be highly effective and are assessed on an ongoing basis to
determine that they have been highly effective throughout the financial reporting periods for which they are designated.
Changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges are recognised in other
comprehensive income and subsequently reclassified into profit or loss as the hedged cash flows occur. Any ineffectiveness is recognised in the
Income Statement as a non-trading income or charge.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecast
transaction occurs at which point it is recognised in the Income Statement. If a hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognised in equity is recognised in the Income Statement immediately.
Certain derivative financial instruments do not quality for hedge accounting. Changes in the fair value of such instruments are recognised
immediately in the Income Statement as a non-trading income or charge.
Details of the fair values of the derivative financial instruments are disclosed in note 16.
Assets classified as held for sale
Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Assets are classified as held
for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the assets are available for sale in their present condition.
Called up share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or share options are shown in
equity as a deduction, net of tax, from the proceeds. Any excess of the net proceeds over the nominal value of any shares issued is credited to
the share premium account.
Dividends
Dividend distributions to the equity holders are recognised in the period in which they are approved by the shareholders in general meeting.
Interim dividends are recognised when paid.
Segmental reporting
The Group’s segmental reporting reflects the management structure which is aligned with the core activities of the Group. The reportable
segments are Commercial Waste, Hazardous Waste, Municipal, Van Gansewinkel Groep (VGG) and Group central services.
126
2. Key accounting judgements and estimates
The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenditure. The areas involving a higher degree of
judgement or complexity are set out below and in more detail in the related notes.
Underlying business performance
The Group uses alternative performance measures as they believe these measures provide additional useful information on the underlying
trends, performance and position of the Group. These include trading profit, underlying profit before tax, underlying profit after tax, underlying
free cash flow, underlying earnings per share and EBITDA (earnings before interest, tax, depreciation and amortisation). These measures are
used by the Group for internal performance analysis and incentive compensation arrangements for employees.
The terms ‘trading profit’, ‘exceptional items’ and ‘underlying’ are not defined terms under IFRS and may therefore not be comparable with similarly
titled profit measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measurements of profit.
The term ‘underlying’ refers to the relevant measure being reported for continuing operations excluding non-trading and exceptional items,
financing fair value remeasurements and amortisation of acquisition intangibles. ‘Trading profit’ is defined as continuing operating profit
before amortisation of acquisition intangibles and exceptional items. . The Group incurs costs each year in maintaining the acquired customer
relationships, permits and licences intangible assets and excludes amortisation of these assets from trading profit to avoid double counting
such costs within underlying results. EBITDA comprises trading profit from continuing operations before depreciation, amortisation and profit
or loss on disposal of property, plant and equipment. Reconciliations are set out in note 4.
A full list of alternative performance measures and non-IFRS measures are set out on page 189.
Non-trading and exceptional items
Items classified as non-trading and exceptional are disclosed separately due to their size or incidence to enable a better understanding of
performance. These include, but are not limited to, significant impairments, restructuring of the activities of an entity including employee severance
costs, acquisition and disposal related transaction costs, onerous contracts, profit or loss on disposal of properties or subsidiaries and amortisation
of acquisition intangibles. A full listing of those items presented as non-trading and exceptional is shown in note 4.
Service concession arrangements under PFI/PPP contracts
Financial assets are recognised in accordance with IFRIC 12. They represent the present value of the future cash flows of the contract. These
cash flows are dependent on, amongst other things, tonnages, indexation, recycling rates and labour costs.
UK PFI/PPP contracts
The Group’s UK PFI/PPP arrangements involve the construction of waste management facilities to be provided to local authorities. The building
of the facilities is governed by the engineer, procure and construct contract entered into by the Group. The construction work is undertaken by
third party contractors with drawdowns of financing from the UK PFI/PPP funders used to pay the subcontractor for the construction works.
The Group has considered all relevant factors in the contractual arrangements between the parties to determine whether the Group acts as
agent or principal during the construction phase of the contracts. The considerations taken into account in reaching this conclusion are:
The Group obtains quotes for the fixed price construction contract from a number of contractors as part of the preparation to submit a bid to
the municipality. Once the Group has been selected as preferred bidder it has no further opportunity to vary the prices it has bid other than
indexation for inflation following delay to financial close. The detailed specification and prices of the works are agreed in advance and
milestone payments are only made against works to the agreed specification. In the event that a revision to the specification of works is
required these and the pricing adjustment are jointly agreed with the municipality and the funders.
At the date of financial close direct agreements are signed between the municipality, the funders and the construction contractors which
govern the procedures for the completion of the waste management facilities.
The Group has an obligation to pay the construction contractor from the non-recourse bank debt regardless of any non-payment by the
municipality. In the event that the municipality fails to pay tonnage fees after the construction period there is a termination procedure which
calculates the amount of damages due to all parties including fully repaying the debt. We consider that the likelihood of the risk of the
municipality becoming insolvent is remote. Therefore in our view the weight of this factor in coming to our overall judgement is educed.
In the event that the construction contractor fails to perform under the terms of the contract the Group holds performance and retention
bonds which guarantee the obligations of the contractor. Any additional costs arising from having to replace the contractor, should they arise,
would be satisfied by payments from the bonds.
The Group earns certain fixed fees in connection with UK PFI/PPP arrangements. These fees represent consideration for services delivered
before financial close or for ongoing project management.
127
NOTES TO THE FINANCIAL STATEMENTS
2. Key accounting judgements and estimates continued
In summary we consider that, on the basis that the construction contractor is known to the municipality at the date of financial close and in
view of the negligible credit risk taken by the Group, on balance, despite some overall risk residing with the Group for delivery of services, we
consider that we act as agent versus principal in the provision of construction services. Accordingly, revenue and costs for the construction are
not recognised gross in the Income Statement.
In light of these conclusions and the presentation of the revenue and costs associated with the construction services net in the Income
Statement, we consider that the most appropriate classification of the PFI/PPP non-recourse debt cash flows associated with the construction
of the waste management facilities in the Statement of Cash Flows is as financing and investing cash flows respectively and not as operating
cash flows. This classification has been consistently applied to all periods presented in the financial statements.
The Group is the operator for one class of service concession arrangements, that of the provision of waste treatment and waste treatment
facilities, and these are classified as service concession arrangements in accordance with IFRIC. If the Group underperforms, including failure to
divert waste from landfill, the contract can be terminated before the end of its term.
Canadian PPP contract
The Group’s Canadian PPP arrangement involves the construction of waste management facilities to be provided to the City of Surrey. The
building of the facilities is governed by the design-build agreement entered into by the Group. The construction work is undertaken by third
party contractors with the financing provided from the Group’s core bank facilities.
All relevant factors in the contractual arrangements between the parties have been considered to determine whether the Group acts as agent
or principal during the construction phase of the contracts. Given the level of risks and rewards borne by the Group it has been concluded that
we act as principal in this contract. Revenue and costs for the construction are therefore recognised gross in the Income Statement and the
cash flows associated with the construction of the waste management facilities are classified as operating cash flows in the Statement of Cash
Flows. For the year ended March 2017 the construction revenue recognised was £20.8m (2016: £13.8m).
Other information for PFI/PPP contracts
The table below sets out the Group’s interest in service concession arrangements as at 31 March 2017.
Contract
Financial close
Full Service Commencement
(actual or forecast)
April 2003
September 2001
June 2009
April 2013
Contract Expiry
Interests in Special Purpose Vehicle
September 2026
June 2034
Renewi: 100%
Renewi: 100%
January 2013
December 2015
February 2038
Renew: 50.001%
Equitix Infrastructure 4 Limited:
49.99%
City of Surrey (Canada)
February 2015
January 2042
Renewi: 100%
March 2012
June 2040
Late 2017
July 2015
Argyll & Bute
Cumbria
Wakefield
Barnsley, Doncaster
and Rotherham
Derby City
and Derbyshire
August 2014
January 2018
March 2042
Dumfries and Galloway
November 2004
February 2007
September 2029
East London
Waste Authority
December 2002
August 2007
December 2027
Renewi: 75%
SSE Generation Limited: 25%
Renewi: 50%
Interserve Developments No 4
Limited: 50%
Renewi: 20%
John Laing Environmental Assets
Group (UK) Limited: 80%
Renewi: 20%
John Laing Environmental Assets
Group (UK) Limited: 80%
Following the entering into a share purchase agreement on 30 March 2016 the sale of 49.99% of the equity interest in Wakefield Waste PFI
Holdings completed on 17 August 2016.
The design and build phase of the facility for the City of Surrey service concession arrangement remains in progress with full service
commencement scheduled for late 2017.
There have been no changes to the other arrangements during the year ended 31 March 2017. Further disclosures in respect of service
concession arrangements as required by paragraph 6 SIC 29 are provided on pages 32 to 35 of the review of Municipal.
128
2. Key accounting judgements and estimates continued
PPP contracts in the Netherlands
Following the acquisition of VGG, the Group now participates in PPPs with local governments in the Netherlands with regard to waste collecting
activities. The PPP entities are each 100% owned by the local government municipality with the Group wholly responsible for the management
of the legal entity. In addition to 100% ownership by the municipality, the considerations taken into account in reaching this conclusion are that
the municipality has the ability to direct the activities that significantly affect the investee’s returns through approval of budgets, investment
plans and business plans and has the ability to terminate the operating agreement. The Group has considered all relevant factors in the
contractual arrangements between the parties and has concluded that the municipality has control over the PPPs and therefore the PPP
entities are not consolidated within the Group’s financial statements.
Invoice finance facilities
The Group has entered into invoice finance facilities whereby certain of its trade receivables are sold to third parties on a monthly basis. Trade
receivables subject to the arrangement are derecognised if it is assessed that substantially all risks and rewards and rights to receive cash flows
have been transferred. For trade receivables where the Group has neither transferred nor retained substantially all the risks and rewards of
ownership and control has not passed to the third party, the Group continues to recognise part of the trade receivable according to the Group’s
continuing exposure to the risks and rewards of the financial asset. The continuing involvement on the non-recourse invoice finance facility is
the remaining late payment risk and is included within trade receivables and other payables.
The Group continues to perform the servicing of the receivables sold and is not authorised to use the receivables sold other than in its capacity
as servicer. The value of this service is not considered material for specific disclosure. Residual amounts owed from the third parties under the
arrangement are disclosed in note 21.
Impairment of intangible assets
In conducting the impairment review on goodwill and intangibles, management is required to make estimates of pre-tax discount rates, future
profitability and growth rates. Detailed descriptions of assumptions and values are given in note 13.
Provisions
Restoration and aftercare provisions are recognised in the financial statements at the net present value of the estimated future expenditure
required to settle the Group’s restoration and aftercare obligations. A discount is applied to recognise the time value of money and is unwound
over the life of the provision. Provisions also include the present value of the estimated operating losses on loss-making onerous contracts.
Further information is set out in note 26.
Retirement benefit schemes
The Group operates defined benefit schemes in the UK, the Netherlands and Belgium for which actuarial valuations are carried out as
determined by the trustees at intervals of not more than three years. The pension cost under IAS 19 (revised) Employee Benefits is assessed in
accordance with management’s best estimates using the advice of an independent qualified actuary and assumptions in the latest actuarial
valuation. The principal assumptions in connection with the Group’s retirement benefit schemes are set out in note 27.
Taxation
The Group operates principally in the Netherlands, Belgium, the UK, France, Germany and Canada, all of which have their own tax legislation.
Deferred tax assets and liabilities have been calculated based on the substantially enacted tax rates in the relevant jurisdictions at the balance
sheet date or those rates expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The Group has
available tax losses, some of which have been recognised as a tax asset and some have not based on management’s best estimate of the ability
of the Group to utilise those losses. Further information is set out in note 18.
129
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental reporting
The Group’s chief operating decision maker is considered to be the Board of Directors. The Group’s reportable segments determined with
reference to the information provided to the Board of Directors in order for it to allocate the Group’s resources and to monitor the performance
of the Group are set out below. Following the recent acquisition of the Van Gansewinkel Groep (VGG) on 28 February 2017 the results of VGG
have been reported as a separate reportable segment with no changes to the existing segments.
Commercial Waste
Collection and treatment of commercial waste in the Netherlands and Belgium.
Hazardous Waste
Industrial cleaning and treatment of hazardous waste in the Netherlands.
Municipal
Operation of waste management facilities under long-term municipal contracts in the UK and Canada.
Van Gansewinkel Groep (VGG) Waste collection, recycling and head office functions operating principally in the Netherlands and Belgium
Group central services
Head office corporate function.
The Commercial Waste division includes the Netherlands and Belgium operating segments and the Municipal division includes the UK and Canada
operating segments, based on geographical location. Operating segments within the Commercial Waste and Municipal divisions have been
aggregated as they operate in similar markets in relation to the nature of the products, services, production processes and type of customer.
The profit measure the Board of Directors uses to evaluate performance is trading profit. Trading profit is continuing operating profit before the
amortisation of acquisition intangibles, non-trading and exceptional items. The Group accounts for inter-segment trading on an arm’s length basis.
Revenue
Netherlands Commercial Waste
Belgium Commercial Waste
Commercial Waste
Hazardous Waste
UK Municipal
Canada Municipal
Municipal
VGG
Inter-segment revenue
Total revenue from continuing operations#
#Total revenue from continuing operations in 2016 excludes the impact of the non-trading item of £1.0m.
2017
£m
226.6
121.0
347.6
160.2
174.8
32.8
207.6
71.5
2016
£m
185.5
111.8
297.3
136.2
163.5
24.2
187.7
–
(7.7)
779.2
(6.4)
614.8
130
3. Segmental reporting continued
Results
Netherlands Commercial Waste
Belgium Commercial Waste
Commercial Waste
Hazardous Waste
UK Municipal
Canada Municipal
Bid costs
Municipal
VGG
Group central services
Total trading profit
Non-trading and exceptional items
Total operating (loss) profit from continuing operations
Finance income
Finance charges
Finance charges – non trading and exceptional items
Share of results from associates and joint ventures
Loss before taxation and discontinued operations
2017
£m
16.0
6.6
22.6
19.3
(4.2)
1.8
(0.2)
(2.6)
3.9
(6.7)
36.5
(75.5)
(39.0)
10.3
(23.1)
(11.6)
2.0
(61.4)
2016
£m
10.0
5.4
15.4
15.6
7.8
2.0
(0.4)
9.4
–
(7.0)
33.4
(23.6)
9.8
16.7
(30.0)
–
1.0
(2.5)
Net Assets
31 March 2017
Gross non-current assets
Gross current assets
Gross liabilities
Net assets (liabilities)
31 March 2016
Gross non-current assets
Gross current assets
Gross liabilities
Net assets (liabilities)
Operating Assets
Commercial
Waste
£m
Hazardous
Waste
£m
Municipal
£m
VGG
£m
Group
central
services
£m
Tax, net
debt and
derivatives
£m
Total
continuing
operations
£m
Discontinued
operations
£m
Total
£m
280.8
68.0
(131.8)
217.0
267.6
61.0
(125.6)
203.0
180.2
29.2
(42.0)
167.4
171.3
26.6
(38.2)
159.7
245.6
51.8
(112.4)
185.0
681.5
123.6
(302.2)
502.9
209.5
53.1
(92.1)
170.5
–
–
–
–
0.4
0.6
(40.9)
(39.9)
1.6
0.6
(21.2)
(19.0)
31.6
75.0
1,420.1
348.2
(701.5) (1,330.8)
437.5
(594.9)
0.8
–
(0.2)
0.6
1,420.9
348.2
(1,331.0)
438.1
19.9
35.0
(387.3)
(332.4)
669.9
176.3
(664.4)
181.8
0.5
0.7
(0.2)
1.0
670.4
177.0
(664.6)
182.8
131
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental reporting continued
Other disclosures
31 March 2017
Capital expenditure:
Property, plant and equipment
Intangible assets
Depreciation charge
Amortisation of intangibles
Impairment charge:
Intangible assets
Property, plant and equipment
31 March 2016
Capital expenditure:
Property, plant and equipment
Intangible assets
Depreciation charge
Amortisation of intangibles
Impairment charge:
Property, plant and equipment
Commercial
Waste
£m
Hazardous
Waste
£m
Municipal
£m
VGG
£m
Group central
services
£m
Discontinued
operations
£m
19.1
2.1
24.6
3.6
–
0.3
18.8
0.8
22.5
3.5
0.5
7.3
0.3
9.9
0.6
–
–
8.5
0.2
8.4
0.5
–
0.9
8.4
3.3
0.2
3.2
6.0
1.1
3.9
2.3
0.2
–
7.0
0.3
4.0
0.8
–
–
–
–
–
–
–
–
–
–
–
0.2
–
–
–
–
–
0.2
–
–
–
–
–
–
0.5
–
–
–
–
–
–
Total
£m
34.3
11.1
41.8
5.4
3.2
6.8
28.4
4.9
33.2
4.4
0.5
Geographical information – continuing operations
The Group’s revenue from external customers and information about its segment assets (non-current assets being intangibles assets, property plant
and equipment and investments in joint ventures, associates and other unlisted investments.) by geographical location are detailed below:
Revenue from external customers
Non-current assets
2017
£m
423.0
145.7
174.8
32.8
1.8
0.9
0.2
–
779.2
2016
£m
315.3
110.8
163.5
24.2
–
–
–
–
613.8
2017
£m
769.9
324.4
36.1
28.1
37.7
9.0
0.9
0.4
1,206.5
2016
£m
401.4
37.6
38.2
25.1
–
–
–
–
502.3
Netherlands
Belgium
UK
Canada
France
Portugal
Germany
Hungary
132
4. Non-trading and exceptional items
To improve the understanding of the Group’s financial performance, items which are not considered to reflect the underlying performance are
presented in non-trading and exceptional items.
Continuing operations
Restructuring charges and employee related costs
Portfolio management activity:
Acquisition costs
Synergy delivery costs
Integration costs
Industrial Cleaning disposal in Belgium
Disposals in the Netherlands
Wakefield equity and subordinated debt disposal
Other items:
Onerous contract provisions
Municipal contract issues
Costs relating to a fire
ATM waterside contamination
ATM soil revenue recognition
Profit on disposal of land (Vliko)
Prior period exceptional provision releases
Exceptional finance costs
Impairment of assets and goodwill
Amortisation of acquisition intangibles
Change in fair value of derivatives at fair value through profit or loss
Non-trading and exceptional items in loss before tax
Tax on non-trading and exceptional items
Non-trading and exceptional items in loss after tax
Discontinued operations
Total non-trading and exceptional items in loss after tax
The above non-trading and exceptional items include the following:
Note
17
17
17
13
10
2017
£m
2.4
18.9
4.5
2.9
0.4
(0.3)
–
26.4
28.2
5.3
1.6
–
–
–
–
35.1
11.6
9.5
2.1
–
87.1
(6.4)
80.7
0.5
81.2
2016
£m
2.4
0.8
–
–
3.7
–
5.0
9.5
5.0
4.9
–
1.3
1.0
(2.7)
(0.1)
9.4
–
0.5
1.8
(0.1)
23.5
(0.8)
22.7
(0.4)
22.3
Restructuring charges and employee related costs
Restructuring and employee related charges were incurred for structural cost reduction programmes across the Group in place prior to the
merger of £1.5m (2016: £2.4m) and reassessment of prior year employee related provisions of £0.9m (2016: £nil). The total cost of £2.4m is
recorded in administrative expenses (2016: £2.4m).
Portfolio management activity
Acquisition related costs of £18.9m (2016: £0.8m) principally comprising advisory, corporate finance and legal fees have been incurred in
relation to the merger with Van Gansewinkel Groep BV. Synergy costs of £4.5m (2016: £nil) and integration costs of £2.9m (2016: £nil) were
incurred as the Group starts to execute merger plans for generating value.
Following the sale of the loss-making industrial cleaning business in the prior year further costs of £0.4m (2016: £3.7m) were incurred. The
disposals in the Netherlands generated a profit of £0.3m including the loss on the sale of the groundworks business (£0.6m), profit on sale of
surplus land in Netherlands Commercial Business (£0.5m) and the profit on sale of a closed facility in Hazardous Waste (£0.4m).
The total charge of £26.4m is recorded in administrative expenses (2016: £0.1m in cost of sales and £9.4m in administrative expenses).
133
NOTES TO THE FINANCIAL STATEMENTS
4. Non-trading and exceptional items continued
Other items
The onerous contract charge of £28.2m (2016: £5.0m) includes increases in the Cumbria (£2.2m) and D&G (5.0m) onerous contract provisions
which were classified as exceptional in previous years. New provisions were recognised this year in relation to the BDR operating contract
(£8.6m), a provision for a specific loss-making contract entered into under the ELWA operating contact (£1.6m) and a provision for the
commissioning of the Derby facility due to an uncontrollable delay in completion (£1.8m). Separately, a provision has been recognised to cover
incremental capital works that are required at BDR and Wakefield to enable the plants to function as intended (£9.0m).
The Municipal contract issues of £5.3m (2016: £4.9m) relate to the Derby, Wakefield, ELWA and Canada contracts. As a result of the insolvency of
one of the major contractors for the Derby contract, there has been a delay in the commissioning of the facility. The Group is largely protected
from this as it is not involved in the construction of the project, however liquidated damages and associated costs of £1.7m will be incurred. At
Wakefield, £2.5m of additional third party cleaning and disposal costs have been incurred in the year due to operational issues following on
from the subcontractor insolvency last year. Other items totalling £1.1m include reinstatement works on leased land (£0.6m) and a legal claim
in Canada (£0.5m).
Costs of £1.6m have been incurred relating to incremental operating costs which were unable to reclaimed under the Group’s business
interruption insurance following the fire at the UK Municipal East London site in August 2014.
The total charge of £35.1m (2016: £9.4m) is recorded as £32.0m in cost of sales and £3.1m in administrative expenses (2016: £1.0m in revenue,
£1.4m credit in cost of sales and £9.8m in administrative expenses).
Finance costs
The total charge of £11.6m (2016: £nil) includes the costs of arranging the banking facility, extinguishment of the previous facility together with
the settlement of the Pricoa deferred premium.
Impairment of assets and goodwill
Impairment of assets of £9.5m (2016: £0.5m) relates to plant and equipment at the Westcott Park UK Municipal facility (£6.0m), contract rights
in UK Municipal (£3.2m) and Shanks branding on trucks in Netherlands Commercial (£0.3m). The prior year impairment charge of £0.5m
principally related to plant and equipment at the Shanks Wood Products biomass facility in Belgium as a result of market changes. The charge
was split £9.2m (2016: £0.1m) in cost of sales and £0.3m (2016: £0.4m) in administrative expenses.
Amortisation of acquisition intangibles
Amortisation of intangible assets acquired in business combinations of £2.1m (2016: £1.8m) is all recorded in cost of sales.
Reconciliation of trading profit to EBITDA from continuing operations
Trading profit
Depreciation of property, plant and equipment
Amortisation of intangible assets (excluding acquisition intangibles)
Non-exceptional gains on disposal of property, plant and equipment
Landfill related expense and provisioning
EBITDA from continuing operations
2017
£m
36.5
41.8
3.3
(0.5)
(0.7)
80.4
2016
£m
33.4
33.2
2.6
(0.3)
(0.4)
68.5
134
5. Operating profit
Operating profit for the year is stated after charging (crediting):
Continuing operations
Staff costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Repairs and maintenance expenditure on property, plant and equipment
Net profit on disposal of property, plant and equipment
Non-trading and exceptional items
Trade receivables impairment
Government grants
Operating lease costs:
– Minimum lease payments
– Less sub-lease rental income
Remuneration of the Group’s auditor, PricewaterhouseCoopers LLP and its associates:
– Audit of parent company and consolidated financial statements
– Audit of subsidiaries pursuant to legislation
Fees payable to the auditors pursuant to legislation
Corporate finance services
Other non-audit services
Total fees
Note
6
14
13
4
21
2017
£m
178.2
41.8
5.4
42.8
(0.5)
75.5
1.4
(0.1)
15.8
(0.3)
15.5
2017
£m
0.2
1.0
1.2
3.1
0.1
4.4
2016
£m
144.1
33.2
4.4
35.1
(0.3)
23.6
1.3
(0.3)
11.2
(0.2)
11.0
2016
£m
0.2
0.5
0.7
–
0.1
0.8
Corporate finance services relate to professional services performed in respect of the acquisition of VGG. The Corporate Governance section on
page 84 includes an explanation of how the external auditor's objectivity and independence are safeguarded when non-audit services are
provided by the external auditor.
6. Employees
Staff costs and the average monthly number of employees analysed by reportable segment are shown below:
Wages and salaries
Social security costs
Share-based benefits
Other pension costs
Total staff costs
The average number of employees by reportable segment during the year was:
Commercial Waste
Hazardous Waste
Municipal
VGG*
Group central services
Total average number of employees
* For the VGG reportable segment the number of employees for the month of March 2017 was 3,709.
Note
7
27
2017
£m
139.5
25.4
0.5
12.8
178.2
1,895
758
665
309
18
3,645
2016
£m
112.0
21.3
0.5
10.3
144.1
2,012
783
631
–
20
3,446
135
NOTES TO THE FINANCIAL STATEMENTS
7. Share-based payments
As described in the Remuneration Report, the Group issues equity-settled share-based payments under a Savings Related Share Option
Scheme (SRSOS), a Long Term Incentive Plan (LTIP) and a Deferred Annual Bonus (DAB) arrangement. The final options under the Executive
Share Option Scheme (ESOS) expired on 5 June 2015.
Outstanding options – SRSOS and LTIP
SRSOS
ESOS
LTIP
Outstanding at 1 April 2015
Granted
Forfeited
Expired
Exercised
Outstanding at 31 March 2016
Rights issue adjustment*
Granted*
Forfeited*
Expired*
Exercised*
Outstanding at 31 March 2017
Exercisable at 31 March 2017
Exercisable at 31 March 2016
Weighted average share price at date of exercise
At 31 March 2017:
Range of price per share at exercise
Weighted average remaining contractual life
Weighted
average
exercise
price
114p
–
–
114p
–
–
–
–
–
–
–
–
Options
Number
33,979
–
–
(33,979)
–
–
–
–
–
–
–
–
Options
Number
11,625,000
3,708,000
(880,000)
(3,856,000)
–
10,597,000
1,595,447
4,710,000
(598,288)
(4,868,019)
–
11,436,140
Options
Number
1,307,369
816,336
(425,838)
(25,260)
(339,140)
1,333,467
198,294
537,060
(277,833)
(86,679)
(233,202)
1,471,107
35,143
70,910
Weighted
average
exercise
price
79p
75p
80p
90p
74p
77p
(10p)
83p
69p
67p
66p
73p
63p
73p
94p
65.2p to 82.6p
1 – 2 years
*All information is given as if the Rights Issue occurred on 1 April 2016 to enable comparison (see note 28 for details of the Rights Issue).
Fair value of options granted during the year
Valuation model
Weighted average fair value
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free interest rate
Dividend yield
SRSOS
LTIP
2017
Black-
Scholes
19p
92p
71p
25%
3 years
0.1%
3.9%
2016
Black-
Scholes
18p
90p
75p
26%
3 years
0.5%
3.4%
2017
Discounted
89p
89p
–
–
3 years
–
–
2016
Discounted
109p
109p
–
–
3 years
–
–
2017
Monte
Carlo
34p
89p
–
27%
3 years
0.3%
–
2016
Monte
Carlo
29p
109p
–
26%
3 years
0.7%
3.4%
For the LTIP awards granted, the fair value of the element subject to non-market conditions has been calculated using a discounted model
based on the share price at the award date and the expense recognised is based on expectations of these conditions being met which are
reassessed at each balance sheet date. The awards granted in 2016/17 vest after three years, three and a half years and four and a half years.
The awards granted during 2014/15 and 2015/16 vest after three years, four years and five years. There is no service condition after three years
on any of the awards granted, just a holding period of between half a year and two years.
The Monte Carlo valuation model is used to determine the weighted average fair value of the market conditions element of awards granted.
Expected volatility has been calculated using average volatility historical data over a three-year period from the grant date. The risk-free interest
rate is based on the implied yield of zero-coupon government bonds with a remaining term equal to the expected life. The expected life used in
the models equals the vesting period.
136
7. Share-based payments continued
Deferred Annual Bonus (DAB)
On 23 November 2016 364,372 shares were granted in relation to the DAB for the year ended March 2016 and in the prior year 182,149 shares
(adjusted in relation to the Rights Issue) were granted in relation to the year ended March 2015. The DAB awards for the year ended March 2017
have not yet been granted and therefore the charge is based on an estimate.
Further details and performance metrics of both LTIPs and DABs can be found in the Directors’ Remuneration Report on pages 86 to 101.
Charge for the year
The Group recognised a total charge of £0.5m (2016: £0.5m) relating to equity-settled share-based payments.
8. Net finance charges
Continuing operations
Finance charges
Interest payable on borrowings wholly repayable within five years
Interest payable on borrowings repayable after five years
Interest payable on PFI/PPP non-recourse net debt
Unwinding of discount on provisions (note 26)
Interest charge on the retirement benefit schemes (note 27)
Amortisation of loan fees
Other finance costs
Total finance charges
Finance income
Interest receivable on financial assets relating to PFI/PPP contracts (note 20)
Unwinding of discount on deferred consideration receivable
Interest income on bank deposits
Interest receivable on other loans and receivables
Total finance income
Change in fair value of derivatives at fair value through profit or loss
Exceptional finance charges (note 4)
Net finance charges
9. Taxation
The tax (credit) charge based on the loss for the year from continuing operations is made up as follows:
Current tax:
UK corporation tax
– Current year
Overseas tax
– Current year
– Prior year
Total current tax
Deferred tax (note 18)
– Origination and reversal of temporary differences in the current year
– Adjustment in respect of prior year
Total deferred tax
Total tax (credit) charge for the year
2017
£m
7.9
2.9
7.3
2.6
0.3
1.0
1.1
23.1
(9.6)
(0.2)
–
(0.5)
(10.3)
–
11.6
24.4
2017
£m
1.4
3.7
0.2
5.3
(5.3)
(0.5)
(5.8)
(0.5)
2016
£m
9.5
1.9
14.2
2.3
0.5
1.1
0.5
30.0
(16.2)
(0.2)
(0.1)
(0.1)
(16.6)
(0.1)
–
13.3
2016
£m
1.0
3.1
0.2
4.3
(2.6)
(0.2)
(2.8)
1.5
137
NOTES TO THE FINANCIAL STATEMENTS
9. Taxation continued
The tax on the Group’s loss for the year from continuing operations differs from the UK standard rate of tax of 20% (2016: 20%), as
explained below:
Total loss before taxation
Tax credit based on UK tax rate of 20% (2016: 20%)
Effects of:
Adjustment to tax charge in respect of prior years
Profits taxed at overseas tax rates
Non-deductible (non-taxable) other items
Non-deductible transaction costs
Non-taxable disposals
Unrecognised deferred tax assets
Change in tax rate
Total tax (credit) charge for the year
2017
£m
(61.4)
(12.3)
(0.3)
0.8
1.3
1.9
–
6.4
1.7
(0.5)
2016
£m
(2.5)
(0.5)
–
–
(1.2)
–
(1.6)
3.8
1.0
1.5
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2015 (on 26 October 2015) and Finance Bill 2016 (on
7 September 2016). These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 17% from 1 April 2020. As a
result the UK deferred tax for the year has been calculated based on the enacted rates of 17%, 19% and 20% depending on when the timing
differences are expected to reverse (2016: 18%,19% and 20%).
10. Discontinued operations
The table below show the results of the UK Solid Waste discontinued operations which are included in the Income Statement.
Income Statement
Revenue
Cost of sales
Administrative expenses
Trading loss before exceptional and non-trading items
Exceptional and non-trading items
Operating profit before tax on discontinued operations
Taxation
Profit after tax on discontinued operations
2017
£m
–
–
–
–
(0.5)
(0.5)
–
(0.5)
2016
£m
0.1
(0.2)
(0.2)
(0.3)
0.4
0.1
–
0.1
The £0.5m non-trading item related to the impairment of an unused piece of land based on the recoverable amount calculated on the fair value
less costs to sell. The prior year gain related to profit generated on the sale of the Kettering material recycling facility.
The net cash inflow generated from the discontinued operations included in the consolidated cash flow statement was £0.4m (2016: £2.8m inflow).
138
11. Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend paid for the year ended 31 March 2016 of 2.35p per share (2015: 2.35p)
Interim dividend paid for the year ended 31 March 2017 of 0.95p per share (2016: 1.1p)
Proposed final dividend for the year ended 31 March 2017 of 2.1p per share (2016: 2.35p)
Total dividend per share
12. Earnings per share
Number of shares
Weighted average number of ordinary shares for basic earnings per share
Effect of share options in issue
Weighted average number of ordinary shares for diluted earnings per share
Continuing operations
Loss attributable to owners of the parent used to determine basic and diluted earnings per share (£m)
Non-trading and exceptional items (net of tax) (£m) (see note 4)
Earnings attributable to owners of the parent for underlying basic and underlying diluted earnings per share (£m)
Basic and diluted loss per share
Underlying and underlying diluted earnings per share (see note below)
Discontinued operations
(Loss) profit attributable to owners of the parent used to determine basic and diluted earnings per share (£m)
Non-trading and exceptional items (net of tax) (£m) (see note 4)
Loss attributable to owners of the parent for underlying basic and underlying diluted earnings per share (£m)
Basic and diluted loss per share
Underlying and underlying diluted loss per share (see note below)
Total operations
Loss attributable to owners of the parent used to determine basic and diluted earnings per share (£m)
Non-trading and exceptional items (net of tax) (£m) (see note 4)
Earnings attributable to owners of the parent for underlying basic and underlying diluted earnings per share (£m)
Basic and diluted loss per share
Underlying and underlying diluted earnings per share (see note below)
*Earnings (loss) per share for 2016 has been restated to reflect the bonus factor within the 2017 equity raise .
2017
£m
9.4
5.7
15.1
16.8
3.05p
2016
£m
9.3
4.4
13.7
9.4
3.45p
2017
2016*
536.3m
0.9m
537.2m
449.5m
0.5m
450.0m
(60.6)
80.7
20.1
(11.3)p
3.7p
(0.5)
0.5
–
(0.1)p
–
(61.1)
81.2
20.1
(11.4)p
3.7p
(4.0)
22.7
18.7
(0.9)p
4.2p
0.1
(0.4)
(0.3)
–
(0.1)p
(3.9)
22.3
18.4
(0.9)p
4.1p
As detailed in note 28, the Group issued new shares during the year by way of a firm placing and rights issue. As required by International
Accounting Standard 33 – Earnings per Share, the Group has adjusted the current year and prior year basic, diluted and underlying earnings per
share, for the bonus element included within the placing and rights issue. The bonus adjustment factor was 1.129.
The Directors believe that adjusting basic earnings per share for the effect of the amortisation of acquisition intangibles, the change in fair value
of derivatives, non-trading and exceptional items enables comparison with historical data calculated on the same basis. Exceptional items are
those items that need to be disclosed separately on the face of the Income Statement, because of their size or incidence, to enable a better
understanding of performance.
139
NOTES TO THE FINANCIAL STATEMENTS
13. Intangible assets
Cost
At 1 April 2015
Acquisition through business combination
Additions
Disposals
Reclassification (note 20)
Exchange
At 31 March 2016
Acquisition through business combination – VGG
Acquisition through business combination – other
Additions
Exchange
At 31 March 2017
Accumulated amortisation and impairment
At 1 April 2015
Amortisation charge
Disposals
Exchange
At 31 March 2016
Amortisation charge
Impairment charge
Exchange
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
Goodwill
£m
Landfill void
£m
Computer
software and
others
£m
Acquisition
related
intangibles
£m
200.6
0.3
–
(0.1)
–
18.7
219.5
337.2
0.2
–
17.6
574.5
46.2
–
(0.1)
4.4
50.5
–
–
4.0
54.5
520.0
169.0
154.4
18.6
–
–
–
–
1.7
20.3
–
–
–
1.6
21.9
9.7
1.4
–
0.8
11.9
1.4
–
1.0
14.3
7.6
8.4
8.9
11.6
–
4.9
(0.1)
3.9
1.1
21.4
9.1
–
11.1
1.0
42.6
6.5
1.2
(0.1)
0.7
8.3
1.9
3.2
0.6
14.0
28.6
13.1
5.1
23.8
–
–
–
–
2.2
26.0
44.0
0.8
–
2.2
73.0
18.4
1.8
–
1.8
22.0
2.1
–
1.8
25.9
47.1
4.0
5.4
Total
£m
254.6
0.3
4.9
(0.2)
3.9
23.7
287.2
390.3
1.0
11.1
22.4
712.0
80.8
4.4
(0.2)
7.7
92.7
5.4
3.2
7.4
108.7
603.3
194.5
173.8
The £11.1m (2016: £4.9m) additions in the year include £8.1m (2016: £3.7m) contract rights in relation to Municipal contracts. The
reclassification in the prior year of £3.9m related to UK Municipal contract rights which have been reclassified from financial assets.
Of the total £5.4m (2016: £4.4m) amortisation charge for the year, £2.1m (2016: £1.8m) related to intangible assets arising on acquisition. Of the
remaining amortisation expense of £3.3m (2016: £2.6m), £1.9m (2016: £1.6m) has been charged in cost of sales and £1.4m (2016: £1.0m) has
been charged in administrative expenses.
The acquisition related intangibles net book value of 47.1m (2016: £4.0m) included customer relationships of £31.5m (2016: £1.3m), permits of
£7.3m (2016: £1.8m) and licences of £7.7m (2016: £nil).
The impairment charge of £3.2m (2016: £nil) for the year related to contract right intangibles in UK Municipal as it has been determined that
they are no longer recoverable.
140
13. Intangible assets continued
Goodwill impairment
Impairment testing is carried out at cash generating unit (CGU) level on an annual basis. The following is a summary of the goodwill allocation
for each reporting segment:
Commercial Waste
Hazardous Waste
Municipal
VGG
Total goodwill
2017
£m
67.0
99.6
15.7
337.7
520.0
2016
£m
61.9
92.3
14.8
–
169.0
The Group estimates the recoverable amount of a CGU using a value in use model by projecting cash flows for the next five years together with
a terminal value using a growth rate. The key assumptions underpinning the recoverable amounts of the CGUs tested for impairment is forecast
revenue and trading profit. The forecast revenues in these models are based on management’s predictions of overall market growth rates,
including both volume and price. Trading margin is the average trading profit margin as a percentage of revenue over the five-year forecast
period. The five-year plans used in the impairment models are based on management’s past experience and future expectations of
performance and reflect the planned changes in the CGUs as a result of restructuring programmes and actions instigated in the current year
together with limited recovery and improvement in general market and economic conditions.
For each of the CGUs with significant goodwill in comparison with the total carrying value of goodwill of the Group, the key assumptions, long-
term growth rate and discount rate used in the value in use calculations are shown below.
31 March 2017
Revenue (% annual growth rate)
Trading margin (average % of revenue)
Long-term growth rate
Pre-tax discount rate
31 March 2016
Revenue (% annual growth rate)
Trading margin (average % of revenue)
Long-term growth rate
Pre-tax discount rate
Netherlands
Commercial
Waste
3.6%
7.8%
2.0%
8.6%
Netherlands
Commercial
Waste
2.9%
7.8%
2.0%
8.6%
Hazardous
Waste
1.2%
14.1%
2.0%
8.7%
Hazardous
Waste
2.5%
13.2%
2.0%
8.6%
VGG
1.0%
4.7%
2.0%
8.9%
VGG
–
–
–
–
The recoverable amounts of the Commercial, Hazardous Waste, Municipal and VGG CGUs were in excess of the carrying values and it is
considered unlikely that any reasonably possible change to key assumptions would result in an impairment charge.
141
NOTES TO THE FINANCIAL STATEMENTS
14. Property, plant and equipment
Cost
At 1 April 2015
Acquisition through business combination
Additions
Disposals
Transfer from assets held for sale
Exchange
At 31 March 2016
Acquisition through business combination (note 17)
Additions
Disposals
Exchange
At 31 March 2017
Accumulated depreciation and impairment
At 1 April 2015
Depreciation charge
Impairment charge
Disposals
Transfer from assets held for sale
Exchange
At 31 March 2016
Depreciation charge
Impairment charge
Disposals
Exchange
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
Land and
buildings
£m
Landfill
sites
£m
Plant and
machinery
£m
226.7
–
11.5
(6.6)
3.3
17.9
252.8
140.4
7.8
(4.4)
20.4
417.0
88.3
8.0
0.2
(3.9)
1.7
7.6
101.9
10.0
0.5
(2.6)
8.1
117.9
299.1
150.9
138.4
36.5
–
–
–
–
3.4
39.9
3.9
0.1
-
3.1
47.0
33.9
0.2
–
–
–
3.2
37.3
0.4
–
–
2.7
40.4
6.6
2.6
2.6
470.1
0.1
16.9
(34.2)
–
40.9
493.8
140.8
26.4
(18.7)
37.7
680.0
328.2
25.0
0.3
(32.6)
–
29.4
350.3
31.4
6.3
(17.0)
27.3
398.3
281.7
143.5
141.9
Total
£m
733.3
0.1
28.4
(40.8)
3.3
62.2
786.5
285.1
34.3
(23.1)
61.2
1,144.0
450.4
33.2
0.5
(36.5)
1.7
40.2
489.5
41.8
6.8
(19.6)
38.1
556.6
587.4
297.0
282.9
Included above are plant and machinery assets under construction of £9.8m (2016: £4.2m) and land and buildings assets under construction
of £2.7m (2016: £3.0m).
Depreciation expense of £40.0m (2016: £32.1m) has been charged in cost of sales and £1.8m (2016: £1.1m) in administrative expenses.
Included in plant and machinery are assets held under finance leases with a net book value of £55.2m (2016: £11.0m) and in land and buildings
are assets under finance leases with a net book value of £8.9m (2016: £2.8m).
The impairment charge of £6.8m (2016: £0.5m) relates principally to plant and machinery at the UK Municipal organics facility as a result of adverse
market developments. The recoverable amount was based on the value in use with a pre-tax discount rate applied of 8.5%. The impairment of land
and buildings relates to the discontinued UK Solid Waste business as referred to in note 10. The prior year impairment charge of £0.5m relates
principally to plant and equipment at the Belgium Commercial Shanks Wood Products facility as a result of market changes with the recoverable
amounts determined with reference to the estimated fair value less costs of disposal of the land and buildings based on an external valuation and
for the plant and equipment based on the value in use and a pre-tax discount rate of 9.5%. The impairment charge was split £6.0m (2016: £0.1m)
cost of sales, £0.3m (2016: £0.4m) administrative expenses and £0.5m (2016: £nil) in discontinued cost of sales.
142
15. Investments and Loans to joint ventures and associates
At 1 April 2015
Additions
Share of retained profits
Dividend income
Fair value adjustment on cash flow hedges
Exchange
At 31 March 2016
Additions
Acquisitions through business combinations (note 17)
Share of retained profits
Dividend income
Fair value adjustment on cash flow hedges
Exchange
At 31 March 2017
Loans
Loans to joint
ventures and
associates
£m
1.3
–
–
–
–
–
1.3
18.5
0.1
–
–
–
–
19.9
Investments
Associates
£m
3.4
–
0.4
–
0.1
–
3.9
–
1.1
0.5
(0.1)
0.3
–
5.7
Other unlisted
investments
£m
2.4
–
–
–
–
0.3
2.7
–
1.0
–
–
–
0.3
4.0
Joint ventures
£m
3.0
0.7
0.6
(0.1)
–
–
4.2
–
0.4
1.5
–
–
–
6.1
Total
£m
8.8
0.7
1.0
(0.1)
0.1
0.3
10.8
–
2.5
2.0
(0.1)
0.3
0.3
15.8
Joint ventures are held at nil value when the Group’s share of losses exceeds the carrying amount as a result of the charge in relation to the fair
value movement on cash flow interest rate hedges. The Group’s share of losses in the year was £3.8m (2016: £1.9m), cumulatively £13.9m (2016:
£10.1m) which is unrecognised.
The loans to joint ventures and associates increased by £18.5m in the year which included £17.5m in relation to the subordinated debt injection
into Resource Recovery Solutions (Derbyshire) Limited. The loans to joint ventures and associates is split £5.7m current (2016: £nil) and £14.2m
non-current (2016: £1.3m).
Where the associate or joint venture holds non-recourse PFI/PPP debt there is a restriction on payment of dividends, which is due to the terms
of the financing facility agreements and as such requires lender approval.
Details of joint ventures and investments in associates are shown in note 35. No joint venture or associate is considered individually material to
the Group for further disclosure.
143
NOTES TO THE FINANCIAL STATEMENTS
16. Derivative financial instruments
Relating to core financing facility
Cross-currency interest rate swaps – cash flow hedges
Fuel derivatives – cash flow hedges
Forward foreign exchange contracts – cash flow hedges
Interest rate cap – cash flow hedge
Relating to PFI/PPP contracts
Interest rate swaps – cash flow hedges
Interest rate swaps – at fair value through profit or loss
Total
Current
Non-current
Total
2017
Assets
£m
Liabilities
£m
2016
Assets
£m
Liabilities
£m
–
–
–
0.3
–
–
0.3
–
0.3
0.3
1.1
0.8
0.1
–
28.6
0.2
30.8
0.8
30.0
30.8
–
–
0.3
–
–
–
0.3
0.3
–
0.3
–
3.0
0.1
–
27.9
0.2
31.2
2.4
28.8
31.2
The fair value of a derivative financial instrument is classified as a non-current asset or liability when the remaining maturity of the hedged item
is more than one year and as a current asset or liability when the remaining maturity is less than one year.
Cumulative losses recognised in equity on the derivative financial instruments at 31 March 2017 were £29.4m (2016: £30.7m) with a gain of
£1.3m recognised in the current year (2016: £4.8m loss) in the Statement of Comprehensive Income. There was no ineffectiveness to be
recorded for the cash flow hedges. The foreign exchange gain on translation of the borrowings under the cross currency interest rate swaps
of £0.9m (2016: £nil) is included within the £1.3m gain recognised in other comprehensive income. In the prior year £17.8m of losses were
reclassified from equity to the Income Statement as a result of the interest rate swap contracts disposed of in relation to Wakefield Waste
PFI Limited.
Relating to core financing facilities
Cross-currency interest rate swaps
The notional principal amount of the outstanding forward cross currency interest rate swaps at 31 March 2017 was £75.0m (2016: £nil). Under
these two contracts a floating rate term loan borrowing of Canadian dollar $50.0m was swapped to €36.1m at a fixed interest rate of 2.18% and
a floating rate revolving credit facility (RCF) borrowing of Sterling £45m was swapped to €53.0m at a fixed interest rate of 2.17%. The expiry date
for both contracts is 28 February 2020.
Interest rate cap
The notional principal amount of the outstanding interest rate cap contract at 31 March 2017 was £106.9m (2016: £nil). Under this contract the
3-month Euribor interest rate payable on £106.9m (€125m) of term loan and RCF borrowings is capped at 0.25% until 28 February 2020.
Fuel derivatives
The value of wholesale fuel covered by fuel derivatives at 31 March 2017 amounted to £12.6m (2016: £9.6m). The combined Group has annual usage
across the Netherlands and Belgium of approximately 54m litres of diesel per annum of which approximately 34m litres has been fixed at an average
of €0.40 per litre for the year to 31 March 2018 and a further 7m litres has been fixed at an average of €0.39 per litre for the year to 31 March 2019.
Forward foreign exchange contracts
The notional principal amount of the outstanding forward foreign exchange contracts at 31 March 2017 was £10.1m (2016: £5.6m). Under these
contracts the UK Municipal business has fixed the Sterling rate of underlying Euro off take contracts on a monthly basis at an average GBP:EUR
rate of 1.15 expiring on 7 March 2018.
Relating to PFI/PPP contracts
Interest rate swaps
The notional principal amount of the outstanding interest rate swap contracts at 31 March 2017 was £100.4m (2016: £104.3m). Under these
contracts the Libor rate of PPP/PFI non-recourse borrowing for Argyll & Bute, Cumbria and Barnsley Doncaster & Rotherham projects are fixed
at rates of 5.8%, 4.8% and 3.4% respectively from inception to expiry on 16 January 2023, 30 September 2032 and 30 June 2037 respectively.
The gains and losses recognised in the Statement of Comprehensive Income for cash flow hedges will be released to the Income Statement
within finance costs until the repayment of the non-recourse borrowings.
144
17. Acquisitions and disposals
Acquisitions
On 28 February 2017, the Group acquired 100% of the share capital of Van Gansewinkel Groep BV (VGG) for £205.6m being £24.9m cash and
consideration shares of £180.7m. The fair value of the 190,187,502 shares issued was based on the published share price on the date of
acquisition of 95p per share.
VGG is a market leader in the Benelux region whose operations were divided into two segments Waste Collections and Recycling. Following the
acquisition, the Renewi Group has a fully national presence across the Netherlands bringing the opportunity to service all areas and clients in-
house enabling a full waste-to-product service and allow it to address increased potential waste volumes to maximise utilisation of the Group’s
facilities. In Belgium the combined Group will be able to provide a full waste service offering as legacy VGG and Shanks traditionally focussed on
different regions.
The provisional fair value of the identifiable assets and liabilities acquired in respect of the VGG acquisition were:
Intangible assets: Customer relationships
Intangible assets: Licenses
Intangible assets: Permits
Intangible assets: Software
Property, plant and equipment
Investments
Trade and other receivables
Assets held for sale
Inventory
Deferred taxation
Current tax receivable
Cash and cash equivalents
Trade and other payables
Provisions
Defined benefit pension schemes deficit
Deferred tax liability
Current tax payable
Derivatives
Borrowings – Syndicated facility
Borrowings - Finance leases, overdraft and other loans
Net identifiable assets acquired
Less: Non-controlling interests
Add: Goodwill arising on acquisition
Net assets acquired
Purchase consideration – cash (outflow) inflow
Cash consideration
Less: Cash balances acquired
Net cash inflow – investing activities
Provisional fair
value acquired
£m
30.8
7.7
5.5
9.1
285.1
2.6
107.8
0.3
11.1
5.6
0.1
78.2
543.9
(186.9)
(96.5)
(8.1)
(40.5)
(4.6)
(12.6)
(276.9)
(41.7)
(667.8)
(123.9)
(7.7)
337.2
205.6
Total
£m
(24.9)
78.2
53.3
145
NOTES TO THE FINANCIAL STATEMENTS
17. Acquisitions and disposals continued
The fair value of acquired trade receivables is £67.4m. The gross contractual amount for trade receivables due is £70.2m of which £2.8m is
expected to be uncollectable.
Land and buildings of £139.8m, included in property plant and equipment in the table above, have provisionally been carried at book value for
the purposes of the purchase price allocation exercise as at 28 February 2017. The directors intend to obtain an external market appraisal of the
fair value of the land and buildings acquired within the next six months, at which point a measurement period adjustment will be recorded
which will affect the carrying value of the land and buildings and goodwill.
The goodwill arising on the acquisition is attributable to management’s expectations in regard to VGG’s growth prospects and margin
improvements as well as synergies to be achieved post acquisition. None of the goodwill on this acquisition is expected to be deductible
for tax.
As disclosed in note 4, the Group incurred £30.5m of acquisition related costs that were not directly attributable to the issue of shares and have
been charged to the consolidated Income Statement as exceptional items.
VGG contributed revenues of £71.5m and trading profit of £3.9m to the Group for the month of March 2017. If the acquisition had occurred on
1 April 2016, consolidated pro forma revenue and EBITDA for the year ended 31 March 2017 would have been £1,463.5m and £150.3m
respectively. EBITDA is shown as this was the measure used by VGG prior to acquisition. This information is not necessarily indicative of the
2017 results for the consolidated group had the purchase actually been made at the beginning of the year presented, or indicative of the future
consolidated performance given the nature of the business acquired.
Disposals
On 30 November 2015 the Group sold 100% of its holding in Shanks Wallonia Industrial Cleaning SA, a non-core industrial cleaning business in
the Belgium Commercial Waste segment. A loss of £0.4m (2016: £3.7m) was recognised in non-trading administrative expenses as a result of the
transaction. A payment of £1.2m including deferred consideration and a working capital adjustment was paid during the year ended 31 March
2017 (2016: £1.4m).
On 30 March 2016 the Group signed a share purchase agreement to dispose of 100% of the subordinated debt and 49.99% of its equity interest
in the Wakefield Waste PFI Holdings Limited. A loss of £5.0m was recognised in non-trading administrative expenses during the year ended
31 March 2016 as a result of the transaction. Total cash consideration was £30.0m of which £25.8m was received during the year ended
31 March 2016 and the remaining deferred consideration of £4.2m was received during the year ended 31 March 2017. The remaining holding
in the Wakefield SPV is now recognised as a joint venture.
146
18. Deferred tax
Deferred tax is provided in full on temporary differences under the liability method using applicable local tax rates. Deferred tax assets and
liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.
At 1 April 2015
(Charge) credit to Income Statement (note 9)
(Charge) credit to equity
Disposal of subsidiary
Exchange
At 31 March 2016
(Charge) credit to Income Statement (note 9)
Credit (charge) to equity
Acquisition through business combination (note 17)
Exchange
At 31 March 2017
Deferred tax assets
Deferred tax liabilities
At 31 March 2017
Deferred tax assets
Deferred tax liabilities
At 31 March 2016
Retirement
benefit
schemes
£m
3.3
(0.5)
(0.9)
–
–
1.9
(0.4)
1.7
2.1
–
5.3
5.3
–
5.3
1.9
–
1.9
Tax
losses
£m
9.2
0.4
–
(2.9)
0.2
6.9
4.6
–
3.3
0.2
15.0
5.5
9.5
15.0
1.7
5.2
6.9
Derivative
financial
instruments
£m
8.9
–
0.2
(3.2)
–
5.9
–
(0.7)
–
–
5.2
5.2
–
5.2
5.9
–
5.9
Capital
allowances
£m
(27.3)
1.7
–
4.9
(2.2)
(22.9)
(1.9)
–
(26.0)
(1.6)
(52.4)
7.3
(59.7)
(52.4)
7.2
(30.1)
(22.9)
Other timing
differences
£m
(2.6)
1.2
(0.2)
(1.4)
(0.5)
(3.5)
3.5
(0.1)
(14.3)
(1.0)
(15.4)
8.0
(23.4)
(15.4)
3.2
(6.7)
(3.5)
Total
£m
(8.5)
2.8
(0.9)
(2.6)
(2.5)
(11.7)
5.8
0.9
(34.9)
(2.4)
(42.3)
31.3
(73.6)
(42.3)
19.9
(31.6)
(11.7)
At 31 March 2017, £31.3m (2016: £19.1m) of the deferred tax asset and £73.6m (2016: £31.6m) of the deferred tax liability is expected to be
recovered after more than one year.
As at 31 March 2017, the Group had unused trading losses (tax effect) of £61.2m (2016: £29.4m) available for offset against future profits.
A deferred tax asset has been recognised in respect of £15.0m (2016: £6.9m) of such losses and recognition is based on management’s
projections of future profits in the relevant companies. No deferred tax asset has been recognised in respect of the remaining £46.2m (2016:
£22.5m) due to the uncertainty of future profit streams. Tax losses may be carried forward indefinitely in the relevant companies with the
exception of the Netherlands where the losses expire after 9 years (£3.2m recognised and £20.0m unrecognised).
No liability has been recognised on the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries. This is
because the Group is in a position to control the timing and method of the reversal of the differences and it is probable that such differences will not
give rise to a tax liability in the foreseeable future. The total temporary difference at 31 March 2017 amounted to £194.3m (2016: £157.5m) and the
unrecognised deferred tax on the unremitted earnings is estimated to be £0.3m (2016: £0.3m) which relates to taxes payable on repatriation and
dividend withholding taxes levied by overseas jurisdictions. UK tax legislation relating to company distributions provides for exemption from tax for
most repatriated profits, subject to certain exemptions.
147
NOTES TO THE FINANCIAL STATEMENTS
19. Inventories
Raw materials and consumables
Finished goods
2017
£m
9.8
10.1
19.9
2016
£m
6.1
0.7
6.8
20. Financial assets relating to PFI/PPP contracts
Financial assets result from the application of IFRIC 12 on accounting for concession arrangements relating to the UK and Canada PFI/PPP
Municipal contracts and they are measured initially at fair value of consideration receivable and subsequently at amortised cost.
At 1 April 2015
Income recognised in the income statement: Interest Income (note 8)
Advances
Disposal
Repayments
Reclassified to intangible assets (note 13)
Exchange
At 31 March 2016
Income recognised in the income statement: Interest Income (note 8)
Advances
Repayments
Exchange
At 31 March 2017
Current
Non-current
At 31 March 2017
Current
Non-current
At 31 March 2016
£m
278.2
16.2
37.3
(133.7)
(36.4)
(3.9)
0.9
158.6
9.6
21.4
(13.1)
2.3
178.8
13.3
165.5
178.8
12.8
145.8
158.6
The prior year disposal related to the agreement to sell 49.99% of the equity of the Wakefield Waste SPV and the prior year reclassification of
£3.9m related to UK Municipal contract rights which were reclassified to intangible assets.
148
21. Trade and other receivables
Non-current assets
Deferred consideration
Other receivables
Current assets
Trade receivables
Provision for impairment of receivables
Trade receivables – net
Accrued income
Deferred consideration
Other receivables
Prepayments
2017
£m
0.8
2.3
3.1
144.5
(8.5)
136.0
53.0
–
30.0
15.0
234.0
2016
£m
0.5
0.6
1.1
71.2
(7.5)
63.7
20.0
4.7
22.5
11.5
122.4
As at 31 March 2017, the carrying amount included in trade and other receivables representing the Group’s continuing involvement in trade
receivables subject to invoice finance facilities (as described on page 129) totalled £4.0m (2016: £3.3m) in trade receivables and £12.9m
(2016: £3.4m) in other receivables.
Movement in the provision for impairment of receivables:
At 1 April
Charged to Income Statement
Utilised
Disposal of subsidiary
Exchange
At 31 March
The allowance for bad and doubtful debts is equivalent to 5.9% (2016: 10.5%) of gross trade receivables.
Ageing of trade receivables that are past due but not impaired:
Neither impaired nor past due
Not impaired but overdue by less than three months
Not impaired but overdue by between three and six months
Not impaired but overdue by more than six months
Impaired
Impairment provision
2017
£m
7.5
1.4
(1.0)
–
0.6
8.5
2017
£m
99.6
31.5
1.7
3.2
8.5
(8.5)
136.0
2016
£m
6.6
1.3
(0.7)
(0.2)
0.5
7.5
2016
£m
47.3
14.7
0.5
1.2
7.5
(7.5)
63.7
Past due and current amounts are not impaired where collection is considered likely. The Group considers that the carrying amount of trade
and other receivables approximates their fair value.
There is no concentration of credit risk with respect to trade and other receivables as the Group has a large number of customers internationally
dispersed with no individual customer owing a significant amount.
149
NOTES TO THE FINANCIAL STATEMENTS
21. Trade and other receivables continued
The carrying amounts of trade and other receivables are denominated in the following currencies:
Sterling
Euro
Canadian Dollar
22. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
The carrying amounts of cash and cash equivalents are denominated in the following currencies:
Sterling
Euro
Canadian Dollar
23. Assets classified as held for sale
Property, plant and equipment
2017
£m
34.8
200.9
1.4
237.1
2016
£m
41.2
80.9
1.4
123.5
2017
£m
74.8
0.1
74.9
2017
£m
18.1
56.2
0.6
74.9
2017
£m
0.3
2016
£m
34.6
0.1
34.7
2016
£m
9.3
24.7
0.7
34.7
2016
£m
–
The assets held for sale were acquired through the VGG acquisition and consist of a piece of land on the Maarheeze site in the Netherlands
which was formerly used as a waste collection site.
150
24. Borrowings
Current borrowings
Bank overdraft
Finance lease obligations
Other loans
Core borrowings
PFI/PPP non-recourse net debt
Non-current borrowings
Retail bonds
Term loan
Revolving credit facility
Finance lease obligations
Other loans
Core borrowings
PFI/PPP non-recourse net debt
2017
£m
4.0
12.3
0.1
16.4
2.1
18.5
170.2
123.0
156.2
32.9
0.1
482.4
85.0
567.4
The table below details the maturity profile of non-current borrowings:
Between one and two years
Between two years and five years
Over five years
2017
PFI/PPP non-
recourse net
debt
£m
2.5
9.3
73.2
85.0
Core
borrowings
£m
9.5
379.0
93.9
482.4
Total
£m
12.0
388.3
167.1
567.4
2016
PFI/PPP non-
recourse net
debt
£m
3.0
8.5
76.4
87.9
Core
borrowings
£m
2.0
141.5
81.4
224.9
The carrying amounts of borrowings are denominated in the following currencies:
Sterling
Euro
Canadian Dollar
2017
£m
132.1
398.7
55.1
585.9
2016
£m
–
2.4
–
2.4
3.2
5.6
157.5
–
59.6
7.8
–
224.9
87.9
312.8
Total
£m
5.0
150.0
157.8
312.8
2016
£m
112.6
200.8
5.0
318.4
Core borrowings
The Group’s core bank loans and retail bonds are unsecured and have cross guarantees from members of the Group.
Term loan and revolving credit facilities
At 31 March 2017, the Group had a core multicurrency bank facility of £513.1m (€600m) (2016: £142.7m (€180m)). €575m (£491.7m) of the facility,
including the whole term loan and part of the revolving credit facility mature in five years on 29 September 2021 (in each case subject to two, one
year extension options), the remaining €25m (£21.4m) of the revolving credit facility matures in two years on 29 September 2018. At 31 March 2017
the margin on the facility was 2.15% which will then vary according to a leverage based pricing grid.
At 31 March 2017 the £123.0m (€143.8m) term loan was fully drawn (2016: £nil) and £156.2m (€182.7m) (2016: £61.3m (€77.4m)) of the revolving
credit facility was drawn for borrowing. The remaining £233.9m (€273.5m) (2016:£81.4m (€102.6m)) was available for drawing under the revolving
credit facility of which £69.7m (€59.6m) (2016: £nil (€nil)) was utilised for ancillary guarantee facilities.
Retail bonds
At 31 March 2017 the Group had two issues of retail bonds to investors in Belgium and Luxembourg which are listed on the London Stock
Exchange. The retail bonds due July 2019 of £85.2m (€100m) (2016: £79.3m (€100m)) have an annual coupon of 4.23% and the green retail
bonds due June 2022 of £85.0m (€100m) (2016: £79.3m (€100m)) have an annual coupon of 3.65%.
151
NOTES TO THE FINANCIAL STATEMENTS
24. Borrowings continued
Finance leases
The Group’s finance lease liabilities are payable as follows:
Group
Within one year
Between one and five years
More than five years
2017
2016
Minimum
lease
payments
£m
13.4
25.9
10.7
50.0
Interest
£m
(1.1)
(2.0)
(1.7)
(4.8)
Principal
£m
12.3
23.9
9.0
45.2
Minimum
lease
payments
£m
2.8
5.8
4.5
13.1
Interest
£m
(0.4)
(0.9)
(1.6)
(2.9)
Principal
£m
2.4
4.9
2.9
10.2
The Group has an option to purchase leased assets at the end of the lease term. There are no restrictions imposed by lessors to take out further
debt or leases.
PFI/PPP non-recourse net debt
The PFI/PPP non-recourse debt is held in the three PFI/PPP companies: Argyll & Bute, Cumbria and Barnsley, Doncaster & Rotherham with
maturities on 15 January 2023, 30 September 2032 and 30 June 2037 respectively.
PFI/PPP cash and cash equivalents are offset against the non-recourse gross debt as they are subject to offsetting arrangements under the
debt facilities.
PFI/PPP non-recourse gross debt
PFI/PPP cash and cash equivalents
PFI/PPP non-recourse net debt
2017
Bank Loans
PFI/PPP
non-recourse
net debt
£m
102.7
(15.6)
87.1
2016
Bank Loans
PFI/PPP
non-recourse net
debt
£m
105.8
(14.7)
91.1
Each UK Municipal PFI/PPP company has non-recourse loan facilities which are secured by a legal mortgage over any land and a fixed and
floating charge over the assets of the PFI/PPP company.
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations as they fall due. The Group primarily
manages liquidity risk by monitoring forecast cash flows to ensure that revolving credit facility drawdowns are arranged as necessary and an
adequate level of headroom is maintained. The way the Group manages liquidity risk has not changed from the previous year.
Unutilised committed borrowing facilities:
Expiring between one and two years
Expiring in more than two years
Core borrowings
2017
£m
21.4
161.6
183.0
2016
£m
–
81.4
81.4
PFI/PPP non-recourse
net debt
2017
£m
–
1.9
1.9
2016
£m
–
1.9
1.9
Total
2017
£m
21.4
163.5
184.9
2016
£m
–
83.3
83.3
In addition, the Group had access to £4.3m (2016: £25.1m) of undrawn uncommitted working capital facilities.
In the majority of cases subsidiaries holding non-recourse PFI/PPP debt and financial assets are restricted in their ability to transfer funds to the
parent in the form of cash dividends or to repay loans and advances. This is due to the terms of the financing facility agreements and require
lender approval to make such transfers.
152
24. Borrowings continued
The following table analyses the Group’s financial liabilities and net settled derivative financial instruments into relevant maturity groupings.
The maturities of the undiscounted cash flows, including interest and principal, at the balance sheet date are based on the earliest date on
which the Group is obliged to pay.
Within
one year
£m
Between one
and five years
£m
Over
five years
£m
At 31 March 2017
Retail bonds
Bank loans – core borrowings
Bank loans – PFI/PPP non-recourse net debt
Finance lease liabilities
Net settled derivative financial instruments
Trade and other payables
At 31 March 2016
Retail bonds
Bank loans – core borrowings
Bank loans – PFI/PPP non-recourse net debt
Finance lease liabilities
Net settled derivative financial instruments
Trade and other payables
25. Trade and other payables and other non-current liabilities
Current liabilities
Trade payables
Other tax and social security payable
Other payables
Accruals
Deferred revenue
Deferred consideration
Non-current liabilities
Other payables
Deferred revenue
Deferred consideration
Government grants
6.7
11.6
6.8
13.4
3.1
347.6
389.2
5.7
1.4
6.7
2.8
3.7
171.7
192.0
105.2
307.6
26.2
25.9
12.2
0.6
477.7
99.0
63.9
26.7
5.8
13.5
1.2
210.1
2017
£m
177.1
34.9
46.4
123.4
26.8
0.7
409.3
2.9
1.6
0.4
0.2
5.1
The carrying amounts of trade and other payables and other non-current liabilities are denominated in the following currencies:
Sterling
Euro
Canadian Dollar
2017
£m
73.5
335.3
5.6
414.4
88.6
–
108.4
10.7
23.0
2.7
233.4
84.5
–
116.0
4.5
25.4
2.7
233.1
2016
£m
89.2
16.4
15.0
66.3
15.2
1.2
203.3
2.9
2.2
1.0
0.3
6.4
2016
£m
74.0
131.6
4.1
209.7
153
NOTES TO THE FINANCIAL STATEMENTS
26. Provisions
At 1 April 2016
Provided in the year
Released in the year
Acquisition through business combination
Finance charges – unwinding of discount (note 8)
Utilised in the year
Transfer
Exchange
At 31 March 2017
Current
Non-current
At 31 March 2017
Current
Non-current
At 31 March 2016
Site
restoration
and
aftercare
£m
36.9
0.4
–
74.8
1.7
(1.1)
(0.5)
3.0
115.2
6.8
108.4
115.2
2.5
34.4
36.9
Restructuring
£m
1.3
5.4
–
1.3
–
(1.6)
–
–
6.4
6.4
–
6.4
1.3
–
1.3
Onerous
contracts
£m
12.2
28.2
–
4.8
0.8
(5.9)
0.5
–
40.6
21.7
18.9
40.6
5.0
7.2
12.2
Other
£m
6.5
9.4
(0.2)
15.6
0.1
(5.6)
–
0.2
26.0
10.6
15.4
26.0
4.2
2.3
6.5
Total
£m
56.9
43.4
(0.2)
96.5
2.6
(14.2)
–
3.2
188.2
45.5
142.7
188.2
13.0
43.9
56.9
Site restoration
The site restoration provision as at 31 March 2017 related to the cost of final capping and covering of the landfill sites. The Group’s minimum
unavoidable costs have been reassessed at the year end and the net present value fully provided for. These costs are expected to be paid over
a period of up to 34 years from the balance sheet date and may be impacted by a number of factors including changes in legislation and
technology.
Aftercare
Post-closure costs of landfill sites, including such items as monitoring, gas and leachate management and licensing, have been estimated by
management based on current best practice and technology available. These costs may be impacted by a number of factors including changes
in legislation and technology. The dates of payments of these aftercare costs are uncertain but are anticipated to be over a period of at least
30 years from closure of the relevant landfill site.
Restructuring
The restructuring provision relates to redundancy and related costs incurred as part of the previous structural cost programme and also recent
restructuring initiatives including the delivery of merger related synergies. As at 31 March 2017 the remaining affected employees are expected
to leave the business during the following year.
Onerous contracts
Onerous contracts are provided at the net present value of the least net cost of either exiting the contracts or fulfilling our obligations under the
contracts. The provisions are to be utilised over the period of the contracts to which they relate with the latest date being 2040.
Other
Other provisions principally cover dilapidations, long-service employee awards, lifecycle expenditure obligations, legal claims, indirect tax,
warranties and indemnities. Under the terms of the agreements for the disposal of certain businesses, the Group has given a number of
warranties and indemnities to the purchasers which may give rise to payments.
154
27. Retirement benefit schemes
Retirement benefit costs
UK defined contribution scheme
UK defined benefit scheme
VGG defined benefit schemes
Other overseas pension schemes
2017
£m
1.1
0.3
0.2
11.2
12.8
2016
£m
1.0
0.3
–
9.0
10.3
UK defined benefit scheme
The UK defined benefit pension scheme (called the Shanks Group Pension Scheme) covers eligible UK employees and is closed to new
entrants. The defined benefit plan provides benefits to members in the form of a guaranteed level of pension payable for life and the level of
benefits provided depends on the members’ length of service and salary. Plan assets are managed by the trustees. There are five trustees, three
were appointed by the Company and two nominated by members, who are responsible for ensuring the scheme is run in accordance with the
members’ best interests and the pension laws of the UK (which are overseen by The Pensions Regulator).
The most recent triennial actuarial valuation of the Scheme, which was performed by independent qualified actuaries for the trustees of the
Scheme, was carried out as at 5 April 2015. The Group has agreed that it will aim to eliminate the pension plan deficit over a further five years, with
an agreed annual deficit contribution of £3.1m. The total estimated contributions expected to be paid to the scheme in the year ending 31 March
2018 are £3.3m.
The scheme’s assets of £174.0m (2016: £150.8m) are invested via Aon’s Delegated Consulting Service which is a fiduciary investment
management platform managed by Hewitt Risk Management Services Limited. The delegated mandate is split into a growth and a hedging
component and the allocation to each is determined by the investment objectives set by the trustees. The growth component of £97.0m (2016:
£84.2m) comprises the following asset classes: equities, fixed income, debt, property, infrastructure and hedge funds. The hedging component
of £77.0m (2016: £66.6m) comprises a mix of leveraged gilt funds and cash.
The significant actuarial assumptions adopted at the balance sheet date were as follows:
Discount rate
Rate of price inflation
Consumer price inflation
2017
% p.a.
2.6
3.3
2.2
2016
% p.a.
3.5
3.0
2.0
The discount rate assumption is derived from the single agency curve based on high quality AA rated bonds. The mortality assumptions are
based on standard mortality tables which allow for future mortality improvements. The assumptions are that a member currently aged 65 will
live on average for a further 23 years if they are male and for a further 25 years if they are female. For a member who retires in 2037 at age 65 the
assumptions are that they will live on average for around a further 25 years after retirement if they are male or for a further 27 years after
retirement if they are female.
The weighted average duration of the defined benefit obligation is approximately 19 years.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Discount rate
Rate of price inflation
Consumer price inflation
Life expectancy
Impact on net defined benefit obligation
Change in
assumption
%
0.25
0.25
0.25
Increase in
assumption
£m
8.9
(5.6)
(5.6)
Decrease in
assumption
£m
(9.4)
4.8
4.8
Increase
by 1 year in
assumption
£m
(7.0)
Decrease
by 1 year in
assumption
£m
7.0
155
NOTES TO THE FINANCIAL STATEMENTS
27. Retirement benefit schemes continued
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely
to occur, as changes in assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial
assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of
the reporting period) has been applied as when calculating the pension liability recognised within the balance sheet.
VGG defined benefit schemes
The VGG net defined benefit obligation relates to funded plans, mainly insurance contracts managed by insurers, in both the Netherlands and
Belgium. There are various schemes which are based on final salaries and in some cases on average salaries. The assets consist of qualifying
insurance policies which match the vested benefits. The vested benefits will be financed immediately for the pension plan. The build-up of
rights for inactives are indexed on the basis of additional interest and rights of active employees are being indexed unconditionally with the
price-inflation figure. There are no unfunded plans. The total estimated contributions expected to be paid to the scheme in the year ending
31 March 2018 are £2.0m.
The significant actuarial assumptions adopted at the balance sheet date for the most significant scheme were as follows:
Discount rate
Rate of salary inflation
Rate of price inflation
2017
% p.a.
2.2
2.5
2.0
The discount rate assumption is based on interest rates applying to high quality corporate bonds with a term approximately equal to the
term of the related pension liability. The mortality assumptions are based on standard mortality tables which allow for future mortality
improvements. The assumptions are that a member currently aged 65 will live on average for a further 22 years if they are male and for a further
24 years if they are female. For a member who retires in 2037 at age 65 the assumptions are that they will live on average for around a further
24 years after retirement if they are male or for a further 26 years after retirement if they are female.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Discount rate
Rate of price inflation
Impact on net defined benefit obligation
Change in
assumption
%
0.25
0.25
Increase in
assumption
£m
(2.8)
0.3
Decrease in
assumption
£m
3.0
(0.3)
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely
to occur, as changes in assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial
assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of
the reporting period) has been applied as when calculating the pension liability recognised within the balance sheet.
156
27. Retirement benefit schemes continued
The amounts recognised in the financial statements are as follows:
Income statement
Current service cost
Interest expense on scheme net liabilities
Net retirement benefit charge before tax
Statement of comprehensive income
Actuarial (loss) gain on scheme liabilities
Actuarial gain (loss) on scheme assets
Actuarial (loss) gain
2017
2016
UK
£m
0.3
0.3
0.6
UK
£m
(33.2)
22.5
(10.7)
VGG
£m
0.2
–
0.2
VGG
£m
–
–
–
2017
Total
£m
0.5
0.3
0.8
Total
£m
(33.2)
22.5
(10.7)
UK
£m
0.3
0.5
0.8
UK
£m
9.6
(6.4)
3.2
VGG
£m
–
–
–
VGG
£m
–
–
–
2016
Cumulative actuarial gains and losses recognised in the statement of comprehensive income since 1 April 2004 are losses of £36.4m
(2016: £25.7m).
Balance sheet
Present value of funded obligations
Fair value of plan assets
Pension scheme deficit
Related deferred tax asset (note 18)
Net pension liability
2017
2016
UK
£m
(192.7)
174.0
(18.7)
3.2
(15.5)
VGG
£m
(52.8)
44.6
(8.2)
2.1
(6.1)
Total
£m
(245.5)
218.6
(26.9)
5.3
(21.6)
The movement in the amounts recognised in the balance sheet:
At 1 April 2015
Current service cost
Interest expense
Net actuarial gains recognised in the year
Contributions from employer
At 31 March 2016
Acquisition through business combination (note 17)
Current service cost
Interest expense
Net actuarial losses recognised in the year
Contributions from employer
At 31 March 2017
UK
£m
(161.5)
150.8
(10.7)
1.9
(8.8)
UK
£m
(16.4)
(0.3)
(0.5)
3.2
3.3
(10.7)
–
(0.3)
(0.3)
(10.7)
3.3
(18.7)
VGG
£m
–
–
–
–
–
VGG
£m
–
–
–
–
–
–
(8.1)
(0.2)
–
–
0.1
(8.2)
Total
£m
0.3
0.5
0.8
Total
£m
9.6
(6.4)
3.2
Total
£m
(161.5)
150.8
(10.7)
1.9
(8.8)
Total
£m
(16.4)
(0.3)
(0.5)
3.2
3.3
(10.7)
(8.1)
(0.5)
(0.3)
(10.7)
3.4
(26.9)
157
NOTES TO THE FINANCIAL STATEMENTS
27. Retirement benefit schemes continued
Reconciliation of the defined benefit obligation:
At 1 April 2015
Current service cost
Interest expense
Remeasurements:
Actuarial gain on scheme liabilities arising from changes in financial assumptions
Actuarial gain on scheme liabilities arising from changes in experience
Actuarial loss on scheme liabilities arising from changes in demographic assumptions
Contributions from plan participants
Benefit payments
At 31 March 2016
Acquisition through business combination
Current service cost
Interest expense
Remeasurements:
Actuarial loss on scheme liabilities arising from changes in financial assumptions
Actuarial gain on scheme liabilities arising from changes in experience
Actuarial loss on scheme liabilities arising from changes in demographic assumptions
Contributions from plan participants
Benefit payments
At 31 March 2017
Reconciliation of plan assets:
At 1 April 2015
Interest income
Remeasurements:
Return on plan assets excluding interest expense
Contributions from employer
Contributions from plan participants
Benefit payments
At 31 March 2016
Acquisition through business combination
Interest income
Remeasurements:
Return on plan assets excluding interest expense
Contributions from employer
Contributions from plan participants
Benefit payments
At 31 March 2017
UK
£m
(169.2)
(0.3)
(5.7)
3.8
6.0
(0.2)
(0.1)
4.2
(161.5)
–
(0.3)
(5.5)
(33.3)
1.1
(1.0)
(0.1)
7.9
(192.7)
UK
£m
152.8
5.2
(6.4)
3.3
0.1
(4.2)
150.8
–
5.2
22.5
3.3
0.1
(7.9)
174.0
VGG
£m
–
–
–
–
–
–
–
–
–
(52.4)
(0.2)
(0.1)
–
–
–
(0.1)
–
(52.8)
VGG
£m
–
–
–
–
–
–
–
44.3
0.1
–
0.1
0.1
–
44.6
Total
£m
(169.2)
(0.3)
(5.7)
3.8
6.0
(0.2)
(0.1)
4.2
(161.5)
(52.4)
(0.5)
(5.6)
(33.3)
1.1
(1.0)
(0.2)
7.9
(245.5)
Total
£m
152.8
5.2
(6.4)
3.3
0.1
(4.2)
150.8
44.3
5.3
22.5
3.4
0.2
(7.9)
218.6
158
27. Retirement benefit schemes continued
Through its defined benefit pension schemes the Group is exposed to a number of risks, the most significant of which are set out below.
Asset volatility
The scheme liabilities are calculated using a discount rate set with reference to corporate bond yields and if plan assets underperform this
yield, this will result in a deficit. The UK pension scheme’s assets are held in a portfolio of pooled funds which are single priced at the net asset
value. The investment objective of the portfolio is to achieve long-term total returns in excess of a nominal portfolio of long-dated Sterling
bonds through a diversified portfolio of collective investment schemes, which may include derivatives. Investments are well diversified, such
that the failure of any single investment would not have a material impact on the overall level of assets. The trustees have agreed an underlying
strategy with the Company so that any ongoing improvements in the scheme’s funding position would trigger movements from growth assets
to non-growth assets in order to protect and consolidate such improvements.
The assets in the VGG pension schemes consist of qualifying insurance policies which match the benefits that will be paid to employees.
Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the scheme’s
bond holdings.
Inflation risk
The majority of benefit obligations are linked to inflation and higher inflation will lead to higher liabilities. For the UK scheme caps on the level
of inflationary increases are in place to protect the plan against extreme inflation.
Life expectancy
The majority of the scheme’s obligations are to provide benefits for the life of the member, so increases in the life of the member will result in
an increase in the liabilities.
Other overseas schemes
The total cost in the year for other overseas pensions was £11.2m (2016: £9.0m).
In the Netherlands in particular, employees are members of either a multi-employer pension scheme or other similar externally funded
schemes, including Government funded schemes. These schemes are treated as defined contribution plans as it is not possible to separately
identify the Group’s share of the assets and liabilities of those schemes. The Group has been informed by the schemes that it has no obligation
to make additional contributions in the event that the schemes have an overall deficit. In addition there are a number of pension schemes in
Belgium which are considered as defined benefit schemes under IAS 19. At 31 March 2017 the potential liability to the Group was estimated and
determined as not significant.
159
NOTES TO THE FINANCIAL STATEMENTS
28. Share capital and share premium
Group
Share capital allotted, called up and fully paid
At 1 April 2015
Issued under share option schemes
At 31 March 2016
Issued under rights issue and firm placing
Consideration shares issued as consideration for acquisition of subsidiary
Issued under share option schemes
At 31 March 2017
Ordinary shares
of 10p each
£m
Share premium
£m
Number
397,850,417
339,140
398,189,557
211,201,962
190,187,502
233,202
799,812,223
39.8
–
39.8
21.1
19.0
–
79.9
100.0
0.2
100.2
115.2
161.7
0.1
377.2
On 24 October 2016 a firm placing of 45,000,000 shares was completed at a price of 100p per share. On 10 November 2016 a 3 for 8 rights issue
of 166,201,962 shares to qualifying shareholders was completed at 58p per share. The Company raised £136.3m net of £5.1m issuance costs.
The bonus factor used in all calculations was 1.129.
On 28 February 2017 the Group issued 190,187,502 shares as part of the purchase consideration for 100% of the ordinary share capital of Van
Gansewinkel Groep B V. The ordinary shares issued have the same rights as the other shares in issue.
During the year 233,202 (2016: 339,140) ordinary shares were allotted following the exercise of share options under the Savings Related Share
Option Schemes for an aggregate consideration of £156,017 (2016: £249,548). Further disclosures relating to share-based options are set out
in note 7.
160
29. Financial instruments
Carrying value of financial assets and financial liabilities
Financial assets
Loans and receivables
Loans to joint ventures and associates
Trade and other receivables excluding prepayments
Cash and cash equivalents
Financial assets relating to PFI/PPP contracts
Derivative financial instruments
Interest rate cap
Forward foreign exchange contracts
Available for sale financial assets
Unlisted investments
Note
15
21
22
20
16
15
2017
£m
19.9
222.1
74.9
178.8
0.3
–
4.0
500.0
2016
£m
1.3
112.0
34.7
158.6
–
0.3
2.7
309.6
The Group considers that the fair value of financial assets is not materially different to their carrying value. For unlisted investments the carrying
value is measured at cost as the range of possible fair values is significant and the Group has no current plans to dispose of these investments.
Financial liabilities
Financial liabilities at amortised cost
Bank overdraft
Term loan, revolving credit facility and other loans
Retail bonds
Finance lease obligations
Trade and other payables excluding non-financial liabilities
Bank loans – PFI/PPP non-recourse net debt
Derivative financial instruments
Cross-currency interest rate swaps
Fuel derivatives
Forward foreign exchange contracts
Interest rate swaps relating to PFI/PPP contracts
Note
24
24
24
24
25
24
16
16
16
16
2017
£m
4.0
279.4
170.2
45.2
350.9
87.1
1.1
0.8
0.1
28.8
967.6
2016
£m
–
59.6
157.5
10.2
175.6
91.1
–
3.0
0.1
28.1
525.2
The Group considers that the fair value of bank loans, trade and other payables and finance lease obligations are not materially different to
their carrying value.
Fair value hierarchy
The Group uses the following hierarchy of valuation techniques to determine the fair value of financial instruments:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
During the year ended 31 March 2017, there were no transfers between level 1 and level 2 fair value measurements and no transfers into and out
of level 3.
161
NOTES TO THE FINANCIAL STATEMENTS
29. Financial instruments continued
Valuation techniques used to derive Level 2 fair values
The fair values of interest rate swaps, interest rate caps, cross-currency interest rate swaps, forward foreign exchange contracts and fuel
derivatives are determined by discounting the future cash flows using the applicable period-end yield curve. For the retail bonds, the fair value
is based on indicative market pricing.
The table below presents the Group’s assets and liabilities measured at fair value:
Assets
Derivative financial instruments (note 16)
Liabilities
Derivative financial instruments (note 16)
Retail bonds
Level 2
2017
£m
0.3
0.3
30.8
177.4
208.2
2016
£m
0.3
0.3
31.2
164.6
195.8
Risk management
The Group is exposed to market risk (interest rate risk and commodity price risk), foreign exchange risk, liquidity risk and counterparty credit
risk. The Group’s Treasury Committee is charged with managing and controlling risk relating to the financing and liquidity of the Group under
policies approved by the Board of Directors. The Group does not enter into speculative transactions.
These risks are described in more detail below in addition to the information disclosed in note 16.
Interest rate risk
Changes in interest rates could have an impact on the interest cover covenant of the core Group facilities and on the interest charge in the
Income Statement. In order to monitor and manage the risk, borrowings and the expected interest cost for the year are frequently forecasted
and sensitised for potential changes.
The Group has continued to limit its exposure to interest rate risk by using fixed rate retail bonds, fixed rate finance leases and, following the
recent acquisition, entering into cross currency interest rate swaps and an interest rate cap to protect the Group from movements in interest
rates over the next three years. The proportion of the Group’s core borrowing that was fixed or hedged at 31 March 2017 was £387.1m (2016:
£168.5m) or 78% (2016: 74%). Additionally the PFI/PPP non-recourse floating rate borrowings are hedged using interest rate swaps. The interest
rate swaps hedge the interest cash flows.
The interest rate swaps and cross currency swaps are accounted for under IAS 39 with changes in the fair value of interest rate swaps being
recognised directly in reserves, as they are effective hedges. The interest rate swap in relation to Argyll & Bute has not been designated as a
hedge by the Group therefore it is classified as held for trading in accordance with IAS 39.
162
29. Financial instruments continued
Interest rate sensitivity for core borrowings
Interest on the unhedged floating rate revolving credit facility will vary as interest rates increase or decrease. If rates had moved by 1% the
impact on profit before tax would have been a loss or gain of £0.8m (2016: £0.5m) based on the average core bank borrowing during the year.
The fair values of cross currency interest rate swaps for hedging the core borrowing are determined with reference to floating market interest
rates. A 1% increase in interest rates would have reduced the fair value of the interest rate hedge liabilities and resulted in a pre-tax gain in other
comprehensive income of £2.3m (2016: £nil). A 1% decrease in interest rates would have increased the fair value of the interest rate hedge
liabilities and led to a pre-tax loss in other comprehensive income of £2.4m (2016: £nil).
The fair value of the interest rate cap used for hedging the core borrowing was determined with reference to floating market interest rates. A 1%
increase in interest rates would have increased the fair value of the interest rate cap asset and resulted in a pre-tax gain in other comprehensive
income of £1.6m (2016: £nil). A 1% decrease in interest rates would have reduced the fair value of the interest rate cap asset and led to a pre-tax
loss in other comprehensive income of £0.2m (2016: £nil).
Interest rate sensitivity for PFI/PPP non-recourse borrowings
There is no unhedged amount of the PFI/PPP facilities. The fair values of interest rate swaps used for hedging of PFI/PPP non-recourse
borrowings are determined with reference to floating market interest rate. A 1% increase in interest rates would have reduced the fair value of
the interest rate swap liabilities and resulted in a pre-tax gain in other comprehensive income of £11.0m (2016: £22.2m as restated to remove
the sale of the Wakefield investment). A 1% decrease in interest rates would have increased the fair value of the cross currency interest rate
swap liabilities and led to a pre-tax loss in other comprehensive income of £12.6m (2016: £13.5m as restated to remove the impact of the sale of
the Wakefield investment).
Foreign exchange risk
The Group operates in Europe and Canada and is exposed to translation risk on the value of assets denominated in Euro and Canadian Dollar
into Sterling. This exposure is reduced by borrowing in Euros and Canadian Dollars. The Group applies hedge accounting principles to net
investments in foreign operations and the related borrowings.
The Group has limited transactional risk as the Group’s subsidiaries conduct the majority of their business in their respective functional
currencies. Some risk arises on the export of processed waste from the UK to Europe in Euros which is managed through the use of forward
exchange contracts.
The Group has designated the carrying value of Euro borrowings (excluding finance leases) of £349.8m (2016: £190.8m) (fair value of £357.0m
(2016: £197.9m)) as a net investment hedge of the Group’s investments denominated in Euros. The hedge was 100% effective for the year ended
31 March 2017 (2016: 100%) and as a result the related exchange loss of £17.2m (2016: £18.7m loss) on translation of the borrowings into
Sterling has been recognised in the exchange reserve.
Foreign exchange sensitivity
The impact of a change in foreign exchange rates of 10% on the Group’s profit before tax would be £2.3m (2016: £0.5m) and the impact on
underlying profit before tax would have been £3.4m (2016: £2.0m).
The fair values of cross currency interest rate swaps for hedging the core borrowing are determined with reference to spot foreign exchanges
rates. A 10% increase in the Euro foreign exchange rate against the Canadian Dollar and Sterling would have increased the fair value of the cross
currency interest rate swap liabilities and resulted in a pre-tax loss in other comprehensive income of £7.3m (2016: £nil). A 10% decrease in the
Euro foreign exchange rate against the Canadian Dollar and Sterling would have reduced the fair value of the cross currency interest rate swap
liabilities to become an asset and led to a pre-tax gain in other comprehensive income of £8.9m (2016: £nil).
163
NOTES TO THE FINANCIAL STATEMENTS
29. Financial instruments continued
Commodity price risk
The Group is exposed to diesel price changes which are managed using forward contracts. The Group manages other exposures to prices
of paper, plastics, metals, residual fuels and other recyclates associated with off take through commercial contracting as they are not
commoditised.
Commodity price sensitivity
The impact of a change in unhedged wholesale fuel prices (excluding duty) of 10% on the Group’s profit before tax would have been £0.4m
(2016: £0.2m).
Credit risk
Credit risk is the risk of financial loss where counterparties are not able to meet their obligations.
Surplus cash is primarily used to repay borrowings. At 31 March 2017 the amount of credit risk on cash and short-term deposits totalled £74.9m
(2016: £34.7m).
Trade and other receivables mainly comprise amounts due from customers for services performed. Management considers that the exposure
to any single customer is not significant and that where credit quality is in doubt, adequate provision has been made for probable losses.
At 31 March 2017 the amount of credit risk on trade and other receivables amounted to £209.2m (2016: £108.6m). The Group does not hold any
collateral as security.
The financial assets relating to PFI/PPP contracts are recoverable from the future revenues relating to these contracts. Management consider
that as the counterparties for the future revenues are local authorities or councils, there is minimal credit risk. At 31 March 2017 the amount of
credit risk on financial assets amounted to £178.8m (2016: £158.6m).
Capital management
The Group actively manages the capital available to fund the Group, comprising equity and reserves together with core debt funding. In order
to make decisions over where capital is allocated, the Group monitors the return on capital employed. The Group has a funding strategy to
ensure there is an appropriate debt to equity ratio as well as an appropriate debt maturity profile. The strategy is based on the requirements of
the Company’s Articles of Association, which state that borrowings should be limited to three times the level of capital and reserves, which is
the equity attributable to the owners of the parent.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as core net debt divided by total capital. The gearing ratios
at 31 March 2017 and 2016 were as follows:
Total core borrowings
Less: cash and cash equivalents
Core net debt
Total equity
Total capital
Gearing ratio
Note
24
22
2017
£m
498.8
(74.9)
423.9
438.1
862.0
49%
2016
£m
227.3
(34.7)
192.6
182.8
375.4
51%
During the year the firm placing and rights issues raised additional funding of £136.3m.
The Group has to comply with a number of banking covenants which are set out in the core bank facility agreements including interest cover
and the ratio of debt to EBITDA of the Group. There are other restrictions in the loan documentation concerning acquisitions, disposals, security
and other issues. The Group has complied with its banking covenants during the year.
164
30. Notes to the statements of cash flows
Loss before tax
Fair value gain on financial instruments
Finance income
Finance charges
Share of results from associates and joint ventures
Operating (loss) profit from continuing operations
Operating (loss) profit from discontinued operations
Amortisation and impairment of intangible assets
Depreciation and impairment of property, plant and equipment
Gain on disposal of property, plant and equipment
Increase in service concession arrangement receivable
Exceptional gain on disposal of property, plant and equipment
Exceptional gain on disposal of discontinued assets
Exceptional loss on disposal of subsidiaries
Net increase in provisions
Payments to fund defined benefit pension scheme deficit
Share-based compensation
Exceptional non-cash contract costs
Operating cash flows before movement in working capital
(Increase) decrease in inventories
(Increase) decrease in receivables
Increase in payables
Cash flows from operating activities
2017
£m
(61.4)
–
(10.3)
34.7
(2.0)
(39.0)
(0.5)
8.6
48.6
(0.5)
(19.6)
(0.5)
–
0.2
29.0
(3.1)
0.5
–
23.7
(1.5)
(4.1)
9.8
27.9
2016
£m
(2.5)
(0.1)
(16.6)
30.0
(1.0)
9.8
0.1
4.4
33.7
(3.0)
(10.3)
–
(0.4)
8.7
2.1
(3.1)
0.5
2.3
44.8
0.8
5.0
21.6
72.2
Movement in net debt
Cash and cash equivalents
Bank loans
Retail bonds
Finance leases
Total core net debt
PFI/PPP non-recourse net debt
Total net debt
At 1 April
2016
£m
34.7
(59.6)
(157.5)
(10.2)
(192.6)
(91.1)
(283.7)
Cash flows
£m
(40.4)
65.7
–
3.2
28.5
4.0
32.5
Acquired
£m
78.2
(282.3)
–
(36.3)
(240.4)
–
(240.4)
Other
non-cash
changes
£m
–
(1.6)
(0.2)
(1.1)
(2.9)
–
(2.9)
Exchange
movements
£m
2.4
(5.6)
(12.5)
(0.8)
(16.5)
–
(16.5)
At 31 March
2017
£m
74.9
(283.4)
(170.2)
(45.2)
(423.9)
(87.1)
(511.0)
Consolidated movement in net debt
Net decrease in cash and cash equivalents
Net decrease in borrowings and finance leases
Capitalisation of loan fees
Cash and borrowings acquired through the VGG business combination
Total cash flows in net debt
Disposal of PFI/PPP non-recourse debt
Finance leases entered into during the year
Deferred interest of PFI/PPP non-recourse debt
Amortisation of loan fees
Exchange loss
Movement in net debt
Net debt at beginning of year
Net debt at end of year
2017
£m
(40.4)
72.9
–
(240.4)
(207.9)
–
(1.1)
–
(1.8)
(16.5)
(227.3)
(283.7)
(511.0)
2016
£m
(28.9)
62.4
1.7
–
35.2
80.4
(0.3)
(3.1)
(1.1)
(17.2)
93.9
(377.6)
(283.7)
165
NOTES TO THE FINANCIAL STATEMENTS
30. Notes to the statements of cash flows continued
Reconciliation of underlying free cash flow as presented in the Finance Review
Net cash inflow from operating activities
Exclude provisions, working capital and restructuring spend
Exclude payments to fund UK defined benefit pension scheme
Exclude increase in service concession arrangement
Include finance charges and loan fees paid (excluding exceptional finance charges)
Include finance income received
Include purchases of replacement items of intangible assets
Include purchases of replacement items of property, plant and equipment
Include proceeds from disposals of property, plant and equipment
Underlying free cash flow
31. Capital commitments
Contracts placed for future capital expenditure on financial assets
Contracts placed for future capital expenditure on property, plant and equipment
Contracts placed for future intangible assets
Joint venture contracts placed for future capital expenditure including financial assets
2017
£m
22.6
25.5
3.1
19.6
(19.4)
9.9
(3.1)
(37.9)
2.8
23.1
2017
£m
1.9
18.9
1.3
10.4
2016
£m
67.4
7.4
3.1
10.3
(25.4)
12.6
(1.0)
(23.8)
6.2
56.8
2016
£m
17.2
9.6
1.1
30.2
166
32. Financial commitments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Within one year
Later than one year and less than five years
More than five years
Future minimum lease payments expected to be received under non-cancellable sub-leases
2017
£m
31.1
70.8
140.3
242.2
(0.6)
241.6
2016
£m
10.9
24.1
52.8
87.8
(0.2)
87.6
33. Contingent liabilities
Due to the nature of the industry in which the business operates, from time to time the Group is made aware of claims or litigation arising in the
ordinary course of the Group’s business. Provision is made for the Directors’ best estimate of all known claims and all such legal actions in progress.
The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on
that advice that the action is unlikely to succeed or a sufficiently reliable estimate of the potential obligation cannot be made.
Under the terms of sale agreements, the Group has given a number of indemnities and warranties relating to the disposed operations for which
appropriate provisions are held.
In respect of contractual liabilities the Group and its subsidiaries have given guarantees and entered into counter indemnities of bonds and
guarantees given on their behalf by sureties and banks totalling £216.4m (2016: £165.7m).
167
NOTES TO THE FINANCIAL STATEMENTS
34. Related party transactions
Non-controlling interests
The information below reflects the amounts included in the Group’s Income Statement and Balance Sheet for subsidiaries with material non-
controlling interests at 31 March 2017.
Revenue
Profit after tax
Other comprehensive income
Total comprehensive income
Loss allocated to the non-controlling interests
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Accumulated non-controlling interests
Maltha Groep BV
£m
4.2
(0.1)
–
(0.1)
–
28.9
15.5
(10.3)
(14.6)
19.5
6.5
2017
Others
£m
18.3
(1.2)
(0.7)
(1.9)
(0.5)
73.6
9.5
(62.1)
(24.6)
(3.6)
(1.3)
Total
£m
22..5
(1.3)
(0.7)
(2.0)
(0.5)
102.5
25.0
(72.4)
(39.2)
15.9
5.2
Net increase (decrease) in cash and cash equivalents
0.3
(0.3)
–
Comparative information is not disclosed as there were no material non-controlling interests in the year ended 31 March 2016.
Transactions between the Group and its associates and joint ventures
The Group had the following transactions and outstanding balances with associates and joint ventures, in the ordinary course of business:
Sales
Purchases
Management fees
Interest on loans to joint ventures and associates
Receivables at 31 March
Payables at 31 March
Loans made by Group companies at 31 March
Loans made to Group companies at 31 March
Associates
2017
£m
64.1
1.5
0.7
–
7.2
0.3
1.1
–
2016
£m
59.3
0.1
0.7
–
5.9
–
–
–
Joint ventures
2017
£m
74.6
0.4
0.8
0.1
4.1
0.2
19.1
0.5
2016
£m
40.0
1.4
0.4
0.1
3.2
0.1
1.3
0.5
The receivables and payables are due one month after the date of the invoice are unsecured in nature and bear no interest.
168
34. Related party transactions continued
Remuneration of key management personnel
Key management personnel comprises the Board of Directors and the members of the Group’s Executive Committee. The disclosures required
by the Companies Act 2006 and those specified by the Financial Conduct Authority relating to Directors’ remuneration (including retirement
benefits and incentive plans), interests in shares, share options and other interests, are set out within the Directors’ Remuneration Report on
pages 86 to 101, and form part of these financial statements. The emoluments paid or payable to key management personnel were:
Short-term employee benefits
Post-employment benefits
Share-based payments
2017
£m
3.9
0.2
0.2
4.3
2016
£m
3.7
0.3
0.3
4.3
169
NOTES TO THE FINANCIAL STATEMENTS
35. Subsidiary undertakings and investments at 31 March 2017
Subsidiary undertakings
In accordance with section 409 of the Companies Act, a full list of subsidiaries at 31 March 2017 is disclosed. All are wholly-owned by the Group
and have a 31 March year end unless otherwise stated and all operate in the waste management sector and have been consolidated in the
Group’s financial statements. Those subsidiaries owned by Renewi plc, the parent company, are indicated with an asterix.
Subsidiary
Address of the registered office
Incorporated in the Netherlands
AB Civiel Beheer BV
Afvalstoffen Terminal Moerdijk BV
A&G Holding BV
B.V. Twente Milieu Bedrijven
B.V. van Vliet Groep Milieu-Dienstverleners
Coolrec BV
Coolrec Nederland BV
EcoSmart Nederland BV
Glasrecycling Noord-Oost Nederland BV
Icopower BV
Icova BV
IMMO CV
Klok Containers BV
Maltha Glasrecycling Nederland BV (67%)
Maltha Glassrecycling International BV (67%)
Maltha Groep BV (67%)
Orgaworld International BV
Orgaworld Nederland BV
Orgaworld WKK 1 BV
Orgaworld WKK II BV
Orgaworld WKK III BV
Plastic Herverwerking Brakel BV
Riebeek Olie Amsterdam 1 BV
Regionale Reinigingsdienst (R.R.D.) BV
Reym BV
Robesta Vastgoed Acht BV
Robesta Vastgoed BV
Semler BV
Shanks Belgium Holding BV
Shanks BV
Valgenweg 7, 9936HV Farmsum, Netherlands
Vlasweg 12, 4782 PW Moerdijk, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Grote Wade 45, 3439 NZ Nieuwegein, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Grevelingenweg 3, 3313 LB Dordrecht, Netherlands
Spaarpot 6, 5667 KX Geldrop, Netherlands
Columbusstraat 20, 7825 VR Emmen, Netherlands
Kajuitweg 1, 1041 AP Amsterdam, Netherlands
Kajuitweg 1, 1041 AP Amsterdam, Netherlands
Loswalweg 50, 3199 LG Maasvlakte Rotterdam, Netherlands
Molenvliet 4, 3076 CK Rotterdam, Netherlands
Glasweg 7, 4794 TB Heijningen, Netherlands
Glasweg 7, 4794 TB Heijningen, Netherlands
Glasweg 7, 4794 TB Heijningen, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
Hornweg 67, 1044 AN Amsterdam, Netherlands
Hornweg 69, 1044 AN Amsterdam, Netherlands
Hornweg 71, 1044 AN Amsterdam, Netherlands
Van Hilststraat 7, 5145 RK Waalwijk, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Computerweg 12, 3821 AB Amersfoort, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Ockhuizenweg 5-A, 5691 PJ Son, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
170
35. Subsidiary undertakings and investments at 31 March 2017 continued
Subsidiary
Address of the registered office
Incorporated in the Netherlands
Shanks European Investments 1 Coop WA
Shanks European Investments 2 Coop WA*
Shanks Hazardous Waste BV
Shanks Nederland BV
Shanks Netherlands Holdings BV
Shanks Netherlands Investments BV
Smink Afvalverwerking BV
Smink Beheer BV
Transportbedrijf Van Vliet BV
Van Gansewinkel CFS BV
Van Gansewinkel Industrial Services BV
Van Gansewinkel Industrie BV
Van Gansewinkel International BV
Van Gansewinkel Maasvlakte BV
Van Gansewinkel Milieuservices Overheidsdiensten BV
Van Gansewinkel Milieutechniek BV
Van Gansewinkel Nederland BV
Van Gansewinkel Recycling BV
Van Gansewinkel Zweekhorst BV
Verwerking Bedrijfsafvalstoffen Maasvlakte (V.B.M.) CV
Vliko BV
Incorporated in Belgium
Belgo-Luxembourgeoise de Services Publics SA
Coolrec Belgium NV
Eco-Smart NV
Enviro+ NV
Maltha Glasrecycling Belgie BVBA
Ocean Combustion Service NV
Recydel SA (80%)
Shanks Belgium NV (previously Shanks Vlaanderen NV)
Shanks Logistics NV
Shanks Valorisation & Quarry SA (previously Shanks SA)
Shanks Wood Products NV
Van Gansewinkel NV
Van Gansewinkel ES Treatment NV
Van Gansewinkel Industrial Services Belgium NV
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Computerweg 12D, 3821 AB Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Wateringveldseweg 1, 2291 HE Wateringen, Netherlands
Wetering 14, 6002 SM Weert, Netherlands
Quebecstraat 1, 3197 KL Botlek Rotterdam, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Loswalweg 50, 3199 LG Maasvlakte Rotterdam, Netherlands
Touwslagerstraat 1, 2984 AW Ridderkerk, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Doesburgseweg 16 D, 6902 PN Zevenaar, Netherlands
Loswalweg 50, 3199 LG Maasvlakte Rotterdam, Netherlands
Industrieweg 24, 2382 NW Zoeterwoude, Netherlands
Rue de Rolleghem 381, 7700 Mouscron, Belgium
Baeckelmansstraat 125, 2830 Willebroek, Belgium
Nijverheidsstraat 2, 2870 Puurs, Belgium
John Kennedylaan 4410, 9042 Gent, Belgium
Fabrieksstraat 114, 3920 Lommel, Belgium
Terlindenhofstraat 36, 2170 Meerksem, Belgium
Rue Wérihet 72, 4020 Liège, Belgium
Da Vincilaan, 2, Building G, 3de verdieping, 1930 Zaventem, Belgium
John Kennedylaan 4410, 9042 Gent, Belgium
Da Vincilaan, 2, Building G, 3de verdieping, 1930 Zaventem, Belgium
John Kennedylaan 4410, 9042 Gent, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Incorporated in Germany
ATM Entsorgung Deutschland GmbH (Year end 31 December)
Reym GmbH
Coolrec Deutschland GmbH (Year end 31 December)
Coolrec RDE Rucknahmen Demontagen Elektronik-Recycling
GmbH (Year end 31 December)
Kaldenkirchener Strasse 25, D-41063, Mönchengladbach, Germany
Hansestrasse 14-16, 49685 Schneiderkrug, Germany
Donatusstraße 127-129, 50259 Pulheim, Germany
Industriestraße 1, 50259 Pulheim, Germany
171
NOTES TO THE FINANCIAL STATEMENTS
35. Subsidiary undertakings and investments at 31 March 2017 continued
Subsidiary
Incorporated in France
Coolrec France SAS (90%)
Maltha Glass Recycling France SAS (67%)
Address of the registered office
Rue Iéna Parcelle 36, 59810 Lesquin, France
Zone Industrielle, 33450 Izon, France
Incorporated in Hungary
Maltha Hungary Uvegujrahasznosito Kft. (67%)
1214 Budapest, Orion utca 14, Hungary
Incorporated in Luxembourg
Van Gansewinkel Luxembourg SA
Z.A. Gadderscheier, 4501 Differdange, Luxembourg
Incorporated in Poland
Maltha Szklo Recycling Polska Sp. zoo (67%)
ul. Półłanki 64, 30-740 Kraków, Poland
Incorporated in Portugal
Maltha Glass Recycling Portugal Lda (67%)
Parque Industrial da Gala, Lotes 26 e 27, 3081-801 Figueira da Foz, Portugal
Incorporated in the Czech Republic
A&G Envirotech sro
U Vlečky 592, 664 42 Modřice, Czech Republic
Incorporated in the UK
Renewi Waste Management Limited*
Safewaste Limited
Shanks European Holdings Limited
Shanks Financial Management Limited
Shanks Holdings Limited*
Shanks PFI Investments Limited*
Shanks SRF Trading Limited
Shanks Waste Management Limited*
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
172
35. Subsidiary undertakings and investments at 31 March 2017 continued
Subsidiary
Address of the registered office
Incorporated in Canada
Orgaworld Canada Limited
Orgaworld Design-Builder General Partner Limited
Orgaworld Design-Builder Limited Partnership
Orgaworld Surrey General Partner Limited
Orgaworld Surrey Limited Partnership
2940 Dingman Drive, London ON N6N 1G4, Canada
800-885 West Georgia Street, Vancouver BC V6C 3H1, Canada
800-885 West Georgia Street, Vancouver BC V6C 3H1, Canada
800-885 West Georgia Street, Vancouver BC V6C 3H1, Canada
800-885 West Georgia Street, Vancouver BC V6C 3H1, Canada
Subsidiary undertakings holding UK PFI/PPP contracts
Shanks Argyll & Bute Limited
Shanks Argyll & Bute Holdings Limited*
Shanks Cumbria Limited
Shanks Cumbria Holdings Limited
16 Charlotte Square, Edinburgh, EH2 4DF, United Kingdom
16 Charlotte Square, Edinburgh, EH2 4DF, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
3SE (Barnsley, Doncaster & Rotherham) Holdings Limited (75%) Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
3SE (Barnsley, Doncaster & Rotherham) Limited (75%)
Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1BU, United Kingdom
173
NOTES TO THE FINANCIAL STATEMENTS
35. Subsidiary undertakings and investments at 31 March 2017 continued
Joint ventures, joint operations and associates
At 31 March 2017 the Group through wholly-owned subsidiaries had the following interests in joint venture companies, joint operations and
associates, all of which operate in the waste management sector.
Joint venture, joint operation and associates
Incorporated in the Netherlands
Afval Loont Holding BV
AMP BV
Baggerspecieverwerking Noord-Nederland VOF
Dorst BV
Induserve VOF
Mokum Mariteam BV
Mokum Mariteam CV
Octopus VOF
PQA BV
Recycling Maatschappij Bovenveld BV
Reym HMVT BV
Smink Boskalis Dolman VOF BV
SQAPE BV
Tankterminal Sluiskil BV
TOP Leeuwarden VOF
Zavin BV
Zavin CV
Incorporated in France
ENVIE2e SAS
Incorporated in Belgium
Marpos NV
Recypel BVBA
Silvamo NV
SUEZ PCB Decontamination NV
Valorem SA
% Group
holding
Most recent
year end
Address of the registered office
22% 31 December 2016
33% 31 December 2016
50% 31 December 2016
50% 31 December 2016
67% 31 December 2016
50% 31 December 2016
20% 31 December 2016
50% 31 December 2016
50% 31 December 2016
50% 31 December 2016
50% 31 December 2016
50% 31 December 2016
50% 31 December 2016
40% 31 December 2016
50% 31 December 2016
33% 31 December 2016
33% 31 December 2016
Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Victoriberg 18, 2211 DH Noordwijkerhout, Netherlands
Newtonweg 1, 8912 BD Leeuwarden, Netherlands
Van’t Hoffstraat 12A, 2313SP, Leiden, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Jan van Galenstraat 4, 1051 KM, Amsterdam,
Netherlands
Jan van Galenstraat 4, 1051 KM, Amsterdam,
Netherlands
Forellenweg 24, 4941 SJ Raamsdonksveer,
Netherlands
Bennebroekerdijk 244, 2142 LE, Cruquius, Netherlands
Coevorderweg 48, 7737 PG Stegeren, Netherlands
Maxwellstraat 31, 6716 BX Ede, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
Bennebroekerdijk 244, 2142 LE Cruquius, Netherlands
Oude Haven 44, 4501 PA Oostburg, Netherlands
Newtonweg 1, 8912 BD Leeuwarden, Netherlands
Baanhoekweg 42, 3313 LA Dordrecht, Netherlands
Baanhoekweg 46, 3313 LA Dordrecht, Netherlands
17% 31 December 2016
2 Boulevard Thomson, 59810 Lesquin, France
45% 31 December 2016
L. Coiseaukaai 43 8380 Brugge, Belgium
50% 31 December 2016
50% 31 March 2017
Reinaertlaan 82, 9190 Stekene, Belgium
Regenbeekstraat 7C 8800 Roeselare, Belgium
23% 31 December 2016
30% 31 December 2016
Westvaartdijk 97, 1850 Grimbergen, Belgium
Rue des trois Burettes 65 1435 Mon-Saint-Guibert,
Belgium
174
35. Subsidiary undertakings and investments at 31 March 2017 continued
Joint venture, joint operation and associates
Incorporated in Austria
EARN Elektrogeräte Service GmbH
% Group
holding
Most recent
year end
Address of the registered office
33% 31 December 2016
Johannesgasse 15, 1010 Wien, Austria
Incorporated in the UK
Caird Evered Holdings Limited
Caird Evered Limited
ELWA Limited
ELWA Holdings Limited
Energen Biogas Limited
50% 31 December 2016
50% 31 December 2016
20% 31 March 2017
20% 31 March 2017
50% 31 March 2017
Resource Recovery Solutions (Derbyshire) Holdings
Limited
Resource Recovery Solutions (Derbyshire) Limited
50% 31 March 2017
50% 31 March 2017
Shanks Dumfries and Galloway Holdings Limited
20% 31 March 2017
Shanks Dumfries and Galloway Limited
20% 31 March 2017
Wakefield Waste Holdings Limited
50.001% 31 March 2017
Wakefield Waste PFI Holdings Limited
50.001% 31 March 2017
Wakefield Waste PFI Limited
50.001% 31 March 2017
Bardon Hall, Copt Oak Road, Markfield, Leicestershire,
LE67 9PJ, United Kingdom
Bardon Hall, Copt Oak Road, Markfield, Leicestershire,
LE67 9PJ, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
16 Charlotte Square, Edinburgh, EH2 4DF, United
Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
16 Charlotte Square, Edinburgh, EH2 4DF, United
Kingdom
16 Charlotte Square, Edinburgh, EH2 4DF, United
Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
Dunedin House, Auckland Park, Mount Farm, Milton
Keynes, Buckinghamshire, MK1 1BU, United Kingdom
175
CONSOLIDATED FIVE YEAR FINANCIAL SUMMARY
Consolidated income statement
Revenue1
Trading profit from continuing operations1
Finance charges – interest
Finance charges – other
Share of results from associates and joint ventures
Profit from continuing operations before exceptional items and tax
(underlying profit)
Non-trading and exceptional items
(Loss) profit before tax from continuing operations
Taxation
Exceptional tax and tax on exceptional items
(Loss) profit after tax from continuing operations
(Loss) profit after tax from discontinued operations
Loss for the year
(Loss) profit attributable to:
Owners of the parent
Non-controlling interest
Consolidated balance sheet
Non-current assets
Other assets less liabilities
Net debt
Net assets
Equity attributable to owners of the parent
Share capital and share premium
Reserves
Non-controlling interest
Total equity
Financial ratios
Underlying earnings per share – continuing operations2
Basic (loss) earnings per share – continuing operations2
Dividend per share
2017
£m
779.2
36.5
(8.3)
(4.5)
2.0
25.7
(87.1)
(61.4)
(5.9)
6.4
(60.9)
(0.5)
(61.4)
(61.1)
(0.3)
(61.4)
1,420.9
(471.8)
(511.0)
438.1
457.1
(24.2)
432.9
5.2
438.1
3.7p
(11.3)p
3.05p
2016
£m
614.8
33.4
(9.7)
(3.7)
1.0
21.0
(23.5)
(2.5)
(2.3)
0.8
(4.0)
0.1
(3.9)
(3.9)
–
(3.9)
670.4
(203.9)
(283.7)
182.8
140.0
44.8
184.8
(2.0)
182.8
4.2p
(0.9)p
3.45p
2015
£m
601.4
34.3
(10.6)
(2.8)
0.8
21.7
(42.2)
(20.5)
(1.7)
4.0
(18.2)
1.3
(16.9)
(17.0)
0.1
(16.9)
737.3
(170.6)
(377.6)
189.1
139.8
51.1
190.9
(1.8)
189.1
4.4p
(4.1)p
3.45p
2014
£m
633.4
45.6
(11.7)
(4.1)
0.3
30.1
(22.5)
7.6
(7.2)
1.4
1.8
(30.0)
(28.2)
(28.3)
0.1
(28.2)
744.4
(166.8)
(304.1)
273.5
139.7
134.0
273.7
(0.2)
273.5
5.1p
0.4p
3.45p
2013
£m
611.9
44.9
(10.8)
(3.8)
(0.3)
30.0
(40.3)
(10.3)
(7.5)
6.7
(11.1)
(24.1)
(35.2)
(35.3)
0.1
(35.2)
767.7
(179.7)
(274.3)
313.7
139.5
174.1
313.6
0.1
313.7
5.0p
(2.5)p
3.45p
1 Revenue and trading profit from continuing operations is stated before non-trading and exceptional items as set out in note 4.
2 Underlying and basic (loss) earnings per share for continuing operations have been restated to reflect the bonus factor within the 2017 equity raise as described in note 12.
176
PARENT COMPANY BALANCE SHEET
As at 31 March 2017
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Trade and other receivables
Deferred tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Other non-current liabilities
Defined benefit pension scheme deficit
Current liabilities
Derivative financial instruments
Trade and other payables
Current tax payable
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings*
Total equity
31 March
2017
£m
31 March
2016
£m
Note
6
7
8
9
10
9
11
12
13
14
16
13
14
15
17
17
0.2
0.3
411.2
272.6
7.0
691.3
183.5
18.1
201.6
892.9
(170.2)
(0.1)
–
(18.7)
(189.0)
(0.8)
(120.2)
–
(0.9)
(121.9)
(310.9)
582.0
79.9
401.2
100.9
582.0
0.3
0.3
498.8
81.1
3.1
583.6
175.0
2.6
177.6
761.2
(209.3)
(0.7)
(96.9)
(10.7)
(317.6)
(2.4)
(39.7)
(0.3)
(0.8)
(43.2)
(360.8)
400.4
39.8
124.2
236.4
400.4
*As permitted by section 408 of the Companies Act, the Company has elected not to present its own Income Statement or Statement of Comprehensive Income. The
Company reported a loss for the year ended 31 March 2017 of £111.8m (2016: £14.6m profit).
These Financial Statements were approved by the Board of Directors and authorised for issue on 25 May 2017. They were signed on its behalf by:
Colin Matthews
Toby Woolrych
Chairman
Chief Financial Officer
177
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 1 April 2016
Loss for the year
Other comprehensive loss:
Actuarial loss on defined benefit pension scheme
Tax in respect of other comprehensive income items
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Share-based compensation
Movement on tax arising on share-based compensation
Proceeds from exercise of employee options
Proceeds from share issues, net of transaction costs
Issue of ordinary shares in consideration for a business combination
Dividends
Balance at 31 March 2017
Balance at 1 April 2015
Profit for the year
Other comprehensive income:
Fair value movement on cash flow hedges
Actuarial gain on defined benefit pension scheme
Tax in respect of other comprehensive income items
Total comprehensive gain for the year
Transactions with owners in their capacity as owners:
Share-based compensation
Movement on tax arising on share-based compensation
Proceeds from exercise of employee options
Dividends
Balance as at 31 March 2016
Note
16
3
17
17
17
5
16
3
17
5
Share
Capital
£m
39.8
–
–
–
–
–
–
–
21.1
19.0
–
79.9
39.8
–
–
–
–
–
–
–
–
–
39.8
Share
Premium
£m
124.2
–
–
–
–
–
–
0.1
115.2
161.7
–
401.2
124.0
–
–
–
–
–
–
–
0.2
–
124.2
PARENT COMPANY STATEMENT OF CASH FLOWS
Cash flows from (used in) operating activities
Income tax (paid) received
Net cash inflow (outflow) from operating activities
Investing activities
Proceeds from sale of subordinated debt and on loss of control of subsidiary
Investment in subsidiaries
Finance income
Net cash (outflow) inflow from investing activities
Financing activities
Finance charges and loan fees paid
Proceeds from share issues
Costs in relation to share issues
Dividends paid
Proceeds from issuance of retail bonds
Repayment of retail bonds
(Repayment of) proceeds from bank borrowings
Net cash inflow from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
178
Retained
Earnings
£m
236.4
(111.8)
(10.7)
1.7
(120.8)
0.5
(0.1)
–
–
–
(15.1)
100.9
232.3
14.6
0.8
3.2
(1.1)
17.5
0.5
(0.2)
–
(13.7)
236.4
2017
£m
1.2
(0.4)
0.8
–
(43.4)
6.9
(36.5)
(13.2)
141.5
(5.1)
(15.1)
–
–
(56.9)
51.2
15.5
2.6
18.1
Total
Equity
£m
400.4
(111.8)
(10.7)
1.7
(120.8)
0.5
(0.1)
0.1
136.3
180.7
(15.1)
582.0
396.1
14.6
0.8
3.2
(1.1)
17.5
0.5
(0.2)
0.2
(13.7)
400.4
2016
£m
(39.3)
1.1
(38.2)
25.8
(15.0)
5.5
16.3
(9.0)
0.2
–
(13.7)
71.4
(73.5)
41.1
16.5
(5.4)
8.0
2.6
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
1. Accounting policies
General information
Renewi plc (previously Shanks Group plc) is a public limited company listed on the London Stock Exchange and is incorporated and domiciled
in Scotland under the Companies Act 2006, registered number SC077438. The address of the registered office is given on page 191. The nature
of the Company’s principal activity is a head office corporate function.
Basis of preparation
The separate financial statements of the Company are presented in compliance with the requirements for companies whose shares are listed
on the London Stock Exchange. They have been prepared on the historical cost basis, except for derivative financial instruments and share-
based payments, which are stated at fair value. The policies set out below have been consistently applied. The Company has applied all
accounting standards and interpretations issued relevant to its operations and effective for accounting periods beginning on 1 April 2016.
Going concern
Having assessed the principal risks and other matters in connection with the viability statement, the Directors consider it appropriate to
continue to adopt the going concern basis of accounting in preparing these financial statements.
Statement of compliance
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and related interpretations issued
by the IFRS Interpretations Committee (IFRS IC) adopted by the European Union (EU) and therefore comply with Article 4 of the EU IAS
Regulation and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Adoption of new and revised accounting standards and interpretations
There were no new standards, amendments to standards or interpretations adopted for the first time for the Company’s financial year
beginning 1 April 2016 that had a significant impact on these financial statements.
New standards and interpretations not yet adopted
Standards and interpretations issued by the International Accounting Standards Board (IASB) are only applicable if endorsed by the
European Union.
At the date of approval of these financial statements, the following standard was in issue but not yet effective:
IFRS 9 Financial Instruments, effective for annual periods beginning on or after 1 January 2018. This standard addresses the classification,
measurement and recognition approaches for financial assets and liabilities and requires additional disclosures in relation to hedging activities.
The Company is yet to assess the full effect of the standard, however it is not expected to have a significant impact on the recognition and
measurement of its financial instruments.
There are no other IFRSs or IFRS IC interpretations not yet effective that would be expected to have a material impact on the Company.
Intangible assets
Computer Software
Computer software is capitalised on the basis of the costs incurred to purchase and bring the assets into use. These costs are amortised over
the estimated useful life ranging from one to five years on a straight-line basis.
179
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
1. Accounting policies – Company continued
Property, plant and equipment
Property, plant and equipment, except for freehold land, is stated at cost less accumulated depreciation and provision for impairment. Cost
includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Freehold land is not depreciated. The asset’s residual values and useful lives are reviewed and adjusted if appropriate at the end of each
reporting period.
Assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value. An impairment loss is recognised immediately as an operating expense and at each subsequent reporting date the impairment
is reviewed for possible reversal.
Depreciation is provided on fixtures and fittings to write off their cost (less the expected residual value) on a straight line basis over an expected
useful life of up to 10 years.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost in the Company’s balance sheet less any provision for impairment in value.
Provisions
Provisions are recognised where there is a present legal or constructive obligation as a result of a past event and it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
Employee benefits
Retirement benefits
The Company accounts for pensions and similar benefits under IAS 19 (revised) Employee Benefits. For defined benefit plans, obligations are
measured at discounted present value whilst plan assets are recorded at fair value. The operating and financing costs of the plans are
recognised separately in the Income Statement. Interest is calculated by applying the discount rate to the net defined pension liability.
Actuarial gains and losses are recognised in full through the Statement of Comprehensive Income; surpluses are recognised only to the extent
that they are recoverable. Movements in irrecoverable surpluses are recognised immediately in the Statement of Comprehensive Income.
Payments to defined contribution schemes are charged to the Income Statement as they become due.
Share-based payments
The Company issues equity-settled share-based awards to certain employees. The fair value of share-based awards is determined at the date of
grant and expensed on a straight-line basis over the vesting period with a corresponding increase in equity based on the Company’s estimate of
the shares that will eventually vest. At each balance sheet date the Company revises its estimates of the number of options that are expected to
vest based on service and non-market performance conditions. The amount expensed is adjusted over the vesting period for changes in the
estimate of the number of shares that will eventually vest, save for changes resulting from any market-related performance conditions.
180
1. Accounting policies – Company continued
Taxation
Current tax
Current tax is based on taxable profit or loss for the year. Taxable profit differs from profit before tax in the Income Statement because it
excludes items of income or expense that are taxable or deductible in other years or that are never taxable or deductible. The asset or liability
for current tax is calculated using tax rates that have been enacted, or substantively enacted, at the balance sheet date.
Deferred tax
Deferred tax is recognised in full where the carrying value of assets and liabilities in the financial statements is different to the corresponding tax
bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that the taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax is calculated at the tax rates that have been substantively enacted at the balance sheet date. Deferred
tax is charged or credited in the Income Statement, except where it relates to items charged or credited directly to equity in which case the
deferred tax is also dealt with in equity.
Foreign currencies
The functional and presentational currency of the Company is Sterling. Monetary assets and liabilities denominated in foreign currencies at the
year end are translated at the period end exchange rate. Foreign currency gains or losses are credited or charged to the profit and loss account
as they arise.
Financial instruments
Amounts owed by subsidiary undertakings
Amounts owed by subsidiary undertakings are initially recognised at fair value and subsequently measured at amortised cost less provision for
impairment. A provision for impairment is established when there is objective evidence that the Company will not be able to collect all
amounts due according to the original terms of the receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with a maturity of three months or less.
External borrowings
Interest bearing loans and retail bonds are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Income Statement using the effective
interest rate method.
When the Company exchanges with an existing lender one debt instrument for another one with substantially different terms, such exchange is
accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly the Company
accounts for substantial modifications of the terms of an existing liability or part of it as an extinguishment of the original financial liability and
the recognition of a new liability. The terms are considered to be substantially different if the discounted present value of the cash flows under
the new terms, including any fees paid and discounted using the original effective rate, is at least 10% different from the discounted present
value of the remaining cash flows of the original financial liability. Any gain or loss on extinguishment is recognised in the Income Statement.
Trade payables
Trade payables are not interest bearing and are stated initially at fair value and subsequently held at amortised cost.
Amounts owed to subsidiary undertakings
Amounts owed to subsidiary undertakings are initially recognised at fair value and subsequently held at amortised cost.
Other receivables and other payables
Other receivables and other payables are initially recognised at fair value and subsequently measured at amortised cost.
Derivative financial instruments
In accordance with its treasury policy, the Company only holds derivative financial instruments to manage the Group’s exposure to financial
risk. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company’s derivatives
financial instruments are not designated as hedges and the changes in fair value are recognised in the Income Statement. Details of the fair
values of the derivative financial instruments are disclosed in note 13.
181
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
1. Accounting policies – Company continued
Called up share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or share options are shown in
equity as a deduction, net of tax, from the proceeds. Any excess of the net proceeds over the nominal value of any shares issued is credited to
the share premium account.
Dividends
Dividend distributions to the equity holders are recognised in the period in which they are approved by the shareholders in general meeting.
Interim dividends are recognised when paid
2. Key accounting judgements and estimates
The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenditure. The area involving a higher degree of
judgement or complexity is set out below and in more detail in the related note.
Retirement benefit scheme
The Company operates a defined benefit scheme in the UK for which an actuarial valuation is carried out as determined by the trustees
at intervals of not more than three years. The pension cost under IAS 19 (revised) Employee Benefits is assessed in accordance with
management’s best estimates using the advice of an independent qualified actuary and assumptions in the latest actuarial valuation.
The principal assumptions in connection with the retirement benefit schemes are set out in note 27 of the Group financial statements.
3. Employees
Staff costs
Wages and salaries
Social security costs
Share-based benefits
Other pension costs
Total staff costs
2017
£m
3.4
0.4
0.5
0.1
4.4
2016
£m
3.3
0.4
0.5
0.2
4.4
The average number of people (including executive directors) employed by the Company was 18 employees (2016: 20).
See pages 86 to 101 of the Directors’ Remuneration report for details of the remuneration of executive and non-executive Directors and their
interest in shares and options of the Company.
See note 7 of the Group financial statements for details of share based payments.
4. Auditor’s remuneration
The auditor’s remuneration for audit services to the Company was £0.1m (2016: £0.1m). Fees paid to PricewaterhouseCoopers LLP and its
associates for non-audit services for the Company are disclosed in note 5 of the Renewi plc consolidated financial statements.
182
5. Dividends
See Note 11 of the Group financial statements for details of the dividends of the Company.
6. Intangible assets
Cost
At 1 April 2015, 31 March 2016 and 31 March 2017
Accumulated amortisation and impairment
At 1 April 2015
Amortisation charge
At 31 March 2016
Amortisation charge
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
7. Property, plant and equipment
Cost and accumulated amortisation and impairment
At 1 April 2015, 31 March 2016 and 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
8. Investments
At 1 April 2015
Additions
Disposals
At 31 March 2016
Additions
Disposals
Impairment
At 31 March 2017
Computer
Software
£m
1.2
0.7
0.2
0.9
0.1
1.0
0.2
0.3
0.5
Total
£m
0.3
0.3
0.3
0.3
Investments
in subsidiary
undertakings
£m
487.4
15.0
(3.6)
498.8
43.4
(29.4)
(101.6)
411.2
Land
£m
0.1
0.1
0.1
0.1
Fixtures and
fittings
£m
0.2
0.2
0.2
0.2
During the year an impairment of £101.6m related to the investment in Shanks Waste Management Limited as a result of the difficult trading
conditions being encountered in the UK Municipal division. The addition of £43.4m relates to a loan to Shanks Waste Management Limited
which was capitalised on 31 March 2017.
The disposals of £29.4m (2016: £3.6m) related to investments in dormant non-trading subsidiaries which were placed into voluntary liquidation
during the year.
183
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
9. Trade and other receivables
Non-current assets
Amounts owed by subsidiary undertakings
Current assets
Amounts owed by subsidiary undertakings
Other receivables
Prepayments
2017
£m
272.6
272.6
183.0
0.4
0.1
183.5
2016
£m
81.1
81.1
174.5
0.4
0.1
175.0
Interest on inter-company balances is received at rates of between 0% and 13% (2016: 0% and 13%), the balances are unsecured and repayable
either on demand or in accordance with the loan agreement with the final repayment due on 30 September 2039.
The carrying amounts of trade and other receivables are denominated in the following currencies:
Sterling
Euro
Canadian Dollar
10. Deferred tax
2017
£m
62.3
362.8
31.0
456.1
2016
£m
65.3
163.1
27.7
256.1
Deferred tax is provided in full on temporary differences under the liability method using applicable local tax rates.
At 1 April 2015
(Charge) credit to Income Statement
Charge to equity
At 31 March 2016
(Charge) credit to Income Statement
Credit to equity
At 31 March 2017
Retirement
benefit
schemes
£m
3.3
(0.5)
(0.9)
1.9
(0.4)
1.7
3.2
Tax losses
£m
–
–
–
–
2.9
–
2.9
Derivative
financial
instruments
£m
0.2
0.4
–
0.6
(0.4)
–
0.2
Other
timing
differences
£m
1.0
(0.2)
(0.2)
0.6
–
0.1
0.7
Total
£m
4.5
(0.3)
(1.1)
3.1
2.1
1.8
7.0
At 31 March 2017, £7.0m (2016: £3.1m) of the deferred tax asset is expected to be recovered after more than one year.
As at 31 March 2017, the Company has unused tax losses (tax effect) of £6.6m (2016: £5.9m) available for offset against future profits. A deferred
tax asset has been recognised in respect of £2.9m (2016: £nil) of such losses and recognition is based on management’s projections of future
profits in the Company. Tax losses may be carried forward indefinitely.
11. Cash and cash equivalents
The carrying amount of cash and cash equivalents of £18.1m (2016: £2.6m) were denominated in the following currencies:
Sterling
Euro
Canadian Dollar
.
184
2017
£m
10.0
8.1
–
18.1
2016
£m
1.5
0.8
0.3
2.6
12. Borrowings
Non-current borrowings
Retail bonds
Revolving credit facility
The table below details the maturity profile of non-current borrowings:
Between two years and five years
Over five years
The carrying amounts of borrowings are denominated in the following currencies:
Sterling
Euro
2017
£m
170.2
–
170.2
2017
£m
85.2
85.0
170.2
2017
£m
–
170.2
170.2
2016
£m
157.5
51.8
209.3
2016
£m
130.4
78.9
209.3
2016
£m
16.9
192.4
209.3
The terms of the retails bonds and the revolving credit facility, including the amount available for drawing, are detailed in the Group financial
statements note 24. The retail bonds are carried at amortised cost and are not subject to the consolidated hedging arrangements.
13. Derivative financial instruments
The Company held fuel derivatives with a current liability of £0.7m (2016: £2.3m) and a non-current liability of £0.1m (2016: £0.7m). The notional
value of the wholesale fuel covered by fuel derivatives as at 31 March 2017 amounted to £12.6m (2016: £9.6m). Forward foreign exchange
contracts were held with a current liability of £0.1m (2016: £0.1m) and a notional value of £10.6m (2016: £2.4m).
185
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
14. Trade and other payables and other non-current liabilities
Current liabilities
Trade payables
Other tax and social security payable
Other payables
Accruals
Amounts owed to Group undertakings
Non-current liabilities
Amounts owed to Group undertakings
2017
£m
7.5
0.3
0.1
12.4
99.9
120.2
–
–
2016
£m
0.3
0.3
0.5
8.1
30.5
39.7
96.9
96.9
Interest on inter-company loan balances is charged at rates of between 0% and 2.15% (2016: 0% and 2.32%) and these balances are unsecured
and repayable upon demand.
The carrying amounts of trade and other payables and other non-current liabilities are denominated in the following currencies:
Sterling
Euro
15. Provisions
At 1 April 2016
Provided in the year
Utilised in the year
At 31 March 2017
2017
£m
82.9
37.3
120.2
Other
£m
0.8
–
(0.1)
0.7
2016
£m
111.8
24.8
136.6
Total
£m
0.8
0.2
(0.1)
0.9
Restructuring
£m
–
0.2
–
0.2
Restructuring
The restructuring provision relates to redundancy and related costs incurred as part of the delivery of merger related synergies. As at 31 March
2017 the remaining affected employees are expected to leave the business during the following year.
Other
Other provisions principally covers warranties, under the terms of the agreements for the disposal of certain businesses, the Company has given
warranties to the purchasers which may give rise to payments.
186
16. Retirement benefit scheme
The Renewi plc defined benefit pension scheme (called the Shanks Group Pension Scheme) covers eligible UK employees and is closed to new
entrants. The defined benefit plan provides benefits to members in the form of a guaranteed level of pension payable for life and the level of
benefits provided depends on the members’ length of service and salary. See note 27 of the Group financial statements for further details.
17. Share capital and share premium
Share capital allotted, called up and fully paid
At 1 April 2015
Issued under share option schemes
At 31 March 2016
Issued under rights issue and firm placing
Consideration shares issued
Issued under share option schemes
At 31 March 2017
Ordinary shares
of 10p each
£m
Number
Share
premium
£m
397,850,417
339,140
398,189,557
211,201,962
190,187,502
233,202
799,812,223
39.8
–
39.8
21.1
19.0
–
79.9
124.0
0.2
124.2
115.2
161.7
0.1
401.2
On 24 October 2017 a firm placing of 45,000,000 shares was completed at a price of 100p per share. On 10 November 2016 a 3 for 8 rights issue
of 166,201,962 shares to qualifying shareholders was completed at 58p per share. The Company raised £136.3m net of £5.1m issuance costs.
The bonus factor used in all calculations was 1.129.
On 28 February 2017 the Group issued 190,187,502 shares as part of the purchase consideration for 100% of the ordinary share capital of Van
Gansewinkel Groep B V. The ordinary shares issued have the same rights as the other shares in issue.
During the year 233,202 (2016: 339,140) ordinary shares were allotted following the exercise of share options under the Savings Related Share
Option Schemes for an aggregate consideration of £156,017 (2016: £249,548).
18. Financial instruments
The carrying value of the Company’s financial assets and financial liabilities is shown below:
Financial assets
Trade and other receivables excluding prepayments
Cash and cash equivalents
Financial liabilities
Bank loans
Retail bonds
Trade and other payables excluding non-financial liabilities
Fuel derivatives
Forward foreign exchange contracts
Note
9
11
12
12
14
13
13
2017
£m
456.0
18.1
474.1
–
170.2
119.9
0.8
0.1
291.0
2016
£m
256.0
2.6
258.6
51.8
157.5
136.3
3.0
0.1
348.7
The fair value of financial assets and financial liabilities is not materially different to their carry value except for the retail bonds which have a fair
value of £177.4m (2016: £164.6m).
187
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
19. Notes to the statement of cash flows
(Loss) profit before tax
Fair value (gain) loss on financial instruments
Finance income
Finance charges
Operating (loss) profit from continuing operations
Amortisation and impairment of intangible assets
Exceptional provision against investment in subsidiary
Exceptional loss on disposal of subsidiaries
Net increase (decrease) in provisions
Payments to fund defined benefit pension scheme deficit
Share-based compensation
Exchange gain
Operating cash flows before movement in working capital
(Increase) decrease in receivables
Decrease in payables
Cash flows from operating activities
20. Contingent liabilities
2017
£m
(113.9)
(2.1)
(8.4)
14.8
(109.6)
0.1
101.6
29.4
0.1
(3.1)
0.5
1.9
20.9
(1.5)
(18.2)
1.2
2016
£m
14.6
3.1
(8.0)
11.6
21.3
0.2
–
3.6
(0.3)
(3.1)
0.5
4.7
26.9
38.0
(104.2)
(39.3)
In addition to the contingent liabilities in Note 33 of the Group financial statements the Company has given guarantees in respect of the
Group’s subsidiary and joint venture undertakings’ borrowing facilities totalling £323.1m (2016: £34.4m). The Company also has contingent
liabilities in respect of both VAT and HM Revenue & Customs group payment arrangements of £1.4m (2016: £2.5m).
21. Related party transactions
A list of the Company’s subsidiaries is set out in note 35 of the Group financial statements. Transactions with subsidiaries relate to interest on
intercompany loans and management charges. Net interest income was £7.9m (2016: £6.7m) and management charges were £7.3m (2016:
£7.7m). Total outstanding balances are listed in notes 9 and 14.
188
EXPLANATION OF NON-IFRS MEASURES
The Directors use alternative performance measures as they believe these measures provide additional useful information on the underlying
trends, performance and position of the Group. These measures are used for internal performance analysis. These terms are not defined terms
under IFRS and may therefore not be comparable with similarly titled measures used by other companies. These measures are not intended to
be a substitute for, or superior to, IFRS measurements. The alternative performance measures used are set out below.
Financial Measure
Trading profit
Trading margin
EBITDA
Underlying profit before tax
Underlying EPS
Return on operating assets
Post-tax return on capital
employed
Pre-tax return on investment
programme
Underlying free cash flow
Free cash flow conversion
Core net debt
Net debt to EBITDA
Pro forma information
Underlying effective tax rate
How we define it
Operating profit from continuing operations
excluding amortisation of intangible assets arising
on acquisition, non-trading and exceptional items
Trading profit as a percentage of revenue
Trading profit before depreciation, amortisation and
profit or loss on disposal of plant, property and
equipment
Profit before tax from continuing operations before
non-trading and exceptional items, amortisation of
intangible assets arising on acquisition and fair
value remeasurements
Earnings per share before non-trading and
exceptional items, amortisation of intangible assets
arising on acquisition and fair value
remeasurements
Last 12 months trading profit divided by a 13 month
average of total net assets excluding core net debt,
derivatives, tax balances, goodwill and acquisition
intangibles
Last 12 months trading profit as adjusted by the
Group effective tax rate divided by a 13 month
average of total net assets excluding core net debt
and derivatives
Last 12 months trading profit generated by the
investment divided by the original invested capital
spend presented for the total programme spend
and also for fully operational assets only
Net cash generated from operating activities
principally excluding non-trading and exceptional
items and including interest, tax and replacement
capital spend
The ratio of underlying free cash flow to trading
profit
Core net debt includes cash and cash equivalents
but excludes the net debt relating to the UK PFI/PPP
contracts.
Why we use it
Provides insight into ongoing profit generation and
trends
Provides insight into ongoing margin development
and trends
Measure of earnings and cash generation to assess
operational performance
Facilitates underlying performance evaluation
Facilitates underlying performance evaluation
Provides a measure of the return on assets across the
Divisions and the Group excluding historic goodwill
and acquisition intangible balances
Provides a measure of the Group return on assets
taking into account the historic goodwill and
acquisition intangible balances
Provides a measure of the efficiency of recent
significant capital investment
Measure of cash available after regular replacement
capital expenditure to pay dividends, fund growth
capital projects and invest in acquisitions
Provides an understanding of how our profits convert
into cash
The borrowings relating to the UK PFI/PPP contracts
are non-recourse to the Group and excluding these
gives a suitable measure of indebtedness for the
Group
Commonly used measure of financial leverage and
consistent with covenant definition
Core net debt divided by an annualised EBITDA with
a net debt value based on the terminology of
financing arrangements and translated at an
average rate of exchange for the period
Last 12 months for VGG to align to the Renewi plc
financial year
The effective tax rate on underlying profit before tax Provides a more comparable basis to analyse our
Provides a comparable measure with the legacy
Shanks activity
tax rate
189
MORE INFORMATION
SHAREHOLDER INFORMATION
ANALYSIS OF SHAREHOLDERS AS AT 31 MARCH 2017
Holders
%
Shares held
Private shareholders
Corporate shareholders
Total
1,870
632
2,502
74.7
25.3
15,293,221
784,519,002
100.0
799,812,223
100.0
%
1.9
98.1
Size of shareholding
Holders
%
Shares held
1-5,000
5,001 - 25,000
25,001 - 50,000
50,001 - 100,000
100,001 - 250,000
250,001 - 500,000
over 500,000
Total
1,595
63.8
2,948,507
561
101
47
54
31
113
22.4
5,952,450
4.0
3,449,311
1.9
3,353,870
2.2
8,300,143
1.2
10,544,782
4.5
765,263,160
2,502
100.0
799,812,223
%
0.4
0.8
0.4
0.4
1.0
1.3
95.7
100.0
Change of Company name
On 28 February 2017, following the
completion of the merger of Shanks Group
plc and Van Gansewinkel Groep BV, the
combined company was renamed Renewi
plc. Replacement share certificates were not
issued and existing certificates in the name
of Shanks Group plc will remain valid.
Registrar services
Administrative enquiries concerning
shareholdings in the Company should be
made to the Registrar, Computershare
Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZZ.
Computershare can also be contacted by
telephone on 0370 707 1290. Shareholders
can also manage their holding online by
registering at www.investorcentre.co.uk.
Dividends
Shareholders are strongly encouraged
to receive their cash dividends by direct
transfer as this ensures dividends
are credited promptly and efficiently.
Shareholders who do not currently have
their dividends paid directly to a bank or
building society account, and who wish to
do so, should complete a mandate form
obtainable from Computershare. Overseas
shareholders wishing to receive their
dividend payment in local currency can
now do so using Computershare’s Global
Payments Service.
Dividend tax allowance
The announcement made by the Chancellor
in the 2017 Spring Budget that the annual
dividend tax allowance will be reduced
from £5,000 to £2,000 per annum does not
come into force until April 2018. For the
Financial Year 2017/18 dividends received
amounting to less than £5,000 are tax free.
Dividends in excess of this allowance will
be taxed at 7.5% for basic rate taxpayers,
32.5% for higher rate taxpayers and 38.1%
for additional rate taxpayers. Renewi plc will
continue to provide registered shareholders
with a confirmation of the dividends paid by
the Company. Any dividends received from
Renewi plc should be added to all other
dividend income received by shareholders
for the respective year when calculating and
reporting their total dividend income for
tax purposes. It is the responsibility of the
shareholder to include all dividend income
from all shares held in all companies, when
calculating any tax liability.
ShareGift
If shareholders have only a small number
of shares, the value of which makes it
uneconomic to sell, they may wish to
consider donating them to the charity
ShareGift (registered charity no. 1052686).
Further information may be obtained from
their website at www.sharegift.org or by
calling 020 7930 3737.
Electronic shareholder communication
Shareholders may elect to receive future
shareholder documents and information by
email or via the Company’s website. This is
intended to help the environment by reducing
paper and transport as well as enabling
the Company to save on administration,
printing and postage costs. Please contact the
Company Registrar for details.
Share fraud warning
Fraudsters use persuasive and high pressure
tactics to lure investors into scams. They
may offer to sell shares that turn out to be
worthless or non-existent, or to buy shares
at an inflated price in return for an upfront
payment. While high profits are promised,
if you buy or sell shares in this way you will
probably lose your money.
How to avoid fraud
Firms authorised by the Financial Conduct
Authority (FCA) will rarely contact you out
of the blue with an offer to buy or sell your
shares. If you feel that the person contacting
you is not legitimate, note their name
and the firm they work for; you can check
the Financial Services Register at www.
fca.org.uk to see if the person and firm is
authorised by the FCA. Call the FCA on 0800
111 6768 if the firm does not have contact
details on the register or they are out of
date. You can search the list of unauthorised
firms to avoid at www.fca.org.uk/scams. If
you buy or sell shares from an unauthorised
firm, you will not have access to the
Financial Ombudsman or Financial Services
Compensation Scheme. You should always
consider getting independent financial
advice before any transaction.
Report a scam
If you are approached by a fraudster please
tell the FCA using the share fraud reporting
form at www.fca.org.uk/scams, where you
can find out more about investment scams,
or call the FCA Consumer Helpline on 0800
111 6768. If you have already paid money to
share fraudsters you should contact Action
Fraud on 0300 123 2040.
190
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RENEWI plcAnnual Report and Accounts 2017 FINANCIAL CALENDAR
29 June 2017
Ex-dividend date for final 2017 dividend
November 2017
Announcement of interim results and dividend
30 June 2017
Record date for final 2017 dividend
31 March 2018
2018 financial year end
13 July 2017
Annual General Meeting
May 2018
Announcement of 2018 preliminary results and dividend recommendation
28 July 2017
Payment of final 2017 dividend
For updates to the calendar during the year, please visit the
Company website: www.renewi.com
COMPANY INFORMATION
PRINCIPAL OFFICES
Netherlands Commercial Division
Former Shanks Head Office:
Lindeboomseweg 15
3828 NG Hoogland
The Netherlands
Tel: 00 31 (0) 332 050 200
Fax: 00 31 (0) 332 050 211
Website: www.shanks.nl
info@shanks.nl
Email:
Former Van Gansewinkel Head Office:
Flight Forum 240
5657 DH Eindhoven
Netherlands
Tel: 00 31 (0) 40 751 40 00
Website: www.vangansewinkelgroep.com
www.vangansewinkel.nl
info@vangansewinkel.com
Email:
Hazardous Division
Computerweg 12D
Postbus 1545
3821 AB Amersfoort
The Netherlands
Tel: 00 33 (0) 455 88 90
Fax: 00 33 (0) 456 25 81
Website: www.shankshazardouswaste.com
info@shankshazardouswaste.com
Email:
CORPORATE ADVISERS
Belgium Commercial Division
Former Shanks Belgium Head Office:
Corporate Village
Leonardo Da Vincilaan, 2
1935 Zaventem
Belgium
Tel: 00 32 (0) 247 710 00
Fax: 00 32 (0) 272 124 54
Website: www.shanks.be
info@shanks.be
Email:
Former Van Gansewinkel Head Office:
Nijverheidstraat 2
2870 Puurs
Belgium
Tel: 00 32 (0) 344 325 00
Website: www.vangansewinkelgroep.com
www.vangansewinkel.be
info@vangansewinkel.com
Email:
Municipal Division
Shanks Waste Management Limited
Dunedin House
Auckland Park, Mount Farm
Milton Keynes
Buckinghamshire MK1 1BU
Tel: 00 44 (0) 1908 650650
Fax: 00 44 (0) 1908 650699
Website: www.shanksmunicipal.co.uk
info@shanks.co.uk
Email:
Corporate Head Office
Renewi plc
Dunedin House
Auckland Park, Mount Farm
Milton Keynes
Buckinghamshire MK1 1BU
Tel: 00 44 (0) 1908 650580
Website: www.renewi.com
info@renewi.com
Email:
Registered Office
Renewi plc
16 Charlotte Square
Edinburgh
EH2 4DF
Registered in Scotland
No. SC077438
Group Company Secretary
Philip Griffin-Smith, FCIS
Independent Auditors
PricewaterhouseCoopers LLP
Financial Advisers
Greenhill & Co International LLP
PR Advisers
Brunswick
Solicitors
Ashurst LLP
Dickson Minto W.S.
Corporate Brokers
Investec
Peel Hunt
Principal Bankers
ING Bank N.V.
Coöperatieve Rabobank U.A.
ABN Amro Bank N.V.
KBC Bank N.V.
BNP Paribas Fortis S.A./N.V.
HSBC Bank plc
_Renewi_ARA_17.indb 191
191
02/06/2017 11:16
MORE INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWRENEWI plcAnnual Report and Accounts 2017
MORE INFORMATION
GLOSSARY
AD
AGM
AVR
BDR
Anaerobic Digestion
Annual General Meeting
Afvalverwerking B.V.
Barnsley, Doncaster and Rotherham
BENELUX
The economic union of Belgium,
the Netherlands and Luxembourg
BRZO
C&D
CAGR
CE
CER
CFS
CGU
CI
Major accident regulations
Construction and Demolition
Compound Annual Growth Rate
Commercial Effectiveness
Constant Exchange Rate
A brand in the Van Gansewinkel
portfolio
Cash Generating Unit
Continuous Improvement
CONNECTUS
Group-wide collaboration tool
CORE NET DEBT
CSR
DAB
EBITDA
ELWA
EPC
EPS
EU
EXCOM
FCA
HWRC
I&C
ICT
IFRS
Borrowings less cash from core
facilities excluding PFI/PPP
non-recourse debt
Corporate Social Responsibility
Deferred Annual Bonus
Trading profit before Interest, Tax,
Depreciation and Amortisation
East London Waste Authority
Engineering, Procurement
and Construction
Earnings Per Share
European Union
Executive Committee
Financial Conduct Authority
Household Waste Recycling Centre
Industrial and Commercial
Information and Communications
Technology
International Financial
Reporting Standards
IMO
IVC
LTIP
M&A
MBT
MRF
NORM
OEM
PDR
PFI
PPP
RDF
Integration Management Office
In-Vessel Composting
Long Term Incentive Plan
Mergers and Acquisitions
Mechanical Biological Treatment
Material Recycling Facility
Naturally Occuring Radioactive
Materials
Original Equipment Manufacturer
Performance Development Review
Private Finance Initiative
Public Private Partnership
Refuse Derived Fuel
RIDDOR
Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations
ROCE
SPV
SRF
SSC
TAG
TOM
Return on Capital Employed
Special Purpose Vehicle
Solid Recovered Fuel
Shared Service Centre
Tar and Asphalt Granulate
Target Operating Model
TRADING PROFIT
TRI
TSR
UK GAAP
UFCF (UNDERLYING
FREE CASH FLOW)
VGG
VGIS
Operating profit before the
amortisation of acquisition
intangibles, exceptional items
and discontinued operations
Thermische Reinigings Installatie
(Thermal Cleaning Installation)
Total Shareholder Return
UK Generally Accepted
Accounting Practice
Cash flow before dividends,
growth capex, Municipal/PFI
funding, acquisitions, disposals
and exceptional items
Van Gansewinkel Groep B.V.
Van Gansewinkel Industrial Services
192
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RENEWI plcAnnual Report and Accounts 2017 Designed and produced by
Wardour www.wardour.co.uk
Printed by Newnorth on FSC® certified
paper with 100% vegetable inks.
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oil-based, 95% of press chemicals are
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Newnorth is FSC and PEFC certified. Its
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Please see details on page 190 on
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of future documentation from
Renewi plc.
_Renewi_ARA_17.indb 8
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