Renewi Annual Report 2019

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FY2019 Annual Report · Renewi

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BUILD
CONFIDENCE
DELIVER
GROWTH

RENEWI PLC
ANNUAL REPORT AND ACCOUNTS
2019

OUR
PURPOSE
to protect the world
by giving new life
to used materials

OUR
VISION
to be the leading
waste-to-product
company

OUR
APPROACH

LOCAL
SERVICE

INTERNATIONAL
EXPERTISE

UNRIVALLED
RANGE OF
PRODUCTS AND
SERVICES

DELIVERED BY OUR PASSIONATE AND COMMITTED PEOPLE

OVERVIEW

CONTENTS

STRATEGIC REPORT

002 2018/19 in summary
006 Chairman’s statement
008 Our strategy
010 Our stakeholders
013 CEO’s Review
022 Executive Committee
025 CFO’s Review
035 Operating Review
060 People
064 Corporate Social Responsibility
068 Risks and uncertainties

GOVERNANCE

078 Board of Directors
080 Corporate governance:
Chairman’s introduction
081 Corporate Governance Report
084 Audit Committee Report
088 Nomination Committee Report
090 Remuneration Committee
Chairman’s statement

093 Directors’ remuneration policy
099 Annual report on remuneration
108 Other disclosures
111 Directors’ responsibilities statement
112 Auditors’ Report

FINANCIAL STATEMENTS

121 Financial statements

MORE INFORMATION

207 Shareholder information
208 Company information
209 Glossary

001
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
INTRODUCTION

2018/19 IN SUMMARY
FINANCIAL HIGHLIGHTS OVERVIEW

Revenue*

€1,799m

Up 1%

Underlying EBIT*

€87.0m

Up 11%

Underlying profit before tax*

€63.8m

Up 9%

Statutory loss for the year

€(97.7)m

Prior year €(53.9)m

FINANCIAL HIGHLIGHTS BY DIVISION

Revenue

€1,194m

Revenue

€211m

Revenue

€213m

Revenue

€195m

COMMERCIAL

More on our stakeholders
page 10

WASTE
PRODUCER

MANUFACTURER

CONVERSION TO
RAW MATERIALS

Renewi

Society

We are paid by waste producers to take their waste away. We process it to create products of positive value and reduce the liability
of disposing of the residues. In the Commercial Division around 80% of our income comes from waste producers and 20% from
our products. This can change as market prices for the products can go up or down and we pass these fluctuations on to the waste
producer, protecting our margins.

RENEWI IN NUMBERS

189

Number of
operating sites1

7,036

107

13.85m

Number of
employees

Number of operating
sites with recycling/
recovery

Total tonnes of
waste handled

2,541

Number of collection
and transport trucks2

1. Active operating sites; does not include offices and other non- operational sites
2. Does not include vans, passenger cars, mobile plant and similar

004
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
INTRODUCTION CONTINUED

OUR VALUES

Our values are the foundation for everything we do. They show that how
we act is just as important as what we do. We use our values to guide the way
we behave and make decisions at Renewi.

WHAT WE ARE

HOW WE ACT

Safe
Safety above all else

We work safely or not at all by making
safety part of all our systems, structures
and processes. We stick to the rules,
promote safety in our work and confront
unsafe behaviour.

Accountable
Do what we say we’ll do

Collectively, we ensure that our operations
run efficiently. Our team’s performance-driven
mindset means we are committed to raise
standards, show active integrity, and deliver
with energy and pace.

Innovative
Do it better every day

Innovation is what keeps us at the forefront
of the waste-to-product revolution,
helping us to deliver better products and
services. Together, we actively explore new
ideas and ways of working. Listening and
sharing is key.

Customer-focused
Add value for our customers

Our customers come first, so we are committed
to providing excellent customer service
to each and every one. We do this by being
consistently reliable and timely, responsive
and entrepreneurial, and full of friendly,
positive energy.

Sustainable
Make a daily difference to our planet

Sustainability is at the heart of what we do.
We are proud of our contribution to the
environment and of the work we do.
We are at the centre of the circular economy
and ambitious about our impact on
future generations.

Together
Always open and respectful

Cooperation and supporting each other
are essential within Renewi. That is why we
treat each other with respect, listen and learn
from one another, work together across all
boundaries, and value every person’s role
and contribution.

For more information on our values see the People section on page 60

005
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CHAIRMAN’S STATEMENT

Colin Matthews
Chairman

REVIEW OF THE YEAR

EPS AND DIVIDEND

Total underlying earnings per share grew
by 13% to 6.1 cents (2018: 5.4 cents). We are
recommending a reduced final dividend for
the year ended 31 March 2019 to 0.5 pence
per share, which will result in a total dividend
for the year of 1.45 pence per share. This,
together with a similar reduction in the total
dividend for the year ending 31 March 2020,
will benefit the Group by around €30m.
Thereafter, the Board will review the dividend
policy and expects to maintain a dividend
cover policy on earnings before non-trading
and exceptional items of 2.0x – 2.5x in line
with previous guidance.

SAFETY AS OUR FIRST VALUE

We work hard to improve safety, the first of
our six Renewi values. Safety matters because
our people matter, and improved safety
means improved operational performance.
Renewi launched a new safety culture
initiative and set new ambitious targets,
which you can read more about on page 64.
During the year to 31 March 2019 our
“greater than 3 day lost time accident rate”
improved by 7%.

2019 was a challenging year for the Group,
with the good progress in our core Benelux
Commercial businesses, including a strong
final fourth quarter, offset by the extended
reduction in output at ATM, our facility in the
Netherlands that treats contaminated soil,
and underperformance in our Monostreams
Division. The commissioning of our waste
treatment centre in Derby was also delayed.
As a result, underlying profit before tax on
a total operations basis was €63.8m which,
after significant exceptional and non-trading
items, produced a statutory loss of €97.7m.

In light of the reduced performance at ATM,
we have taken a number of steps to reduce
the Group’s core net debt and leverage ratio,
which has peaked following the merger of
Shanks with Van Gansewinkel in 2017. These
steps include the planned disposals of our
Canadian business and our Reym industrial
cleaning business, which are well-advanced,
and tight control of costs and capital
expenditure across the Group. We have
also temporarily reduced the Group’s
dividend payments.

These actions will increase the Group’s
focus on our core Benelux Commercial
businesses. Following the successful
integration of Shanks and Van Gansewinkel,
these businesses enjoy strong market
positions and are delivering improving
performance underpinned by our continuous
improvement and commercial effectiveness
programmes alongside the realisation of our
planned merger benefits.

006
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

KEY NUMBERS*

€1,799

Revenue

€63.8m

Underlying profit before tax

€146.0m

Non-trading and exceptional items

13%

Underlying EPS improvement

Improvement in our >3 day
accident rate

* Numbers quoted on a total operations basis
including continuing and discontinued
operations

See page 25 for more

STRATEGIC REPORT
CHAIRMAN’S STATEMENT

Renewi has a compelling offering
for waste producers and purchasers
of secondary materials, with local
service supported by a range of
processing technologies

CORPORATE GOVERNANCE

The Board and its committees paid close
attention to the integration of the two legacy
businesses and the associated control,
reporting and risk management frameworks.

We also prioritised the recruitment
and development of leaders and the
strengthening of our corporate functions.
We activated our Renewi values and launched
a new Code of Conduct, supported by an
extensive education scheme.

The Board aims for the highest standards of
corporate governance. Details of our policies
and procedures, 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 78 to 120.

BOARD CHANGES

Peter Dilnot stepped down as CEO on the last
day of the year after seven years in the role.
I thank him for his part in creating Renewi
and for his hard work and dedication. The
Board was pleased to appoint Otto de Bont
as the Group’s new CEO. He has transitioned
smoothly into the role from 1 April 2019
having previously run our Commercial
business in the Netherlands.

Neil Hartley joined us as Non-Executive
Director, bringing expert and relevant
knowledge as an investor in adjacent
industries. Jacques Petry, Senior
Independent Director, will reach nine years
of service during the coming year and will
stand down from the Board before the 2020
AGM. When he does so, Allard Castelein will
become Senior Independent Director.

Following the merger of Shanks and Van
Gansewinkel, Renewi has been undergoing
a major transformation. As the two recently
announced disposals complete, we secure
regulatory alignment at ATM, and we achieve
a secondary listing in Amsterdam, Renewi will
focus on creating value in our core Benelux
markets. Our Board structure and governance
will continue to evolve accordingly and
we expect to launch a search for a new
Chairperson based within the Benelux region
during the current financial year.

A DEDICATED TEAM
AND A POSITIVE FUTURE

On behalf of the Board, I thank all our
colleagues for their commitment and
resilience in a challenging year.

Renewi is well positioned at the heart of the
emerging circular economy, a market driven
by pressing societal needs. The Benelux
is at the forefront of these trends where
legislation and the demands of consumers
and companies for sustainable solutions are
leading to new opportunities. Renewi has
a compelling offering for waste producers
and purchasers of secondary materials,
with local service supported by a range of
processing technologies. We are focused on
ensuring that Renewi capitalises on these
opportunities and delivers sustainable
future growth.

Colin Matthews
Chairman

007
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OUR STRATEGY

BUILD CONFIDENCE. DELIVER GROWTH

Our strategy is focused on resolving short-term challenges and
positioning ourselves for growth in increasingly favourable markets

Dispose of
non-core assets

Decrease
leverage

Resolve ATM
regulatory issues

Ringfence
Municipal

Sort and fix immediate issues, creating a cash generative business
with competitive advantage in Benelux recycling

BUILD
CONFIDENCE
DELIVER
GROWTH

Capture benefits from strong structural drivers
to deliver strategic growth and shareholder value

Deliver integration
benefits

Expand
margins

Simplify
organisation and
processes

Digitalise through
new digital
channels and
business models

Innovate and
invest in recycling
technologies

Actively manage
portfolio

008
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OUR STRATEGY

OUR FUTURE GROWTH

We have clear plans to address the current challenges and to deliver
long-term profitable growth.

DIVISIONS

COMMERCIAL
Concentrate on treatment and
creating value-added secondary
products. Continue to expand
margins through commercial
effectiveness, continuous
improvement and by focusing on
overheads and cost-to-serve.

HAZARDOUS WASTE
Resolve regulatory challenges for
thermal soil at ATM and invest to
refine thermally-cleaned soil into
secondary products. Complete
strategic disposal of Reym.

MONOSTREAMS
Address market and operational
challenges through rationalisation
and investment in operational
improvements. Exploit growth
opportunities, focusing on organic
waste treatment, bottom ash
treatment and plastics.

MUNICIPAL
Following Canada sale, focus on UK
portfolio improvements, commercial
and operational performance, and
reducing risk and volatility. Negotiate
commissioning of Derby or exit
without further loss.

Goals 2019/20
Î Complete Phase 1 of integration
to deliver €40m committed cost
synergies

Î Next phase of integration to
identify further savings

Î Focus on increasing margins in

tenders and pricing
Î Selective investment in

processing technology alone/
through partners

Goals 2019/20
Î Resume shipments of thermally-

Goals 2019/20
Î Rationalise Coolrec, focusing on

Goals 2019/20
Î Complete sale of Canadian

treated soil

profitable business lines

assets

Î Gain product certification for

Î Improve performance of Maltha

new building products and invest
in larger-scale equipment for
full-scale production

Î Transition to new partnership

relationship with Reym
Î Integrate support activities

into Renewi

Netherlands

Î Build on positive momentum for
Orgaworld, embedding Rotie and
securing synergies

Î Complete Maasvlakte expansion,
explore opportunities to expand
in bottom ash treatment

Î Resolve Derby situation through
renegotiated commissioning
plan or exit

Î Deliver significant operational
improvements, especially BDR
and ELWA

Î Review UK market for alternative

growth opportunities

GROUP

DELIVER INTEGRATION
Deliver €40m committed cost
synergies and complete physical
rebranding and transition of the
two legacy businesses to one way
of working.

STRATEGIC EXPANSION
Position Renewi as cost-efficient
leader, including simplification of
organisation. Invest to maintain
leading position in sorting and
production of high-quality recyclates
and secondary materials.

MARGIN IMPROVEMENT
Continue to focus on driving margins
through optimised price and reduced
cost-to-serve, leveraging scale and
the breadth of our capabilities.

Goals 2019/20
Î Complete Phase 1 of integration

Goals 2019/20
Î Complete actions to strengthen

to deliver cost synergies

balance sheet

Î Complete rebranding and build
positive brand recognition
Î Complete site IT and process

Î Simplify portfolio, organisation
and processes, including initial
phase of Renewi 2.0

Goals 2019/20
Î Increase margins in tenders
through offering enhanced
service and capabilities

Î Ensure price increases to capture
and pass on inflationary costs

migrations in Belgium

Î Invest in processing capability

Î Reduce cost-to-serve and

Î Complete pilot phases for C&D
migration in Netherlands and
transfer first sites

and capacity, including
partnerships

Î Develop innovation portfolio,

including partnerships

optimise processes, including
continuous improvement and
digitalisation/robotics

MANAGING THE PORTFOLIO
Disposal of non-core assets and
those not delivering returns, invest in
assets for scale and new capabilities,
positioning Renewi with a range of
secondary products in expanding
sectors.

Goals 2019/20
Î Complete the sale of Canadian

business

Î Complete the sale of Reym
Î Acquire Rotie (organics) and

consider other niche acquisitions
that can add value and deliver
sustainable attractive returns

009
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OUR STAKEHOLDERS

INVESTORS
We are committed to delivering stable
profitable growth and attractive returns
for our investors. We intend to reduce
volatility and increase cash generation
for longer-term stability.

CUSTOMERS
As a pure-play waste-to-product company
we have a unique position in the value chain,
linking waste producers to secondary raw
material consumers. We actively support our
customers to achieve their recycling targets,
secure secondary raw materials and to create
circular solutions.

OUR
STAKEHOLDERS

COMMUNITIES
(Local and Wider Society)
We aim to be a good neighbour and make a
positive contribution to the local community.

GOVERNMENTS
(Regulators and Policy Makers)
We support government initiatives to further
stimulate recycling and the use of secondary
raw materials. We work with regulators to
ensure the market receives high-quality
products, manufactured responsibly.

EMPLOYEES
Our success is driven by our talented team of
people and we are committed to developing
and driving our people agenda and keeping
our people safe.

010
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OUR STAKEHOLDERS

HOW WE ENGAGE

We have a number of important stakeholders who are central to all that we do.
Engaging with these people is a core part of our everyday operations. We strive to
communicate effectively with them, using a two-way dialogue.

STAKEHOLDER

HOW WE ENGAGE

Employees

` Daily Interactions

` CEO Vlogs

` Town Hall Meetings

` Internal Announcements

` Works Councils

` Divisional Magazines

` Renews Magazine

` Intranet

` Employee Engagement Survey

` Toolbox Talks (safety updates)

Investors

` Investor Briefings

` Corporate Reporting

` Investor Roadshows

` Investor Meetings

` Analyst Presentations

` Capital Markets Days

` Website

Customers

` Waste Collection

` Meetings

` Websites

` Webchat

` AGM

` Site Visits

` Emails

` Letters

` Calls

` Social Media

` Feedback Surveys

` Customer Events

Governments

REGULATORS
` Meetings

` Site Visits

` Letters

POLICY-MAKERS
` Lobbying Activities

` Letters

` Briefings

` Membership Body Events

` Industry Events

Communities

LOCAL
` Liaison Committees

` Site Visits

` Leaflets

` Meetings

WIDER SOCIETY
` Websites

` Local Media

011
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FROM WASTE TO PRODUCT

ORANGE PEEL

ESSENTIAL OILS

Renewi will collect citrus peel from supermarkets
and catering companies and transport them to
PeelPioneers’ new plant. The peel will be turned into
essential oils and citrus pulp which will be used as
ingredients in products such as detergents.
Every 1,000 kg of peels processed will provide enough
detergent to clean 4,500 m2 of floor.

012
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW

Otto de Bont
CEO

OVERVIEW

Peter Dilnot stepped down as CEO on the last day of the financial year
after seven years in the role. The Board and I thank him for his part in
creating Renewi and for his hard work and dedication.

I took over as CEO on 1 April 2019, following two years as Managing
Director of the Netherlands Commercial Division. Together with
our Belgian Commercial business, the Commercial Division, which
accounts for two-thirds of Renewi activities, delivered good profit
growth year on year, supported by merger cost synergies, and is well
positioned for future profitable growth. This good progress was offset
by significant challenges elsewhere in the Group.

As previously announced, ATM was severely impacted by the ongoing
industry-wide suspension of the application of thermally treated
soil. We are progressing the additional tests required by the Dutch
authorities for the resumption of shipments of thermally treated
soil from ATM on an interim basis and as an input to a planned
new regulatory framework. We continue to expect the authorities
to permit shipments under such an interim regime during the year
ending 31 March 2020 and we maintain a strong order book of
domestic and export customers waiting to take the cleaned soil once
regulatory clearance is given.

Following market and operational challenges in Monostreams, we
are rationalising sites and products, which will deliver improved
performance. In the Municipal Division, our main challenge is the
new Derby facility. Following the failure of our partner, Interserve,
to commission the facility, we have now provided for the complete
termination of the PPP contract.

As previously announced, we have also implemented a series of
actions to reduce the Group’s core net debt and leverage, including
an extension of bank covenants, reduced capital expenditure, cost
reduction actions and the reduction of the dividend. The planned
strategic disposals of our Canadian and Reym businesses are
expected to reduce the leverage ratio by at least 0.5x with both
processes progressing well.

We are focused on resolving our short-term challenges and building
a solid base for future growth. Renewi remains well positioned for
profitable growth in increasingly favourable markets.

013
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

TOTAL OPERATIONS

Commercial Waste

Hazardous Waste

Monostreams

Municipal

Group central services

Inter-segment revenue

Continuing Operations

Discontinued Operations

Total

REVENUE

UNDERLYING EBIT

Mar 19
€m

1,194.4

211.3

213.3

195.2

–

(33.5)

Mar 18
€m

1,158.2

231.0

204.4

200.5

–

(33.8)

1,780.7

1,760.3

18.3

18.8

1,799.0

1,779.1

Variance
%

Mar 19
€m

Mar 18
€m

Variance
%

-9%

-3%

86.5

7.0

12.9

0.8

(21.7)

–

85.5

1.5

87.0

73.3

19.9

18.2

(6.6)

(22.3)

–

82.5

(4.2)

78.3

18%

-65%

-29%

N/A

11%

The underlying figures above are reconciled to statutory measures in note 2 in the consolidated financial statements.
Discontinued operations include the results of the Canada Municipal segment which meets the criteria as set out in IFRS5.

As previously announced, the proposed
dividend for the year was reduced to
1.45 pence per share, reflecting the Group’s
focus on strengthening its balance sheet.

DIVISIONAL PERFORMANCE SUMMARY
– further detail provided in the
Operating Review

Encouraging growth in our core
Commercial Division
Our Commercial Division, representing
around 65% of Group revenues, had a good
year, increasing underlying EBIT by 18%
to €86.5m on revenues up 3% to €1,194m.
Margins increased by a further 90 basis
points to 7.2% and returns on operating
assets increased 250 basis points to 23.1%.
The Netherlands increased underlying EBIT
by 21% to €53.2m, while Belgium grew
underlying EBIT by 14% to €33.3m. The
performance reflected the positive impact
of strong price increases for inbound waste
introduced in January 2019 to offset lower
recyclate income and increasing costs
during the year, especially in the disposal of
residues. Market share is being maintained
and tender renewals continue to be won
at improved margins. Divisional synergies
amounted to €19.1m during the year in line
with our expectations.

GROUP PERFORMANCE

Including discontinued operations, total
revenues grew 1% to €1,799m and total
underlying EBIT increased 11% to €87m. Total
underlying profit before tax was 9% ahead of
last year at €64m. Total underlying earnings
per share grew 13% to 6.1 cents (2018:
5.4 cents).

Total exceptional items were €146m (2018:
€97m), of which €52m were cash. These
items included the €57m of planned synergy
delivery and merger integration costs. It
also included the €64m write-off of our
investment in the Derby gasification facility
and additional provision for associated costs,
due to the failure of our partner, Interserve, to
commission the facility. As a result, there was
a Group statutory loss for the year of €98m
(2018: €54m).

Strong cash management continued through
the year despite a material reduction in cash
flow as a result of ATM remaining at low
output levels. Underlying free cash flow was
€30m and benefited from tight control of
capital expenditure to mitigate the lower than
expected profitability. Cash balances were
increased by the disposal of non-core assets
including the Energen Biogas anaerobic
digestion (AD) facility for €20m in cash. Our
core net debt at 31 March 2019, excluding the
impact of assets held for sale, was €556m,
representing a multiple of 3.06x EBITDA,
within our recently extended covenant level
of 3.50x and in line with our expectations for
the year.

014
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

We are delivering integration
benefits in the form of cost
synergies (see page 09)

STRATEGIC
OBJECTIVES

KEY NUMBERS*

€87.0m

Underlying EBIT

€63.8m

Underlying profit before tax

Improvement in our >3 day
accident rate

90%

Recycling and recovery rate

* Numbers quoted on a total operations basis
including continuing and discontinued
operations

See page 25 for more

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

Hazardous Waste Division lower due
to ongoing regulatory suspension of
soil shipments
As previously announced, ATM was
significantly impacted by the ongoing
suspension of the offset of remediated soil in
the Netherlands by the regulators. Revenues
reduced 9% to €211m and underlying
EBIT reduced 65% to €7.0m, with margins
decreasing by 530 basis points to 3.3%.
The waterside and packed chemical waste
activities at ATM performed as expected and
a strong pipeline both of contaminated soil
and potential outlets remains for remediated
soil once the market reopens.

Market and operational challenges
impacted the Monostreams Division
After a strong first year, our Monostreams
Division delivered a disappointing
performance. Revenues increased 4% to
€213m but underlying EBIT fell 29% to
€12.9m. Margins reduced by 290 basis points
to 6.0%. Mineralz performed well during the
year, including the long-term extension of the
permit for the Maasvlakte Class 1 landfill site.
Orgaworld also performed well. However,
Coolrec and our glass business Maltha were
disappointing and are being restructured
under new leadership, simplifying the range
of geographies served and products recycled.

We are progressing the additional tests
required by the Dutch authorities for the
resumption of shipments of thermally treated
soil from ATM on an interim basis, during the
year ending 31 March 2020, which will also be
used as an input to a planned new regulatory
framework. We maintain a strong order book
of domestic and export customers waiting
to take the cleaned soil once regulatory
clearance is given.

In parallel we are developing a process to
treat soil further, separating it into gravel,
sand and fly ash for sale into the construction
industry as building materials. We have made
good progress in recent months, securing
planning permission and producing pilot-
scale quantities. We will invest in full-scale
production capacity in the coming year, and
expect material production to take place
during 2020/21.

Reym had a challenging year with fewer
customer shutdowns within which to operate
and lower productivity due to less predictable
scheduling of projects. A series of commercial
initiatives implemented in the fourth quarter
have resulted in an improved performance
and outlook for the current financial year.

015
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

OUR COMPETITIVE ENVIRONMENT

Political/social/environmental background
Renewi’s purpose as a company is to provide solutions for the
structural and thematic challenges of our age: climate change,
energy transition and resource depletion. The overwhelming and
urgent need to reduce carbon emissions and to preserve scarce
materials in an increasingly polluted planet is driving consumer
sentiment, political will and ultimately the regulatory environment
in a positive direction for us. We are strongly positioned to benefit
from long-term trends to increase the use of secondary materials
and reduce carbon footprint.

Outputs: Recyclates, secondary products and
residues customers
Recyclate markets have considerable power to dictate market
pricing when operating in commodity markets, such as ferrous,
non-ferrous and precious metals, baled paper and plastic, but
relatively less when buying bespoke processed products with a
higher value-add (such as plastics) as inputs for manufacturing
processes. Renewi therefore increasingly focuses on further
processing to produce secondary materials with a higher value and
which are better embedded in the customer’s supply chain.

Renewi is influenced by regulation at the international, EU
regional, and national level, including for example the United
Nations Sustainable Development Goals, the EU Waste Directive,
and national policies such as the EU circular economy package,
Belgium OVAM regulations and Zero Waste Scotland. Domestic
policies in international markets also influence our operations; for
example, China’s National Sword policy, which has reduced outlets
for paper and plastic waste streams. Taxation and fiscal incentives
are also significant to the business model of Renewi, including
landfill taxation and fiscal incentives, and incineration taxation,
among others.

These regulations and fiscal incentives largely favour companies
with strong recycling capabilities compared to those focusing on
incineration, landfilling or international exports. The increasingly
complex permit landscape favours companies with scale,
experience and deep knowledge of the markets they operate in.
Renewi fits this profile perfectly.

Industry rivalry
There is significant and effective industry rivalry, especially in
collection. Small-scale local players with low overheads effectively
cap prices for collection, but they lack outlets and treatment
solutions. Barriers to growth tend to limit their size. In our core
markets there are relatively few national players. Competition is
based on the provision of broader or better recycling services,
logistic scale and service, and support in sustainability initiatives.

Input: Waste producing customers
Waste collection historically was a commoditised segment of the
market, with customers buying primarily on price and service level.
Large customers provided base volumes for logistic efficiency
and therefore could command lower prices. This is changing, as
customer demands are evolving towards sustainable solutions.
Customers want us to offer sustainable treatment of their waste
and for us to provide them with the information for their own
sustainability goals and reporting. Our breadth of offering in terms
of accepting a wide range of waste streams provides a compelling
total offering. Large customers also increasingly require circular
solutions: the supply of secondary products back from their
own waste streams. This is in line with Renewi’s primary focus
increasingly being on treatment over collection.

The pricing for waste residues is driven by the supply-demand
balance. At present there is very little spare capacity for the
acceptance of a broad range of residues from burnable waste to
landfill to specialist outlets and pricing has therefore been rising at
above inflation. The largest residue for Renewi is burnable waste
which goes to energy from waste facilities. There is currently a lack
of capacity for burnable waste across northern Europe with strict
limits on likely permits to increase capacity.

Barriers to entry
Barriers to entry historically are low in our industry. As the recycling
market has matured and become more sophisticated, barriers to
entry have increased for scale operators in our markets. From an
environmental perspective, it is no longer easy, or even possible, to
secure the sites and new permits to operate in the Benelux where
regulations progressively become stricter. Efficient collection
requires a nationwide network and high route density. A large truck
fleet is a significant capital commitment, along with the required
network of depots and transfer stations. The processing of waste
requires further significant capital, secured volumes and extensive
know-how in how to operate the facilities safely and efficiently.

Substitute products
Substitutes to waste collection primarily include prevention of
waste arising, and increased re-use, both of which Renewi supports
and stimulates.

Substitutes to recycling primarily include lower grade waste
treatment solutions such as landfill and incineration. The political
environment is increasingly supporting recyclers through fiscal
and regulatory disincentives to use incineration and landfill, such
as rising taxes or outright prohibition. These trends are expected
to continue. There is significant activity in finding new large
and small-scale technical solutions to waste treatment. Renewi
operates some of the most advanced sorting lines in the Benelux
and continually reinvests to improve outputs. Renewi remains
alert to emerging trends in waste processing for new products and
selectively invests directly or through partnerships to maintain a
position in new technologies.

016
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

OUR COMPETITIVE ENVIRONMENT

POLITICAL/SOCIAL/ENVIRONMENTAL BACKGROUND

and reduce carbon emissions

Clear and urgent need to recycle materials
Societal pressure for better
Tightening regulation to

stimulate recycling

recycling

secondary raw materials

Political targets to stimulate use of
Legislation to improve low-carbon

manufacturing rates

BARRIERS TO ENTRY

technologies

Range of processing
Breadth and scale of
Logistic efficiency and

customer offering

route density

leadership

Brand and market
Capital cost
Hard to secure

sites and permits
to operate

of entry

Increasing regulation can create technical
challenges

Closure of Asian markets for lower grade
recyclate

OUTPUTS: RECYCLATES
AND SECONDARY
PRODUCTS CUSTOMER
POWER

secondary materials

Growth in demand for
Increase in circular

partnerships

INPUTS: WASTE
PRODUCING
CUSTOMER
POWER

circular solutions

Demand for more
Need to demonstrate

sustainable outlets for
waste

Breadth of services
required

Collection relatively
commoditised

INDUSTRY
RIVALRY

Volatility in commodity
prices

Reduced demand from
Asia for recyclates

OUTPUTS: RESIDUES
CUSTOMER POWER

to place in market

Renewi has large volumes
Able to lock in long-term

and stable contracts

Lack of capacity driving up
cost

Availability of outlets
could cap collection
volumes

SUBSTITUTE PRODUCTS

Substitute products

(incineration/landfill)
increasingly disincentivised
by regulations

Renewi well placed to
identify successful new
technologies

Renewi well invested with
modern processing lines

017
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

Recovery in the Municipal Division
The UK Municipal business reported
an underlying profit of €0.8m, a €7.4m
improvement on the €6.6m loss in the prior
year, with revenues 3% lower at €195m.
The improvement reflected the reporting of
losses at Wakefield as an onerous contract
along with improvements achieved through
execution of planned portfolio management,
improved operational performance and some
one-off upsides as previously announced,
offset by higher incinerator costs and reduced
recyclate income.

Following the failure of our partner,
Interserve, to commission the new Derby
facility, we have now provided for the
complete termination of the PPP contract.

The Canadian Municipal business is reported
as available for sale and as a discontinued
business this year given the advanced state of
the disposal process.

ADDRESSING THE
SHORT-TERM CHALLENGES

Strengthening the balance sheet
In view of the continued suspension of
soil shipments at ATM, the Board has
implemented a series of actions to reduce
Renewi’s core net debt and leverage
ratio, including:

` agreement with our banks to extend the
net debt to EBITDA bank covenant of 3.5x
for a further year until 30 June 2020;

` the strategic disposals of our Reym and
Canada Municipal businesses, which
are progressing well. Both processes are
now in the second round of due diligence
with encouraging levels of interest. The
proceeds from the sales are expected
to reduce Renewi’s leverage ratio by at
least 0.5x;

We are working hard to
resolve ATM regulatory issues
(see page 08)

STRATEGIC
OBJECTIVES

018
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

` additional specific projects across Renewi
to reduce costs over the next two years,
including cost reductions in Commercial,
plant and operational performance
improvements in Municipal and the
restructuring actions reported above in
Monostreams; and

` as previously announced, the reduction in
the Group’s proposed final dividend for the
year ended 31 March 2019 to 0.5 pence per
share, which will result in a total dividend
for the year of 1.45 pence per share. This,
together with a similar reduction in the total
dividend for the year ending 31 March 2020,
will benefit the Group by around €30m.

As a result of these actions, we expect the
Group to de-lever significantly over the coming
year even if full production is not resumed
at ATM. The Group’s target leverage is to be
below 2.0x.

` we address inflationary cost pressures by
implementing appropriate price rises such
as those introduced in January 2019;

` we invest in further processing and in

identifying new outlets to offset lack of
capacity in certain parts of the off-take
market; and

` we are now rolling out our continuous
improvement programme, increasing
efficiency and capacity across our
operating assets.

New focus on simplification
Some two years into the merger, we believe
Renewi can be more focused and efficient.
We will simplify the business, focusing on
markets, assets and processes that can
consistently generate superior returns. This
simplification is expected to deliver further
material benefits, including:

Ongoing work to improve efficiency
As at the end of March 2019 we had
successfully delivered the committed €30m
of merger cost savings. We are on track to
deliver the remaining committed savings of
€40m in FY20.

` a refined portfolio of businesses;

` a simpler and leaner organisation

structure;

` reduced overhead;

We continue to focus on enhancing margins in
our core businesses, managing the dynamic
interface between the price charged for
inbound waste and the price receivable or
costs incurred for the products we make and
the residues we place:

` our commercial effectiveness programme

reduces loss-making accounts and
increases gross margins on tender renewals;

` reduced cost-to-serve in core processes;

` reduced risk; and

` greater scalability for future expansion.

Further detail will be provided with our half
year results in November.

019
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

We have a clear
strategy to address
current headwinds
and to deliver
sustained growth

Expanding margins is a key
strategic objective for Renewi
(see page 08)

STRATEGIC
OBJECTIVES

We have completed
our first phase of
integration, delivering
€30m of cost savings
as planned, and we
are confident that
the €40m will be
delivered in full

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

OUR VISION AND STRATEGY
TO DELIVER SUSTAINABLE
LONG-TERM GROWTH

We are focused on resolving our short term
challenges and building a solid base for
future growth.

Our vision is to be the leading waste-to-
product company in the world’s most
advanced circular economies. This
differentiates Renewi as a company that
focuses on extracting value from waste
and supplying high-quality secondary raw
materials. We are positioned higher up the
value chain in the segments expected to
show the highest structural growth rates,
such as organics. Our industry is driven
by increasing environmental legislation,
particularly in the European Union, such as
the Circular Economy Package.

Renewi has a consistent strategy to deliver
long-term profitable growth and a higher
quality of earnings. This includes completing
the integration and driving further margin
improvement using our proven tools. Our
current core markets are in the Benelux
where we can see significant opportunity
from the market trends. We will therefore
be focusing increasingly on investments
and innovation to exploit these growth
opportunities in commercial waste
treatment. It is also clear that we can do more
in making Renewi lean and competitive for
the longer term. We will be looking to simplify
the organisation, portfolio and processes in
order to ensure that we are efficient in the
competitive markets we serve.

SECONDARY LISTING

As previously indicated, Renewi intends
to achieve a secondary listing on Euronext
Amsterdam, reflecting closer proximity to
the majority of Renewi’s business, the strong
regional focus on the circular economy and
the Group’s core operations as a Benelux
recycling business. In addition, the secondary
listing is expected to increase visibility of
Renewi in the region, expand research
coverage, widen investor interest in the Group
and contribute to liquidity in the Group’s
shares. We expect that the listing will take
place in the second half of this financial year.

OUTLOOK

The Group outlook is unchanged, with a
prudent assumption of no shipments of
thermally treated soil from ATM for the
purposes of forecasts for the year ending
31 March 2020. We expect to see year-
on-year progress in the Commercial and
Monostreams Divisions offset by a reduced
performance in Municipal due to Derby and
higher central costs.

Looking forward, the Group is well positioned
as an established leader in the European
recycling market which is set for sustained,
structural growth.

Otto de Bont
Chief Executive Officer

020
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CEO’S REVIEW CONTINUED

Renewi is very well placed to help advanced economies meet sustainability
targets. Our focus on becoming a leading producer of secondary raw
materials will reduce waste going to landfill and CO2 emissions

021
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
EXECUTIVE COMMITTEE

EXPERIENCED AND PASSIONATE TEAM

Our Executive Committee comprises a unique mix of industry experts and talented leaders
from other sectors. This combination makes us stronger, as we have fresh perspectives to
supplement our existing deep sector knowledge.

HELEN RICHARDSON
HUMAN RESOURCES
DIRECTOR

GEORGE SLADE
IT DIRECTOR

PATRICK DEPREZ
PRODUCT SALES
DIRECTOR

BAUKJE DREIMULLER
GENERAL COUNSEL

BAS VAN GINKEL
STRATEGY AND
BUSINESS
DEVELOPMENT
DIRECTOR

Appointed: April 2019

Appointed: April 2015

Appointed: Dec 2012

Appointed: Sep 2017

Appointed: Sep 2018

George joined the legacy
Shanks business as
IT Director in 2013 to
focus on improving the
Group’s IT landscape and
developing technology
to support and grow the
business. During this
time, he has led a number
of key projects across
the business including
commercial effectiveness
and the implementation
of a Group-wide
collaboration platform.
He has previously held
a number of executive
positions at IMI plc,
BGL Group, Cable and
Wireless, Ericsson
and Level(3).

Helen joined Renewi
on 1 April 2019 as HR
Director. Helen has
a strong track record
in international HR
leadership roles. She has
worked across various
industries including FMCG,
Telecommunications,
Real Estate Development
and Retail. Most recently,
Helen held various
HR leadership roles
at Danone / Nutricia.
During this period,
Helen played a leading
role in the integration
of several businesses,
professionalising HR
by driving employee
engagement, putting
Talent Management
at the heart of the
organisation and
improving HR Services.

Patrick joined the legacy
Van Gansewinkel (VGG)
business in 1998 and was
the regional director for
West Belgium until 2002
when he was appointed
as Group SHEQ and
Technical Development
Director. During this
period he was responsible
for leading several quality
and safety improvement
programmes. Since 2006,
Patrick has managed the
strategic waste outlet
portfolio for VGG and in
2012 was appointed as
a member of the VGG
Executive Committee.
Before joining VGG, he
was the head of the
waste division at B&P
Sobry NV for almost
10 years. Patrick has a
degree in Environmental
Management.

Baukje has extensive
experience from leading
legal firms Simmons &
Simmons, Ashurst and
Houthoff. She joined
Renewi from Houthoff,
where she held the
position of senior lawyer
within the corporate
transaction (M&A)
department. In this
capacity, Baukje was very
closely involved with
the VGG-Shanks merger
having led much of the
deal-related legal activity.
Baukje holds Master’s
degrees in both Dutch
Law and European &
International Law from
the Radboud University
of Nijmegen.

Bas joined Renewi on
1 September 2018 as
Strategy Director and was
promoted to join Renewi’s
Executive Committee on
1 February 2019. Since
joining Renewi, Bas has
worked on a wide range of
corporate and divisional
strategy topics. He has further
refined the Renewi corporate
strategy, led portfolio
optimisation and M&A
activities, and has supported
divisional leadership teams
in developing their strategic
plans. Prior to joining
Renewi, Bas held senior
positions at Philips Lighting
and Bain & Company.
He holds an MBA from
Harvard Business School
in the USA, plus an MSc in
Business Administration
(with a specialisation in
corporate finance) and a
BSc in Economics from the
University of Groningen in
the Netherlands.

022
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
EXECUTIVE COMMITTEE

Otto de Bont (l) & Toby Woolrych (r)
Our CEO and CFO respectively, are
members of the Executive Committee,
and are also on the Board. Their
biographies can be found on page 79.

WIM GEENS
MANAGING DIRECTOR,
COMMERCIAL
BELGIUM

JONNY KAPPEN
MANAGING DIRECTOR,
HAZARDOUS WASTE
FOCUSED ON REYM

THEO OLIJVE
STATUTORY DIRECTOR,
RENEWI HAZARDOUS
WASTE BV FOCUSED
ON ATM

BAS BLOM
MANAGING DIRECTOR,
MONOSTREAMS &
GROUP CONTINUOUS
IMPROVEMENT
DIRECTOR

JAMES PRIESTLEY
MANAGING DIRECTOR,
MUNICIPAL

Appointed: Nov 2012

Appointed: July 2012

Appointed: June 2019

Appointed: Feb 2017

Appointed: Nov 2016

Wim was appointed
as Director Belgium,
Luxembourg and France
at VGG in May 2015. He
was appointed to the VGG
Executive Committee in
November 2012. Wim has
been working for VGG
since 2006. He started
within operations and
became Group Director
Operations/Real Estate/
Procurement in 2009.
Prior to his appointment
at VGG, Wim was a
Director within Carrefour
NV, a French retail group.
Before that, Wim was
a Board member and
Executive Director in
several Industries and
has an MBA and Master’s
in commercial and
financial sciences.

Jonny has been working
for the legacy Shanks
business since 2000
when Shanks took over
operations from Waste
Management Inc (WMI).
He was later appointed
Managing Director of the
Hazardous Waste Division
in 2007. Jonny started his
career as a civil engineer
working for Reym in 1979
as a field engineer and
he was promoted first
to Operations Director
in 1994 and then to
Managing Director in 1997.
Jonny is also Chairman
of the Industrial Cleaning
Foundation – a Benelux
Safety Foundation.

Theo joined Renewi on
1 June 2019 as Statutory
Director of Renewi
Hazardous Waste BV with
focus on ATM. He worked
in senior management
positions in the
petrochemical industry
and liquid bulk terminals
for more than 25 years.
Theo was Divisional VP for
LyondellBasell, where he
was responsible for global
manufacturing. He was
also Managing Director
for the Odfjell Terminal
Rotterdam, where he was
responsible for restoring
the operation and
compliance after a safety
shutdown in 2012. He
became an independent
management consultant
in 2017. Theo holds
a Master’s degree in
Chemical Engineering
from the University of
Groningen.

Bas is an experienced
executive leader of
regional and global
commercial business-to-
business organisations,
business process re-
engineering projects,
including manufacturing
operations and joint-
ventures, strategic
business development
and M&A. He worked
for 26 years at General
Electric Plastics and
its successor after
acquisition: SABIC
Innovative Plastics, a
division of the large global
chemicals corporation.
Bas holds an MSc in
Aerospace Engineering
and an MBA.

James was appointed as
Managing Director of the
Municipal Division and to
the Executive Committee
in November 2016. He
has a wide range of
experience running and
improving businesses
in Europe and America.
Prior to joining the legacy
Shanks business he
was interim President
Americas for Britax Child
Safety and before this
President Europe for RGIS,
an inventory services
company owned by
Blackstone. After starting
his career at ICI he moved
on to gain extensive
management experience
at Ford, British Airways
and Tesco and consulting
with Alix Partners. He
has a degree in Chemical
Engineering and an MBA.

Otto de Bont was previously Managing Director, Netherlands Commercial. We are actively recruiting for this role at the time of going to print (June 2019).

023
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FROM WASTE TO PRODUCT

FOOD WASTE

COMPOST

Renewi processes green waste from flower and
vegetable growers. During a closed composting
process, the green waste is placed into tunnels to
decompose. It takes approximately two weeks to
process the waste into a sustainable source of compost
which is supplied to the agricultural industry.

024
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CFO’S REVIEW

Toby Woolrych
CFO

OVERVIEW

INTRODUCTION

On a total operations basis (including Canada Municipal now reported
as discontinued), we saw revenue growth of 1% and underlying EBIT
growth of 11% despite the loss of expected EBIT at ATM of around
€13m. Group underlying EBIT margins grew by 40 basis points, and by
90 basis points in the Commercial Division. We also saw an increase in
the Group return on operating assets on a total operations basis from
15.9% to 20.7%. Non-trading and exceptional items of €146.0m after
tax resulted in a statutory loss for the year of €97.7m.

FINANCIAL REVIEW

The Group reports in Euros from 1 April 2018 to reflect the fact that
the majority of our revenues and costs are Euro denominated. The
impact of currency is much reduced and as such no comparisons at
constant currency are required.

On 8 November 2018 the Group announced its intention to sell
Canada Municipal and Reym. Active disposal programmes are
underway and have reached a stage whereby we consider that the
assets and liabilities of both businesses should be presented as
assets held for sale. The Canada disposal meets the definition of a
discontinued operation as stated in IFRS 5 Non-current assets held
for sale and discontinued operations, therefore the net results are
presented as discontinued operations in the Income Statement,
and the Income Statement and Cash Flow Statement prior year
comparatives have been restated.

025
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

FINANCIAL PERFORMANCE

Continuing operations

Revenue

Underlying EBIT

Underlying profit before tax

Non-trading and exceptional items

Loss before tax

Total tax credit for the year

Loss for the year from continuing operations

Loss for the year from discontinued operations

Total operations: loss for the year

Mar 19
€m

Mar 18
€m

1,780.7

1,760.3

85.5

62.5

(151.5)

(89.0)

12.4

(76.6)

(21.1)

(97.7)

82.5

62.3

(115.1)

(52.8)

1.4

(51.4)

(2.5)

(53.9)

NON-TRADING
AND EXCEPTIONAL ITEMS

` other items: this category includes

impairments and provisions.

The Group reported significant non-trading
and exceptional items, under three main
headings:

Total non-trading and exceptional items
amounted to €146.0m (2018: €97.4m) as set
out in the table below.

` merger and integration costs: items that
were known, planned for and previously
communicated in relation to the costs of
integrating Renewi. These costs are one-off
and exceptional in nature;

` portfolio costs: items associated with
the acquisition or disposal of assets,
generally only communicated close
to the completion of the related
transaction. These include profit or
loss on sale, goodwill impairments and
transaction costs; and

Other items primarily comprise €64.3m
relating to impairments and onerous contract
provisions in UK Municipal, of which €59.3m
relates to the Derby contract, and €6.5m
relates to ATM. The exceptional finance costs
include interest receivable impairments and
ineffectiveness of interest rate derivatives.

The portfolio management activity charge
of €8.7m includes a profit on sale of €11.4m
from the sale of Energen Biogas and the
transfer of 50% of an ATM subsidiary to a joint

NON-TRADING & EXCEPTIONAL ITEMS

Merger-related costs

Portfolio management activity

Other items

Amortisation of acquisition intangibles

Exceptional finance costs

Non-trading & exceptional items in loss before tax

Tax on non-trading & exceptional items

Exceptional tax

Discontinued operations

TOTAL

Mar 19
€m

Mar 18
€m

56.8

8.7

70.2

6.4

9.4

151.5

(12.4)

(15.6)

22.5

146.0

25.0

26.1

57.3

6.7

–

115.1

(9.3)

(7.8)

(0.6)

97.4

026
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

We are actively managing
our portfolio to deliver long-
term, sustainable growth
(see page 08)

STRATEGIC
OBJECTIVES

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

MERGER-RELATED P&L CHARGES

FY17
€m

3.4

5.3

–

8.7

–

8.7

FY18
€m

8.5

13.4

–

21.9

0.5

2.6

25.0

FY19
€m

12.5

22.1

–

34.6

10.0

12.2

56.8

FY20
€m

3.0

13.4

–

16.4

–

Total
€m

27.4

54.2

–

81.6

10.5

14.8

16.4

106.9

Original
€m

Difference
€m

20.0

50.0

12.0

82.0

(7.4)

(4.2)

12.0

(0.4)

We believe that by
making appropriate
provisions for ATM
and Municipal over
the past two years,
the number and size
of impairments and
provisions should
fall significantly
going forward

Share of results from associates and
joint ventures
The lower income compared to last year is
a result of the disposal of Energen Biogas
which was disposed of in August 2018.

Loss before tax
Statutory loss before tax from continuing
operations, including the impact of non-
trading and exceptional items, was €89.0m
(2018: €52.8m).

Taxation
Total taxation for the year on continuing
operations was a credit of €12.4m (2018:
€1.4m). The effective tax rate on underlying
profits from continuing operations was 25.0%
at €15.6m, slightly lower than last year’s
25.1%. The tax credit arising on the non-
trading and exceptional items of €151.5m was
€28.0m given a significant proportion of these
are non-taxable.

Both the Dutch and Belgian governments
have recently implemented a number of
corporate tax reforms, including lower
corporate tax rates. These changes were
substantively enacted in Belgium in early
2018, which resulted in a tax credit of
€7.8m due to lower deferred tax liabilities
at 31 March 2018. In the Netherlands the
lower rates were enacted in late 2018 and a
tax credit of €6.3m has been reflected in the
current year. In addition there has been an
exceptional tax credit of €10.5m in relation
to the recognition of a significant proportion
of legacy VGG Netherlands fiscal unity losses
given utilisation of these is now more certain.

027
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

Integration costs*

Synergy delivery

Branding capex

Initial merger programme

Monostreams restructuring

Non-cash costs

TOTAL

*Including branding capex now expensed rather than capitalised

venture partner, together with a fair value
adjustment relating to Reym as it has now
been classified as an asset held for sale.

At merger completion we announced total
expected merger-related cash costs of
€50m for synergy delivery, €20m for other
integration costs and €12m for rebranding
capital spend. The table above shows how
this has been incurred over the last three
years and what is expected in FY20. Total
spend is expected to be in line with initial
indications. Branding spend is now expensed
rather than capitalised. The additional costs
for Monostreams relate to restructuring
activities in Coolrec and the glass businesses
and are expected to deliver €1.4m of
additional synergy benefits.

The discontinued operations charge of
€22.5m reflects a fair value adjustment as the
business has now been classified as an asset
held for sale.

Including disposal proceeds, non-trading and
exceptional charges resulted in a net cash
outflow of €52m. These items are explained
further in note 5 to the financial statements.

Net finance costs
Net finance costs, excluding the exceptional
items, were €0.6m higher year on year
at €23.4m (2018: €22.8m). The charge
for discount unwind on provisions has
increased in the current year as a result of
the onerous contract provisions recorded at
31 March 2018. This increase in cost has been
compensated by savings in other areas as
shown in note 6 to the consolidated financial
statements. Exceptional and non-trading
finance charges of €9.4m include interest
receivable impairments due to Derby, interest
rate swap ineffectiveness and a change in fair
value of derivatives.

Looking forward, we anticipate the
underlying tax rate to fall to around
24% in the next few years, reflecting the
recently enacted rates in Belgium and
the Netherlands.

The Group statutory loss after tax, including
all discontinued and exceptional items, was
€97.7m (2018: €53.9m).

Earnings per share (EPS)
Underlying EPS from continuing operations,
excluding non-trading and exceptional items,
increased by 1.7% to 5.9 cents per share
(2018: 5.8 cents) and including the Canadian
discontinued operations increased by 13%
to 6.1 cents per share. Basic EPS from total
operations was 11.6 cents loss per share
compared to a loss of 6.8 cents per share in
the prior year.

Dividend
As announced previously, the Board is
recommending a final dividend of 0.5 pence
per share, making a full year dividend of
1.45 pence per share (2018: 3.05 pence per
share). Subject to shareholder approval, the
final dividend will be paid on 26 July 2019
to shareholders on the register at close of
business on 28 June 2019. Total dividend
cover, based on earnings before non-trading
and exceptional items from total operations,
is 3.8 times (2018: 1.6 times).

CASH FLOW PERFORMANCE

Free cash flow was impacted by the
suspension of ATM soil shipments which
was mitigated by continuing tight Group
capital spend. Working capital was adverse
due to €11.6m unrecovered delay damages
at Derby and higher accounts receivable in
Commercial Netherlands as the January
price increases briefly delayed invoicing. In
the prior period there was positive working
capital at ATM and from improved factoring of
receivables. Replacement capital expenditure
at €88.1m represents 91% of depreciation
(2018: 88%) showing tight control and
integration related expenditure has been
spent later than originally forecast. Tax paid
was €5.6m higher than last year following
the utilisation of brought forward tax losses
in Belgium.

The growth capital expenditure of €11.7m
relates to the extension at the Maasvlakte
landfill and the extension of the Ottawa site in
Canada Municipal.

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

The Canada Municipal funding includes the
one-off cash payment from the City of Surrey
municipality as this facility entered into
full service.

The acquisitions and disposals inflow in the
current year includes €20m for the sale of
our 50% share in Energen Biogas and €4m
from the sale of 50% of the shareholding in a
Hazardous Waste subsidiary.

Synergy and integration related expenditure
includes €24.1m for synergy delivery costs
and €14.4m for costs incurred in the merger
and integration of the two businesses with
the latter including non-capitalised branding
expenditure of c.€7m. Transaction related
spend in the current year includes some
initial transaction costs relating to the Reym
and Canada disposal processes.

Free cash flow
conversion was better
than anticipated,
despite reduced
profits from ATM,
boosted by tight
capital spend and
no soil off-take

CASH FLOW

EBITDA

Working capital movement

Movement in provisions and other

Net replacement capital expenditure

Interest, loan fees and tax

Underlying free cash flow

Growth capital expenditure

UK PFI funding

Canada Municipal funding

Acquisitions and disposals

Dividends paid

Restructuring spend

Synergy and integration spend

Transaction related spend

UK Municipal onerous contracts

Other

VGG acquisition – net cash

Net core cash flow

Free cash flow conversion

All numbers above include both continuing and discontinued operations.
Free cash flow conversion is underlying free cash flow as a percentage of underlying EBIT.
Net core cash flow is reconciled to the movement in net debt on page 194.

028
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

Mar 19
€m

181.3

Mar 18
€m

178.3

(22.2)

(9.8)

(88.1)

(30.9)

30.3

(11.7)

2.4

6.8

24.1

(27.4)

(0.2)

(38.5)

(0.2)

(21.4)

(16.1)

–

28.0

(6.6)

(86.2)

(25.1)

88.4

(3.5)

(2.5)

(11.5)

(7.2)

(27.6)

(1.3)

(20.4)

(12.5)

(7.1)

(8.6)

0.8

(51.9)

35%

(13.0)

113%

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

MEASURING OUR PERFORMANCE – 2018/19

Revenue
€m

EBIT margin
%

GROUP

1,746

1,779

1,799

4.8

4.4

3.6

4.2

ROCE
%

5.6

Leverage
ratio

6.6

2.78

2.93

3.06

2016/17

2017/18 2018/19

2016/17

2017/18 2018/19

2016/17

2017/18 2018/19

2016/17

2017/18 2018/19

Revenue
€m

COMMERCIAL

EBIT margin
%

1,158

1,194

1,103

7.2

6.3

ROA
%

20.6

23.1

4.9

14.4

2016/17

2017/18 2018/19

2016/17

2017/18 2018/19

2016/17

2017/18 2018/19

029
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

Capital expenditure
in all divisions has
remained tightly
controlled across the
year and integration-
related expenditure
has been lower
than expected

Other cash flows include the onerous
contract provision spend in UK Municipal of
€21m which includes the €12m termination
payments relating to the exit of the Dumfries
and Galloway contract in October, the ATM
spend on additional logistics and other
associated costs of €5m, €3m funding for the
closed UK defined benefit pension scheme
and €9m relating to the purchase of short-
term investments in the insurance captive
and own shares for incentive funding.

Net cash generated from operating activities
decreased from €136.0m in the prior year to
€73.6m in the current year. A reconciliation
to the underlying cash flow performance as
referred to above is included on page 194 in
the consolidated financial statements.

INTEGRATING THE FINANCE FUNCTION
TO DELIVER ENHANCED VALUE

Our finance integration programme has
progressed well over the year, delivering a
wide range of projects to reduce cost or to
support the integration:

Reduced transaction costs through
shared services
We successfully closed a second shared
service centre (SSC) during the year on time
and without disruption, transferring activities
from Amersfoort to the main SSC in Lommel.

Treasury programmes to increase
liquidity and reduce cost
Our treasury programmes are reducing our
financing cost and increasing headroom.
They include a cash management
transformation project, which creates one
single way of working including instructing
payments using the Group treasury
management system and concentration of
cash via a new cash pooling structure. Other
programmes focus on optimisation of our
covenants, guarantees, leasing and hedging,
as well as further Green accreditation which
has included establishing a European Private
Placement (EUPP) programme with a €25m
issuance in the period.

030
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

Enhanced capabilities in Risk
Management, Internal Control and
Internal Audit
We have continued our investment in
Risk Management, Internal Control and
Internal Audit, reflecting the requirements
of the enlarged Group. This has included
further expansion of the team and
investment in additional risk and control
framework capabilities.

Consolidation and upgrade of
finance systems
We have been working during the year
to prepare a new consolidation system
that has gone live in April 2019. This will
standardise and enhance visibility of financial
performance across the Group, replacing two
separate legacy systems. Our Netherlands
Commercial business has also consolidated
its financial transactions onto one accounting
system in April 2019.

INVESTMENT PROJECTS

TREASURY AND CASH MANAGEMENT

Expenditure in 2019/20
The Group’s ongoing expectations for
replacement capital expenditure remain
around 75% to 80% of depreciation. This
level may from time to time be supplemented
with larger-scale replacement projects. Given
2019/20 is another year of catch-up, with
a few larger projects and the continuation
of the investment in new IT platforms, the
ratio is therefore expected to be around 95%
this year. Total capital spend estimated at
c€110m. Over the next two to three years we
expect to spend €15m to replace and upgrade
major components of ATM’s soil treatment
line and €2m for the digestate dryer at
Roeselare. Growth capital expenditure will
continue next year with the completion of
the Maasvlakte landfill extension and the
upgrade of the Ottawa site.

Group return on assets
The Group return on operating assets
(excluding debt, tax and goodwill) from total
operations increased from 15.9% at 31 March
2018 to 20.7% at 31 March 2019. The Group
post-tax return on capital employed was 6.6%
compared with 5.6% at 31 March 2018.

Core net debt and gearing ratios
The net core cash outflow of €51.9m, along
with an adverse exchange effect of €5.9m on
the translation into Sterling of the Group’s
Euro and Canadian Dollar denominated debt
and loan fee amortisation, has resulted in
core net debt increasing to €556.2m. Core
net debt excludes the consolidated UK PFI/
PPP contract debt asset backed finance
with no recourse to the Group. This was in
line with expectations and resulted in a net
debt to EBITDA ratio of 3.06x, within our
covenant limit of 3.5x which was extended
until 30 June 2020. Given the actions already
taken and the planned disposal programme
for Canada and Reym we expect net debt to
fall in the coming year. The Group’s target
leverage is to be below 2.0x.

Debt structure and strategy
Core borrowings are mainly long-term as set
out in the table on page 32. The Group’s main
banking facility is a €575m multicurrency
Green Loan including a €550m combined
term loan and revolving credit facility
with pricing linked to leverage and to CSR
measures. These facilities have two one-year
extension options. In December 2018 a €25m
Green European private placement facility
was incorporated into the main banking
facility and was fully drawn.

031
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

Decreasing leverage is a core
part of our strategy to deliver
growth for stakeholders
(see page 08)

STRATEGIC
OBJECTIVES

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

The Group has a debt cost of less than 3%
across all facilities, including the effect of
hedging instruments. At 31 March 2019, 90%
of our core net debt was fixed or hedged.
The fixed rate debt includes the two €100m
retail bonds and the €25m European Private
Placement instruments. The hedging
includes a €125m interest rate cap and three
cross currency swaps totalling €168m. At
31 March 2019, the Group had guarantees of
€238.6m (2018: €235.4m).

As noted above, a €100m Belgian retail bond
will mature in July 2019. Based on expected
business funding requirements there is
sufficient liquidity headroom within existing
facilities without further issuance together
with the expected proceeds from the disposal
processes for Canada and Reym which are
well underway.

to export paper and plastics to China and
reduced ATM soil processing, which also
brought total waste volumes down year on
year. These improvements also led to an
improved carbon avoidance intensity ratio
of 0.218, which is equivalent to 3m tonnes
of CO2 avoided across our 14m tonnes of
waste handled. During the year we invested
in our fleet with a further 285 Euro 6 trucks
entering service. This enabled us to reduce
emissions and retire older vehicles, and they
now account for 34.9% of the total fleet. Our
collections efficiency improved in the year to
3.117, supported by the successful migration
of systems in the past few months which will
deliver a fully annualised route optimisation
impact next year. There was a strong focus
on safety in the year, with multiple group-
wide initiatives which contributed to an
improved >3 day accident rate of 1,404
per 100,000 employees.

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 2019, this debt
amounted to €95.4m (2018: €94.6m).

Green finance initiative results in
reduced finance costs
Last year Renewi refinanced its entire bank
borrowings using a green certification. All
Green KPIs progressed well year on year
and exceeded our FY19 targets in each
case, leading to a further reduction in the
margin of our main banking facility. Our
recycling rate, as well as our recycling and
recovery rate, improved to record levels at
66.9% and 90.0% respectively, despite the
headwinds from reduced opportunities

DEBT STRUCTURE

€100m Belgian retail bond

€100m Belgian Green retail bond

€550m Green RCF and term loan

Green EUPP – 5 year term

Green EUPP – 7 year term

Finance leases and other

Finance leases transferred to disposal group

Loan fees

Cash

Core net debt

032
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

Term

July 19

June 22

May 23

Dec 23

Dec 25

Drawn
€m

100.0

347.6

15.0

10.0

572.6

33.7

4.2

(3.9)

(50.4)

556.2

Directors’ valuation of UK PFI/PPP
portfolio
The Directors provide a valuation of the
financial investments in the SPVs used
to fund the contracts and into which the
Group has often invested in the form of
subordinated debt and equity. The benefits
of these financial assets are not easily
assessed from the financial statements. As
at 31 March 2019, the Directors believed that
this valuation has reduced to €32m (2018:
€51m) as a result of the ongoing challenges
faced by the Derby SPV.

PROVISIONS AND
CONTINGENT LIABILITIES

Around 85% of the Group’s provisions
are long-term in nature, with the onerous
contract provisions in the UK Municipal
being utilised over 20 years and landfill
provisions for many decades longer. The
current provisions amount to €55m, of
which we expect around €30m to be spent
in the year. Of this €7m relates to exceptional
restructuring, €15m relates to Municipal,
and €8m relates to landfill. Municipal
cash outflows are expected to reduce in
subsequent years.

The Group does not expect other contingent
liabilities to crystallise in the coming year.

Retirement benefits
The Group operates a defined benefit
pension scheme for certain UK employees
which has been closed to new entrants since
September 2002. At 31 March 2019, the net
retirement benefit deficit relating to the UK
scheme was €3.1m compared with €13.6m
at 31 March 2018. The decrease in the deficit
was a result of good asset returns, benefits
from the change in mortality assumptions
to align with the latest actuarial valuation
net of lower discount rate and higher
inflation assumptions. Given the conclusion
of the High Court case on guaranteed
minimum pension (GMP) in October 2018,
it has been estimated that the impact of
GMP equalisation is 1% of liabilities and
as a result past service costs of €2.0m have
been recorded as an exceptional charge in
the current year. The most recent triennial
actuarial valuation of the scheme was carried
out at 5 April 2018 and will be finalised in the
current year. The Group has agreed that it
will aim to eliminate the pension plan deficit
with an annual deficit funding of €3.5m for a
further period still to be determined.

STRATEGIC REPORT
CFO’S REVIEW CONTINUED

In addition, there are a number of defined
benefit pension schemes for employees in
the Netherlands and Belgium which had a
net retirement benefit deficit of €6.1m (2018:
€6.7m). The principal Dutch legacy scheme
acquired as part of the VGG merger has now
been closed and a new defined contribution
scheme has been set up which has resulted in
a curtailment gain of €2.1m which has been
recorded as an exceptional credit.

Toby Woolrych
Chief Financial Officer

033
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FROM WASTE TO PRODUCT

CONTAMINATED STEEL

METAL BLOCKS

Renewi will collect and transport contaminated steel
direct to PMC’s recycling facility which has been
specifically designed to recycle steel contaminated
with asbestos. The fibrous parts of the asbestos are
destroyed and other hazardous substances such as
chromium-6 and mercury are captured or neutralised.
The process prepares steel for reuse in the steel industry
in the form of Purified Metal Blocks (PMB)™.

034
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

We provide customers
with cost-efficient
waste-to-product
solutions and advise
them on how to
achieve their own
sustainability goals

STRATEGIC REPORT
OPERATING REVIEW

COMMERCIAL

The Commercial Divisions are located
in the Netherlands and Belgium. They
provide a wide range of waste-to-product
solutions and represent around 65% of
Renewi’s revenues.

The commercial waste market covers the
collection, sorting, treatment and recycling
of waste materials from a range of sources.
It also includes the ultimate disposal of
waste streams that cannot be recycled
or incinerated.

Renewi is the market leader in the Benelux.
We provide customers with cost-efficient
waste-to-product solutions and advise them
on how to achieve their own sustainability
goals by optimising source separation of
waste which can then be converted into high-
quality raw materials and energy.

Our market is divided into the following main
segments: Construction and Demolition
(C&D) – Netherlands only; Industrial
and Commercial (I&C); Domestic and
Hazardous – Belgium only.

Renewi deploys part of its own sorting
and recycling operations for, amongst
other things, paper, cardboard, wood,
plastics, metals and C&D waste. Renewi
has partnerships with other recyclers to
make sure that we can offer our customers
the solutions that are best suited for their
specific waste streams. Other specific
recycling activities are clustered within the
Monostreams Division.

Our unique business model in this market
allows us to focus on the value that we can
recover from specific waste streams. We then
upgrade this waste to new products during its
sorting and treatment.

We generally collect a large part of the waste
ourselves to secure volumes, which we value
as sources from which to produce secondary
raw materials. We maximise recycling based
upon the quality of the waste we collect, 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 37.

Our Commercial Divisions operate over
119 sites in the Benelux. Our sites have a
diverse profile in terms of the activities that
take place on the site as well as the focus
on specific sources 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 four main
market segments across the Benelux: C&D
in Netherlands only, I&C, Domestic and
Hazardous in Belgium only.

The I&C segment meets the needs of specific
markets, sectors and businesses including
factories, offices, hospitals, retail, shops and
restaurants. Waste streams are preferably
separated at the source to retain quality, such
as segregated paper or plastic, food waste or
glass. However, within this sector there is still
a significant flow of mixed waste. For specific
situations such as office buildings we have
developed specific concepts like Ecosmart in
the Netherlands, which provides collection
bins and services to maximise source
separation.

035
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

KEY NUMBERS

€1,194

Revenue

€86.5m

Underlying EBIT

See page 38 for more

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

The division will deliver long term
growth and attractive returns from
the increasing demand for its wide
range of recycling services

The Commercial segment is vulnerable to price
movements within the incineration market due
to the relatively high amount of residual waste.
In the past three years the market conditions
have improved, with the incinerators full and
prices continuing to rise. These higher prices
for incineration also have a positive effect on
recycling as separation of waste becomes more
financially attractive for our customers.

In August 2017 the Chinese government
announced its National Sword legislation to
block imports of recycled paper and plastic
and to enforce stricter purity standards
going forward. Prices for recycled paper
and plastics have fallen sharply. Renewi has
demonstrated that it is comparatively well-
positioned to manage this change due to our
high quality products and dynamic pricing.

The introduction of dynamic pricing has
reduced risk to the business operating model.
Within our dynamic pricing model we pass
on monthly movements in the value of the
recyclates by changing the gate fee where
needed.

The C&D segment is core for Renewi in the
Netherlands and arises from residential,
commercial or infrastructure construction.
The construction market in the Netherlands,
which had hit a 63-year low in 2014, has since
recovered for four consecutive years. The
hazardous part in Belgium is comparable
to the Hazardous Waste Division, on a
smaller scale.

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
Renewi controls the service provision for a
management fee. This municipal segment is

different to the Municipal Division because
the contracts tend to be much shorter in
duration and for collection not treatment;
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.

Over the year there have been improving end
markets in our Commercial Divisions, with
ongoing economic growth. GDP grew 2.6%
in the Netherlands and 1.4% in Belgium.
Dutch incinerators remain effectively full,
underpinning more stable pricing in the
Dutch waste market. Belgian incinerator
capacity remains full and restricted, which
has led to some volumes even ending up in
landfill in the past year.

Recyclate prices were generally stable with
the exception of paper. which were generally
negative compared to the prior year.

DIVISIONAL STRATEGY

The Commercial Division creates value from
its leadership position in waste collection and
treatment in the Netherlands and Belgium.
Its national coverage, operational scale and
advantaged technology positions it strongly
in its core markets. The division will deliver
long-term growth and attractive returns from
the increasing demand for its wide range of
recycling services and products. This will be
reinforced through the delivery of synergies

036
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

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
Domestic

Food and
supermarket

Industrial
fats

Eddy current
separators

RECYCLATES AND PRODUCTS

Paper

Glass

Solid
recovered
fuel

Compost

Wood
chips

Metal
blocks

Plastic

Metal

Aggregate ICOPOWER®

pellets

Green
electricity

Essential
oils

Customers pay us to
take their waste

Customers purchase
our products

We aim to process, sort and make products from waste but there is a small residual amount which has to be landfilled or sent to incineration

We minimise the cost
of disposing
of the residues

and the application of margin-enhancing
initiatives such as commercial effectiveness
and continuous improvement.

FINANCIAL PERFORMANCE

The Commercial Division performed strongly
in 2018/19, delivering an 18% increase in
underlying EBIT to €86.5m on revenues up
3% to €1,194m. Margins increased by 90 basis
points to 7.2% and the return on operating
assets rose 250 basis points to 23.1%.

Revenues in the Netherlands grew by 4%
to €764.7m and underlying EBIT by 21%
to €53.2m. Margins improved by 100 basis
points to 7.0%. Return on operating assets
increased by 70 basis points to 18.7%.

Core volumes increased by around 2%, with
bulky waste the strongest segment and
construction & demolition waste volumes
up slightly less than 1%. Volumes of pure
recyclates were up by 1% driven by paper
and plastic. Other volumes decreased by
3%, principally rubble, where our main
processing line was being rebuilt for much of
the year, and in landfill where we have been
phasing down volumes to conserve the void.
Pricing for inbound waste increased by 7%,
particularly in a strong fourth quarter, and
outbound pricing for core recyclates was
more stable after sharp falls last year.

037
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

A core strategic focus is
expanding margins through
commercial effectiveness and
continuous improvement in
Commercial (see page 09)

STRATEGIC
OBJECTIVES

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

COMMERCIAL FINANCIAL PERFORMANCE

REVENUE

UNDERLYING EBIT

Netherlands Commercial Waste

Belgium Commercial Waste

Intra-segment revenue

Mar 19
€m

764.7

430.8

(1.1)

Mar 18
€m

736.9

422.2

(0.9)

Total

1,194.4

1,158.2

Variance
€m

Variance
%

Mar 19
€m

Mar 18
€m

Variance
€m

Variance
%

27.8

8.6

(0.2)

36.2

53.2

33.3

–

86.5

44.0

29.3

–

73.3

9.2

4.0

21%

14%

13.2

18%

Netherlands Commercial Waste

Belgium Commercial Waste

Total

UNDERLYING
EBIT MARGIN

7.0%

7.7%

7.2%

6.0%

6.9%

6.3%

RETURN ON
OPERATING ASSETS

18.7%

37.3%

23.1%

18.0%

27.4%

20.6%

Note
On 1 April 2018 the Dutch property portfolio entity was transferred to the Netherlands Commercial division from the Group Central Services and the glass activities of van Tuijl were transferred to
the Monostreams division.
The return on operating assets for Belgium excludes all landfill related provisions.

KEY NUMBERS

€53.2m

Netherlands Commercial Waste EBIT

+18%

Increase in underlying EBIT in
Commercial division

7.2%

Underlying EBIT margin for
Commercial

€1.19bn

Total revenue for Commercial

The ongoing increase in operating margin
was encouraging, particularly given the
€4m headwind from lower recyclate prices
and further increasing costs of disposal of
residues. Total synergies were €11.3m with
additional synergies of €6.5m delivered
during the year.

Belgium revenues increased by 2% to
€430.8m and underlying EBIT grew by 14%
to €33.3m. Underlying volume growth was
flat in line with the market, impacted by the
tight outlet market. Pure recyclates were
down by 3% driven by paper and metals.
The core collection and treatment business
was steady, offsetting headwinds from
lower recyclate prices and higher outlet
costs including solid recovered fuel (SRF).
Profitability of the Cetem landfill continued
to decline as expected, with volumes
reducing prior to its final closure in 2019.
Total synergies were €7.8m, with additional
synergies of €3.4m delivered during the year.

OPERATIONAL REVIEW

Our principal focus was on delivering the
integration, increasing margins and investing
in innovation and processing.

Integration and synergies
After a successful first year of integration, the
first half of 2018/19 was primarily focused
on creating “one way of working” in each
of the Netherlands and Belgium. This
migration onto one set of core processes
and, where possible, one IT platform

is essential for synergies such as route
optimisation and site rationalisation. Pilot
trials were used to reduce the migration
risks. In the Netherlands we upgraded our
software to the core Clear operating system
to establish the required functionality for
the integration. Migration of sites onto the
Renewi model accelerated through last
summer and autumn on schedule such
that, as at 31 March 2019, almost all of the
business migrations have been completed.
The final sites in Belgium will complete
before the summer and the construction
& demolition customers of legacy-Shanks
in the Netherlands will be transferred over
the coming year. This progress allowed us
to accelerate cost synergy initiatives in the
second half, increasing run rate savings from
€27m as at 30 September 2018 to €35m as at
31 March 2019. The remaining €5m of benefits
to reach our €40m cost synergies target are
primarily a result of site rationalisation and
additional procurement savings.

Brand recognition is important to help win
new business and it has increased with very
positive association. We have rebranded
over 2,100 vehicles, 20,000 containers and
300,000 wheeled containers. All of our sites
now show the Renewi brand and our team of
over 7,000 employees have new workwear.
Renewi brand campaigns have also taken
place on national radio and through social
media. Brand recognition has improved from
below 5% when Renewi was first created to
approximately 15% following our extensive
rebranding activities.

038
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

Our Commercial division
is improving margins
through synergy delivery
and commercial effectiveness

Improving margins
The recycling industry has historically relied
on Asian markets, particularly China, as
an end destination for recycled paper and
plastics. This end market has been shrinking
over the past 18 months and may ultimately
close completely. As a consequence, the
value of low-quality recycled paper and
plastics has reduced significantly and
some of the lower grades are now being
incinerated. Paper and plastics comprise just
0.8m tonnes of the 14m tonnes of waste we
take in each year.

By working with our customers to segregate
paper and plastic at source, we earn more
from the resulting recyclates. We have
14 facilities focusing on the recycling of
source segregated paper from which the
majority of the output goes to European
paper mills. The separation also allows us to
implement dynamic pricing for over 70% of
these materials.

Over the past two years, our revenue from
recycled paper and plastics has fallen by
€30m. By focusing on quality and dynamic
pricing, the impact on our profits has been
restricted to an estimated €8m, during a
period in which we have delivered strongly
increased divisional profits and margins.

As reported through the year, we have seen
inflationary cost pressure in the market
including sharp rises in some off-take costs
and a tighter labour market. This has been
exacerbated by new Dutch legislation
regarding holiday pay, which has caused a
one-off industry-wide increase in blue collar
salaries of around 6%, and above all by the
140% increase in the Dutch incinerator tax
from €13 per tonne to €32 per tonne. We
responded by introducing significant price
increases on 1 January 2019 averaging

TECHNOLOGIES

PRODUCTS

Sorting
lines

Trommels

Crushers

Composting

Paper

Glass

Recovered
fuels

Biogas

Magnets

Optical
sorters

Eddy current
separators

Balers

Plastic

Metal

ICOPOWER®
pellets

Metal
blocks

Shredders

Float baths

Digestate/
compost

Wood
chips

Granules

Essential
oils

around 11% in the Netherlands, and around
6% in Belgium. Results in the last quarter
show that these price increases have been
successful and tender renewals have
continued at higher gross margins. Dynamic
pricing means that the amount we charge,
or pay, the customer for the waste paper or
plastic is linked to international price indices,
limiting Renewi’s commodity exposure.

Investment and innovation
We have invested selectively in the
Commercial Division during 2018/19. As
previously reported, the collection fleet is
being rejuvenated to reduce the growing
costs associated with an aged fleet. We are
funding this investment in trucks through
asset-backed finance which matches the
cash costs of running the fleet to the related
cash inflows and which allows the fleet to be
flexed in size according to evolving market
trends in logistics. Renewi is one of the largest
fleet operators in the Benelux and during

039
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

We are focusing on treatment
and creating value-added
secondary products in
Commercial (see page 09)

STRATEGIC
OBJECTIVES

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

We work with our customers to
ensure that paper and plastic are
separated at source, which creates
cleaner inputs that can be more
effectively recycled

the year we placed an order for over 420 new
Euro 6 compliant trucks which are coming
on stream now. The impact of replacing fully
depreciated vehicles with new ones results
in an increase in cost, around €3m in each of
2018/19 and 2019/20.

Some of our integration activities also
require capital investment. For example, the
rationalisation of our Rotterdam region from
five sites to three requires €6m in capital
investment to expand the Vlaardingen site,
offset by €5m from the sale of the two closed
sites, one of which completed in 2018/19: a
net investment of €0.5m to realise an annual
benefit of €1m.

Our net replacement capital is carefully
controlled and in 2018/19 amounted to €56m
(90% of depreciation), of which the majority
was spent on maintaining Renewi’s estate
of 109 operating sites, replacing obsolete
or broken containers and replacing on-site
vehicles such as cranes and loaders. Looking
forward, we intend selectively to increase
investment in our processing footprint and
capabilities in order to generate higher
returns and more stable earnings.

Innovating and investing in
recycling technologies will
help create shareholder value
(see page 08)

STRATEGIC
OBJECTIVES

040
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

Our innovation initiatives have also made
good progress. During the past year we have
celebrated the opening of the PeelPioneers
plant at our site in Son. Renewi collects
citrus peels from supermarkets and catering
companies. PeelPioneers recycles these
into essential oils and citrus pulp, for use
in products such as detergents and animal
feeds. Our project on recovering cellulose
from nappies and incontinence products has
progressed from lab scale to pilot scale. A
large-scale test with used products is planned
for the beginning of the next financial year,
after which a decision will be made for
the construction of a full-scale plant. We
are also partnering with the Purified Metal
Company to allow recycling of steel that has
been contaminated with asbestos, mercury
or other impurities. Pre-collection of these
metals has started, meaning that material
that is now collected will be recycled in the
plant that is currently under construction and
will be completed in 2020.

During the next year we expect to innovate
in a capital-light way by partnering with
universities, start-ups and specialised
recycling companies.

Divisional outlook
The Commercial Division is expected to
make progress in the current year. We
expect our implemented price increases
and the final year of synergy delivery from
the transformational merger to offset
lower growth in the construction market,
the previously reported closure of our
CETEM landfill in Belgium and ongoing
cost pressures.

CASE STUDY: BEYOND SIMPLY RECYCLING

Innovation is at the heart of what
we do. The “i” in Renewi stands
for innovation and is one of our
core values, as well as a key
growth factor.

Our innovation portfolio has over
100 potential opportunities and is
co-ordinated by a central team that
supports division and group-wide
transformational projects, which
must all demonstrate sustainable
competitive advantage and target
financial returns

We act as an enabler with our partners
to deliver new technologies, putting
into practice our expertise in bringing
waste products to quality levels. This
year, our innovations ranged from cat
litter to essential oils.

In Belgium, Renewi and Recypel have
created a new facility that produces
high-quality cat litter pellets and
animal bedding from pallet waste
wood and other construction
materials. Renewi is also looking at
developing this waste wood into oils
for engine use.

“No one else in Europe is innovating
to such an extent with waste
wood – we are a true pioneer,”

says Wim Pype, Manager Biogenic
Waste at Renewi Commercial
Belgium Division.

In May 2019, we launched a unique
solution for recycling asbestos-
contaminated steel with Purified
Metal Company. A new facility will
open in 2020, specifically designed
to recycle contaminated steel,
combining innovative processes with
existing techniques, ensuring it is no
longer hazardous.

We have also worked with Peel
Pioneers to launch a circular solution
for processing citrus peels into
essential oils and citrus pulp, then
used in detergents and animal feed.

Together with Essity, we have
developed a solution to process
used baby nappies and incontinence
materials. We use cellulose fibre from
the recycling process as a secondary
raw material for the chemical industry.

“We are always looking for new
innovative ways to process waste
streams into valuable raw materials
and achieve our vision to ‘waste
no more’,” explains Eric Segers,
director of Specialities at Renewi
Commercial Netherlands.

041
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FROM WASTE TO PRODUCT

POLLUTED
WATER

CLEAN
WATER

Renewi’s ATM plant treats soil, sludges, oils, solvents
and water. The contaminated water is usually received
at the site’s own jetty. It is treated on-site using ATM’s
bio-water system, comprising physical and biological
cleaning processes. The cleaned water is then
discharged off-site for further treatment.

042
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

The core drivers are
industrial activity,
coupled with
construction and site
remediation activity
across Europe

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

HAZARDOUS WASTE

The Hazardous Waste Division is
made up of two businesses: Reym
and ATM. It represents around 12%
of Renewi’s revenues.

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 Weert called CFS. 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 page 46.

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. As you can read on page 18, ATM has
been heavily impacted during the year by
specific discussions with the regulators on
the soil cleaning process.

Reym is a leading industrial cleaning
company 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.
Reym’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. The disposal process for this
business is on track.

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 shutdown
maintenance projects.

The core oil and gas market, which represents
up to half of the division’s revenues, remains
mixed. Oil prices have steadily increased to
c. $65 per barrel in the period, which is
positive, but onshore gas production
has continued to fall due to regulatory
restrictions. As expected, maintenance
and cleaning activity at refineries has
recovered. Reym faced ad-hoc requests from
its customers during this year, impacting
its utilisation rates. Project margins have
improved during the past year.

DIVISIONAL STRATEGY

Our initial focus is to return ATM to normal
operation during FY20. In the future we
intend to refine soil outputs further into
higher-value secondary raw materials. As
previously announced, our Reym industrial
cleaning business is currently being marketed
in a process expected to complete in the
coming months.

FINANCIAL PERFORMANCE

Hazardous Waste had a difficult year as a
result of the ongoing restrictions on the
shipments of thermally cleaned soil in the
Dutch market. Revenues fell by 9% to €211m
and underlying EBIT fell by 65% to €7.0m. An
exceptional item of €6.5m (2018: €2.9m) was

043
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

Our ATM contaminated waste
treatment facility has a strategy
to restore normal operations and
produce higher-value secondary
raw materials

As part of our strategy in
Hazardous Waste, we plan to
invest in refining thermally-
cleaned soil into secondary
products (see page 09)

STRATEGIC
OBJECTIVES

additionally reported in relation to the ATM
soil issue.

Overall revenues at ATM fell by 17% to €89m.
Revenue at the waterside increased on prior
year and pyro throughput was broadly flat.
Processing of contaminated soil was around
50% of capacity in the first half, reducing to
around 20% of capacity in the final months of
the year.

Reym saw revenues fall by 2% to €129m,
with fewer large shutdowns at customer sites
as expected. Profitability was impacted by
ongoing late rescheduling of client projects
with a consequent impact on productivity.

OPERATIONAL REVIEW

ATM and CFS
Historically, ATM disposed of treated soil to
a neighbouring building services company,
which placed the treated soil into the market.
End uses for treated soil include landscaping,
industrial and infrastructure developments.
As previously reported, our ATM soil

treatment facility has been operating at
reduced output as a result of the nationwide
ban from mid-2018 in the issuing of approvals
for the use of thermally treated soil pending
further review. This review, the detail of which
was announced in the Dutch parliament in
December 2018, is looking at how a range of
secondary materials, with a focus on cleaned
soil and dredging soil, should be used safely
in the Dutch market in the future.

We have been working closely with the
authorities to provide extensive data on a
wide range of parameters on the cleaned
soil stored at ATM. All parties intend that this
data should provide a new basis to define
the conditions in which thermally treated
soil can be used. The data gathering process
is expected to complete in the summer,
although we cannot say how long it will
take for new permits to be issued thereafter.
There remains a strong pent-up supply of
inbound contaminated soil and TAG requiring
treatment and we have maintained a pipeline
of domestic and international customers for
the cleaned soil.

HAZARDOUS WASTE FINANCIAL PERFORMANCE

REVENUE

UNDERLYING EBIT

Mar 19
€m

211.3

Mar 18
€m

231.0

Variance
€m

Variance
%

(19.7)

-9%

Mar 19
€m

7.0

Mar 18
€m

19.9

Variance
€m

Variance
%

(12.9)

-65%

UNDERLYING
EBIT MARGIN

3.3%

8.6%

RETURN ON
OPERATING ASSETS

10.7%

24.1%

Total

044
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

CASE STUDY: PUTTING THINGS RIGHT AT ATM

Dutch politicians and regulators have
temporarily closed the thermally-cleaned
soil market in the Netherlands in response
to quality and usage concerns. The negative
impact of this temporary ban has been
profound on ATM, Renewi and its investors.
As we work our way towards a successful
resolution and resumption of output, there
are important things that we have learned
and demonstrated.

The importance of quality
It is essential that Dutch regulators and
citizens have confidence in the quality of
secondary materials. We have market-leading
technical capabilities and a strong compliance
culture at ATM. Our large laboratory tests
all incoming contaminated products and
outgoing cleaned products to ensure they
meet specifications. We are now deep into
an unprecedented testing programme,
supported by the regulators, to test cleaned
soil for over 250 different parameters.

We are confident that this will conclude that
thermally cleaned soil is safe for use when
applied in appropriate locations.

The importance of innovation
We invest continually to improve our
processes and our products. Market
requirements and the improving sensitivity
of analytical tools sets more stringent
requirements around secondary materials.
Over the past three years we have invested
nearly €10m in a flue gas incinerator, an
expanded ESP gas cleaning unit and in a
de-salter that purifies wash water so that
it can be reused. We are innovating with
processing treated soil into three grades
(gravel, sand and fly ash) for secondary
building materials in construction and
asphalt markets. These new products
are even further up the recycling
chain and are expected to be highly
attractive as demand to use secondary
materials increases.

The importance of transparency
We consistently engage with our different
stakeholder groups, including regulators,
local communities and customers. The
concerns raised around thermal soil over
the past two years have shown us that we
can always do more. “Trust resulting from
transparent communication can accelerate
mutual working towards solutions. We
believe that this transparency is in place
and we are confident that jointly we can
work towards the reopening of an essential
market if the Netherlands is to be able
to treat its own contamination and meet
its targets for a circular economy,” says
Jacques de Jong, Compliance Director
at ATM.

045
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

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

Contaminated
soil

Sludge

Gasification

Thermal
treatment

Clean soil

GROWING REGULATION

046
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

TECHNOLOGIES

Thermal
treatment

High
pressure

Ultrasonic

Scrubbing

Vacuum

Chemical

Gasification

Biological

Detonation

Separation

PRODUCTS

Cleaned
water

Clean soil

Inert ash

In addition, we have over the past year
continued our development project to
further refine thermally treated soil into
three secondary materials: gravel, sand
and fly ash. We expect these can be sold for
a positive consideration into the building
materials market for use in asphalt, concrete
and cement. We have been progressing the
trials in a joint venture with a third party
with around €0.8m of losses reported in
results from joint ventures. We have received
planning permission for the new process and
we are developing our capability using a pilot
line. The current production can be used
to develop the customer base and to gain
product certifications. A full-size line capable
of refining all the output from the thermal
treatment process would then potentially be
commissioned in early 2020. The economics
of the new process are expected to be
at least as good as the historic thermally
treated soil outlet.

As a result of the soil offset issues, the Group
incurred an exceptional charge of €6.5m
relating to the logistics and storage off-site
of around 760,000 tonnes of soil along with
testing and legal costs.

804,000 tonnes, with a further 84,000 tonnes
of sludges. Treatment of packed chemical
waste through the pyro plant was broadly
flat and the new inbound warehouse was
installed during the second half of the year.
The CFS water treatment facility in the
southern part of the Netherlands did well,
increasing profits by 17%.

Reym
The industrial cleaning market for our Reym
business was challenging during the year
while the ongoing recovery of the oil price is
positive over time and helpful for volumes.
However, there were fewer large customer
shutdowns, as expected, and the ordering
patterns of customers remained prone to
late changes with a consequent impact
on productivity.

We have introduced a range of pricing
and initiatives in all our new contracts to
counter changes in customer ordering
patterns. Performance was stronger in the
fourth quarter as a result and is expected to
continue in 2019/20.

DIVISIONAL OUTLOOK

The other core waste treatment processes
for the Division performed well. Water intake
and treatment at ATM increased compared
to the prior year. Inbound volumes by truck
and industrial sludge volumes remained
weak but ship volumes were significantly
stronger. Waste water throughput was over

As previously announced, while we expect
to resume shipments from ATM under an
interim regime during the year, the timing
of this is uncertain and therefore we have
prudently assumed no such shipments
for the purposes of the Group’s financial
forecasts for the year.

047
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FROM WASTE TO PRODUCT

PLASTIC WASTE

VACUUM CLEANERS

Renewi’s plastics recycling specialist subsidiary,
Coolrec, collects and dismantles old devices such as
refrigerators, televisions, vacuum cleaners and mobile
phones. The material is treated and processed into
granules which are used, for example, by Philips for
making new vacuum cleaners which consist of 36%
recycled materials.

048
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

In Monostreams our strategy
includes investing in recycling
technologies: focusing on
organic waste treatment,
bottom ash treatment and
plastics (see page 09)

STRATEGIC
OBJECTIVES

MONOSTREAMS

The Monostreams Division comprises four
businesses: Coolrec, Maltha, Mineralz and
Orgaworld. It represents around 12% of
Renewi’s revenues.

These businesses produce materials for
specific markets from waste streams such
as glass bottles, discarded electrical and
electronic equipment, food waste, source
separated organics and bottom ashes from
incinerators. The resulting products are
used in markets such as jars and bottles
for food and beverage packaging, plastics
for new appliances, green energy, compost
and fertiliser products, and building and
construction materials in western Europe.

Coolrec is a recycler of electrical and
electronic appliances, producing recycled
plastics and both ferrous and non-ferrous
metals. It has eight sites across Belgium, the
Netherlands, France and Germany, and the
appliances are being supplied largely from
so-called producer schemes on long-term
supply contracts. Coolrec has innovative
partnerships with industry partners such as
Philips and Miele to make products circular.

The Mineralz business produces building
materials from incinerator bottom ashes,
extracting both minerals and metals as part
of the process. The company has become
an important partner for incinerators who
need to comply with the Dutch Green Deal.
The Deal states that 100% of the bottom
ashes have to be recycled by 2020. Mineralz
has partnerships with producers of building
materials to turn cleaned materials into
products like concrete tiles. Mineralz
continues to operate unique landfill services
to manage specialist waste streams such
as fly ashes at the Maasvlakte landfill site in
Rotterdam which was granted an extension
during the year.

Orgaworld is an innovative leader in organic
waste treatment and is a producer of green
electricity and soil enhancing materials.
It has five facilities in the Netherlands,
primarily based on (tunnel) composting,
anaerobic digestion and waste water
treatment technology. In the Amsterdam
area, Orgaworld produces green energy
for around 15,000 homes. In addition to
its production facilities, Orgaworld has an
Organics Innovation Centre to develop
products of the future.

Maltha is a European leader in glass
recycling, focused primarily on recycling flat
and container glass into “cullet” and glass
powder for reuse in the glass industry. 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 and has customers on both ends
of the value chain. The companies source
their materials from the collection and
sorting market for waste and from corporate
circularity programmes and transform them
into raw materials to provide customers
at the other end of the value chain with
secondary raw materials. Monostreams is a
division where Renewi’s waste-to-product
strategy is tangible.

049
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

In Coolrec, input volumes have been
relatively stable over the past years, though
the mix is changing rapidly, for example old
televisions are fading out and more smart
devices are appearing. The business can
benefit from changes in environmental
legislation and incentive schemes to
drive additional recycling, and also from
technology changes which will lead to higher
quality output (secondary) raw materials.
The business is exposed to the value of the
materials that it recovers, particularly non-
ferrous metals and plastics, many of which
have been at low price levels during 2018.

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

The Mineralz business is generating good
growth from creating building materials from
the bottom ashes. A significant proportion
of bottom ashes from incinerators is not yet
being recycled and will need to be by 2020 in
order to comply with the Green Deal policy.
Mineralz further 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.
Waste legislation and policy is very specific
on which waste streams can be landfilled.
For the Netherlands this means that only
waste streams that cannot be recycled or
incinerated can be landfilled. This legislation
is well-established and has resulted in
relatively stable waste flows being landfilled.
However, two negative legislative rulings
will reduce pricing and profit margins at the
landfill in the coming years.

MONOSTREAMS BUSINESS MODEL

INPUT

OUTPUT

Fridges

Washing
machines

Electronics

Plastics

Non-ferrous
metals

Plastics

Metals

Industrial
waste

Soil

Ashes

Clean soil

Aggregate

Landfill
locations

Binder

Coolrec

Mineralz

Orgaworld

Food
waste

Green
waste

Digestate/
compost

Green
electricity

Industrial
organics

Maltha

Car
windscreens

Packaging
glass

Glass
cullet

Glass
powder

050
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

MONOSTREAMS FINANCIAL PERFORMANCE

REVENUE

UNDERLYING EBIT

Mar 19
€m

213.3

Mar 18
€m

204.4

Variance
€m

Variance
%

8.9

Mar 19
€m

12.9

Mar 18
€m

18.2

Variance
€m

Variance
%

(5.3)

-29%

UNDERLYING
EBIT MARGIN

6.0%

8.9%

RETURN ON
OPERATING ASSETS

18.1%

25.6%

Total

Note
From 1 April 2018 the activities of van Tuijl were transferred from Netherlands Commercial.
The return on operating assets excludes all landfill related provisions.

At Orgaworld, inbound volumes from
municipalities are relatively mature and are
secured on long-term contracts, many of
which have been renewed over the past year.
Electricity prices increased over the year,
supporting the anaerobic digestion units.

Our Maltha glass recycling business sources
waste, flat and container glass across Europe.
Supply has been stable, although margin has
been under pressure among other costs by
increased waste costs and high input prices.
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 and expected to further increase
following circularity drive in the packaging
industry shifting from the use of plastics to
glass. Market demand and pricing for fine
fractions and for Ceramic Stone and Porcelain
(CSP) materially worsened over the year,
resulting in impairments at Dintelmond.

DIVISIONAL STRATEGY

Monostreams incorporates Maltha, Coolrec,
Mineralz and Orgaworld. All four focus on
producing high-quality products from specific
source segregated input streams.

FINANCIAL PERFORMANCE

Monostreams had a disappointing 2018/19
after a successful first year. Revenue increased
by 4% to €213m with strong revenue growth
delivered at Mineralz and Orgaworld offset by
a contraction at Coolrec. However, underlying
EBIT fell by 29% to €12.9m. Both Maltha and
Coolrec saw significant profit declines on
prior year as a result of margin pressure from
material price movements and operational
issues. Margins fell by 290 basis points to
6.0% and return on operating assets by
750 basis points to 18.1%.

OPERATIONAL REVIEW

The Coolrec business recycles e-waste and
white goods into plastics and metals. Over
the past year the business saw a sharp
reduction in profitability due to changes in
incoming waste streams, such as volume
reduction in televisions, and rapid shifts in
the value of certain recyclates, in particular
non-ferrous aluminium. Two sites in Germany
have been closed around year end and we
have closed two underutilised production
lines in Belgium. New management has been
appointed to drive the reorganisation and
future growth.

TECHNOLOGIES

Anaerobic
digestion

Specialist
landfill

Composting

Glass
recycling

Electrical and
electronic
equipment

PRODUCTS

Plastics

Metals

Lame videps, Patilii patient
Clean soil
ions tia ctatreh emursus fur.
Odium teru mei sedo, quam
tam num ist aucerob untius.

Aggregate

Binder

Digestate/
compost

Green
electricity

Industrial
organics

Glass
cullet

Glass
powder

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STRATEGIC REPORT
OPERATING REVIEW CONTINUED

Our glass businesses saw operational
challenges in two facilities in the Netherlands.
We closed one on 1 April 2019 and we
are working with Owens-Illinois, our 33%
partner in Maltha, to improve performance
at the other. The overall glass market is
set for growth due to a shift from plastic
towards glass products. We have put in
place new management.

Orgaworld delivered growth in volumes
treated, in addition to growth in inbound
green waste. Improved electricity productions
and prices at the two anaerobic digesters
also boosted profitability. Orgaworld is well
placed in a dynamic market and provides
important services to Renewi commercial
clients such as the large supermarkets.

Mineralz delivered a solid year of profits with
increased volumes from projects, regular
landfill and soil-cleaning. Volumes and
pricing from bottom ashes offset the positive
volume growth.

DIVISIONAL OUTLOOK

We expect progress at Monostreams, with
some recovery in Coolrec and Maltha offset
by a decline in Mineralz where increases in
landfill tax cannot be passed on into the
market because they compete with outlets
not subject to tax.

A key part of Monostreams’
growth strategy is to improve
performance in Maltha
(see page 09)

STRATEGIC
OBJECTIVES

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

What makes the
Maasvlakte site unique
is its highly specialised
technology and market-
leading position

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

CASE STUDY: INNOVATION IN LANDFILL

Renewi’s Maasvlakte operation in Rotterdam
is a pioneering and innovative landfill
site in the Netherlands, providing a very
necessary and unique service to safely treat
hazardous waste.

Run by the company’s Mineralz business,
the Maasvlakte is the only location in the
country authorised to immobilise and
store hazardous materials such as fly ashes
and low-level NORM (Naturally Occurring
Radioactive Materials) waste in a safe and
environmentally responsible way.

What makes the Maasvlakte site unique
is its highly-specialised technology and
market-leading position. A pioneering
‘Class 1’ landfill site, it has been in
operation since 1988, employing 30 people
today. Taking waste from incineration
plants such as fly ashes which contain
dioxides and heavy metals, input volumes
are increasing, particularly for highly
leaching hazardous waste. “We immobilise
approximately 50% of the total incoming
waste volumes for safe deposition. Our
technology can bind chlorides and heavy
metals using specialised binders, so
they are no longer leaching,” explains

Paul Dijkman, Director of Mineralz, part of
Renewi’s Monostreams Division.

“We deal with the waste that no-one else
can deal with in a sustainable way. We can’t
just leave it untreated – and we are the only
outlet within the Netherlands that can treat
and dispose of these hazardous materials in a
safe manner,” he adds.

In 2018, Renewi was granted permission to
expand Maasvlakte to create an additional
85% increase in potential landfill volume,
from 4.5 million m3 to 8.2 million m3 of
hazardous waste, though the surface areas
will only increase by 45%. This means it now
has the required disposal capacity to meet
forecasted demand for the next 20 years.

Waste legislation and policy are very specific
on which waste streams can be landfilled.
For the Netherlands this means that only
waste streams that cannot be recycled or
incinerated can be landfilled. This legislation
is well established and has resulted in
relatively stable waste flows being landfilled.
Renewi is also strongly placed to recycle and
recover non-hazardous waste to increase
diversion from landfill.

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FROM WASTE TO PRODUCT

DOMESTIC WASTE

ENERGY

Renewi uses mechanical biological treatment
technology to produce solid recovered fuel or refuse
derived fuel from black bag waste. A combination
of mechanical and biological processes is used to
sort the waste. This includes removing recyclates,
such as metals, removing moisture and shredding.
The remaining material can be used to produce
green electricity.

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

The Municipal
Division is focused
on running and
optimising these
existing contracts,
rather than bidding
for new ones

Actively managing our
portfolio is a core part
of our strategy to Build
Confidence and Deliver
Growth (see page 08)

STRATEGIC
OBJECTIVES

MUNICIPAL

The Municipal Division operates waste
treatment facilities for UK and Canadian
city and county councils. It represents
around 11% of Renewi’s revenues.

The waste treatment facilities form part
of long-term PFI or PPP contracts between
Renewi and the associated council,
usually lasting 25 years. These contracts
are established primarily to divert waste
away from landfill in a cost-effective and
sustainable way.

The contract provides guaranteed volumes
under agreed terms, typically with some form
of price indexation. However, the contracts
are not always linked to the variable cost
of the disposal of processed off-take and
changes in this market can result in margin
pressure. To mitigate this, off-take contracts
are predominantly secured under long-
term contracts.

Renewi runs six municipal contracts in the UK
using a range of technologies. The contracts
are with Argyll and Bute, Wakefield, Barnsley
Doncaster and Rotherham (BDR), Derby,
Elstow and East London (ELWA) councils.
All of these contracts, except Derby, are in
full operation. Further detail on challenges
in the Derby contract is provided in the
following sections.

In Canada, Renewi manages three
municipal contracts – Surrey, Ottawa
and London (Ontario).

The Municipal Division is focused on
running and optimising these existing
contracts, rather than bidding for new
ones. The business model is shown in
the graphic on page 57.

MARKETS

The Municipal Division, having secured its
input waste under long-term contracts,
competes in a number of downstream
markets, in particular with regard to
the provision of RDF to energy from
waste companies and SRF to cement
manufacturers. In line with our stated
strategy, the majority of these disposal
routes are now secured under long-term
agreements, which has removed this price
volatility risk.

The Division also supplies various recyclate
materials into the market. Typically, pricing
for these waste and product streams is
secured against market indices. During
2018/19, impacted by China’s National Sword
policy, there was a general tightening of
market prices across key streams as well as
a requirement in the market for higher grade
recyclate materials.

The Canadian market is growing, with
many municipalities yet to invest in the
infrastructure required to divert waste,
especially organic waste, from landfill. On
8 November 2018 the Group announced its
intention to exit Municipal Canada.

In line with the strategy to actively manage
our portfolio, the Municipal Division
completed its exit from the UK AD Sector with
the sale of its anaerobic digestion (AD) facility
(50% Joint Venture) in Cumbernauld in
September 2018. In November 2018 we exited
the loss-making and deteriorating operating
contract held between Renewi and Shanks
Dumfries And Galloway Limited regarding the
D&G PFI contract.

055
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

Looking forward, the UK remains a dynamic
market place beyond the Municipal sector,
poised for further transition towards better
recycling and product production as and
when the UK increasingly may adopt the
EU Circular Economy Package.

DIVISIONAL STRATEGY

We are de-risking the business, simplifying
the portfolio and delivering operational
excellence in the remaining assets. As
previously announced, the planned strategic
disposal of our Canadian business is on track
and progressing well.

FINANCIAL PERFORMANCE

The Municipal Division turned a loss of
€10.6m in 2017/18 into an underlying EBIT of
€2.3m during 2018/19 on revenues 3% lower
at €213.5m. The drivers of performance were
operational improvement, effective portfolio
management to exit loss-making activity
and the reporting of Wakefield as an onerous
contract in 2018/19.

The UK business reported revenues down
3% to €195m and made an underlying
EBIT of €0.8m (2018: loss of €6.6m) as
reported above. The key drivers of this were
improvement in underlying operational

The Municipal Division’s
strategy is to deliver a
recovery plan that will
stabilise and de-risk
the business

MUNICIPAL FINANCIAL PERFORMANCE

REVENUE

UNDERLYING EBIT

Mar 19
€m

195.2

18.3

213.5

Mar 18
€m

Variance
€m

Variance
%

Mar 19
€m

Mar 18
€m

Variance
€m

200.5

18.8

219.3

(5.3)

(0.5)

(5.8)

-3%

0.8

1.5

2.3

(6.6)

(4.0)

7.4

5.5

(10.6)

12.9

UNDERLYING
EBIT MARGIN

0.4%

8.2%

1.1%

-3.3%

-21.3%

-4.8%

UK Municipal

Canada Municipal (discontinued)

Total

UK Municipal

Canada Municipal (discontinued)

Total

Given the disposal process, the Canada business is held for sale at 31 March 2019 and meets the criteria of a discontinued operation.

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

MUNICIPAL BUSINESS MODEL

RECEIVE

SORT

PRODUCE

DISPOSE

Sorting
lines

Trommels

Shredding

In-vessel
composting

Landfill*

Local Authorities
in the UK and Canada

Magnets

Optical
sorters

Anaerobic
digestion

Mechanical
biological

INPUT

RECYCLATES

PRODUCTS

Black bag
waste

Dry
recyclate

Paper

Glass

Solid recovered
fuel

Green
electricity

Green
waste

Food
waste

Plastic

Metal

Refuse
derived fuel

Digestate/
compost

* We aim to process, sort and make products from waste but there is a small residual amount which has to be landfilled.

performance of Cumbria, reduced losses from
the sale of Westcott Park in March 2018 and
one-off benefits from a rates rebate, offset by
a €1.4m impact of lower recyclate prices and
off-take challenges at East London (ELWA).
These were supplemented by the impact
of reporting the losses at Wakefield as an
onerous contract. Performance at Barnsley,
Doncaster and Rotherham (BDR) stabilised
and improved with the contract reducing
losses year on year despite underlying cost
pressures with no impact on underlying
EBIT. The exit from Dumfries and Galloway
(D&G) has reduced ongoing onerous
contract losses.

The Canadian business reported revenues
down by 3% to €18.3m. A strong operational
improvement resulted in an underlying EBIT
of €1.5m compared to a loss of €4.0m in the
prior year. All three facilities generated a
profit and we were particularly pleased with
the performance of the Surrey advance bio-
fuel facility in its first year of operation.

OPERATIONAL REVIEW – UK

The UK Municipal business has delivered an
improved performance based on operational
execution and portfolio management. This
has been offset this year by issues at Derby
and ELWA. We believe that all issues at UK
Municipal have been provided for following
the provisions and impairments taken
this year.

Improving operational performance
Achieving stable operations gives
Renewi a platform to drive continuous
improvement through all contracts. This
includes optimising operating costs,
eliminating cost of failure and reducing
exposure to difficult off-take markets.
Looking forward, an expanding continuous
improvement programme will deliver
further improvements.

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ANNUAL REPORT AND ACCOUNTS 2019

Managing the portfolio
In March 2018, we sold our loss-making
facility at Westcott Park saving annual
losses of c. €2m per annum going forward.
In September 2018 we sold our 50% stake
in Energen Biogas in Scotland for €20m,
generating a profit on sale of €11m. In
November 2018 we exited the loss-making
and deteriorating operating contract held
between Renewi and Shanks Dumfries And
Galloway Limited regarding the D&G PFI
contract for a cash cost of €12m.

Commissioning problems with the Derby
PPP contract
In 2014, Renewi signed a contract to become
the long-term operator of a gasification
facility at Derby as part of a PPP contract
between Resource Recovery Solutions
(Derbyshire) Limited (RRS), a joint venture
between Renewi and the constructor,
Interserve, and Derby City and Derbyshire
County Councils. As previously reported, the
facility is two years late in commissioning. We
have supported our customer and insisted on
not accepting the facility until it has properly
passed acceptance tests such that it can be
safely and profitably operated. Recognising
the significant risks that the facility cannot
be commissioned in a timely way, we have
written off our historic €40m investment in
the Derby project, taken a €7.6m provision
for ongoing losses and assumed termination
costs in the event that the contract comes
to an end, and have provided €11.6m
against delay damages which we believe
are owed to us by Interserve but which
remain outstanding.

ELWA and Brexit
We have therefore taken an impairment
charge against our assets of €4m in ELWA
as no longer considered recoverable. As
previously announced, the only significant
direct impact of Brexit on Renewi is at
ELWA from where around 200,000 tonnes of
refuse derived fuel (RDF) is exported to the
Netherlands each year.

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

OPERATIONAL REVIEW – CANADA

Our Canadian business delivered a much
improved performance over the prior year.
The Surrey facility made an encouraging
profit in its first full year of operation. Local
market dynamics are moving favourably
and improved industrial and commercial
organic inputs and off-take contracts have
been negotiated. London returned to full
production after operational challenges
in the prior year and made good progress
in filling the facility with short and longer
term contracts in a growing local market.
At Ottawa planning is underway to amend
the facility following successful resolution
of a longstanding commercial dispute with
the customer that will result in the enlarged
facility being able to process a wider range of
inputs that should increase diversion rates in
the City.

DIVISIONAL OUTLOOK

We expect a reduced performance in the
UK Municipal Division as a result of the
anticipated loss of income from Derby.
The Canadian business is now reported as
discontinued operations.

TECHNOLOGIES

PRODUCTS

Sorting
lines

Trommels

Shredding

Paper

Glass

Solid
recovered fuel

In-vessel
composting

Magnets

Optical
sorters

Green
electricity

Plastic

Metal

Anaerobic
digestion

Mechanical
biological

Refuse
derived fuel

Digestate/
compost

058
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
OPERATING REVIEW CONTINUED

CASE STUDY: DELIVERING ON OUR COMMITMENTS

Our Municipal Division has made great
strides over the past year in establishing
a stable base. Our focus on the effective
execution of planned strategic, operational
and financial actions has created a stronger
business, ready to face the future.

The Municipal portfolio consists of long-
term waste treatment contracts for UK and
Canadian councils, established to recycle
and divert waste away from landfill in a
cost-effective and sustainable way.

Describing it as an ‘improvement phase’,
James Priestley, Managing Director of
Municipal, explains that the Division’s
strategic focus is on driving operational
improvements and efficiencies. “We’ve
come out of the building phase and have
long term off-take contracts in place. This

gives us a sound structure, which allows
us to move ahead in all areas. So now we
need to ensure that our operations are as
efficient as possible,” adds James.

Over the past year, the Division has
increasingly directed capital investment
towards improvement; investing to
maintain plants and ensuring that they are
working at optimum efficiency. There are
also a range of new initiatives designed
to improve operational processes and
service delivery.

We have invested in new training for
management and first-level supervisors –
vital to manage the business going forward
and a key area we will continue to develop.
The Renewi Rewards programme has also
been successful in helping our teams

to increase recognition and continue to
learn and develop. While our continuing
focus on health and safety in line with
our values, means that the division has
made significant improvements it its
safety performance.

“We continue to build a stable base from
which we can grow. We’ve taken bold
action over the past year to ensure that
our portfolio is the right strategic fit going
forward – this has included exiting loss-
making contracts. We’ve an excellent team
with a track record of delivery, and we are
investing in the right places to prepare our
business for the future,” James comments.

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
PEOPLE

Helen Richardson
HR DIRECTOR

CREATING “ONE RENEWI”
Our success is driven by our talented
team of people and we are committed
to developing and driving forward our
people agenda. Over the last year, our
focus has been on building “One Renewi”
culture, nurturing health and wellbeing
and engaging with our teams during
turbulent times.

BUILDING “ONE RENEWI”

values and their experiences in a debrief
session after the game.

Change management
Change has been an ongoing theme at
Renewi over the last year. It has been
important that we bring our people on the
change journey with us. From continuous
improvement and portfolio management to
our large-scale integration programme.

We recognise and value our people as our
most important asset in achieving our goals.
It is the hard work that they put in every day
that makes a difference. From site cleaners,
to financial controllers and from creative
marketeers to truck drivers. No matter what
role our people have in Renewi, they each
play a crucial part in delivering our long-term
strategy for growth.

Building our culture
Helping our people to feel part of “One
Renewi” has been an important focus and
we have taken every opportunity to become
“better together”.

Our integration programme has delivered
the committed €30m of synergies over the
year. In addition to delivering the financials,
our teams have been working hard to
create “One Renewi”. This has involved
route optimisation, site migration and
roll-bin migration.

To support our people, we have delivered
change management training across Renewi
and successfully built the “iRenew” network
in Belgium. The iRenew network appoints
ambassadors to support and train on
certain change projects. Over 70 leaders and
managers have been trained so far. In the

Netherlands and Belgium, projects have been
launched which encourage our teams to look
at and experience their colleagues’ work. This
builds both empathy and trust, helping to
facilitate change.

As part of the integration programme we
needed to harmonise our reward structure.
In Belgium the landscape is particularly
complex with several union delegations and
three Works Councils in place until the next
social elections in May 2020. We therefore
set up a unique central union delegation,
comprising representatives from the different
unions to negotiate important integration
items such as reward structures, different pay
systems and our lease car policy.

Divestments and other portfolio management
activities also involve change. We publicly
announced the sales of our Canada and
Reym businesses in November 2018. Whilst
the sales processes gain pace, it has been
important to keep our people motivated and
to communicate the latest information.

Our values have helped this journey. They
are the foundation for everything we do.
They guide the way we behave and make
decisions, outline what is important to us,
how we operate and what differentiates us
from our competitors. Most importantly,
they show that ‘how’ we do things is just as
important as ‘what’ we do. We are proud that
these values were not created in a boardroom
by a small group of people but were crafted
and shaped by our people.

As each of our divisions is different, dedicated
value activation initiatives were taken
using the model opposite. Our Commercial
Netherlands Division has been the pilot for
a values game, which has been launched
based on the popular escape rooms concept.
Colleagues work together during the game
to solve a variety of puzzles and discuss the

ACTIVATING OUR VALUES

We have focused on a culture activation programme using the following
model to activate our values

1: CREATING
AWARENESS:

Helping our people
know, remember
and ultimately “live”
our values.

2: ALIGNING
PROCESSES:

Changing any process
or procedure that is
not aligned with
our values.

3: ADDRESSING THE
“SOFT” SIDE:

a. Our leaders behaving

according to our values.
b. Unwanted behaviour is

corrected, and good behaviour
is recognised.
Communicating in line with
our values.

d. Our workplace reflecting

our values.

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
PEOPLE

061
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

Safety is our first value
and our top priority.
There is nothing more
important than getting
our people home safely
at the end of each
working day

STRATEGIC REPORT
PEOPLE CONTINUED

ENGAGING IN TURBULENT TIMES

Renewi is operating during turbulent times.
During this period, it is more important than
ever for us to engage with our people.

In the Benelux, Works Councils and Unions
have specific rights regarding corporate
activities. We find it helpful to work closely
with these bodies to deliver organisational
changes in a smooth and negotiated
manner and in full compliance with good
employment practice.

These Works Councils reflect the voice of our
employees. In Belgium, employee strikes
are more common practice, so it has been
crucial to have a good understanding of each
other, have regular contact and maintain
social peace. A similar cooperative approach
is working well in the Netherlands, especially
during the integration programme where
numerous joint decisions have been taken.

Another way we listen to and engage with our
people is through our annual engagement
survey, Pulse. We want to attract, gain and
retain the best talent. To do that, we need to
listen to our employees and act upon their
input. Especially during these challenging
times, it is increasingly important to take our
people’s suggestions on board. Our 2019
survey will be more frequent, faster and
better with a modern digital approach.

Nurturing our people’s health
and wellbeing
Safety is our first value and our top priority.
There is nothing more important than getting
our people home safely at the end of each
working day. We launched a new Safety
Culture Initiative over the year to further
develop our safety culture. The initiative
is managed by our leadership team and
includes setting the right standards and
ensuring we have capable leadership.

In addition to safety, we prioritise the
health and wellbeing of our people. We
launched a sustainable health programme
in the Netherlands called “Fit2Finish”. The
programme supports our people to be fit and
healthy to continue work until retirement, as
well as reducing sickness levels.

In the UK, we have recently launched a new
employee portal called RenewiYOU. The
programme centres around three topics
– Reward, Recognise and Revitalise. The
Reward part gives our people great benefits
such as access to retailer discounts. The
Recognise section creates a platform to
improve how we recognise our colleagues
including e-cards that can be sent to
recognise colleagues’ living our values. The
Revitalise part offers support to help our
people’s overall wellbeing, including topics
such as sleep, alcohol intake and mental
health awareness.

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STRATEGIC REPORT
PEOPLE CONTINUED

GENDER DIVERSITY

18%

of our workforce is female

1,229

women are employed

2 (22%)

female Board members

1* (9%)

female member of our
Executive Committee

67 (22%)

female Senior Managers

* A second female Executive Committee
member was appointed on 1 April 2019.

Developing our talented people
Our people are Renewi. The hard work they
put in every day makes the difference, so
ensuring we develop them is a natural step.

In the UK we have historically focused on
technical training rather than on building
leadership capabilities. To improve this, we
introduced a new leadership development
programme. The programme comprises
six modules: driving performance,
driving change, authentic leadership, the
productive manager, rehearsing crucial
conversations and coaching for results.
A similar programme is being built in the
Netherlands and Belgium.

Our Board will engage with employees
and the wider workforce to enhance
the ‘employee voice’ in the boardroom.
In addition to the existing channels of
communication via our Works Council
arrangements in Netherlands and Belgium, the
Board has designated Non-Executive Director
Jolande Sap to assist the Board with workforce
reporting. Our UK trading entity, Renewi UK
Services Ltd, is obliged to disclose annual
male/female pay details under UK Gender Pay
Gap Reporting legislation. The data suggests
that although our total female population
employed is significantly lower than our total
male population, the difference within the
mean pay gap category is negligible.

Our ethics, compliance and people
We are proud to have a diverse workforce which
includes people from different backgrounds
and cultures. We operate in nine countries and
have employees from much further afield. This
creates a vibrant working environment in which
our people can thrive.

This year we launched our new Code of
Conduct which is based on our core values and
establishes preferred behaviours. This includes
creating a safe and healthy work environment,
diversity, equality, non-discrimination and
being accountable – doing the right thing
even when nobody is watching. An IT Code of
Conduct is also included which explains the
right way for our people to behave online to
keep both themselves, and Renewi safe.

Renewi is an equal opportunities employer,
which means that full and fair consideration
is given to applications from, the continuing
employment, career development and
training of disabled people. We do not
disclose information about human rights
in this report, since it is not considered
necessary for an understanding of the
development, performance or position
of Renewi’s activities. During the year,
we reviewed our policies concerned
with combating the possibility of human
trafficking and slavery in our business and
supply chains. In compliance with the UK
Modern Slavery Act 2015, our statement on
this matter is considered and approved by
the Board on an annual basis and can be
found on our website.

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ANNUAL REPORT AND ACCOUNTS 2019

From focusing on
integration, our next
steps are taking our
CSR approach and
performance into true
improvement, with a
new CSR policy

STRATEGIC REPORT
CSR

DEVELOPING OUR INTEGRATED APPROACH

Over the past year we have established a
new Corporate Social Responsibility (CSR)
policy and structure for Renewi, and we
are now ready to put these into practice.

that in the second half we were able to
become more outward-looking; taking our
new structures and processes and using
them to explore key focus areas.

We started 2018/19 with clear CSR goals. We
wanted to establish a holistic CSR structure
for Renewi, one that is embedded into our
different divisions and acts as a guiding
principle for future activity. We also wanted
to initiate a company-wide CSR policy
relevant to all our stakeholder groups. Using
both projects as a basis, we will now start
developing in more detail our approach to
core CSR areas across Renewi.

This is a strategic step forward for Renewi
post integration. This integration was
facilitated by the two legacy companies
having a shared commonality of CSR
approach. Our next step is to take our
CSR approach and performance beyond
integration and into increasing improvement.

At Renewi, we take a carefully-planned
and thought-out approach to objectives
and goalsetting, ensuring we focus on
the material themes for all our internal
and external stakeholder groups, and
acknowledging their importance (see Our
Stakeholders, page 10).

Our new integrated CSR policy fulfils three
main functions:

1) A statement of intent - how we approach

CSR as a business

2) An overview of our approach to CSR –

what does it mean to Renewi

SAFETY INITIATIVES

Ensuring the health, safety and wellbeing
of our people is crucial to our success. We
take our responsibility to our people very
seriously. Safety is our top priority and our
first value. There is nothing more important
than getting our people home safely every
day. We aspire to have zero accidents. This
is embedded into each of our divisions and
we are proud of the progress we have made
with our new Safety Culture Initiative over
the past year. This was activated following
our leadership conference in June 2018, the
first day of which was devoted to safety. We
identified key areas for safety focus, and
used the themes identified by our leaders
to understand important issues for all our
people. Our Safety Culture Initiative focuses
on five key themes:

` Leadership

` Employee engagement

` Standards

` Communications

` Performance

3) How we are putting CSR into practice

RECYCLING AND RECOVERY PERFORMANCE

at Renewi

We have set objectives in core areas such
as carbon and energy efficiency, health and
safety, and community engagement, and all
divisions are working to deliver on them.

We made positive progress in meeting our
2018/19 CSR goals and start the new year
well-positioned to build on our hard work
into 2019/20. For the first half of the year,
we focused our efforts on the processes
and strategy behind data collection and
embedding internal structures. This meant

Indicator

Total waste handled at sites (million tonnes)

Materials recycled (million tonnes)1,2

Materials recovered for energy production from waste (million tonnes)1,2

Total materials recycled and recovered for energy production
(million tonnes)

Recycling as % of total waste handled

Recycling and recovery as % of total waste handled

2018/19

2017/18

13.85

9.27

3.20

12.47

66.9%

90.0%

14.02

9.30

3.19

12.49

66.3%

89.1%

1. Recycled 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 and similar.

2. Includes water recovery and moisture loss during treatment for some technologies employed.

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STRATEGIC REPORT
CSR CONTINUED

For each theme, we have since developed
more than 40 specific improvement projects
and embedded outputs in areas such as
our 10 lifesaving rules, our new HomeSafe
awards scheme and crisis communication
improvements. We are also developing
meaningful local safety KPIs on a site-by-site
basis, and plan to implement a common
SHEQ IT reporting system including best-
practice performance reporting.

In 2017/2018 we reset some of our health and
safety objectives because we had already
achieved them early. For example, we reset
our near-miss close-out target from 75% to
85% and revised our severity rate target. This
reset, aimed at pushing our performance
even further, has resulted in our 2018/19
performance lagging behind in some areas.
We accept this, as there is little point in
setting targets that are easy to achieve.

ACCIDENTS AND NEAR-MISSES

Indicator

Number fatal accidents

Number >3 day accidents

>3 day accident rate

Number lost time injuries (LTI)

LTI frequency rate

Severity rate

Number near-misses raised

Number near-misses closed-out

Near-miss close-out rate

2018/19

2017/18

108

1,404

1,505

168

10.8

18.8

17,927

12,293

69%

172

12.5

17.4

10,934

9,097

83%

Key
>3 day accident: Accident which results in a person being off-work for more than 3 days
>3 day accident rate: Number >3 day accidents / 100,000 employees = rate
LTI (lost time injury): Accident which results in a person being off work for a day or more
LTI frequency rate: Number LTIs / total number hours worked x 1,000,000 = rate
Severity rate: Total number days lost as result of accidents / total number LTIs
Near-miss: An accident which nearly, but did not, happen. Also called risk reports, close-calls etc
Near-miss close-out rate: Number near-misses closed-out / number near-misses raised as a %

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STRATEGIC REPORT
CSR CONTINUED

CARBON PERFORMANCE

EMISSIONS FROM OUR ACTIVITIES (CO2 EQUIVALENT ’000 TONNES)1,2

Source

Process based emissions

Emissions from green composting

Emissions from hazardous waste treatment

Emissions from landfill

Emissions from other processes (mechanical biological treatment – MBT – and anaerobic digestion – AD)

Transport based emissions

Fuel used by waste collection and transport vehicles

Business travel (cars, trains, flights and similar)

Energy use emissions

Electricity used on sites and in offices

Gas used on sites and in offices

Fuel used on sites for plant/machinery and equipment/heating

Total emissions from significant sources

2018/19

2017/18

204

120

117

732

256

101

120

221

799

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
2. Minor restatement of the 2018 data as the result of analysis of merged company data during the year

CARBON AVOIDANCE AS A RESULT OF OUR ACTIVITIES

GREENHOUSE GAS EMISSIONS AND AVOIDANCE INTENSITY RATIOS

Source

2018/19

2017/18

Ratio

Renewable energy generated

Waste derived fuels produced and sold

Materials separated for re-use/recycling

Energy from waste used on site as a fuel

970

1,764

241

946

1,699

305

Million tonnes greenhouse gases emitted
(CO2 equivalent) per million tonnes waste handled

Million tonnes greenhouse gases avoided by our
activities (CO2 equivalent) per million tonnes waste
handled

2018/19

2017/18

0.053

0.057

0.218

0.214

Total potential avoided emissions

3,022

3,006

As a core plank of our
strategy to deliver growth
we will innovate and invest
in recycling technologies
(see page 08)

STRATEGIC
OBJECTIVES

We have worked to increase the number of
near-miss accidents raised by our employees,
and have been successful – the number of
near-miss accidents raised by our employees
increased by 64% from 10,934 in 2017/18 to
17,927 in 2018/19. Our focus in 2019/20 is to
continue the improvements we have seen in
accident rates, while targeting other areas for
improvement to meet our 2020 targets.

PROTECTING THE ENVIRONMENT

We handled almost 14 million tonnes of waste
in 2018/19. Our overall recycling and recovery
rate increased to 90% as a percentage of waste
handled, meeting our 2020 target a year early.
We are investing to ensure we can continue
to keep improving our recycling and recovery
rate, by optimising our sites and investing
in pioneering processes to ensure we stay
efficient. Innovation is at the heart of how we
work, it plays a vital part in tomorrow’s recycling
solutions (see case study, page 41).

We protect the environment by giving new life
to used materials. This helps to protect the
world’s natural resources and to preserve the
planet for future generations. This is central
to our company purpose. Everything we do
is integral to protecting the environment and
it puts us at the heart of the circular economy.

We continue to take positive steps towards
reducing our own carbon footprint,
decreasing our emissions and increasing
the carbon avoidance benefit our activities
produce. Over the past few years our carbon
avoidance trend, in terms of tonnes of
CO2-equivalent per million tonnes of waste
handled, is on an upward trajectory.

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STRATEGIC REPORT
CSR CONTINUED

We are one of the first large companies
to establish a Green Finance Framework
encompassing the whole business. The
innovative Green Scorecard embeds
sustainability improvement into the
terms of our Green Loan

GREEN FINANCE

In 2017/18 we established our Green Finance
Framework (GFF), which positions Renewi as
a pure player focused on sustainability and
provides assurance to all stakeholders that
an investment in Renewi will make a positive
contribution to the environment.

We are able to do this because we are wholly
focused on sustainability, with the vast
majority of our assets classified as ‘green’
because they support ‘pollution prevention
and control’, as defined in the ICMA Green
Bond Principles and the LMA Green
Loan Principles.

We are one of the first large companies to
establish a GFF encompassing the whole
business, and to convert our entire €550m
bank borrowing into a Green Loan. This loan
facility has been extended to May 2023 with
options to extend into 2025. It is structured so
as to allow future green bonds and green debt
placements to be issued under the same GFF.

Over 2018/19 this has included new Green
Leases to fund our Euro 6 trucks, which will
reduce Renewi’s potential emissions due to
their efficiency, as well as a Green European
Private Placement instrument. As a result,
we are on track to be almost entirely Green
funded during 2019 after the repayment of the
2013 Belgian Retail bond.

To support our Green Finance initiative,
our innovative ‘Green Scorecard’ embeds
sustainability improvement into the terms of
our Green Loan. This scorecard means that
the banks providing our loans charge lower
borrowing costs if we achieve the targets we
have set ourselves for recycling percentages,
carbon emission avoidance and pollution
reduction. We are delighted and encouraged

that we have exceeded our ambitious
targets against all of the five key indicators
in our Green Scorecard. Our main banking
facility margin will be slightly reduced for
the year ahead.

Green Scorecard Key Indicators

` Increases in our recycling and recovery rate

` Growth in carbon avoidance produced by

our activities

` Increase in fleet fuel efficiency, reducing

carbon emissions

` Transition to a lower-polluting Euro 6 fleet

` Ongoing reduction in our >3 day

accident rate

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RISK MANAGEMENT

Our risk management and internal control
approach are important to the successful
execution of our strategy.

INTEGRATED RISK MANAGEMENT

Risk is under continual observation by the
Board and the Executive Committee. Their
awareness of the potential impacts of our
operational activities on our strategy, the
environment, our customers, employees,
shareholders and the public is key to
our success.

The Board and the Executive Committee are
aligned on our strategy and the associated
identification of key risks and mitigation of
them. Key risks and mitigations are cascaded
into the business and form the foundation
for the divisional risk assessment and risk
management processes.

We operate in a rapidly changing environment
with specific industry, commercial, regulatory
and other key risks, including some beyond
our control. Our risk management strategy,
risk framework and internal control processes
are important to the delivery of our strategy
and objectives, achievement of sustainable
shareholder value, the protection of our
reputation and good corporate governance
and ethical conduct.

During the year we have continued to
complete and revise risk assessment
initiatives across the Group. Our most
significant risks remain output market
related such as recyclate pricing and
incinerator costs and capacity. Key adverse
developments to our risk profile involve
changing law and policies as well as our
financial risks. Good progress in synergy and
integration delivery has reduced this key risk.

Our focus remains to exercise good risk
management, during the integration of
Renewi, to ensure we achieve the value
capture and deliver other benefits of
integration. We have a specific risk register
and risk meetings to manage this, as well as
individual risk registers embedded into all
major project plans.

STRATEGIC REPORT
RISKS AND UNCERTAINTIES

OUR RISK FRAMEWORK

Our risk framework encompasses a systematic
process for evaluating and addressing the
likelihood and impact of risks in a structured
and cost effective way. Risk management is a
cornerstone of sound management practice
and is a fundamental element of our strategic
planning. The core elements of our risk
management framework 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 appropriately managed by Renewi’s
leaders;

` 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 current mitigating
controls and the action plans necessary
to reduce risks to a level aligned with our
risk appetite. Formal responsibility for risk
management is positioned firmly in the line
through the Divisional management teams,
coordinated by the Divisional Finance
Directors. Risk registers, mitigations and
alignment with risk appetite are reviewed
by 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;

` Change being managed carefully
through project management and
approval processes, with embedded
risk management in project
management activities;

` 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;

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` 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.

REVIEW OF THE RISK
ENVIRONMENT DURING 2018/19

The year ended March 2019 was a difficult
one for Renewi and we experienced a number
of challenges that offset good underlying
progress. In this section we review those risks
and assess how well our risk detection and
mitigation processes worked.

Reduced value for products we make
Renewi has both anticipated and effectively
managed the very significant falls in the value
of the paper and plastics it recycles. The risk
was recognised as one of the more important
ones we faced. The projected impacts were
forecast and the dynamic pricing reduced the
adverse impact of this change. Changes in
metal prices at Coolrec were less effectively
hedged and a restructuring of the business
to reduce risk is underway. Going forward,
our focus on higher value-add products is
expected to reduce the risk further.

Increased cost of disposal of residues
As reported, we have seen ongoing increases
in the cost of disposing of many residues,
not only to incinerators but also to landfill
and other specialist outlets. This increased
costs and placed margin pressure on the
Commercial Division in the first half of the year
that was recovered through price increases
in the second half. We were unable to adjust
in a timely way to very significant changes in
available outlets and pricing for by-products of
glass recycling. We are reviewing the business
model at our Maltha business to manage the
risk better in the future.

STRATEGIC REPORT
RISKS AND UNCERTAINTIES

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.

1
KNOW WHAT RISKS
WE FACE

Maintain
and improve
a system of internal
controls to manage
risks in decision
making, contract
management and
financial transactions.

5
CONTROL
SYSTEMIC RISK

2
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.

4
TRAIN OUR
PEOPLE IN RISK
MANAGEMENT

3
MANAGE
OR MITIGATE
OUR RISKS

Ensure that management
is trained in the effective
identification, assessment and
management of risk.

Ensure that all identified key
risks are effectively mitigated or,
where appropriate, transfer risks
through insurance.

ATM soil restrictions
Adverse changes of law or policy have
been a long-identified risk on our register.
Nevertheless, the evolution of initial restrictions
on the use of thermally treated soil into a
complete temporary ban during the summer
of 2018 surprised management as we had
indications that outlets would be granted. We
have reviewed our understanding of how we
address political and regulatory concerns, and
also the level of prudence we should use in our
forward guidance during situations that are
uncertain and unusual.

Derby commissioning
The impairment of the Derby project is to
an extent addressed by our stated risk with
regard to long-term contracts. The risk that our
contractor would be unable to commission the
facility within two years of the due date was
understandably considered remote when the
contract was signed. There is good contractual
protection with regard to the operating
contract and, under the circumstances, the
impairment of the investment vehicle was
almost inevitable given the current status of
the facility. The PFI investment approach used
historically in the UK and Canada is unlikely to
be endorsed in future.

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STRATEGIC REPORT
RISKS AND UNCERTAINTIES CONTINUED

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
and Board;

` Ensures the Board-approved Group risk

management framework is implemented
and effective;

` Promotes an awareness of risk culture
in Renewi in which an appropriate
management of risk in all its forms is
considered in daily activities;

` Supports the Renewi risk culture through
the sharing of learnings and best practices
and review of risk failures;

` Reviews selected risks from risk registers to
ensure consistency of risk appetite being
borne and the mitigations in place;

` Reviews occurrences of risk management
failure to identify root cause, identify and
share lessons learned to mitigate risk
of repetition;

OUR RISK RESPONSIBILITIES AND
ARCHITECTURE

Our operating divisions and business unit
management have responsibility for the
assessment and management of risk,
with formal responsibility assigned to the
Divisional Finance Directors.

Our Risk Committee, working with the Risk
Manager, promotes an appropriate risk
culture in Renewi in which an awareness
and management of risk in all its forms
is considered by management in their
daily activities and ensures that the
Board approved Group Risk Management
Framework is implemented and effective.

The 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 these 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
Renewi.

Toby Woolrych and Baukje Dreimuller
Risk Committee Chairs

RISK MANAGEMENT RESPONSIBILITIES

RENEWI PLC BOARD

Independent
review

AUDIT COMMITTEE

EXECUTIVE COMMITTEE

` Drives consistency in approach, use of

tools and risk appetite across Renewi; and

Risk
reporting

` Provides access to expertise in managing
risks, where appropriate, from across
Renewi or from outside specialists.

Our Risk Committee continues to consist of
internal senior people from a wide spectrum
of specialisms, from finance, commercial
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.

RISK COMMITTEE

OPERATING DIVISIONS

Risk
ĥ Coordination
ĥ Consistency
ĥ Culture
ĥ Best practice review
ĥ Systems
ĥ Policy
ĥ Processes

BUSINESS UNIT
MANAGEMENT

Risk
ĥ Assessment
ĥ Management
ĥ Responsibility
ĥ Reporting

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STRATEGIC REPORT
RISKS AND UNCERTAINTIES CONTINUED

OUR PROGRESS AGAINST 2018 OBJECTIVES AND THE FUTURE

In our 2018 Annual Report we committed to further actions to improve our Risk Management processes in 2018/19. Despite the potential
distractions of integration, good progress has been made. A summary of this progress as well as our objectives for 2019/20 is shown below.

WHAT WE SAID WE WOULD DO IN 2018/19

HOW WE DID

Establish bottom-up divisional and functional risk
register processes. Further improve our divisional risk
registers and increase the revision interval

Establish functional risk registers for ICT, Product
Sales, SHEQ, Finance and HR

Processes for Divisional and Functional risk registers established and are revised at least
bi-annually, or more frequently if needed.

We have conducted risk assessment sessions resulting in a list of key risks for each, with
risk registers and mitigating actions and controls for ICT and Treasury. For Product sales
and Finance the mitigating actions are under review pending several improvement
projects and will be finalised in the coming period.

Our SHEQ related strategic and operational risks are embedded in the safety culture
planner. This planner tracks the improvements of multiple work groups across Renewi.

The HR-related risks are currently covered in the Divisional risk registers.

Establish risk registers at business unit level for
Monostreams businesses

For all Monostreams businesses risk assessment sessions were conducted and a list of key
risks for each business is in place.

Further improve the robustness of our risk
management procedures with development and
implementation of a methodology for identification of
unknown risks

The risk assessment process is an iterative process to ensure we benefit from new
insights and developments. The risk assessment process collects the known risks through
interview of experts and employs analytical methods such as Post Investment Reviews, as
well as creative methods such as brainstorming and mind mapping.

Formalisation of the risk appetite at divisional level,
aligned with Group risk appetite and taking into
account and addressing potential aggregation risks

We have made improvements to the composition of the Risk Committee. The Risk
Committee comprises key functional professionals, including Divisional Finance Directors.
The composition of the Risk Committee is therefore broad and allows us to approach any
risk with expertise regardless of its category.

The Renewi risk appetite has been considered when establishing the risk appetite for
each division.

Creation of additional risk awareness through effective
communication of risk management strategy, risk
appetite, policies and processes

Risk awareness increased at Risk Committee and Divisional Management Team (MT) level.
Risk management strategy implemented, risk appetite aligned and harmonised across
divisions. Risk training completed for all finance leaders.

Identification and execution of additional mitigating
actions required on key risks

Mitigating actions based on current risk levels compared to risk appetite at the Group and
Divisional level. Execution and monitoring will remain ongoing.

Development of Group Key Risk Indicators

Expand a strong risk culture through creation of risk
awareness by training and sharing best practices as
well as making steps in the creation of an open culture
where we learn from past instances

Further embedding risk management in core day-to-
day processes

Implementation of a key control framework, supported
by an ICT tracking and tracing tool

Establish monthly key control compliance reports

Key Risk Indicators have been determined, underlying metrics and thresholds are
in process of being identified. Initial key macro-economic indicators such as GDP,
unemployment and consumer confidence are reported and considered monthly.

Best practices shared and discussed, followed by an extensive risk culture session at the
Risk Committee in October 2018. As part of the standing agenda, risk culture will be a
recurring topic in Risk Committees.

We have completed the divisional risk registers and increased risk awareness at Risk
Committee and Divisional MT level. Risk management strategy implemented, risk appetite
aligned and harmonised across Divisions. Risk training completed for all finance leaders.

Key control framework in place for the Monostreams, Hazardous Waste and Municipal
Divisions. Also for the Shared Service Centre (SSC), Treasury, Tax and ICT functions, key
controls have been developed and implemented.

The commercial divisions are in development as these follow the integration process.

A new automated tool has been selected and approved. Full implementation is anticipated
in H2 of FY20.

Key control compliance reports are prepared and reviewed on a monthly basis for divisions
and functions where the key control framework is designed and implemented. Clear
escalation models are in place.

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RISKS AND UNCERTAINTIES CONTINUED

RISK MANAGEMENT OBJECTIVES FOR FY20

Further improve our divisional risk registers and decrease the revision interval

Reduce major fires by additional investments in fixed fire systems improvements and conduct fire standards audit which covers, among other things, the
processes and checks involving acceptance of waste

Introduce structured use of Key Risk Indicators for first selected areas of risk

Create and embed divisional authorisation documents that sit within and below Group authorisation document

Structured learnings for Risk Committee and senior management by executing post investment reviews and sharing the outcomes for future reference
and making improvements in investment processes and decisions through monthly webinars

Structured learnings for Risk Committee and senior management through other risk-focused learning exercises such as on inventory, being shared
through monthly webinars

Roll out risk-based decision-making training

Broaden the scope of internal audit to cover key business risks in addition to core processes

Complete the rollout of a key control framework and implementation of supporting software

KEY RISKS AND MITIGATIONS

Our key risks are outlined in the heat diagram below and in the table on the following pages. For FY19 our key risks were discussed in detail
by both our Risk Committee and senior leaders and include revisions and additions to risk ratings. The final version has been approved by the
Board and commented on by our Audit Committee.

Overarching key risks
All risk levels shown in the heat diagram are net risks and therefore include the current level of mitigation. A description of each risk can be
found in the table on the next page.

h
g
H

t
c
a
p
m

w
o
L

Low

Likelihood

High

The arrows indicate the risk development compared to the previous year. This year’s risk
position is marked by the blue circles and white circles represent last year’s risk position.
No new key risks have been identified.

Key risks

1. Product pricing, demand and quality – That the value we receive for
recycled product falls, the markets contract reducing demand for our
product or we become unable to produce to the required quality.

2. Residue pricing, capacity and specification – Lack of capacity at outlets
and/or inability to produce in specification, resulting in increased price of
disposal of burnable waste and other residues.

3. Changes in law and policy – Adverse impacts from changes in law and

policy, including environmental, tax and similar legal and policy regimes.
Including changes in regulatory attitude and behaviours as a result of shifts
in public opinion.

4. Environmental compliance – That we fail to comply with environmental

permits and/or environmental laws and regulations.

5. Long-term contracts – That we enter into long-term contracts at

disadvantageous terms or we rely on a small number of large contracts.

6. Unsustainable debt – That funding is not available or that funding sources
are available, but that cash generation is insufficient to allow access to
funding.

7. Labour availability and cost – That there are shortages of certain labour

types leading to unavailability or severe wage inflation.

8. Brexit – That a hard Brexit disrupts the export of waste and recyclates

internationally, creating offtake costs in UK and over-capacity of incineration
in the Benelux.

9. Input pricing – That market pricing may put pressure on our margins.

10. Digitalisation – That a disruptive technology or business model deployed

by a competitor or new entrant impacts our ability to compete.

11. Talent development, leadership and diversity – That we fail to meet the

(future/anticipated) required management capabilities.

12. Health and safety – Injury or loss of life. That we incur reputational loss, or

civil and criminal costs.

13. Major plant failure or fire – Operational failure and/or fire at a key facility

leading to business interruption and other costs.

14. Integration – That integration of the two companies, including the creation
of a strong corporate culture and migration of IT systems, is ineffective and/
or fails to deliver anticipated synergies.

15. Input volumes – That incoming waste volumes in the market may fall

should macro-economic conditions reverse.

16. ICT failure and cyber threat – That ICT failure and/or cyber crime causes

business interruption or loss.

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RISKS AND UNCERTAINTIES CONTINUED

SUMMARY OF KEY RISKS

Risk Direction Key

Reference numbers are consistent with those used in the heat diagram

increase

stable

decrease

KEY RISK

KEY MITIGATION

COMMENTARY

1. Product pricing, demand

Î By focusing on improving product quality we optimise

and quality

That the value we receive for
recycled product falls, the markets
contract reducing demand for our
product or we become unable to
produce to the required quality.

Risk direction:

the value we receive for our products.

Î Investments in technologies which fit with market needs

for products.

Î Sustainable technologies used align with market needs

and international and national policy.

Î Renegotiation of long-term and fixed-price off-take

contracts where appropriate.

Î We apply dynamic pricing that aligns between input and

output prices, which leads to better margins.

Î We thoroughly understand and closely monitor the

capacity-driven markets to mitigate risk and leverage
opportunities that are presented.

Î We use multiple product offtakers to spread the risk

where appropriate.

Product pricing, demand and quality is a stable but
high risk.

The impacts have partly been offset through
dynamic pricing and targeted price rises,
increasing our margins compared to last year and
demonstrating that our mitigations are broadly
effective.

2. Residue pricing, capacity and

Î We have experienced employees dedicated to product

specification

Lack of capacity at outlets and/or
inability to produce in specification,
resulting in increased price of
disposal of burnable waste and
other residues.

Risk direction:

offtake markets.

Î We apply cost control measures to offset impact of lost

revenue.

Î A diversity of residue offtakers are used to spread the risk.
Î Quality control systems in place to ensure specification

of residues is as required.

Î Revised and improved offtake strategy process is

designed and implemented.

Growing input volumes are putting increased
pressure on outlets that are largely full. As a result,
there is increased focus on the calorific value of
residues.

Balancing input and output volumes is an ongoing
risk to short term profits that Renewi is working to
mitigate.

New long-term offtake contracts are signed to
guarantee capacity remains available to us.

3. Changes in law and policy
Adverse impacts from changes
in law and policy, including
environmental, tax and similar
legal and policy regimes. Including
changes in regulatory attitude and
behaviours as a result of shifts in
public opinion.

Risk direction:

Î Horizon scanning by competent internal specialists

to ensure changes are planned for and managed, and
potential opportunities captured.

Î Alignment of business model with national and

international policy and law towards more sustainable
waste management practices.

4. Environmental compliance
That we fail to comply with
environmental permits and/
or environmental laws and
regulations.

Risk direction:

5. Long-term contracts
That we enter into long-term
contracts at disadvantageous terms
or we rely on a small number of
large contracts.

Risk direction:

Î Effective management of all environmental matters

arising through environment management systems and
regular inspections and audits.

Î Monthly environmental issues reporting across all levels

of organisation with adequate follow-up.

Î Experienced and competent environmental specialist

employees in place.

Î Community environmental engagement performance in

place as key business objective.

Î Selective bidding on contracts, combined with strict

Board controls on entering into any new major contracts,
are in place.

Î Detailed risk assessments and due diligence on contracts

are conducted.

Î Tight controls and reviews on build programmes to

ensure they remain on track.

The new testing regime for our ATM soil cleaning
business puts pressure on margins.

We perceive incremental pressure on law and policy
makers for new laws and policies and on regulatory
bodies to adhere to existing laws and policies.
The dialogue with governing bodies becomes
increasingly important.

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.

Internal management of compliance through
competent specialists is recognised as key.

Pressure on environmental permits through
increasingly strict regulation has grown over
recent years.

Continued challenges at ATM being carefully
monitored and addressed by management in close
dialogue with the authorities.

The Board’s caution with regard to complex long-
term contracts remains.

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STRATEGIC REPORT
RISKS AND UNCERTAINTIES CONTINUED

KEY RISK

KEY MITIGATION

COMMENTARY

6. Unsustainable debt
That funding is not available or that
funding sources are available, but
that cash generation is insufficient
to allow access to funding.

Risk direction:

Î Our treasury programmes are reducing our financing cost,

continuously improving cash control and increasing headroom.

Î Reinvest only where profitable.
Î Good budget control on capital projects.
Î Good balance of leased and owned assets.
Î We apply a diverse range of financing options and timings.
Î Quality external advice.
Î An EUPP is in place.
Î Credit facilities have been extended and improved.

7. Labour availability and cost
That there are shortages of certain
labour types, leading to unavailability
or severe wage inflation.

Î We measure employee engagement and satisfaction

through surveys.

Î We offer competitive wages.
Î Successful recruitment programmes in place for drivers.

Risk direction:

We are strategically planning to ensure we have
access to existing and new forms of capital,
including a dual listing on Euronext Amsterdam.

Continuing portfolio management includes
anticipated sales of Reym and our Canadian
business.

General economic conditions and macro-
economics, combined with a relative unwillingness
of the younger generation to undertake certain
forms of physical labour, are the main drivers of this
risk. Our Renewi brand is becoming increasingly
better known and our efforts in shaping Renewi
as an attractive place to work partly mitigated the
potential impact.

Brexit is very likely to have at least some impact
on export of waste and recyclates internationally.
Higher impact scenarios, however, are considered
significantly less likely than lower impact scenarios.
We have put in place mitigators, including a revised
and improved offtake strategy to significantly bring
down the potential impact of Brexit for Renewi.

Given the nature of this risk we emphasise the volatility
of this risk, which can change rapidly. Brexit is therefore
under close monitoring by management.

We have delivered reduced costs and increase price
competitiveness and margins.

We are moving towards pricing new business
for margin over volume and in line with product
offtake demand.

Î Scenario planning for hard Brexit capacity management.
Î Flexible/prudent approach to hedging strategies.
Î Identify potential new offtake solutions in the UK.

Î Prices are constantly monitored and reported on via

operational systems.

Î To deliver cost leadership in core markets we effectively
manage our costs, both structural and operational.
Î Where appropriate, we use longer-term contracts to

limit exposure.

Î Targeted price increases and dynamic pricing are used to

optimise margins.

IT Director part of Executive Committee with remit to
identify future opportunities and risks.

Integration continues to optimise and digitise
Renewi as per plan.

Î Active monitoring across the divisions and group of new
digital entrants, technology or services from competitors.
Î Renewi takes a fast follow approach to emerging threats to

keep expenditure proportionate to threat.

Î Diversification of business, core operational services and

products limits threat and impact from disruptive business
models and technology.

Î Renewi’s innovation programme identifies opportunities
ahead of competitive threats and generates competitive
advantage proactively.

Î Renewi has several digital developments under investigation
to remain a competitive leading position and mitigate threats
(AI, big data, robotics, online/digital services, platform services).
Increased integration across the group to align data and
increased efficiency through digital automation.

Î Key objectives set for employee development with
leadership development programmes in place.
Î Performance appraisal processes are in place.
Î Engagement surveys are conducted and followed up.

Monitoring of competitor threats and fast follower
principle has already identified opportunities and
active projects being investigated within Renewi.

Numerous digitalisation pilots are active within
Renewi to establish their viability, value and
disruptive capability.

We remain alert and proactive to changes seen in
the markets around us and also emerging in the
global waste-to-product markets.

The recovering economy means that talent is in
increasingly short supply.

We have reinforced our HR department to drive
retention and optimisation of internal and the
recruitment of external talent. We also recruited a
new HR Director, Helen Richardson, who has a strong
track record in international HR leadership roles.

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ANNUAL REPORT AND ACCOUNTS 2019

8. Brexit
That a hard Brexit disrupts the
export of waste and recyclates
internationally, creating offtake
costs in UK and over-capacity of
incineration in the Benelux.

Risk direction:

9. Input pricing
That market pricing may put
pressure on our margins.

Risk direction:

10. Digitalisation
That a disruptive technology or
business model deployed by a
competitor or new entrant impacts
our ability to compete.

Risk direction:

11. Talent development/

leadership

That we lack the required
management capabilities.

Risk direction:

STRATEGIC REPORT
RISKS AND UNCERTAINTIES CONTINUED

KEY RISK

KEY MITIGATION

COMMENTARY

12. Health and safety
Injury or loss of life. That we incur
reputational loss, or civil and
criminal costs.

Risk direction:

13. Major plant failure or fire
Operational failure and/or fire at
a key facility leading to business
interruption and other costs.

Risk direction:

14. Integration
That integration of the two
companies, including the creation
of a strong corporate culture
and migration of IT systems, is
ineffective and/or fails to deliver
anticipated synergies.

Risk direction:

Î Corporate Health and Safety Managers and competent

internal specialists in place.

Î Safety is the top agenda item on all management

meetings.

Î Defined and tracked health and safety priorities plan

underway and delivering.

Î We active and openly engage with regulators.
Î Safety leadership programme in place.
Î Coherent targets in place for accident, near-miss and

other key safety performance parameters.

The Renewi-wide safety culture programme is on
track.

We have competent internal specialists in place and
continue to fortify our SHEQ teams.

Î Effective insurance programmes supported by

experienced brokers.

We are optimising the insurance captive which we
introduced in the previous financial year.

Î Improvements in fire control through new and stricter fire

control standards.

Î Fire risk survey process in place including engagement
with insurers, and with competent external advice.
Î Business continuity planning in place at all major sites.
Î Mechanical breakdown insurance in place for at-risk

facilities and reviewed on a regular basis for adequacy.

Î Highly-experienced operational teams with in-depth

knowledge of processes.

Î Regular annual and other shutdowns at key facilities to
ensure they remain well invested and maintained.
Î Business continuity planning includes breakdown risk

and mitigation measures.

Î Comprehensive and in-depth due diligence prior to

merger.

Î Use of competent external advisers where required.
Î Clear integration plan with road map to successful

integration in place.

Î Dedicated divisional integration teams supported by

central integration management office in place.
Î Clear targets in place for integration performance

communicated to all key employees.

Î Regular “Flagship Events” to coordinate teams and

share learnings.

Î Monthly detailed reviews of divisional and functional

projects.

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 flexibility to divert waste and retain value
internally in the event of a breakdown.

We have a clear vision of where value capture from
our merger lies, and a clear plan to achieve it has
been in place since Day One.

Clear reporting for value capture performance and
tracking against integration plan is in place.

We have beaten our plan in the first and second year
and have clear visibility for achieving the remainder.

Site migration in our Belgium Commercial business
was completed last year.

Principal outstanding risk is the migration of core
processes and ICT systems.

15. Input volumes
That incoming waste volumes in
the market may fall.

Î Strong reporting of incoming waste volumes across the

Group for rapid response to market changes.

Î Continued investment to secure new waste streams

We handle 14 million tonnes of waste each year.
Our wide geographical spread provides access to
multiple markets.

Risk direction:

16. ICT failure and cyber threat
That ICT failure and/or cyber crime
causes business interruption or loss.

Risk direction:

and volumes.

Î Market-facing customer-focused organisation.
Î Major capital deployed only if backed by long-term

contracts.

Improved economic environment has resulted in
rising volumes.

Public opinion is shifting towards increased
recycling rather than incineration.

Î Business continuity planning and testing in place for ICT.
Î Assessment of ICT resilience conducted by insurers with

Implementation of state-of-the-art cyber resilience
software completed last year.

high-quality results.

Î Continued investment in upgraded systems and

infrastructure.

Î Regular external security tests and improvements

throughout the year.

Î Security planned for at design stage in all projects/

programs.

Development of greater centralisation of ICT
systems to allow common risk approach. ICT
integration plans are underway.

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ANNUAL REPORT AND ACCOUNTS 2019

STRATEGIC REPORT
RISKS AND UNCERTAINTIES CONTINUED

Commodity price risk
Renewi 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.

Credit risk
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.

Fraud risk
To mitigate the exposure to losses arising
from fraud committed on the Group or
by its employees, robust internal controls
and financial procedures are reviewed and
tested regularly.

At the end of March
2018, circa 90% of
core borrowings were
fixed or hedged

FINANCIAL RISKS

Renewi 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
Renewi has continued to limit its exposure
to interest rate risk on core borrowings by
using fixed rate retail bonds, fixed rate finance
leases, cross currency interest rate swaps
and an interest rate cap. At the end of March
2019, circa 90% of core borrowings were fixed
or hedged. Additionally, the PFI/PPP non-
recourse floating rate borrowings are hedged
for the duration of the contracts using interest
rate swaps entered into as part of financial
close of the project.

Foreign exchange risk
Renewi operates in the UK and Canada and
is exposed to translation risk on the value of
assets denominated in Sterling and Canadian
Dollars into Euros. This exposure is reduced
by borrowing in Sterling and Canadian
Dollars. 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 in
Euros on the export of processed waste from
the UK to Europe, which is managed through
the use of forward exchange contracts.

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STRATEGIC REPORT
RISKS AND UNCERTAINTIES CONTINUED

VIABILITY STATEMENT

In accordance with provision C.2.2 of the 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.

31 March as the Board is confident that the sales will be concluded
in the next 12 months, however for the purpose of this modelling
no sales proceeds have been assumed in any period.

The Board assessed the principal risks to the business as set out in
the preceding pages and concluded that five severe but plausible
risk scenarios should be tested separately and a combination of
two of these happening together. The scenarios modelled included
further challenges in the off-take markets together with restrictions
in low front end pricing, the impact of a disruptive and hard Brexit,
a sustained period of shutdown at our key Hazardous Waste site
and an economic slowdown.

The key assumptions made in Renewi’s long-term financial model
are: delivery of the final year of synergies in the year ending March
2020 together with steady market growth resulting in margin
improvements in the Commercial division, ongoing challenges at
ATM and the maturity of a €100m Retail Bond in July 2019 which
is not assumed to be replaced like for like. As already announced,
there are processes underway for the disposal of the Canada and
Reym businesses. These have been reported as held for sale at

For each scenario the Group has also identified the mitigation
steps it would take to reduce the risk and performed the scenario
testing on that basis. These mitigations include the identification
of structural cost programmes, business continuity and
commercial effectiveness plans and deferral of capital expenditure.

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 headroom in the event of each of the separate
scenarios and the combined scenario occurring.

Based on the consolidated financial impact 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.

077
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ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE

THE BOARD OF DIRECTORS

COLIN MATTHEWS
CBE, FREng
CHAIRMAN

JACQUES PETRY
MBA
SENIOR INDEPENDENT
DIRECTOR

MARINA WYATT
MA, FCA
NON-EXECUTIVE
DIRECTOR

ALLARD CASTELEIN
MD
NON-EXECUTIVE
DIRECTOR

Appointed: March 2016

Appointed: September 2010

Appointed: April 2013

Appointed: January 2017

Skills and experience:
Jacques was until the end
of May 2019 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.

Skills and experience:
Marina currently holds the
position of Chief Financial
Officer of the Associated
British Ports Group. She is
also a Fellow of the Institute
of Chartered Accountants.
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. In
September 2015 she was
appointed Chief Financial
Officer of UBM plc where
she remained until UBM
plc’s takeover by Informa
plc in June 2018. Marina is a
Member of the Supervisory
Board at Lucas Bols N.V.

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, 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 Hospitals, Rotterdam
Partners, Sohar Industrial
Port Company and the
Ronald McDonald House
Sophia Rotterdam. He is a
senior member of several
Dutch trade organisations
including the Economic
Board of Zuid Holland
and the Confederation
of Netherlands Industry
and Employers.

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, Severn Trent
plc and Johnson Matthey
plc. Colin is a Fellow of
the Royal Academy of
Engineering and was
awarded the CBE in 2014
for his services to aviation.
Colin was appointed as the
Non-Executive Chairman of
EDF Energy Holdings Ltd,
a wholly-owned subsidiary
of the EDF Group, in
November 2017.

R N

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE

NEIL HARTLEY
MA, MBA
NON-EXECUTIVE
DIRECTOR

JOLANDE SAP
MSC
NON-EXECUTIVE
DIRECTOR

LUC STERCKX
MSC, PHD
NON-EXECUTIVE
DIRECTOR

OTTO DE BONT
MSC
CHIEF EXECUTIVE
OFFICER

TOBY WOOLRYCH
MA, ACA
CHIEF FINANCIAL
OFFICER

Appointed: January 2019

Appointed: April 2018

Appointed: September 2017

Appointed: April 2019

Appointed: August 2012

Skills and experience:
Neil currently holds the
position of Managing
Director of First Reserve,
a leading global private
equity investment firm
exclusively focused on
energy, which he joined
in 2006. Before joining
First Reserve, he spent
six years in investment
banking with Simmons &
Company International,
most recently as a Director,
where he focused on
corporate finance advisory
work in the energy sector.
Prior to this he was a
Management Consultant
at McKinsey & Company,
Inc. He also spent seven
years with Schlumberger,
most recently as a Field
Service Manager and Field
Engineer. Since 2008 he
has been a Non-Executive
Director of Norwegian
company DOF Subsea AS.
Between 2016 and 2018 he
also held the position of
Non-Executive Director of
UK utility services company
M Group Services Ltd.

Skills and experience:
Jolande has represented
the Green Party, GroenLinks,
in the lower house of the
Dutch parliament, including
two years as party leader.
Between 1996 and 2003
Jolande worked at the Dutch
Ministry of Social Affairs and
Employment and amongst
other responsibilities
headed the Incomes Policy
Department, before being
appointed a director of
LEEFtijd, a consultancy for
sustainable employment
issues, until 2008. Jolande
is currently on the Board of
the Netherlands National
Green Fund, a member of the
Supervisory Boards of KPMG
(Netherlands), Royal KPN
N.V. and the Springtij Forum.
She chairs the Supervisory
Boards of the Netherlands
Public Health Federation,
Arkin and Fairfood
International. Jolande
graduated from the Tilburg
University in economics
having specialised in political
economy and philosophy.

Skills and experience:
Luc started his career at
Exxon Chemicals, then
became the CEO of Indaver
before joining the executive
committee of PetroFina in
which capacity he served
as Managing Director of
Fina Holding Deutschland
and as Group Senior Vice
President for SHEQ matters
worldwide. He was then
appointed CEO of Oleon
where he led a successful
management buyout.
Luc was subsequently
appointed as CEO of
SPE-Luminus in 2005, the
second largest power and
gas company in Belgium,
created as a result of a
multi-party merger. Luc
is an INSEAD certified
international director and
a specialist in internal
governance. He currently
holds a number of non-
executive and advisory
positions, specialising in
the fields of energy and
chemicals, renewables and
corporate governance.

Skills and experience:
Otto succeeded Peter
Dilnot as Chief Executive
Officer in April 2019.
Prior to becoming Chief
Executive Officer, Otto was
the Managing Director
for Renewi’s Netherlands
Commercial Division,
and a member of the
Executive Committee,
playing a central role in the
integration of Shanks Group
plc with Van Gansewinkel
Groep BV. Before his career
at Renewi, Otto worked
for a number of blue-chip
companies including
United Technologies
and the Plastics and
Security divisions of
General Electric. During
his six years at United
Technologies, Otto spent
time in various managerial
positions culminating in
his role as President of
the Fire & Security Field
Continental Europe.

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.

BOARD COMMITTEE
MEMBERSHIP

A Audit

R Remuneration

N Nomination

Chair

079
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ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
CORPORATE GOVERNANCE REPORT

We continue to give
equal consideration to
balancing the interests
of our customers,
shareholders,
employees and the
wider communities in
which Renewi operates

Colin Matthews
Chairman

CORPORATE
GOVERNANCE REPORT

INTRODUCTION

On behalf of the Board, I am pleased
to present our Corporate Governance
Report and confirm our compliance with
the UK Corporate Governance Code
published in April 2016, for the year
ended 31 March 2019.

The Board is aware of the forthcoming
revisions to the UK Corporate Governance
Code which will apply to companies with
financial year ends beginning on or after
1 January 2019. In consideration of the
forthcoming changes, over the last year
we have reviewed the activities of our
organisation to implement the necessary
adjustments. Wherever possible we
have applied the reporting revisions
ahead of schedule and included them
within this report.

Under the revised Code, for example, Boards
must engage with employees and the wider
workforce to enhance the “employee voice”
in the boardroom. In addition to the existing
channels of communication via our Works
Council arrangements in the Netherlands and
Belgium, the Board has designated Non-
Executive Director Jolande Sap to assist the
Board with workforce reporting.

During the year, both the Nomination and
Remuneration Committees were focused
primarily on considering Board composition
and succession. Their full reports can be
found on pages 88 to 89 and 90 to 107
respectively. In January 2019 the Board was
strengthened further by the appointment of
Neil Hartley as an independent non-executive
director. At the end of the year, following the
departure of Peter Dilnot, succession to the
role of Chief Executive Officer was achieved
through internal promotion. Otto de Bont,
former Managing Director of our Netherlands
Commercial Waste Division, joined the Board
as CEO with effect from the start of our
2019/20 financial year.

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.

Colin Matthews
Chairman
23 May 2019

In March, Renewi also launched its new
Code of Conduct together with a range of
policies and protocols. Specifically, that
Code formalises the required behaviours
and procedures in key business integrity
areas such as fraud and bribery prevention,
whistle blowing, management of confidential
information and modern slavery prevention.

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 to deliver growth
and returns by driving margin expansion,
investing in infrastructure and actively
managing the portfolio of businesses. 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 its assessment of these matters
together with those of Going Concern
and Viability Statement disclosures. The
full Audit Committee Report is set out on
pages 84 to 87.

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ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
CORPORATE GOVERNANCE REPORT

OUR CORPORATE GOVERNANCE REPORTING MANAGEMENT FRAMEWORK

RENEWI PLC BOARD

Principal Board
Committees

Executive
Management

Specialist
Committees

Divisional
Management

AUDIT

REMUNERATION

NOMINATION

RISK

EXECUTIVE
COMMITTEE

OPERATING
DIVISIONS

SHEQ (SAFETY, HEALTH,
ENVIRONMENT AND
QUALITY) COMMITTEE*

CSR (CORPORATE
SOCIAL RESPONSIBILITY)
COMMITTEE

GREEN FINANCE
COMMITTEE

*Additional reporting line to Renewi plc Board

The Board fully supports the principles of
good corporate governance. This report,
together with the Directors’ Remuneration
Report on pages 90 to 107, explains how
the Group has applied and complied fully
with the provisions of the UK Corporate
Governance Code 2016 in force for the year
to 31 March 2019.

The Board
The Board comprises the Chairman, a
further six 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.

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 below details the number of formal
Board meetings held in the year and the
attendance record of each director.

Jacques Petry continues to hold the position
of Senior Independent Director. The Senior

The calendar of meetings of the Board and its
Committees for 2018/19 is shown overleaf.

Director

Colin Matthews (Chairman)

Allard Castelein

Jacques Petry

Marina Wyatt

Luc Sterckx

Jolande Sap

Neil Hartley

Peter Dilnot

Toby Woolrych

Board meetings 2018/19

13 (13)

12 (13)

13 (13)

12 (13)

3 (3)

13 (13)

12 (13)

Bracketed figures indicate maximum potential attendance of each director. Neil Hartley was appointed to the Board on
17 January 2019. Otto de Bont did not join the Board until 1 April 2019.
Toby Woolrych was absent from the Board meeting held in October 2018 and Allard Castelein was absent from that held in
January 2019, both due to prior diary commitments. Both meetings were unscheduled and held at short notice.
Jolande Sap notified the Company prior to appointment that she would be absent from the Board meeting held on
28 June 2018 due to a prior commitment.

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GOVERNANCE
CORPORATE GOVERNANCE REPORT CONTINUED

CALENDAR OF MEETINGS OF THE BOARD AND ITS COMMITTEES FOR 2018/19

April

May

June

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

March

Board

Audit Committee

Remuneration Committee

Nomination Committee

Shareholder (AGM)

In addition, 14 duly authorised Board Committee meetings, comprising at least two directors, were held during the year.

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 regularly, having met 13
times during the year.

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.

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, Environment and Quality 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 three main specialist committees covering;
Risk, SHEQ and CSR matters.

In reviewing Renewi’s overall corporate
governance arrangements, the Board
continues to give equal consideration
to balancing the interests of customers,
shareholders, employees and the wider
communities in which Renewi 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 safety
during site visits.

Diversity
At the current time it has not been
determined to set a specific female or
ethnicity Board member quota. However,
the Board recognises both the Lord
Davies and Hampton-Alexander Reviews
on female representation, including the
recommendation that 33% of FTSE 350 Board
positions should be held by women by 2020.
The Board also acknowledges that the Parker
Review recommends that each FTSE 250
Board has at least one director from an ethnic
minority background by 2024. Appointments
to the Board and throughout the Group
continue to be based on the diversity of
contribution and required competencies,

082
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GENDER DIVERSITY

Female

Male

Total

2
(22%)

1*
(9%)

1,229
(17%)

67
(22%)

7
(78%)

10
(91%)

5,806
(83%)

239
(78%)

7,035

306

Board

Executive
Committee

Group

Senior
Managers

* A second female Executive Committee member was
appointed on 1 April 2019.

BOARD BALANCE

EXECUTIVE DIRECTORS
2
NON-EXECUTIVE DIRECTORS 7

BOARD DIVERSITY

FEMALE
MALE

2
7

GOVERNANCE
CORPORATE GOVERNANCE REPORT CONTINUED

irrespective of gender, age, nationality or any
other personal characteristic.

also has access to the external auditors’ advice
without the presence of the executive directors.

The Nomination Committee and 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 which will be available
on the Renewi website in June 2019. Further
summary details, in addition to those shown
below including those on gender pay gap
reporting, can also be found in the People
section on page 63.

Audit Committee
The Audit Committee met three times in the
year and is formally constituted with written
terms of reference which are available on
the Group’s website. The Committee is solely
comprised of non-executive directors: Marina
Wyatt who chairs the Committee, Jacques
Petry, Allard Castelein, Luc Sterckx, and since
17 January 2019, Neil Hartley.

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
of the Associated British Ports Group. In
addition, the Board considers 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

The Audit Committee Report on pages 84 to
87 sets out the role of the Committee and its
main activities during the year.

Remuneration Committee
The Remuneration Committee met four times
in the year and is formally constituted with
written terms of reference which are available
on the Group’s website. The Committee is
solely comprised of non-executive directors:
Allard Castelein, Colin Matthews, Jacques
Petry, Marina Wyatt, Luc Sterckx, Jolande
Sap and, since 17 January 2019, Neil
Hartley. The Committee, which is chaired by
Allard Castelein, 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.

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 90 to 107 contains particulars of
Directors’ remuneration and their interests in
the Company’s shares.

Nomination Committee
The Nomination Committee met four times
in the year and is formally constituted with
written terms of reference which are available
on the Group’s website. The Committee is
chaired by Colin Matthews and is comprised

solely of non-executive directors: Jacques
Petry, Marina Wyatt, Allard Castelein, Luc
Sterckx, Jolande Sap and, since 17 January
2019, Neil Hartley.

The Committee 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.

The Nomination Committee Report on pages
88 to 89 sets out the role of the Committee
in further detail 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
108 to 110.

APPOINTMENTS TO
THE BOARD CONTINUE
TO BE BASED ON
THE DIVERSITY OF
CONTRIBUTION

MEETING ATTENDANCE

Director

Marina Wyatt (Chair)

Allard Castelein

Jacques Petry

Luc Sterckx

Neil Hartley

Audit
Committee Meetings

Director

Remuneration
Committee Meetings

Director

Nomination
Committee Meetings

3 (3)

1 (1)

Allard Castelein (Chair)

Colin Matthews

Jacques Petry

Marina Wyatt

Luc Sterckx

Jolande Sap

Neil Hartley

4 (4)

3 (4)

4 (4)

2 (2)

Colin Matthews (Chair)

Allard Castelein

Jacques Petry

Luc Sterckx

Marina Wyatt

Jolande Sap

Neil Hartley

4 (4)

3 (4)

4 (4)

0 (0)

Bracketed figures indicate maximum potential attendance of each director.
Neil Hartley was appointed to the Board and the Nomination, Remuneration and Audit Committees on 17 January 2019.
Jacques Petry was absent from the Remuneration and Nomination Committee Meetings held on 4 November 2018 due to prior diary commitments. Both meetings were unscheduled and held at
short notice.

083
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
AUDIT COMMITTEE REPORT

Marina Wyatt
Chair of the Audit
Committee

AUDIT COMMITTEE REPORT

On behalf of the Board I am pleased to
present the Audit Committee Report for
the year ended 31 March 2019.

THE ROLE OF THE COMMITTEE:

COMMITTEE CHAIR:

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 systems and internal controls and any other matters referred to it by the
Board. This covers:

Marina Wyatt

` Monitoring the integrity of the financial statements including annual and half yearly

reports

COMMITTEE MEMBERS:

Allard Castelein, Jacques Petry,
Luc Sterckx, Neil Hartley
(appointed 17 January 2019)

` 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

TERMS OF REFERENCE:

internal control and risk management systems

` Keeping under review the adequacy and effectiveness of internal financial controls and

www.renewiplc.com/audit

` 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

084
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
AUDIT COMMITTEE REPORT

At their meeting in May 2018, the Committee
considered corporate governance
compliance, taxation and the 2018 financial
statements. The November 2018 meeting
was concerned primarily with the interim
results, review of the non-trading and
exceptional items policy, the assessment of
the new leasing accounting standard and the
annual audit process effectiveness review.
The February 2019 meeting considered
Group Risk Management Strategy and Policy,
preparation of the 2019 financial statements
and all other year end accounting matters
and treatments and the external audit plan.

In March 2019 the Company received a letter
from the Financial Reporting Council raising
a number of points on the 2018 financial
statements. In response to this these 2019
accounts have included certain additional
disclosures in the following principal areas;
provisions, estimates and judgements and
alternative performance measures. As stated
in the Financial Reporting Council’s letter,
there are inherent limitations of such a
desktop review.

During the year the Committee was again
responsible for reviewing 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 process and the selection of
principal risks to be subject to stress testing
and scenario modelling. The Group’s Viability
Statement on page 77 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 2022.

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. There was 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
reporting standards and relevant financial
and governance reporting requirements. The
significant accounting issues considered by
the Committee during the year were:

` Onerous contracts in UK Municipal.
Given the long-term nature of these
contracts, these provisions are
judgemental. Following on from the

significant provisions reflected in March
2018, further reviews of expected future
cash flows and assumptions on a contract
by contract basis have taken place and
discussed with management. Following
this process, the Committee has concluded
that an appropriate level of provisions has
been reflected in the balance sheet as at
31 March 2019.

` 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.

` 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 annual impairment
review papers prepared by management
and concluded that there is sufficient
headroom across the cash generating
units and that no goodwill impairments
are necessary. The goodwill note in the
financial statements includes appropriate
disclosures for any reasonably possible
changes in assumptions. In addition,
the Committee has concluded that all
necessary impairments for property, plant
and equipment and other intangibles
associated with UK Municipal contracts
and the Monostreams division have been
reflected.

` Lease accounting and the impact of the

new leasing standard from 1 April 2019. A
detailed work programme for the assessment
of the impact of IFRS 16 was performed
during the year. The Committee has reviewed
the papers and discussed with management
the application of the modified retrospective
approach along with the non-restatement of
comparative amounts. It was concluded that
certain long-term leases should be measured
as if the new rules had always existed and for
all others the assets were measured at the
amount of the lease liability on adoption. As
set out in section 1 of the financial statements
this will have a significant impact on the

085
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

balance sheet with right-of-use assets of
€171m being brought onto the balance sheet
along with a lease liability of €177m.

` 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 annual review of provisions
has confirmed that the assumptions
taken including the period of liability and
discount rates were acceptable and the
closing balances were appropriate.

` Accounting for various tax-related

matters including the level of provisions.
The most significant judgements for tax
related to the recognition of deferred
tax assets and the impact of recently
communicated corporation tax changes in
the Netherlands. The Committee received
verbal and written reports from senior
management and the external auditors
and the balances recognised at March
2019 were considered appropriate. The
impact of the enacted corporation tax
rates in the Netherlands which reduced
the carrying value of deferred tax liabilities
and the recognition of a significant
proportion of losses in the legacy VGG
fiscal unity losses given more certainty over
utilisation were both considered to be of a
sufficient size that they should be recorded
as exceptional rather than underlying
tax credits.

` Assets held for sale and discontinued

operations. The Committee has discussed
with management the appropriateness of
determining that the sale processes for the
Canada Municipal and Reym businesses
are sufficiently advanced and that the
criteria as set out in IFRS 5 have been met.
It was also concluded that the Canada
Municipal business meets the definition of
a discontinued operation. Given the asset
held for sale status, the carrying value of
the disposal groups has been assessed,
which resulted in a loss on remeasurement.

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.

GOVERNANCE
AUDIT COMMITTEE REPORT CONTINUED

Fair, balanced and understandable
The Committee has assisted the Board in
its 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 its meeting in May
2019, 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.
A competitive tender process for the external
audit is scheduled to start in the coming
months with a new appointment concluded
by March 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 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, and other partners
and senior staff members every seven or
ten years. Accordingly, the Audit Committee
confirms that the Company is in compliance
with the provisions of the Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014.

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 €35,000 of non-audit services
were provided by PwC, which is comparable
with €60,000 in the prior year. The total audit
fees, as disclosed in note 3.2 of the financial
statements, amounted to €1.8m (2018: €1.5m).

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
2018/19 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 have also been provided to the
Group by the audit firms KPMG, Deloitte
and EY.

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

Internal audit
The internal audit function is an independent
and objective function which aims to
improve Renewi’s overall control framework
and evaluate and improve the design and
effectiveness of control processes. Reviews
on financial processes and cycles are carried
out and investigation activities are performed
on control failures to identify root cause and
provide recommendations for resolution and
prevention. The Committee annually reviews
the internal audit charter and approves any
changes, defining the role and mandate of

086
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

internal audit. The Committee monitors and
reviews the effectiveness of its work and
approves its annual plan.

Consistent with previous years, internal audit
services from suitably qualified external
providers were also engaged during the year.
KPMG performed a limited control review
which covered the integration process in
Belgium. EY was engaged for several site
reviews within our Commercial Division in
the Netherlands and has conducted a data
analysis on manual journal entries across
all Divisions in scope at the shared service
centre in Belgium.

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 111 to 120.

Risk management
The Group risk management framework,
major risks and the steps taken to manage
these risks are outlined on pages 68 to 76.

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 76. 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
and risk management frameworks which
contribute towards continuous monitoring
are as follows:

` A defined schedule of matters for decision

by the Board;

` Group manuals and guidance setting
out financial and accounting policies,
minimum internal financial control
standards and the delegation of
authority matrix over items such as
capital expenditure, pricing strategy
and contract authorisation;

` A comprehensive planning and budgeting

exercise. Performance is measured
monthly against plan, prior year and latest
forecast 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;

GOVERNANCE
AUDIT COMMITTEE REPORT CONTINUED

` 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 are
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 Risk

Committee meetings each year, to consider
all key aspects of the risk management and
internal control systems; and

` 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 receives regular reports
from the Group Tax Manager on the
Group’s tax policy, tax management
and compliance.

Anti-bribery and corruption
2018/19 has seen the implementation
of a new Renewi Code of Conduct and
Reporting and Investigation Protocol,
harmonising the legacy whistle-blowing
facilities and providing 24/7 confidential
reporting.

Marina Wyatt
Chair of the Audit Committee
23 May 2019

` 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
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;

087
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
NOMINATION COMMITTEE REPORT

Colin Matthews
Chairman of the
Nomination Committee

NOMINATION COMMITTEE REPORT

On behalf of the Board, I am pleased to
present the Nomination Committee Report
for the year ended 31 March 2019

COMMITTEE CHAIRMAN:

Colin Matthews

COMMITTEE MEMBERS:

Allard Castelein, Jacques Petry,
Marina Wyatt, Luc Sterckx,
Jolande Sap, Neil Hartley
(appointed 17 January 2019)

TERMS OF REFERENCE:

www.renewiplc.com/nomco

THE ROLE OF THE COMMITTEE IS TO:

` Review the structure, size and

composition (including the skills,
knowledge, experience and
diversity) of the Board and make
recommendations to the Board
with regard to any changes

` Give full consideration to succession
planning for directors and other
senior executives and in particular for
the key roles of Chairman and Chief
Executive Officer

` Keep under review the leadership
needs of the Company, both
executive and non-executive, with
a view to ensuring the continued
ability of the organisation to compete
effectively in the marketplace

` Identify and nominate for the

approval of the Board, candidates
to fill Board vacancies as and when
they arise

` Recommend the re-election by
shareholders of directors under
the annual re-election provisions,
having due regard to their
performance and contribution in
light of the knowledge, skills and
experience required and the need for
progressive refreshing of the Board

` Review the results of the annual
Board performance evaluation
process

088
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

The Committee met four times during the
year and details of members’ attendance are
provided in the Corporate Governance section
on page 83. The Committee was particularly
focused on CEO succession, following the
announcement in November that Peter Dilnot
would be stepping down from the Board at
the end of March 2019. During the year the
Committee has also appointed an additional
non-executive director.

SUCCESSION PLANNING

The Committee worked closely with
independent search consultants Heidrick
& Struggles during the year to refresh
non-executive director representation
on the Board.

A search was undertaken based on a prepared
profile of the necessary and requisite skills
and experience to supplement those already
covered by existing Board members. The
process involved shortlisting of candidates
followed by interviews by the Chairman, other
Committee members and the Chief Executive
Officer before a final recommendation was
made by the Committee to the Board.

Neil Hartley’s appointment as a non-executive
director was announced on 17 January
2019. In his role as Managing Director of
First Reserve, a leading global private equity
investment firm exclusively focused on the
energy sector, Neil has gained significant
experience and knowledge relevant to Renewi.
Neil also has extensive experience investing
within the Benelux region and is a valuable
addition to the Board.

Following the recommendation of the
Committee, Otto de Bont, previously
Managing Director of Renewi Netherlands
Commercial Waste Division, succeeded Peter
Dilnot as Chief Executive Officer in April 2019.

GOVERNANCE
NOMINATION COMMITTEE REPORT

Otto joined Renewi in May 2017 to lead the
enlarged Netherlands Commercial Waste
Division, following the merger between
Shanks Group and Van Gansewinkel Groep.
Otto has led the integration of the two
businesses and has played a central role in
building Renewi’s presence and reputation in
the Benelux region.

Biographies of all directors are set out
on pages 78 and 79 of the Corporate
Governance section and are available on
the Company website.

Any new director appointed to the Board is
subject to election by shareholders at the
first opportunity after their appointment. All
directors are required under the Company’s
Articles of Association to stand for re-election
at each AGM.

BOARD TENURE

<2 YEARS
2-4 YEARS
>4 YEARS

4
2
3

BACKGROUND/EXPERIENCE OF
NON-EXECUTIVE DIRECTORS

ENERGY/CHEMICALS
POLITICS/SOCIO-ECONOMICS
TELECOMS/MARKETING
TRANSPORT
WATER/WASTE
PRIVATE EQUITY/INVESTMENT

2
1
1
1
1
1

In February 2019 Marina Wyatt was
appointed as the Chief Financial Officer
for the Associated British Ports Group. The
Committee believes that the additional role
will bring wider experience to the Board
and not have an impact on the time she
can dedicate to her role at Renewi.

BOARD EVALUATION

2018/19 EVALUATION

The externally facilitated Board evaluation
last year identified a number of strengths in
the Renewi Board including:

` Constructive relationships and a collegiate

atmosphere at the Board;

` Engagement and skill of the Chairman in

leading the Board;

` Complementary experience and skills of

the non-executive directors; and

` Excellent Board support from the

Company Secretary.

Key findings from the 2017/18 review and
subsequent actions are detailed below.

1. A refocused strategy process positioning
Renewi for long-term success and value
creation beyond the merger benefits.

As an external evaluation was carried out in
2017/18 the Board agreed that the 2018/19
review would be carried out through a
structured questionnaire survey.

A number of themes stood out from the
evaluations, building on from the previous
years’ refocused strategic prioritisation.
These included a closer involvement with
technological developments and emerging
themes in the recycling and waste-to-product
markets and circular economy.

Having considered the results of the
evaluation the Board agreed specific 2019/20
action plans across four main areas.

1. Continue the strategy review process with
a greater emphasis on technology and
emerging trends.

2. Refresh the risk management processes.

Action: A new strategy focus and

3. Bring a broader range of employee and

additional divisional strategic reviews have
been held supported by the recruitment of
a new Strategy and Business Director.

2. Supplementary corporate support bandwidth

to support the Executive Directors.

Action: In September 2018 Bas van Ginkel
was promoted to the Executive Committee
as Strategy and Business Development
Director. A permanent Human Resources
Director, Helen Richardson, was appointed
in April 2019.

3. A review of Board Committee structure

and membership.

Action: A dedicated strategy review

meeting was held which included a review
of the committees and the meetings held.
Further review will take place in light of
Director changes.

4. A number of added-value corporate

governance enhancement/improvement
actions.

cultural issues to the Board. Recognising
the UK Corporate Governance Code 2018
recommendations regarding workforce
engagement, Renewi has already
designated a non-executive director to
facilitate interaction with the Board.

4. Schedule more time for talent review and

succession planning discussions.

Following the review, the Board concluded
that, along with its Committees, it continued
to operate effectively during the year and
that each director continued to demonstrate
commitment to their role and perform
effectively. As part of the review, the Senior
Independent Director also reviewed the
Chairman’s performance with the other
directors. The Board was therefore able to
recommend the election and re-election
of all those directors standing at the
forthcoming AGM.

Action: Greater exposure for senior
managers to present at Board and
Committee meetings, to allow more
in-depth questioning from the Board.

Colin Matthews
Chairman of the Nomination Committee
23 May 2019

089
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT

Allard Castelein
Chairman of the
Remuneration Committee

DIRECTORS’
REMUNERATION REPORT

CONTENTS

Section 1: The Annual Statement
Summarises performance and reward in
the year ended 31 March 2019 and how the
Remuneration Policy will be operated for the
year ending 31 March 2020.

Section 2: Remuneration Policy
Details the Remuneration Policy which was
approved by shareholders at the 2017 AGM
and which continues to be applied.

Section 3: Annual Report on
Remuneration
Details how the Remuneration Policy was
implemented during the year ended 31 March
2019 and how the Committee intends the Policy
to apply for the year ending 31 March 2020.

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 Institutional
Shareholder Services (ISS) UK and
Ireland Proxy Voting Guidelines, and has
been prepared in accordance with the
provisions of the Companies Act 2006 (the
Act), 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 119 and those aspects
of the Report which have been subject to
audit are clearly marked.

COMMITTEE CHAIRMAN:

Allard Castelein

COMMITTEE MEMBERS:

Colin Matthews, Jacques Petry, Jolande Sap,
Luc Sterckx, Marina Wyatt, Neil Hartley
(from 17 January 2019)

TERMS OF REFERENCE:

www.renewiplc.com/remco

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 the Chairman,
each of the Executive Directors,
the Company Secretary and
below Board members of the
Executive Team

` Determine the terms on which LTIP
and Sharesave awards are made to
employees

` Determine the policy for and scope
of pension arrangements for the
Executive Directors, Company
Secretary and below Board
members of the Executive Team

090
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT

The Remuneration Committee seeks
to operate a Remuneration Policy that
promotes the long-term success of the
Group by aligning the financial interests
of directors and senior executives with
those of shareholders

1. ANNUAL STATEMENT

On behalf of the Board, I am pleased to
present the Directors’ Remuneration Report
for the year ended 31 March 2019.

2018/19 PERFORMANCE, DECISIONS
AND REWARD OUTCOMES

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.

WORK OF THE COMMITTEE
DURING THE YEAR

The Committee met four times during
2018/19 and details of members’ attendance
at meetings are provided in the Corporate
Governance section on page 83.

The main Committee activities during the
year (full details of which are set out in the
relevant sections of this report) included:

` Agreeing the performance against the

targets and payout for the 2017/18 annual
bonus awards;

` Setting the performance targets for the

2018/19 annual bonus;

` Agreeing the award levels and performance

targets for the 2018 LTIP awards;

` Agreeing Executive Directors’ base salary
increases and the Chairman’s fee from
1 April 2019;

` Agreeing the terms in respect of Peter
Dilnot’s departure and Otto de Bont’s
appointment; and

` Considering the regulatory/disclosure

changes during 2018/19.

Performance
The variable elements of Executive Directors’
remuneration in respect of the year ended
31 March 2019 have been particularly
impacted by profit before tax and share
price performance during the year. As
detailed below and in the Annual Report on
Remuneration, the share price performance
measure relating to the 2016 Long Term
Incentive Plan has significantly reduced the
vesting percentage outcome.

2018/19 Annual bonus
Profit targets were not met, although strong
underlying free cash flow performance did
contribute to the financial target element
of the bonus measures. Personal objectives
were only partially met due in part to
Municipal and Hazardous Waste Division
challenges and Health & Safety performance.
This resulted in potential bonus awards
of 60% and 58.5% of the maximum for the
Chief Executive Officer and Chief Financial
Officer respectively. However, in light of the
shareholder experience over the financial
year, the Committee has determined that no
annual bonus will be payable to the Executive
Directors for 2018/19. Further details are set
out on page 101 and 102.

091
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

2016 LTIP vesting in 2019
The Long Term Incentive Plan (LTIP) granted
in 2016 was designed to incentivise and
reward the achievement of financial (EPS and
ROCE) and share price performance over the
three year performance period to 31 March
2019. Although the threshold ROCE and share
price targets were not met, resulting in both
of these parts of the LTIP award lapsing, the
threshold EPS target was exceeded and as a
result, will trigger partial vesting of the 2016
LTIP awards. This will result in 23% of the LTIP
awards vesting. Further details are set out on
page 103.

Use of Remuneration Committee
discretion
As detailed above and overleaf, the
Remuneration Committee has used its
discretion not to increase the base salary
of Directors, to reduce the 2018/19 annual
bonus to zero and to reduce 2019 LTIP
award levels. There were no other instances
of Remuneration Committee discretion in
respect of 2018/19.

GOVERNANCE
REMUNERATION REPORT CONTINUED

Implementing the Remuneration
Policy for 2019/20
The Remuneration Committee intends
to operate the Remuneration Policy for
Executive Directors for 2019/20 as follows:

` Following the Chief Executive Officer’s

appointment, his next salary review will
be on 1 April 2020. No salary increase was
awarded to the Chief Financial Officer;

` Annual bonus provision will remain at

150% of salary and targets will be based on
profit and cash related measures as well
as personal objectives. 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, 50% vesting after
three years, 25% vesting after four years
and 25% vesting after five years; and

` The appointment of a designated Non-

Executive Director to facilitate workforce
engagement; and

` The Committee’s terms of reference have
been updated to reflect the expanded
scope required by the new Code - i.e. (i) the
responsibility for setting remuneration for
the Chairman, Executive Directors, below
Board members of the executive team and
the Company Secretary, and (ii) taking
account of Group-wide remuneration and
policies when setting executive pay.

While the next review of our Remuneration
Policy in 2020 (i.e. at the end of our current
three-year policy) will be framed against the
six factors listed in the new Code, the current
approach is considered by the Committee to
be well positioned against them:

` Reflecting the disappointing share

` Clarity – our policy is well understood

price performance during 2018/19, the
Committee agreed to further reduce the
2019 LTIP awards granted to Executive
Directors. The Chief Executive Officer’s LTIP
award will be reduced to 100% of salary,
noting that Otto de Bont is new in role, and
the Chief Financial Officer’s award will be
reduced to circa 50% of salary based on
the same number of shares as granted last
year. Targets will continue to measure EPS,
share price and ROCE. A two-year post-
vesting holding period applies to awards
granted to Executive Directors.

by our senior team and employees more
generally and has been clearly articulated
to our shareholders;

` Simplicity – the Committee is mindful
of the need to avoid overly complex
remuneration structures which can be
misunderstood and deliver unintended
outcomes. As such, our executive
remuneration policies and practices are
as simple to communicate and operate
as possible, while ensuring that they are
aligned to our strategy;

APPROACH TO REGULATORY CHANGES

` Risk – our Remuneration Policy is based

` Proportionality – there is a clear link
between individual awards, delivery of
strategy and our long-term performance.
In addition, the structure of our short and
long-term incentives, together with the
structure of the Executive Directors’ service
contracts, ensures that poor performance
is not rewarded; and

` Alignment to culture – Renewi’s focus

on making valuable products from waste,
meeting the growing need to deal with
waste sustainably and cost-effectively, is
fully supported through the metrics in both
the annual bonus and long-term incentive
which measure how we perform against
main KPIs that underpin the delivery of
our strategy.

In addition, we have included some of the
new disclosure requirements prescribed
by recent legislation, e.g. how share price
appreciation impacts executive pay (both
in the ‘single figure table’ and the ‘scenario
charts’ respectively). The Committee is also
aware that Renewi will be required to disclose
the ratio of Chief Executive pay to employee
pay going forward in its report relating to the
year ending 31 March 2020.

Looking forward
At the 2018 AGM, the Annual Statement and
Annual Report on Remuneration received
the support of more than 99% of votes cast.
The Committee thanks shareholders for
their continued support and asks that they
similarly support the 2019 AGM resolution.

Allard Castelein
Chairman of the Remuneration Committee
23 May 2019

The Committee has considered the various
changes to the regulatory environment
as they relate to executive remuneration,
particularly the new UK Corporate
Governance Code (the “new Code”) and
new legislation that will require companies
to make additional pay disclosures in this
report. Notwithstanding that these are
not technically applicable to Renewi until
the financial year ending 31 March 2020,
the Committee has adopted a number
of changes early. Preparatory steps have
already been taken in respect of:

` The operation of the annual bonus plan
and the LTIPs have been reviewed to
ensure that the Committee has necessary
discretion to override formulaic outcomes
(as required by the new Code). The
malus and clawback provisions in the
annual bonus plan and LTIP have also
been reviewed to ensure they reflect
best practice;

on: (i) a combination of both short
and long term incentive plans based
on financial, non-financial and share-
price-linked targets; (ii) a combination
of cash and equity (both in terms of
deferred bonus and LTIP awards); and
(iii) a number of shareholder protections
(i.e. bonus deferral, shareholding
guidelines, malus/clawback provisions)
have been designed to reduce the risk of
inappropriate risk-taking;

` Predictability – our incentive plans are

subject to individual caps, with our share
plans also subject to market standard
dilution limits. The scenario charts in
the Remuneration Policy illustrate how
the rewards potentially receivable by
our Executive Directors vary based on
performance and share price growth;

092
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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
This Directors’ Remuneration Policy Report
was put to a binding shareholder vote at the
AGM on 13 July 2017 and received 96.9%
support. The Policy applies from the date of
approval for a maximum of three years.

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.

The CFO currently receives an allowance of 20% and the
new CEO an allowance of 12.5%.

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).

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.

093
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

ANNUAL BONUS: To motivate senior executives to maximise short-term performance and help drive initiatives that support
long-term value creation

OPERATION

OPPORTUNITY

PERFORMANCE METRICS

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.

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.

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 that 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
cash flow 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

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.

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).

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.

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.

Threshold performance will result in vesting
of no more than 25% of maximum under
each element.

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.

Two year post-vesting holding periods apply to LTIP
awards granted to Executive Directors since 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 are also subject to clawback, i.e. recovery
of vested awards for material financial misstatement
or conduct justifying summary dismissal.

094
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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 were increased at 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.

Following the publication of the new UK
Corporate Governance Code, the Committee
has formalised its post cessation shareholding
policy for Executive Directors as follows:

` Unvested deferred annual bonus and LTIP
awards will be treated in line with the good
leaver/bad leaver provisions explained in
the Remuneration Policy;

` Any LTIP awards which vested pre-

cessation but which are still subject to
the two-year holding period will need to
be retained by the individual (either on a
post-tax basis or as unexercised awards),
post cessation, until the relevant two-year
holding period has expired; and

` No restrictions will apply in respect of own
shares held, irrespective of whether those
shares are held as part of the shareholding
guidelines or not.

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 93 and 94. The maximum limits for
variable pay (excluding buy-outs) will be as for
existing Executive Directors.

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 cash related
targets 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).

095
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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.

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 98. 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.

PAY SCENARIO CHARTS FOR 2019/20

Chief Executive Officer

Maximum with
share price growth

Maximum

Target

24%

28%

43%

Minimum

100%

30%

36%

30%

16%

36%

44%

13%

Chief Financial Officer

Maximum with
share price growth

28%

33%

26%

13%

Maximum

Target

31%

45%

38%

31%

44%

11%

Minimum

100%

£’000

2,014

1,707

1,124

480

£’000

1,604

1,392

970

442

£’000

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

Fixed pay

Annual Bonus

LTIP

Share price growth

PAY SCENARIO CHARTS

The above 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 four different performance
scenarios: ‘Minimum’, ‘Target’, ‘Maximum’ and
‘Maximum with share price growth’.

Potential reward opportunities are based
on the Remuneration Policy, applied to
basic salaries as at 1 April 2019. Note that
the projected values exclude the impact of
any 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 ‘Maximum with share price growth’
scenario is as per Maximum but with a 50%
share price growth assumption.

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

Otto de Bont

Date of service
contract

27 March 2019

Toby Woolrych

27 August 2012

The ‘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 payout of all incentives
based on the normal bonus maximum and
LTIP grant policy.

096
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

The Chief Executive Officer, Otto de Bont,
appointed on 1 April 2019 is based in the
Netherlands and has been engaged on a
Dutch contract. Dutch employment law
constrains the Company’s ability to adhere to
our Directors’ Remuneration Policy approved
by shareholders at the 2017 AGM. While
we retain the one-year notice provision to
be given by the Company, Dutch law limits
the maximum notice the Chief Executive
Officer can be required to provide to half
that amount, i.e. six months. Although in
practice “Payment in lieu of notice” upon
termination remains possible (reflecting
the options under our Policy regarding
payment in instalments and mitigation),
technically this is neither a usual contract
term nor an enforceable construct under
Dutch employment law. The Committee

will next review and consult formally on its
Remuneration Policy ahead of putting it to
shareholders at our AGM in 2020 with suitable
adjustments to avoid such inconsistencies
going forward.

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
below 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.

SCENARIO

TIMING OF VESTING

TREATMENT OF AWARDS

TREATMENT OF AWARDS ON EXIT

Annual Cash Bonds
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.

097
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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 below. 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

Colin Matthews (Chairman)

Allard Castelein

Jacques Petry

Jolande Sap

Luc Sterckx

Marina Wyatt

Neil Hartley

Initial agreement date

7 March 2016

10 November 2016

30 September 2010

13 March 2018

3 August 2017

2 April 2013

17 January 2019

Renewal date

1 August 2019

Non-Executive Directors’ fees are capped in the Company’s Articles of Association at £750,000.

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.

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 receive
benefits (including travel and office
support, together with any associated tax
liability that may arise).

None.

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.

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. During the year Peter Dilnot received an annual fee of £49,250 from Rotork plc, a FTSE 250 global
engineering business, in his capacity as a Non-Executive Director.

098
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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.

In compliance with the new UK Corporate Governance Code, the Board has designated non-executive director Jolande Sap with the
responsibility of assisting the Board with workforce engagement and reporting.

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 Remuneration Policy are provided below:

ANNUAL REPORT ON REMUNERATION
2018 AGM

REMUNERATION POLICY
2017 AGM

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

584,715,450

4,034,699

588,750,149

321,763

99.31%

0.69%

100%

–

547,859,771

17,407,656

565,267,427

106,316,482

96.92%

3.08%

100%

–

3. ANNUAL REPORT ON REMUNERATION

The following section provides details of how our Remuneration Policy will be implemented during the year ending 31 March 2020 and how it
was implemented during the financial year ended 31 March 2019.

IMPLEMENTATION OF REMUNERATION POLICY FOR 2019/20

Basic salary
Current salary levels are as follows:

Otto de Bont

Toby Woolrych

1 Equivalent to £409,015 at an exchange rate of €1 : £0.895

1 April 2018

n/a

£351,900

1 April 2019

€457,0001

£351,900

% Increase

n/a

Following the Chief Executive Officer’s
appointment, his next salary review will be
on 1 April 2020, as will be that of the Chief
Financial Officer. No salary increase was
awarded to the Chief Financial Officer from
1 April 2019.

Pension
The Chief Financial Officer will continue to
receive a cash supplement in lieu of pension
of 20% of salary. Following his appointment
on 1 April 2019, the new Chief Executive Officer

will receive a cash supplement of 12.5% of base
salary in lieu of Company pension scheme
contributions, aligned with the average pension
offered across Renewi’s Netherlands workforce.

Annual bonus
The maximum annual bonus opportunity for
Executive Directors in 2019/20 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.

75% of the bonus will be based on the
achievement of profit and cash related
financial targets. 25% will be based on
personal objectives. Proposed target levels
have been set to be challenging relative to the
2019/20 business plan. The specific targets
are currently deemed to be commercially
sensitive, however they will be disclosed
retrospectively in the 2019/20 Annual Report.

099
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

LTIP
Reflecting the disappointing share price performance during 2018/19, the Committee agreed to further reduce the 2019 LTIP awards granted to
Executive Directors. The Chief Executive Officer’s LTIP award will be reduced to 100% of salary, noting that Otto de Bont is new in role, and the
Chief Financial Officer’s award will be reduced to circa 50% of salary based on the same number of shares as granted last year.

The performance conditions will continue to be based on EPS, share price growth and ROCE weighted 50%, 25% and 25% respectively.
Further details on the measures, vesting schedule and targets, including details of an increase to the share price growth target, can be found
on page 103. 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. A two-year post-vesting holding period will apply.

Chairman and Non-Executive Director fees
Current Chairman and Non-Executive Director fees 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 from
1 April 2018

Basic fee at
1 April 2019

£153,000

£48,960

£8,670

£6,120

£153,000

£48,960

£8,670

£6,120

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 2019 and
the prior year.

Basic salary

Taxable benefits1

Pension2

Single-year variable3

Multiple-year variable4,5

Other6

Total

PETER DILNOT

TOBY WOOLRYCH

2017/18
£000

2018/19
£000

2017/18
£000

500

125

660

160

1,481

510

128

–

674

345

461

985

2018/19
£000

352

481

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 Based on the estimated value of the LTIP award granted to Toby Woolrych in 2016 (Peter Dilnot’s LTIP awards lapsed at cessation), assuming 23% vesting and based on a three month average

share price to 31 March 2019 of 27.26 pence.

5 The impact of share price movements on the vesting of the LTIP awards granted to Toby Woolrych, based on the average three-month share price to 31 March 2019 (27.26p, the 93.5p share price

at grant) and ignoring dividend equivalents, is as follows:

Value of awards expected to vest (504,000 shares x 23% x 27.26p)
Face value of awards when granted (504,000 shares x 23% vesting x 93.5p)
Impact of share price movements on vesting values

6 Includes Sharesave awards, valued based on embedded gain at grant, life assurance and income protection

£31,600
£108,385
-£76,785

100
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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 2019
and the prior year.

Colin Matthews (Chairman)

Allard Castelein1

Jacques Petry2

Luc Sterckx3

Marina Wyatt4

Jolande Sap5

Neil Hartley6

Stephen Riley7

Eric van Amerongen7

BASE FEE

ADDITIONAL FEES

TOTAL

2017/18
£000

150

2018/19
£000

153

–

2017/18
£000

2018/19
£000

–

2017/18
£000

150

2018/19
£000

153

–

1 Allard Castelein’s additional fee is in respect of his role as the Chair of the Remuneration Committee.
2 Jacques Petry’s additional fee is in respect of his role as the Senior Independent Director.
3 Luc Sterckx was appointed to the Board on 1 September 2017.
4 Marina Wyatt’s additional fee is in respect of her role as the Chair of the Audit Committee.
5 Jolande Sap was appointed to the Board on 1 April 2018.
6 Neil Hartley was appointed to the Board on 17 January 2019.
7 Both Stephen Riley and Eric van Amerongen retired from the Board on 13 July 2017.

INCENTIVE OUTCOMES FOR THE YEAR ENDED 31 MARCH 2019

Performance-related annual bonus in respect of 2018/19 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 potential outcomes for the Executive Directors’ 2018/19 annual bonus are shown below.

Measure

Underlying profit before tax

Underlying free cash flow

Weighting

2018/19
final outcome

50%

25%

€63.6m

€30.0m

Threshold

€63.8m

€12.0m

Potential
bonus payout
(% of max)

25%

Max

€87.7m

€12.0m

Both the underlying profit before tax and underlying free cash flow are set based on the Group’s expected budget outcome for the year in
Euros as the Group’s presentational currency, and for all non-Euro denominated entities values are converted to Euros at the budgeted rates
of exchange. Actual performance is also measured at this constant exchange rate.

101
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

Personal element outcomes
The personal performance measures were based on individual objectives, as detailed below.

Peter Dilnot

1. Safety culture improvement

2. Drive successful post-merger integration

3. Ensure Municipal division recovery and ATM soil production

4. Create post-merger growth strategy

5. Leadership recruitment and development

Toby Woolrych

1. Safety culture improvement

2. Drive successful post-merger integration

3. Ensure Municipal Division recovery and ATM soil production

4. Deliver finance integration plan

5. Deliver enhanced and integrated risk and control environment

6. Deliver Treasury programme

7. Enhanced financial reporting capability

Committee’s
assessment
of performance

Potential
bonus payout
(% of max)

Target

25%

15%

1.5%

14%

60%

56%

Overall bonus outcomes

Executive Director

Peter Dilnot

Toby Woolrych

Financial element
bonus outcome
(% of salary)

Personal element
bonus outcome
(% of salary)

Overall potential
outcome
(% of salary/£)

Actual bonus
outcome
(% of salary/£)

37.5%

22.5%

21.0%

60.0%/£306,000

58.5%/£205,861

0%/£nil

2018/19 Annual bonus
Profit targets were not met, although strong underlying free cash flow performance did contribute to the financial target element of the bonus
measures. Personal objectives were only partially met due in part to Municipal and Hazardous Waste Division challenges and Health & Safety
performance. This resulted in potential bonus awards of 60% and 58.5% of the maximum for the Chief Executive Officer and Chief Financial
Officer respectively. However, in light of the shareholder experience over the financial year, the Committee has determined that no annual
bonus will be payable to the Executive Directors for 2018/19.

102
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

2016 LTIP vesting in 2019
Peter Dilnot and Toby Woolrych were granted LTIP awards in 2016 over shares equal to the value of circa 150% and 120% of salary respectively
which would vest in 2019 based on three-year performance to 31 March 2019. 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

EPS CAGR

Weighting

50%

Targets

Actual
performance

% of this part of award
(% of maximum)

Share price CAGR

Improvement in ROCE

Total vesting

25%

0% vesting below 9% p.a.

0% vesting below +0.5%

Share price growth was calculated using three-month average share prices immediately prior to the start and end of the performance period.

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

<9%

<+0.5%

45%
(23%)

23%

Based on the above, the vesting of the 2016 LTIP for the Executive Directors on 23 November 2019 (noting that Peter Dilnot’s LTIP awards
lapsed on cessation of employment on 31 March 2019) will be:

Executive Director

Toby Woolrych

Awards
granted

504,000

Shares vesting based on
performance
(23% of maximum)

Dividend
equivalent shares
(estimated)

115,920

12,117

Total shares
expected
to vest

128,037

Estimated value
at vesting
(£000)1

34,902

1. Based on the average three-month share price to 31 March 2019 of 27.26 pence.

SHARE AWARDS GRANTED IN 2018/19 (AUDITED)

Long Term Incentive Plans
The Executive Directors were granted awards under the Renewi plc 2011 Long Term Incentive Plan on 1 June 2018 as follows:

Executive Director

Peter Dilnot1

Toby Woolrych

Date of grant

Base salary

Basis of award

Share price2

Face value

1 June 2018

£510,000

112.5% of salary

£351,900

90% of salary

76.13p

£573,749

£316,709

1. Peter Dilnot’s outstanding LTIPs lapsed upon his resignation on 31 March 2019.
2. Based on the three-day average dealing price prior to the grant date.

Details of the performance targets are as follows:

Number of
shares

753,645

416,012

Targets

Measure

EPS CAGR (50%)

Share price CAGR (25%)

Improvement in ROCE (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 the share price target for LTIP awards granted in 2019, the maximum growth target will be increased from 17% to 25% p.a. As such,
25% of this part of awards will vest for share price growth of 9% p.a. increasing to 100% vesting of this part of awards for share price growth
of 25% p.a.

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 and will be subject to a further two-year holding period.

103
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

DEFERRED ANNUAL BONUS (DAB)

Peter Dilnot and Toby Woolrych were granted awards under the Renewi plc Deferred Annual Bonus Plan on 1 June 2018 as follows:

Executive Director

Peter Dilnot1

Toby Woolrych

Date of grant

1 June 2018

2017/18
Annual Bonus

Basis of award

Share price2

Face value

£660,000

£460,575

1/3 of bonus

76.13p

£220,000

£153,525

Number of
shares

288,979

201,661

1. Peter Dilnot’s outstanding DABs lapsed upon his resignation on 31 March 2019.
2. Based on the three-day average dealing price prior to the grant date.
50% of the awards will vest on the third anniversary of grant, 25% of awards will vest after four years and 25% will vest after five years, subject to continued employment.

EXIT PAYMENTS AND PAYMENTS MADE TO PAST DIRECTORS MADE IN THE YEAR (AUDITED)

Peter Dilnot stood down as Chief Executive Officer and from the Board on 31 March 2019. Details of his exit arrangements were as follows:

` Salary and contractual benefits, including payment in lieu of pension and car allowance were paid up to 31 March 2019 and in respect of

four additional days, in lieu of untaken holiday entitlement, equating to £10,201.

` All outstanding/unvested awards under the Company’s Long Term Incentive Plan, Deferred Annual Bonus Plan and Sharesave Scheme

lapsed on 31 March 2019.

` No annual bonus for 2018/19 was payable.

INTERNAL APPOINTMENT AND PRIOR CONTRACTUAL COMMITMENTS

Prior to his appointment on 1 April 2019 as Chief Executive Officer, Otto de Bont was recruited originally in May 2017 to the senior position of
Managing Director of Renewi’s Netherlands Commercial Waste Division. In connection with the contractual commitments provided as part of
that original 2017 appointment he is entitled to receive a final deferred joining fee of €75,000 in June 2019.

RELATIVE IMPORTANCE OF SPEND ON PAY

The table shows the percentage change in total employee pay expenditure and shareholder distributions (i.e. dividends) from the financial
year ended 31 March 2018 to the financial year ended 31 March 2019. The Directors are proposing a final dividend for the year ended 31 March
2019 of 0.5 pence per share (2018: 2.1p).

Executive Director

Distribution to shareholders

Employee remuneration

1. Employee remuneration of €430.7m at exchange rate of €1: £0.895

2017/18
£m

24.4

368.6

2018/19
£m

24.3

385.51

%
change

(-0.4)%

4.6%

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RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

PAY FOR PERFORMANCE

The graph shows the total shareholder return (TSR) of Renewi plc over the 10 year period to 31 March 2019. 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 is an index against which the performance of the Group is judged. The FTSE All-Share Index
is also presented. 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 10
years of a hypothetical £100
invested at 31 March 2009.

RENEWI PLC

FTSE All-Share Support
Services Index

FTSE All-Share Index

Source: Datastream (Thomson Reuters)

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400

350

300

250

200

150

100

31 MAR 09

31 MAR 10

31 MAR 11

31 MAR 12

31 MAR 13

31 MAR 14

31 MAR 15

31 MAR 16

31 MAR 17

31 MAR 18

31 MAR 19

CEO SINGLE FIGURE REMUNERATION OVER THE TEN YEARS TO 31 MARCH 2019

Executive Director

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

2018/19

Chief Executive Officer single
figure of remuneration (£000)

Annual bonus outcome
(% of maximum)

LTIP vesting outcome
(% of maximum)

TOM DRURY1

PETER DILNOT2

663

840

284

157

657

860

902

1,063

924

1,481

38%

69%

87%

19%

66%

47%

69%

48%

88%

–

0% 21.50%

0%3

674

1. Tom Drury resigned as Chief Executive Officer on 30 September 2011.
2. Peter Dilnot was appointed as Chief Executive Officer on 1 February 2012 and resigned on 31 March 2019.
3. Although 23% of the 2016 LTIP awards will vest in 2019, Peter Dilnot’s LTIP awards lapsed upon his resignation.

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.

Executive Director

Salary

Taxable benefits

Single-year variable

CHIEF EXECUTIVE
OFFICER

2017/18
£m

2018/19
£m

500

660

510

OTHER
EMPLOYEES

%
change

15%

%
change

-100%

105
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

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 23 May 2019 were as
shown below. Details of Directors’ interests in shares and options under the long-term share schemes are set out in the sections below.

Colin Matthews (Chairman)

Allard Castelein

Jacques Petry

Jolande Sap

Luc Sterckx

Toby Woolrych

Marina Wyatt

Otto de Bont (appointed April 2019)

Neil Hartley (appointed January 2019)

Ordinary shares at
1 April 2018

Ordinary shares at
31 March 2019 and
23 May 2019

250,000

450,000

–

162,235

11,600

–

150,000

373,404

11,600

40,000

–

At 1 April 2018 Peter Dilnot had an interest in 143,691 shares and in 365,280 shares at 31 March 2019, being the date of his resignation.

DIRECTORS’ SHAREHOLDING (AUDITED)

The table below shows the shareholding of each Executive Director, against their respective shareholding requirement as at 31 March 2019:

SHARES HELD

OPTIONS HELD

Unvested
but subject
to holding
period

Unvested
and
subject to
performance
conditions

–

456,518

1,363,012

Owned
outright
or vested

365,280

373,404

Vested
but not
exercised

Exercised
during
the year

Unvested
and
subject to
continuous
employment

Share-
holding
requirement
(% salary)

Current
share-
holding1
(% salary)

Requirement
met?

–

25,648

n/a

200%

n/a

25%

n/a

On track

Peter Dilnot

Toby Woolrych

1. Shareholdings were calculated using the mid-market price at 31 March 2019 of 23.5 pence and salary as at 31 March 2019.

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 Renewi Deferred Annual Bonus Plan.

Outstanding
awards at
31 March 2018

Awards
made during
the year

Awards
lapsed during
the year

Awards vested
during the
year2,3

Outstanding
awards at
31 March 2019

Date of
award

Share price on
date of award
(pence)

Restricted
period end1

110,072

220,189

116,405

–

288,979

72,077

144,183

74,636

–

201,661

55,036

220,189

116,405

288,979

–

55,036

–

36,039

–

36,038

144,183

74,636

201,661

29.05.15

23.11.16

01.06.17

01.06.18

29.05.15

23.11.16

01.06.17

01.06.18

108.92

93.50

93.25

78.10

108.92

93.50

93.25

78.10

29.05.20

23.11.21

01.06.22

01.06.23

29.05.20

23.11.21

01.06.22

01.06.23

Peter Dilnot

Toby Woolrych

1. 50% of awards are released three years after the date of award, 25% after four years and the remaining 25% after five years.
2. In addition to Peter Dilnot’s 55,036 awards which vested under the Deferred Annual Bonus Plan, an additional 5,678 shares were awarded in respect of dividend equivalents, totalling

60,714 shares (reflecting a 10.32% increase).

3. In addition to Toby Woolrych’s 36,039 awards which vested under the Deferred Annual Bonus Plan, an additional 3,718 shares were awarded in respect of dividend equivalents, totalling

39,757 shares (reflecting a 10.32% increase).

106
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
REMUNERATION REPORT CONTINUED

The Executive Directors have been made notional allocations of shares under the Renewi Long Term Incentive Plan:

Outstanding
awards at
31 March
20181

Awards
made during
the year

Awards
lapsed
during
the year2

Awards
vested
during
the year5,6

Outstanding
awards at
31 March
20193

715,650

963,000

804,000

–

753,645

375,083

504,000

443,000

–

416,012

561,785

963,000

804,000

753,645

294,440

–

153,865

–

80,643

–

504,000

443,000

416,012

Share price
on date
of award
(pence)

Performance
period end

Restricted
period end4

108.92

93.50

93.25

78.10

108.92

93.50

93.25

78.10

31.03.18

31.03.19

31.03.20

31.03.21

31.03.18

31.03.19

31.03.20

31.03.21

29.05.18

23.11.19

01.06.20

01.06.23

29.05.18

23.11.19

01.06.20

01.06.23

Date of
award

29.05.15

23.11.16

01.06.17

01.06.18

29.05.15

23.11.16

01.06.17

01.06.18

Peter Dilnot

Toby Woolrych

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. Peter Dilnot’s 2016, 2017 and 2018 LTIP awards lapsed on leaving the Company on 31 March 2019.
3. The performance conditions relating to the vesting of outstanding awards are shown on page 103.
4. For LTIP awards made in 2015 to 2017, half of the awards will be released following the end of the three-year performance period, with the remaining shares delivered in two equal tranches

after a further one and two years respectively. For LTIP awards granted to Executive Directors since the 2017 AGM, a two-year post-vesting holding period applies.

5. 21.5% of Peter Dilnot’s 2015 LTIP award vested in 2018. In addition to the 153,865 awards which vested, an additional 15,875 shares were awarded in respect of dividend equivalents, totalling

169,740 shares (reflecting a 10.32% increase).

6. 21.5% of Toby Woolrych’s 2015 LTIP award vested in 2018. In addition to the 80,643 awards which vested, an additional 8,320 shares were awarded in respect of dividend equivalents, totalling

88,963 shares (reflecting a 10.32% increase).

The Executive Directors held options to subscribe for ordinary shares under the Renewi Sharesave Schemes:

Date of
grant

24.09.15

13.09.17

12.09.18

24.09.15

13.09.17

Normal
exercise
dates
from

01.11.18

01.11.20

01.11.21

01.11.18

01.11.20

Normal
exercise
dates
to

30.04.19

30.04.21

30.04.22

30.04.19

30.04.21

Option price
(pence)1

Number at
1 April
2018

65.18

76.00

52.00

65.18

76.00

13,806

11,842

17,307

13,806

11,842

Granted
in year

–

17,307

–

Lapsed
in year

13,8062

11,8422

17,3072

–

Exercised
in year

Number at
31 March
2019

–

13,806

11,842

Peter Dilnot

Toby Woolrych

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. Lapsed on resignation on 31 March 2019.

The highest closing mid-market price of the
ordinary shares of Renewi plc during the year
was 86.9 pence and the lowest closing mid-
market price during the year was 21.9 pence.
The mid-market price at the close of business
on 31 March 2019 was 23.5 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

Allard Castelein
Chairman of the Remuneration Committee
23 May 2019

ADVICE PROVIDED TO THE COMMITTEE
DURING THE YEAR

FIT Remuneration Consultants LLP (‘FIT’) was
appointed by the Remuneration Committee
during 2016 to provide independent advice on
Committee matters. In 2017/18 and 2018/19,
FIT provided independent advice on executive
remuneration. FIT reports directly to the
Chairman of the Committee. Its total fees for
the provision of remuneration services to the
Committee in 2018/19 were £23,242 charged
on a time and materials basis. FIT provides no
other services to the Group.

FIT is a member of the Remuneration
Consultants Group and is a signatory to
the Code of Conduct for Remuneration
Committees consultants which can be found
at www.remunerationconsultantsgroup.com.

107
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
OTHER DISCLOSURES

Otto de Bont was appointed as Chief
Executive Officer on 1 April 2019 and will
also be standing for election. All other
directors will be offering themselves for
re-election at the 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 Board may appoint any person who is
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,
(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 a general meeting. In
addition, under the Act, the Company
may not allot shares for cash (otherwise
than pursuant to an employee 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 £4,000,666. This authority
lasts until the earlier of the AGM in 2019
or 30 September 2019;

` Repurchase of shares – subject to

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 that 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 80,013,325 ordinary shares.
This authority lasts until the earlier of the
AGM in 2019 or 30 September 2019; 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.

OTHER
DISCLOSURES

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 Articles
can be viewed on the Company website
at www.renewiplc.com

STRATEGIC REPORT

The Strategic Report set out on pages 2
to 77 provides a fair review of the Group’s
business for the year ended 31 March 2019.
It also explains 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 Strategic Report was approved by a
duly authorised committee of the Board on
23 May 2019 and signed on its behalf by the
Company Secretary.

DIRECTORS’ REPORT

The Directors’ Report comprises pages 78 to
111. The Directors’ Report was approved by
a duly authorised committee of the Board on
23 May 2019 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
90 to 107, 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
pages 78 to 79. All served on the Board
throughout the financial year under
review with the exception of Neil Hartley.
Following his appointment on 17 January
2019, Neil Hartley will be standing for
election by shareholders at the 2019 AGM.

108
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

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
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 80 to 107.

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 64 to 67, and in the People
section on pages 60 to 63 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 will be available on the
Company’s website in June 2019.

RESULTS AND DIVIDENDS

The Group’s Consolidated Income Statement,
which appears on page 122 and Note 2 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 €97.7m (2018:
loss of €53.9m).

GOVERNANCE
OTHER DISCLOSURES

The directors recommend a final dividend
of 0.5 pence (2018: 2.1 pence) per share be
paid on 26 July 2019 to ordinary shareholders
on the register of members at the close of
business on 28 June 2019. This dividend, if
approved by shareholders, together with the
interim dividend of 0.95 pence (2018: 0.95
pence) per share already paid on 4 January
2019, will make a total dividend for the year of
1.45 pence per share (2018: 3.05 pence).

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
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 77 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 2022.

SHARE CAPITAL

The Company’s share capital comprises
ordinary shares of 10 pence each par value.
As at 31 March 2019 and as at the date of
this Report, there were 800,141,536 ordinary
shares in issue. During the year ended
31 March 2019 no ordinary shares were
issued other than in respect of the exercise
of options or awards under the Company’s
share schemes, details of which are given in
note 7.3 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

109
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

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.

` 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 amongst
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.

GOVERNANCE
OTHER DISCLOSURES CONTINUED

EMPLOYEE SHARE
SCHEMES – CONTROL RIGHTS

The Company operates a number of
employee share schemes. Under some 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
abstain from voting at general meetings of
the Company in respect of such shares.

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 2019, would have required the
repayment of €349.7m (2018: €340.1m)
in principal and interest relating to the
revolving credit facility and term loan, along
with a make-whole payment amounting
to €2.1m (2018: £nil) which is not provided
for in these financial statements payable to
EUPP investors based on market yields at
31 March 2019.

RETAIL BONDS

As at 31 March 2019 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 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 sixty
days of that notice. Such repayment must
be made within 10 business days of the
expiry of the option period. If exercised at
31 March 2019, repayment of €200m (2018:
€200m) 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.

The Group’s principal financing instrument
at 31 March 2019, is a €575m banking
facility, consisting of a €550m multi-currency
revolving credit facility and term loan with
six major banks and a €25m dual tranche
European Private Placement (EUPP). The
facility contains an option for those banks
and investors to declare by notice that all
sums outstanding under that agreement

RESEARCH AND DEVELOPMENT

The Group spent £251,000 (2018: £556,000)
on research and development during the
year. This primarily related to a number of
projects undertaken by the Monostreams
Division, including research into bioplastics
and the recovery and use of materials from
incinerator bottom ash.

POLITICAL DONATIONS

No donations were made by the Group for
political purposes during the financial year
(2018: £nil).

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.

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.

ANNUAL GENERAL MEETING

Notice of the AGM of the Company to be held
at the offices of Ashurst LLP, The London Fruit
& Wool Exchange, 1 Duval Square, London,
E1 6PW on Thursday, 11 July 2019 at 11.00am
will be made available to shareholders,
together with a form of proxy, and will also be
available on the Company’s website at
www.renewiplc.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.

By order of the Board

NOTIFIABLE INTERESTS

Kabouter Management LLC

Paradice Investment Management LLC

Avenue Europe International Management LP

Cross Ocean Partners

Sterling Strategic Value Fund

Philip Griffin-Smith
Company Secretary
23 May 2019
Renewi plc
Registered in Scotland no. SC077438

Notifications received up
to 23 May 2019

Number
of shares

Issued share
capital %

63,734,846

56,548,933

45,946,642

34,079,882

25,675,000

7.97

7.07

5.74

4.26

3.21

110
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

In the case of each director in office at the
date the Directors’ Report is approved:

` so far as the director is aware, 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
23 May 2019
Renewi plc
Registered in Scotland no. SC077438

GOVERNANCE
DIRECTORS’ RESPONSIBILITIES STATEMENT

DIRECTORS’ RESPONSIBILITIES STATEMENT

The directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable
law and regulation.

Company law requires the directors to
prepare financial statements for each
financial year. Under that law the directors
have prepared the Group financial statements
in accordance with International Financial
Reporting Standards (IFRSs) as adopted by
the European Union 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 profit or 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 financial
statements and IFRSs as adopted by the
European Union have been followed for
the 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 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 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 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.

Directors’ confirmations
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
position and performance, business model
and strategy.

Each of the directors, whose names and
functions are listed on pages 78 to 79 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;
and

` the Overview and Strategic report includes

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.

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GOVERNANCE
INDEPENDENT AUDITORS’ REPORT

INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF RENEWI PLC

Report on the audit of the financial statements

OPINION

BASIS FOR OPINION

We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities
for the audit of the financial statements
section of our report. We believe that the
audit evidence we have obtained is sufficient
and appropriate to provide a basis for our
opinion.

Independence
We remained independent of the group in
accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have
fulfilled our other ethical responsibilities in
accordance with these requirements.

To the best of our knowledge and belief, we
declare that non-audit services prohibited by
the FRC’s Ethical Standard were not provided
to the group or the parent company.

Other than those disclosed in note 3.2 to the
financial statements, we have provided no
non-audit services to the group or the parent
company in the period from 1 April 2018 to
31 March 2019.

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 2019 and of the group’s loss
and the group’s and the parent company’s
cash flows for the year then ended;

` have been properly prepared in

accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union and, as regards the
parent company’s financial statements, as
applied in accordance with the provisions
of the Companies Act 2006; and

` 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.

We have audited the financial statements,
included within the Annual Report, which
comprise: the consolidated and parent
company balance sheet as at 31 March 2019;
the consolidated income statement and
consolidated statement of comprehensive
income, the consolidated and parent
company statements of cash flows, and
the consolidated and parent company
statements of changes in equity for the year
then ended; and the notes to the financial
statements, which include a description of
the significant accounting policies.

Our opinion is consistent with our reporting
to the Audit Committee.

OUR AUDIT APPROACH

Overview

Materiality

` Overall group materiality: €8.9m (2018:
£7.35m), based on 0.5% of revenue.

` Overall parent company materiality: £3.9m
(2018: £5.2m), based on 1% of Net Assets.

Audit scope

` We performed an audit over the complete
financial information of five out of the
seven reporting units being Hazardous
Waste, Netherlands Commercial, Belgium
Commercial, UK Municipal and Group
Central Services divisions. Additional
analytical reviews and specified audit
procedures were performed over
the remaining reporting units, being
Monostreams and Canada Municipal.

` We obtained coverage of approximately

85% of the Group’s revenue and 76% of the
Group’s underlying profit before tax from
the audit procedures performed on full
scope components.

Key audit matters

` Fraud and error in revenue recognition.

` Impairment of tangible and intangible

assets.

` PFI onerous contracts.

` Accounting for other provisions.

` PFI contract accounting.

` Accounting for taxation.

` Presentation of non-trading and

exceptional items.

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The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements.

Capability of the audit in detecting
irregularities, including fraud
Based on our understanding of the group and
industry, we identified that the principal risks
of non-compliance with laws and regulations
related to environmental compliance and
permits and health and safety regulations,
and we considered the extent to which non-
compliance might have a material effect on
the financial statements. We also considered
those laws and regulations that have a direct
impact on the preparation of the financial
statements such as the Companies Act 2006.
We evaluated management’s incentives and
opportunities for fraudulent manipulation
of the financial statements (including the
risk of override of controls), and determined
that the principal risks were related to
posting inappropriate journal entries to
achieve desired financial results and the
manipulation of exceptional items and
management bias in accounting estimates.
The group engagement team shared this risk
assessment with the component auditors
so that they could include appropriate audit
procedures in response to such risks in their
work. Audit procedures performed by the
group engagement team and/or component
auditors included:

` challenging the assumptions and

judgements made by management in
their significant accounting estimates, in
particular in relation to onerous contracts
and impairment of goodwill;

` identifying and testing journal entries, in
particular any journal entries posted with
unusual account combinations.

There are inherent limitations in the audit
procedures described above and the
further removed non-compliance with
laws and regulations is from the events
and transactions reflected in the financial
statements, the less likely we would become
aware of it. Also, the risk of not detecting
a material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion.

GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

Key audit matters
Key audit matters are those matters that, in
the auditors’ professional judgement, were of
most significance in the audit of the financial
statements of the current period and include
the most significant assessed risks of material
misstatement (whether or not due to fraud)
identified by the auditors, including those
which had the greatest effect on: the overall
audit strategy; the allocation of resources
in the audit; and directing the efforts of
the engagement team. These matters, and
any comments we make on the results of
our procedures thereon, were addressed
in the context of our audit of the financial
statements as a whole, and in forming our
opinion thereon, and we do not provide a
separate opinion on these matters. This is
not a complete list of all risks identified by
our audit.

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GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

KEY AUDIT MATTER

HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Fraud and error in revenue recognition
The nature of the Group’s performance obligations under revenue contracts
varies from business to business and from customer to customer. In
Netherlands Commercial and Belgium Commercial 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 judgements, 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. At 31 March 2019 the Group has
€54.4m of deferred revenue on its balance sheet. See note 4.8 to the financial
statements. 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.

Impairment of tangible and intangible assets
At 31 March 2019, the Group had €605.6m of goodwill and intangible assets
and €629.1m of tangible assets on the Group balance sheet. See notes 4.1
and 4.2 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, £4.3m impairment charges have
been recorded by the Group for the year ended 31 March 2019 in relation
to the Derby contract in UK Municipal. 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.

Reym and Canada Municipal have been recognised as Held For Sale, and
accordingly management have compared the carrying value of their net
assets to the fair value less costs to sell resulting in an impairment of €42m.

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.

The tangibles assets impairment charge of €10.3m includes €9.3m relating
to the Monostreams Division due to the underperformance of the glass
operations in the Netherlands and the simplification of the range of
products at Coolrec resulting in site closures. In addition €0.9m relates
to plant and equipment for the underperforming ELWA contract, as well
as other intangibles impairment charge of €14.3m related to €13.8m
of contract right intangibles in UK Municipal in relation to the Derby
and ELWA contracts as it has been determined that they are no longer
recoverable and €0.5m of software in the Commercial Division and Group
Central Services as part of the integration programme.

We focused on these impairments to verify whether the assumptions used
in determining the quantum of the asset impairments were appropriate.

We assessed the accuracy of management’s calculation of deferred
revenue, which is calculated based on waste tonnages and pricing, by:

Î Attending year-end inventory counts of unprocessed waste to test the

existence and completeness of waste tonnages at year-end;

Î 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;

Î Performing substantive tests of detail on the pricing of individual waste

components by tracing to invoices raised to customers; and

Î Re-performing management’s calculation of deferred revenue at

year-end.

Having performed the procedures above we were satisfied that the
assumptions and judgements 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.

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 4.1 and 4.2.

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:

Î Forecast revenue growth rates and trading margins for the CGUs over the

period of the forecasts;

Î The key assumptions for long-term growth rates in the forecasts by

comparing them with historical results; and

Î 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.

Î 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 2019.

For all CGUs with goodwill, we were satisfied that the carrying value of
goodwill was supported by the value in use calculations and no impairment
charge was required.

In relation to those assets held for sale, we have confirmed that the criteria
for the classification of Held for Sale has been met. We have compared
the carrying value of net assets to the estimated fair value less costs to
sell, resulting in an impairment charge of €42m against goodwill and other
assets in Canada and Reym.

For intangibles and tangible assets we have evaluated whether there have
been indicators of impairment, where indicators were present we have
reviewed and challenged management’s impairment model assumptions
and discount rate used.

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GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

KEY AUDIT MATTER

HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

PFI onerous contracts
As disclosed in note 4.9 to the financial statements, the Group has onerous
contract provisions of €88.9m in the Municipal Division. In 2019 the
provision increased to recognise €7.6m in relation to the Derby contract in
UK Municipal to cover ongoing losses and assumed termination costs in
the event that the project fails and €1.8m in relation to the ELWA contract
in UK Municipal due to anticipated additional costs of offtake and adverse
recyclate prices.

Due to their nature, these provisions are judgemental. Where an onerous
contract provision is recognised, the amount recognised is based on
assumptions and estimates to calculate the expected returns from the
operating agreements over the life of the agreement. These include
the level of anticipated operational efficiency, the cost base required,
consumer behaviour regarding waste and recycling, and the use of an
appropriate risk free discount rate.

Accounting for other 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.

In addition to onerous contracts discussed above, as disclosed in note 4.9
to the financial statements, the Group has long-term landfill provisions for
site restoration and aftercare of €138.9m at 31 March 2019. Separately the
Group has other provisions of €37.5m principally comprising restructuring
obligations, dilapidations, long service employee awards, legal claims,
warranties and indemnities.

Due to their nature, these provisions are judgemental. 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.

Our audit work on provisions focused on:

Î Considering significant PFI contracts entered into by the Group to

determine whether any other contracts, other than those identified by
management, are onerous;

Î Reading Board minutes to identify any relevant matters reported to the

Board; and

Î Discussions with management to understand the basis of the calculation

of the provision.

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. Further, we challenged management on the estimated level
of forecast costs required to deliver the forecast operational performance,
their views on future consumer behaviour and the impact that may have on
the calculations, as well as the discount rate used.

Based on this work, we concluded that management’s forecasts were
reasonable and that where provisions were recognised, these had been
calculated on an appropriate basis.

Our audit work on provisions focused on:

Î Understanding the processes and controls in place to ensure compliance
and a discussion of any instances of non-compliance in the year with
management;

Î Considering significant contracts entered into by the Group to

determine whether any other contracts, other than those identified by
management, are onerous;

Î Reading Board minutes to identify any relevant matters reported to

the Board;

Î 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

Î 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
provisions we specifically:

Î 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; and

Î 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.

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GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

KEY AUDIT MATTER

HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Accounting for taxation
The Group has recognised €34.1m of a total potential deferred tax asset of
€76.2m in respect of historic losses as at 31 March 2019. See note 3.5 to the
financial statements.

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.

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 asset recognised
on historic losses in the Netherlands by €10.5m mainly due to the creation
of an integrated Netherlands Commercial trading entity and discussions
with the local tax authorities. The amount recognised has been based on
forecast future profits in the period until the losses expire.

Presentation of non-trading and exceptional items
The Group presents two measures of performance in the Income
Statement; statutory and 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 3.4 to the financial statements.

Specifically we have considered:

Î Board approved budgets and forecasts against historic performance by

legal entity;

Î Correspondence with relevant local tax authorities; and

Î Whether taxable differences result in taxable amounts against which

unused tax losses can be utilised.

Having performed the procedures above we consider that the assumptions
applied in the recognition of deferred tax assets at 31 March 2019 were
reasonable.

We considered the appropriateness of the amounts classified as non-
trading and exceptional. In order to do this we considered:

Î The Group’s accounting policy on exceptional and non-trading items; and

Î 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 2019 is appropriate.

We determined that there were no key audit
matters applicable to the parent company to
communicate in our report.

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 structure
of the group and the parent company, the
accounting processes and controls, and the
industry in which they operate.

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 reports 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, Belgium Commercial,
Hazardous Waste, UK Municipal, Canada
Municipal, Monostreams and Group Central
Services. Of the Group’s seven reporting
units, we identified Netherlands Commercial,
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.

Additional procedures were performed over
non-reporting components, 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 with the
component teams in Eindhoven as well
as attendance by the Group engagement
team at the clearance meetings held for
the Netherlands Commercial, Belgium
Commercial, Hazardous Waste and
Monostreams reporting units and a review of
the audit working papers of our component
teams by the Group engagement team.

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GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

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 in aggregate on the financial
statements as a whole.

Based on our professional judgement, we
determined materiality for the financial
statements as a whole as follows:

GROUP FINANCIAL STATEMENTS

PARENT COMPANY FINANCIAL STATEMENTS

Overall materiality

€8.9m (2018: £7.35m)

How we determined it

0.5% of revenue.

£3.9m (2018: £5.2m)

1% of Net Assets.

Rationale for
benchmark applied

In line with prior year, revenue is considered the most relevant
measure of performance for the Group rather than the trading
result whilst the Group continues to undertake its integration
programme to combine the legacy Shanks business with legacy
VGG. We identified revenue as the benchmark that would not
be volatile as a result of the integration and merger processes,
and which is also reflective of the scale and size of activities of
the group.

We believe that net assets is the primary
measure used by the shareholders in assessing
the performance of the parent company, and
is a generally accepted auditing benchmark. In
determining materiality for 2019, we considered
a range of benchmarks including total assets
which we felt inflated materiality and as such
have chosen a net asset materiality for 2019.

For each component in the scope of our
group audit, we allocated a materiality that
is less than our overall group materiality.
The range of materiality allocated across
components was between €4.2m and €8.0m.
Certain components were audited to a local

statutory audit materiality that was also less
than our overall group materiality.

We agreed with the Audit Committee that
we would report to them misstatements
identified during our audit above €450k

(Group audit) (2018: £365k) and £193k (Parent
company audit) (2018: £259k) as well as
misstatements below those amounts that, in
our view, warranted reporting for qualitative
reasons.

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GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

Going concern
In accordance with ISAs (UK) we report as follows:

REPORTING OBLIGATION

OUTCOME

We are required to report if we have anything material to add or draw
attention to in respect of the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the financial statements and the
directors’ identification of any material uncertainties to the group’s and the
parent company’s ability to continue as a going concern over a period of at
least twelve months from the date of approval of the financial statements.

We have nothing material to add or to draw attention to.

However, because not all future events or conditions can be predicted, this
statement is not a guarantee as to the group’s and parent company’s ability
to continue as a going concern. For example, the terms on which the United
Kingdom may withdraw from the European Union are not clear, and it is
difficult to evaluate all of the potential implications on the group’s trade,
customers, suppliers and the wider economy.

We are required to report if the directors’ statement relating to Going
Concern in accordance with Listing Rule 9.8.6R(3) is materially inconsistent
with our knowledge obtained in the audit.

We have nothing to report.

Reporting on other information
The other information comprises all of the
information in the Annual Report other than
the financial statements and our auditors’
report thereon. The directors are responsible
for the other information. Our opinion on
the financial statements does not cover the
other information and, accordingly, we do
not express an audit opinion or, except to
the extent otherwise explicitly stated in this
report, any form of assurance thereon.

In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the audit, or otherwise appears to be
materially misstated. If we identify an
apparent material inconsistency or material
misstatement, we are required to perform
procedures to conclude whether there is
a material misstatement of the financial
statements or a material misstatement of
the other information. If, based on the work
we have performed, we conclude that there
is a material misstatement of this other
information, we are required to report that
fact. We have nothing to report based on
these responsibilities.

With respect to the Strategic Report and
Directors’ Report, we also considered
whether the disclosures required by the UK
Companies Act 2006 have been included.

Based on the responsibilities described
above and our work undertaken in the
course of the audit, the Companies Act 2006
(CA06), ISAs (UK) and the Listing Rules of the
Financial Conduct Authority (FCA) require us
also to report certain opinions and matters
as described below (required by ISAs (UK)
unless otherwise stated).

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken
in the course of the audit, the information
given in the Strategic Report and Directors’
Report for the year ended 31 March 2019
is consistent with the financial statements
and has been prepared in accordance with
applicable legal requirements. (CA06)

In light of the knowledge and understanding
of the group and parent company and their
environment obtained in the course of
the audit, we did not identify any material
misstatements in the Strategic Report and
Directors’ Report. (CA06)

The directors’ assessment of the
prospects of the group and of the
principal risks that would threaten the
solvency or liquidity of the group
We have nothing material to add or draw
attention to regarding:

` The directors’ confirmation on page 77 of
the Annual Report 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 77 of
the Annual Report 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.

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A further description of our responsibilities
for the audit of the financial statements
is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditors’ report.

Use of this report
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.

GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

We have nothing to report having performed
a review of the directors’ statement that they
have carried out a robust assessment of the
principal risks facing the group and 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 UK Corporate Governance Code
(the “Code”); and considering whether the
statements are consistent with the knowledge
and understanding of the group and parent
company and their environment obtained in
the course of the audit. (Listing Rules).

Other Code Provisions
We have nothing to report in respect of our
responsibility to report when:

` The statement given by the directors,
on page 111, that they consider the
Annual Report taken as a whole to be
fair, balanced and understandable, and
provides the information necessary for the
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 obtained in the
course of performing our audit.

` The section of the Annual Report on

page 84 describing the work of the Audit
Committee does not appropriately address
matters communicated by us to the
Audit Committee.

` The directors’ statement relating to

the parent company’s compliance with
the Code does not properly disclose a
departure from a relevant provision of the
Code specified, under the Listing Rules, for
review by the auditors.

Directors’ Remuneration
In our opinion, the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006. (CA06)

RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS AND THE AUDIT

Responsibilities of the directors for
the financial statements
As explained more fully in the Directors’
Responsibilities Statement set out on page
111, the directors are responsible for the
preparation of the financial statements in
accordance with the applicable framework
and for being satisfied that they give a
true and fair view. The directors are also
responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.

In preparing the financial statements, the
directors are responsible for assessing the
group’s and the parent company’s ability
to continue as a going concern, disclosing
as applicable, matters related to going
concern and using the going concern basis of
accounting unless the directors either intend
to liquidate the group or the parent company
or to cease operations, or have no realistic
alternative but to do so.

Auditors’ responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or
error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance
is a high level of assurance, but is not a
guarantee that an audit conducted in
accordance with ISAs (UK) will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually
or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of these
financial statements.

119
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

GOVERNANCE
INDEPENDENT AUDITORS’ REPORT CONTINUED

OTHER REQUIRED REPORTING

Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

Î we have not received all the information and explanations we require for our audit; or

Î 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

Î certain disclosures of directors’ remuneration specified by law are not made; or

Î 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.

APPOINTMENT

Following the recommendation of the Audit Committee, we were appointed by the members on 11 May 1994 to audit the financial statements
for the year ended 31 March 1995 and subsequent financial periods. The period of total uninterrupted engagement is 25 years, covering the
years ended 31 March 1995 to 31 March 2019.

Matthew Mullins
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
23 May 2019

120
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FINANCIAL STATEMENTS

121
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2019

2019

Non
trading &
exceptional
items
€m

Note

Underlying
€m

2018 Restated*
Non
trading &
exceptional
items
€m

Total
€m

Underlying
€m

CONTINUING OPERATIONS
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
Profit (loss) for the year from discontinued operations
Profit (loss) for the year

Attributable to:
Owners of the parent
Non-controlling interests

1,780.7
(1,470.4)
310.3
(224.8)
85.5
12.4
(35.8)
0.4
62.5
(15.6)
46.9

–
(51.3)
(51.3)
(90.8)
(142.1)
–
(9.4)
–
(151.5)
28.0
(123.5)

1,780.7
(1,521.7)
259.0
(315.6)
(56.6)
12.4
(45.2)
0.4
(89.0)
12.4
(76.6)

1,760.3
(1,430.0)
330.3
(247.8)
82.5
12.6
(35.4)
2.6
62.3
(15.7)
46.6

–
(79.6)
(79.6)
(35.5)
(115.1)
–
–
–
(115.1)
17.1
(98.0)

2,3.1

3.4

2,3.4

5.4

4.3

3.5

6.3

1.4
48.3

(22.5)
(146.0)

(21.1)
(97.7)

(3.1)
43.5

0.6
(97.4)

(2.5)
(53.9)

Total
€m

1,760.3
(1,509.6)
250.7
(283.3)
(32.6)
12.6
(35.4)
2.6
(52.8)
1.4
(51.4)

5.9

48.9
(0.6)
48.3

(141.7)
(4.3)
(146.0)

(92.8)
(4.9)
(97.7)

43.0
0.5
43.5

5.8
(0.4)
5.4

5.8
(0.4)

5.4

(97.2)
(0.2)
(97.4)

(12.3)
0.1
(12.2)

(12.3)
0.1

(12.2)

(54.2)
0.3
(53.9)

(6.5)
(0.3)
(6.8)

(6.5)
(0.3)

(6.8)

Basic earnings (loss) per share attributable to owners of the parent (cent per share)
5.9
Continuing operations
0.2
Discontinued operations
6.1

3.6

Diluted earnings (loss) per share attributable to owners of the parent (cent per share)
Continuing operations
Discontinued operations

5.9
0.2

3.6

6.1

(14.9)
(2.8)
(17.7)

(14.9)
(2.8)

(17.7)

(9.0)
(2.6)
(11.6)

(9.0)
(2.6)

(11.6)

*The 2018 comparatives have been restated to reclassify discontinued operations and details are given in Section 1 Basis of preparation.

The notes on pages 127 to 191 are an integral part of these consolidated financial statements.

122

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2019

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 gain on defined benefit pension schemes
Deferred tax on actuarial gain on defined benefit pension schemes

Other comprehensive income for the year, net of tax
Loss for the year
Total comprehensive loss for the year

Attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive loss for the year

Total comprehensive loss attributable to owners of the parent arising from:
Continuing operations
Discontinued operations

*The 2018 comparatives have been restated to reclassify discontinued operations and details are given in Section 1 Basis of preparation.

The notes on pages 127 to 191 are an integral part of these consolidated financial statements.

Note

5.5

3.5

4.3

7.2

3.5

2019
€m

0.3
2.1
(0.2)
0.2
2.4

10.8
(1.7)
9.1

11.5
(97.7)
(86.2)

(81.1)
(5.1)
(86.2)

(60.1)
(21.0)
(81.1)

Restated*
2018
€m

(4.6)
8.1
(1.6)
0.7
2.6

3.4
(0.7)
2.7

5.3
(53.9)
(48.6)

(49.5)
0.9
(48.6)

(46.7)
(2.8)
(49.5)

123

CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2019

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
Investments
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 of disposal groups 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

Liabilities of disposal groups classified as held for sale

Total liabilities
Net assets
Equity
Share capital
Share premium
Exchange reserve
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity

Note

4.1
4.2
4.3
4.3
4.4
4.7
5.5
3.5

4.6
4.3
4.3
4.4
4.7
5.5

5.2

6.2

5.3
5.3
5.5
4.8
3.5
4.9
7.2

5.3
5.3
5.5
4.8

4.9

6.2

5.9
5.9

5.9

31 March
2019
€m

605.6
629.1
15.9
–
149.8
0.5
0.1
38.6
1,439.6

26.0
5.9
0.9
6.0
278.8
2.9
–
50.4
370.9
162.4
533.3
1,972.9

(92.6)
(483.7)
(28.4)
(6.5)
(56.1)
(215.9)
(11.9)
(895.1)

(2.8)
(118.7)
(4.4)
(518.6)
(17.9)
(55.4)
(717.8)
(40.5)
(758.3)
(1,653.4)
319.5

99.5
473.6
(17.9)
(236.7)
318.5
1.0
319.5

Restated*
31 March
2018
€m

699.3
710.8
19.1
15.7
189.9
5.3
0.6
28.5
1,669.2

26.6
–
6.8
15.4
294.1
1.6
0.1
73.0
417.6
0.4
418.0
2,087.2

(93.3)
(558.9)
(33.3)
(7.7)
(71.2)
(230.1)
(25.4)
(1,019.9)

(1.3)
(14.7)
(0.1)
(547.1)
(20.9)
(46.9)
(631.0)
–
(631.0)
(1,650.9)
436.3

99.5
473.6
(18.2)
(124.7)
430.2
6.1
436.3

31 March
2017
€m

684.9
720.2
18.5
16.6
193.5
3.6
0.4
36.6
1,674.3

23.2
–
6.7
15.6
274.6
–
0.1
87.5
407.7
0.4
408.1
2,082.4

(99.4)
(564.1)
(35.1)
(6.0)
(90.6)
(171.9)
(31.5)
(998.6)

(2.4)
(19.2)
(1.0)
(480.4)
(16.8)
(52.5)
(572.3)
–
(572.3)
(1,570.9)
511.5

99.5
473.4
(13.5)
(53.1)
506.3
5.2
511.5

*The 2018 comparatives have been restated with details given in Section 1 Basis of preparation.

The notes on pages 127 to 191 are an integral part of these consolidated financial statements.

The Financial Statements on pages 122 to 191 were approved by the Board of Directors and authorised for issue on 23 May 2019. They were signed on
its behalf by:

Colin Matthews
Chairman

Toby Woolrych
Chief Financial Officer

124

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019

Balance at 1 April 2018
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 schemes
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

Share-based compensation
Movement on tax arising on share-based compensation
Own shares purchased by the Employee Share Trust
Dividends
Balance as at 31 March 2019

Balance at 1 April 2017
(Loss) profit for the year
Other comprehensive (loss) income:
Exchange (loss) gain on translation of foreign subsidiaries
Fair value movement on cash flow hedges
Actuarial gain on defined benefit pension schemes
Tax in respect of other comprehensive income items
Share of other comprehensive income of investments accounted for
using the equity method
Total comprehensive loss (income) for the year

Share-based compensation
Movement on tax arising on share-based compensation
Proceeds from exercise of employee options
Own shares purchased by the Employee Share Trust
Dividends
Balance as at 31 March 2018

Note

5.5
7.2
3.5

4.3

7.3
3.5
5.9
5.10

5.5
7.2
3.5

4.3

7.3
3.5
5.9
5.9
5.10

Share
capital
€m
99.5
–

Share
premium
€m
473.6
–

Exchange
reserve
€m
(18.2)
–

Retained
earnings
€m
(124.7)
(92.8)

–
–
–
–

–
–

–
–
–
–
99.5

99.5
–

–
–
–
–

–
–

–
–
–
–
–
99.5

–
–
–
–

–
–

–
–
–
–
473.6

473.4
–

–
–
–
–

–
–

–
–
0.2
–
–
473.6

0.3
–
–
–

–
0.3

–
–
–
–
(17.9)

(13.5)
–

(4.7)
–
–
–

–
(4.7)

–
–
–
–
–
(18.2)

–
2.3
10.8
(1.9)

0.2
(81.4)

0.8
(0.6)
(3.4)
(27.4)
(236.7)

(53.1)
(54.2)

–
7.6
3.4
(2.3)

0.7
(44.8)

2.1
(0.2)
–
(1.1)
(27.6)
(124.7)

Non-
controlling
interests
€m
6.1
(4.9)

–
(0.2)
–
–

–
(5.1)

–
–
–
–
1.0

5.2
0.3

0.1
0.5
–
–

–
0.9

–
–
–
–
–
6.1

Total
equity
€m
436.3
(97.7)

0.3
2.1
10.8
(1.9)

0.2
(86.2)

0.8
(0.6)
(3.4)
(27.4)
319.5

511.5
(53.9)

(4.6)
8.1
3.4
(2.3)

0.7
(48.6)

2.1
(0.2)
0.2
(1.1)
(27.6)
436.3

The notes on pages 127 to 191 are an integral part of these consolidated financial statements.

The exchange reserve comprises all foreign exchange differences arising since 1 April 2005 from the translation of the financial statements of non-Euro
denominated operations as well as from the translation of liabilities that hedge the Group’s net investment in foreign operations.

125

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2019

Loss before tax
Finance income
Finance charges
Share of results from associates and joint ventures
Operating loss from continuing operations
Operating loss from discontinued operations
Amortisation and impairment of intangible assets
Depreciation and impairment of property, plant and equipment
Loss on remeasurement of assets held for sale
(Gain) loss on disposal of property, plant and equipment
Exceptional loss allowance of loans to associates and joint ventures
Impairment of investments
Exceptional gain on disposal of joint venture
Outflows in respect of PPP arrangements under the financial asset model
Capital received in respect of PPP financial assets
Exceptional loss on disposal of property, plant and equipment
Exceptional gain on disposal of subsidiaries
Exceptional gain on insurance proceeds in relation to fires in the Netherlands and Belgium
Net (decrease) increase in provisions
Exceptional curtailment net of past service cost in relation to defined benefit pension schemes
Payments to fund defined benefit pension schemes deficit
Other non-cash items
Share-based compensation
Operating cash flows before movement in working capital
Decrease (increase) in inventories
Increase in receivables
Increase in payables
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
Exceptional disposal of property, plant and equipment
Insurance proceeds in relation to fires in the Netherlands and Belgium
Acquisition of subsidiary, net of cash acquired
Acquisition of business assets
Proceeds from disposal of subsidiary
Purchase of joint venture
Net receipt (payment) of deferred consideration
Purchase of other short-term investments
Proceeds from disposal of joint venture
Dividends received from associates and joint ventures
Net repayment of loans granted to associates and 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 outflow from investing activities
Financing activities
Finance charges and loan fees paid
Proceeds from share issues
Investment in own shares by the Employee Share Trust
Dividends paid
Proceeds from bank borrowings
Repayment of PFI/PPP net debt
Repayments of obligations under finance leases
Net cash outflow from financing activities
Net 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 2018 comparatives have been restated to reclassify discontinued operations and details are given in Section 1 Basis of preparation.

The notes on pages 127 to 191 are an integral part of these consolidated financial statements.

126

2019
€m
(89.0)
(12.4)
45.2
(0.4)
(56.6)
(21.0)
31.9
99.5
42.0
(2.3)
20.4
–
(11.1)
(1.7)
8.6
–
(0.3)
–
(16.9)
(0.1)
(3.4)
(2.2)
0.8
87.6
0.1
(5.3)
4.4
86.8
(13.2)
73.6

(5.7)
(101.8)
8.1
–
–
–
(0.1)
7.4
(3.8)
0.3
(5.9)
20.2
0.7
1.6
(1.4)
4.4
11.7
(64.3)

(29.4)
–
(3.4)
(27.4)
40.3
(0.6)
(11.8)
(32.3)
(23.0)
0.4
73.0
50.4

Restated*
2018
€m
(52.8)
(12.6)
35.4
(2.6)
(32.6)
(3.6)
18.2
93.0
–
2.4
–
1.1
–
(11.5)
–
13.1
–
(5.7)
51.7
–
(3.5)
–
2.1
124.7
(3.5)
(20.6)
43.0
143.6
(7.6)
136.0

(9.0)
(87.9)
4.8
(4.2)
4.0
(6.4)
(0.2)
–
–
(0.6)
–
–
1.4
0.2
(2.3)
4.5
11.3
(84.4)

(30.4)
0.3
(1.1)
(27.6)
12.6
(4.7)
(15.1)
(66.0)
(14.4)
(0.1)
87.5
73.0

Note

4.1
4.2
6.2

4.3
4.3

7.2

7.3

6.1

5.9
5.9
5.10
5.1
5.1
5.1

5.2

NOTES TO THE FINANCIAL STATEMENTS

SECTION 1. BASIS OF PREPARATION

This section provides general information about the Group and the accounting policies that apply to the consolidated financial
statements as a whole. Accounting policies that are specific to a particular note are provided within the note to which they relate. This
section also details the new or amended accounting standards adopted during the year as well as the anticipated impact of future
changes to accounting standards that are not yet effective.

Renewi 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 208. The nature of the Group’s operations and its principal
activities are set out in section 2.

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.

The consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments and share-based
payments which are stated at fair value. Assets classified as held for sale are stated at the lower of carrying value and fair value. The accounting
policies adopted in the consolidated financial statements 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 2018. The consolidated financial statements
are presented in Euros and all amounts are rounded to the nearest €0.1m unless otherwise stated.

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 consolidated financial statements.

Changes in presentational currency
On 12 July 2018 the Group announced that from the beginning of the current financial year the currency in which it presents its consolidated financial
results and consolidated financial statements would change from Sterling to Euros to reflect that the majority of the Group’s revenues and costs are
Euro denominated. The comparative information has been restated in Euros in accordance with the guidance in IAS 21 The effects of changes in
foreign exchange rates.

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 results and financial position of all the Group entities that have a functional currency different from the
presentation currency are translated into the presentational currency of the Group as follows:

 assets and liabilities at each balance sheet date are translated into Euros at the closing year end exchange rate;
 income and expenses in each Income Statement are translated into Euros 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
Sterling
Canadian Dollar

31 March
2019
0.862
1.500

Closing rates
31 March
2018
0.876
1.586

Average rates

Change
(1.6)%
(5.4)%

2019
0.895
1.530

2018
0.879
1.520

Change
1.8%
0.7%

The Group applies the hedge accounting principles of IFRS 9 Financial Instruments 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.

127

NOTES TO THE FINANCIAL STATEMENTS

SECTION 1. BASIS OF PREPARATION CONTINUED

Changes in presentation
On 8 November 2018 the Group announced its intention to exit Municipal Canada and the Hazardous Waste Reym industrial cleaning business. Active
programmes are underway and the criteria for asset held for sale have been met therefore the assets and liabilities are presented as held for sale. The
Municipal Canada disposal meets the definition of a discontinued operation as stated in IFRS 5 Non-current assets held for sale and discontinued
operations, therefore the net results are presented as discontinued operations in the Income Statement and the prior year Income Statement and
Cash flow statement comparatives have been restated.

Comparative information
In accordance with IFRS 3 Business Combinations the comparative information in the consolidated balance sheet for the year ended March 2018 has
been restated for acquisition accounting adjustments in relation to the Hazardous Waste acquisition in the prior year and the impacts of the
restatement are set out in note 6.1.

Changes in accounting policies
There were two new standards adopted for the first time for the Group’s financial year that had an impact on the Group’s financial statements.

Accounting standard
IFRS 15 Revenue from Contracts
with Customers and IFRS 15
(amendment)
IFRS 9 Financial Instruments

Requirements
The Group has adopted IFRS 15 from 1 April 2018 and no prior year restatements are required as the impact is
immaterial. The Group has amended its accounting policies, where appropriate and this is explained in the
relevant notes.
The Group has adopted IFRS 9 from 1 April 2018 which introduces new requirements for the classification and
measurement of financial assets and financial liabilities, impairments for financial assets and hedge accounting.
The Group has adopted the new rules retrospectively but has not identified any material amendments to the prior
period therefore no restatement is required. For hedge accounting the Group has considered the new
requirements and no changes to the existing hedge relationships were necessary.

IFRS 9 requires an expected credit loss (ECL) model to be applied to financial assets rather than the incurred loss
model as per IAS 39. The ECL model requires the Group to account for ECLs as a result of the credit risk on initial
recognition of financial assets and to recognise changes in those ECLs at each reporting date. ECLs are calculated
for all financial assets in scope regardless of whether they are overdue or not. Since adoption there have been no
material changes in estimates or assumptions that have led to a significant change in the ECL allowance.

Reclassification of financial assets and liabilities into the IFRS 9 categories had no material overall impact on the
measurement basis applied. Details of the classification and measurement of financial assets and liabilities under
IAS 39 and IFRS 9 at 1 April 2018, the date of initial application are set out in note 5.6.

The accounting policies have been amended as appropriate and are explained in the relevant notes.

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 endorsed and effective for annual periods beginning on or after
1 January 2019:

Accounting standard
IFRS 16 Leases

Transition
The Group will apply IFRS 16 from its mandatory
adoption date of 1 April 2019. The Group intends to
apply the modified retrospective approach and will not
restate comparative amounts for the year prior to first
adoption. Right-of-use assets for certain leases will be
measured on transition as if the new rules have always
been applied. All other right-of-use assets will be
measured at the amount of the lease liability on
adoption, adjusted for any prepaid or accrued lease
expenses and onerous contracts. In addition, the Group
will elect the following main practical expedients and
will apply these consistently to all of our leases:
 to exempt short-term leases and low value items; and
 to not separate lease and non-lease components.

Impact
The most significant changes are the recognition of
right-of-use assets and lease liabilities for operating
leases. Based on the information currently available the
Group expects to recognise on 1 April 2019 right-of-use
assets of €171m, and lease liabilities of €177m, the
current part of the lease liability is €25m.

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.

128

SECTION 1. BASIS OF PREPARATION CONTINUED

Basis of consolidation
The consolidated financial statements incorporate the financial statements of Renewi plc (the Company), all its subsidiary undertakings (subsidiaries)
and the Group’s interests in joint ventures, associates and joint operations.

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.

Other investments in entities that are neither associates, joint ventures nor subsidiaries are held at fair value through profit or loss except for the other
unlisted investments that the Group has elected to hold at fair value through other comprehensive income.

Critical 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. The estimates and associated assumptions are based on factors including
historical experience and expectations of future events that are considered to be relevant and reasonable. These estimates, assumptions and
judgements are reviewed on an ongoing basis.

Judgements in applying the Group's accounting policies
Use of alternative performance measures – The Group uses alternative performance measures as we believe these measures provide additional useful
information on the underlying trends, performance and position of the Group. These underlying measures are used by the Group for internal
performance analysis and incentive compensation arrangements for employees. The term ‘underlying’ refers to the relevant measure being reported
for continuing operations excluding non-trading and exceptional items. These include underlying earnings before interest and tax (underlying EBIT),
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). The terms ‘EBIT’, ‘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. A full list of alternative performance measures and non-IFRS measures together with reconciliations are set out on pages
193 to 194.

Non-trading and exceptional items – In establishing which items are disclosed separately as non-trading and exceptional to enable a better
understanding of the underlying financial performance of the Group, management exercise judgement in assessing the size, nature or incidence
of specific items. See note 3.4 for further details.

Revenue recognition – In applying IFRS 15 Revenue from Contracts with Customers consideration was given to the timing of performance obligations
and it was concluded that there was no material difference with the previous standard. We have adopted the cumulative effect method. Further
details are given in note 3.1.

129

NOTES TO THE FINANCIAL STATEMENTS

SECTION 1. BASIS OF PREPARATION CONTINUED

Service concession arrangements – The consideration from local authorities for the operations of waste management service concessions is treated
as financial assets relating to PFI/PPP contracts in accordance with IFRIC 12. At the balance sheet date, the Group has continuing financial assets
relating to PFI/PPP contracts of €155.8m (2018: €205.3m) and a further €44.0m in assets of disposal group classified as held for sale. Consideration
relating to financial assets is split between a service element as revenue and a repayment element, split between capital and interest receivable, that
is deducted from the financial asset. Further details are given in notes 3.1 and 4.4.

Assets held for sale and discontinued operations – Management has used judgement to determine that the criteria of IFRS 5 Non-current assets held
for sale and discontinued operations have been met for the business disposals underway at 31 March 2019. Further details are given in note 6.2.

Estimates and assumptions
Impairment of intangible assets – Impairment testing is carried out annually on a cash generating unit (CGU) level. The Group estimates the
recoverable amount of a CGU using a value in use model which involves an estimation of future cash flows and the selection of appropriate discount
and long-term growth rates. The future cash flows are derived from approved forecasts. Details of the key assumptions and sensitivity analysis are
given in note 4.1. Where a disposal group meets the criteria for asset held for sale the Group estimates the selling price less cost to sell in order to
determine if an impairment is required.

Impairment of tangible assets and investments – The Group assesses the impairment of tangible assets and investments whenever there is reason to
believe that the carrying value may not exceed the fair value and where a permanent impairment in value is anticipated. The determination of whether
the impairment of these assets is necessary involves the use of estimates that includes, but is not limited to, the analysis of the cause of potential
impairment in value, the timing of such potential impairment and an estimate of the amount of the impairment.

Landfill related provisions – The Group has landfill related provisions of €138.9m (2018: €133.6m). These provisions are long term in nature and are
recognised at the net present value of the best estimate of the likely future cash flows to settle the Group’s obligations. The period of aftercare post-
closure and the level of costs expected are uncertain and could be impacted by changes in legislation and technology and can vary significantly from
site to site. A discount rate is applied to recognise the time value of money and is unwound over the life of the provision. Details of the discount rates
used and a sensitivity assumption are set out in note 4.9.

Onerous contract provisions – Onerous contract provisions arise when the unavoidable costs of meeting contractual obligations exceed the cash
flows expected. The Group has onerous contract provisions of €94.9m (2018: €109.5m) which have been provided at the net present value of either
exiting the contract or fulfilling our obligations under the contract. The most significant component of these provisions relates to UK Municipal
PFI/PPP contracts which amount to €88.9m (2018: €101.7m). The provision has been based on the best estimate of likely future cash flows including
assumptions on tonnage inputs, plant performance and recyclates pricing. Details of the discount rates used and a sensitivity assumption are set out
in note 4.9.

Defined benefit pension schemes – The calculation of the present value of the defined benefit pension schemes is determined by using actuarial
valuations based on assumptions including discount rate, life expectancy and inflation rates. The principal assumptions used to measure schemes’
liabilities, sensitivities to changes in those assumptions and future funding obligations are set out in note 7.2.

Taxation – The recognition of deferred tax assets, particularly in respect of tax losses, is based upon management’s judgement that it is probable that
there will be taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. The Group assesses the availability
of future taxable profits using the same five year projections as used for the value in use calculations for impairment reviews. Adequate provisions
have been recognised where necessary in respect of any uncertain tax positions in the Group, based upon management’s assessment of the potential
outcomes of the relevant discussions with the tax authorities.

130

SECTION 2. SEGMENTAL INFORMATION

This section shows the performance, net assets and other information on a segmental basis. The Group’s segmental reporting reflects the
management structure which is aligned with the core activities of the Group.

The Group’s chief operating decision maker is considered to be the Board of Directors. The Group’s reportable segments are 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:

Commercial Waste
Hazardous Waste
Monostreams

Municipal
Group central services

Collection and treatment of commercial waste in the Netherlands and Belgium.
Industrial cleaning and treatment of hazardous waste in the Netherlands.
Production of materials from waste streams in specific end markets such as glass, electrical and
electronic equipment, organics and minerals in the Netherlands, Belgium, France, Germany,
Hungary and Portugal.
Operation of waste management facilities under long-term municipal contracts in the UK.
Head office corporate function.

Segmental reporting
The Commercial Waste reportable segment includes the Netherlands and Belgium operating segments which have been aggregated and reported as
one reportable segment as they operate in similar markets in relation to the nature of the products, services, processes and type of customer.

The Municipal Canada disposal meets the definition of a discontinued operation as stated in IFRS 5 Non-current assets held for sale and discontinued
operations and consequently the net results are presented as discontinued operations.

The profit measure the Board of Directors uses to evaluate performance is underlying EBIT. Underlying EBIT 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
Intra-segment
Commercial Waste

Hazardous Waste

Monostreams

Municipal

Inter-segment revenue
Total revenue from continuing operations

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

2019
€m
764.7
430.8
(1.1)
1,194.4

Restated*
2018
€m
736.9
422.2
(0.9)
1,158.2

211.3

231.0

213.3

204.4

195.2

200.5

(33.5)
1,780.7

(33.8)
1,760.3

131

NOTES TO THE FINANCIAL STATEMENTS

SECTION 2. SEGMENTAL INFORMATION CONTINUED

Results

Netherlands Commercial Waste
Belgium Commercial Waste
Commercial Waste

Hazardous Waste

Monostreams

Municipal

Group central services

Total underlying EBIT
Non-trading and exceptional items (note 3.4)
Total operating loss from continuing operations
Finance income
Finance charges
Finance charges – non-trading and exceptional items (note 3.4)
Share of results from associates and joint ventures
Loss before taxation and discontinued operations

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

2019
€m
53.2
33.3
86.5

7.0

12.9

0.8

Restated*
2018
€m
44.0
29.3
73.3

19.9

18.2

(6.6)

(21.7)

(22.3)

85.5
(142.1)
(56.6)
12.4
(35.8)
(9.4)
0.4
(89.0)

82.5
(115.1)
(32.6)
12.6
(35.4)
–
2.6
(52.8)

Net Assets

31 March 2019
Gross non-current assets
Gross current assets
Gross liabilities
Net assets (liabilities)
31 March 2018

Gross non-current assets
Gross current assets
Gross liabilities
Net assets (liabilities)

Commercial
Waste
€m

Hazardous
Waste
€m

Monostreams
€m

Municipal*
€m

Group central
services
€m

Tax, net
debt and
derivatives
€m

Total
continuing
operations
€m

Discontinued
operations
€m

Total
€m

880.6
210.1
(353.4)
737.3

163.4
114.7
(102.6)
175.5

804.2
197.5
(358.2)
643.5

263.2
37.5
(96.2)
204.5

183.8
43.3
(166.6)
60.5

188.2
43.6
(150.7)
81.1

159.0
34.6
(166.0)
27.6

285.3
59.8
(181.7)
163.4

14.1
9.8
(55.4)
(31.5)

99.2
4.9
(70.4)
33.7

38.7
53.3
(804.6)
(712.6)

1,439.6
465.8
(1,648.6)
256.8

–
67.5
(4.8)
62.7

1,439.6
533.3
(1,653.4)
319.5

29.1
74.7
(793.7)
(689.9)

1,669.2
418.0
(1,650.9)
436.3

–
–
–
–

1,669.2
418.0
(1,650.9)
436.3

*Municipal includes historic discontinued non-current assets of €0.5m (2018: €0.7m), current assets of €0.2m (2018: €0.2m) and gross liabilities of €nil (2018: €0.1m) in relation to the
UK Municipal discontinued operations.

132

SECTION 2. SEGMENTAL INFORMATION CONTINUED

Other disclosures

2019
Capital expenditure:

Property, plant and equipment
Intangible assets
Depreciation charge
Amortisation of intangibles
Impairment charge:
Intangible assets
Property, plant and equipment
Loans to joint ventures

Non-trading and exceptional items

2018
Capital expenditure:

Property, plant and equipment
Intangible assets
Depreciation charge
Amortisation of intangibles
Impairment charge:
Intangible assets
Property, plant and equipment
Non-trading and exceptional items

Commercial
Waste
€m

Hazardous
Waste
€m

Monostreams
€m

Municipal*
€m

Group central
services
€m

Total
Continuing
operations
€m

Discontinued
operations
€m

63.7
–
60.0
3.9

0.4
0.1
–
27.6

63.4
1.9
55.2
4.6

1.4
3.3
13.1

17.6
–
14.3
0.5

19.5
–
–
26.7

15.3
1.0
13.2
0.6

–
–
3.7

17.8
–
11.2
4.4

–
9.2
–
25.8

9.9
–
12.7
4.5

–
–
4.9

0.6
1.5
0.7
0.4

18.1
1.0
20.4
73.6

0.4
4.0
1.2
0.6

2.2
–
82.6

1.0
3.4
1.1
4.0

0.1
–
–
(2.2)

4.0
3.8
5.0
4.2

0.1
–
10.8

100.7
4.9
87.3
13.2

38.1
10.3
20.4
151.5

93.0
10.7
87.3
14.5

3.7
3.3
115.1

2.9
–
2.4
0.1

15.6
6.9
–
22.5

0.9
0.1
2.4
–

–
–
-

Total
€m

103.6
4.9
89.7
13.3

53.7
17.2
20.4
174.0

93.9
10.8
89.7
14.5

3.7
3.3
115.1

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

Geographical information – continuing operations
The Group’s segment assets (non-current assets being intangible assets, property plant and equipment and investments by geographical location) are
detailed below:

Netherlands
Belgium
UK
Canada
France
Portugal
Germany
Hungary

*The comparatives have been restated for acquisition accounting adjustments in relation to a prior year Hazardous Waste acquisition.

2019
€m
848.0
357.2
9.4
–
28.4
6.0
1.0
0.6
1,250.6

Restated*
2018
€m
953.3
363.1
32.6
42.1
30.0
6.4
1.1
0.6
1,429.2

133

NOTES TO THE FINANCIAL STATEMENTS

SECTION 3. OPERATING PROFIT AND TAX

This section contains the notes that relate to the results and performance of the Group during the year, along with the related accounting
policies that have been applied.

3.1 REVENUE RECOGNITION
The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 April 2018. IFRS 15 requires companies to apportion revenue from
customer contracts to separate performance obligations and recognise revenue as these performance obligations are satisfied. The majority of the
Group’s revenue is generated from the performance obligation to the customer to collect and process the waste. This represents a single performance
obligation and is recognised at a point in time when the waste is collected and accepted by Renewi. The revenue recognition of IFRS 15 by the Group
does not differ materially from the previous accounting practices.

In the Commercial segment where the contract with a customer includes the collection of waste with a positive value, the transaction price includes
an element of non-cash consideration. This has resulted in a change in accounting policy which increases revenue with a corresponding increase in
cost of sales for the value of the waste collected with no impact on or change to operating profit.

Accordingly, the adoption of IFRS 15 has not had a material impact on revenue recognition. In accordance with the new standard the Group elected to
apply the cumulative effect method and as a result prior year comparatives have not been restated.

Accounting policy
Under IFRS 15 revenue is defined as income arising in the course of the Group’s ordinary waste collection and processing activities and is recognised when
the control of goods or services transfer and is allocated to individual performance obligations. Revenue represents the fair value of consideration received
or receivable for goods and services provided in the normal course of business, including landfill tax but excluding sales taxes, discounts and inter-
company sales. Revenue is recognised either at a point in time for example when the goods or services are transferred or over time. Revenue is recognised
over time as the customer simultaneously receives and consumes the goods or services or when there is an enforceable right to payment for performance
completed to date. In general, the Group’s revenue is not subject to conditions that would imply a variable consideration.

Revenue recognition criteria for the key types of services have been examined, determined and documented on a divisional level, based on the
general and specific contracts with customers and applicable revenue types for each division and are as follows:

 Inbound revenue relates to the collection and/or processing of waste. The transaction price is based on contractually agreed prices for collecting and

processing the waste and differs depending upon the nature of the contract – contracts can be an all-in-tariff, split between rent, processing and
transport or on a price per tonne basis. Due to the very short time period between the start and completion of the performance obligations (usually on
the same day), the revenue recognition and the allocation of the transaction price over performance obligations is usually straightforward and
dependent on the daily collection and processing of the waste.
― Waste collection services: revenue is recognised at the point in time when the waste is delivered to our transfer stations or to a third party

processing facility.

― Waste processing services: where the Group’s revenue contracts include an obligation to process waste, revenue is recognised over time as

processing occurs.

 Outbound revenue relates to the sale of recyclate materials and products from waste and the generation of power from gas. The transaction price is
agreed with the customer either in a contract or in relation to a market index and is charged based on tonnage or kilowatt hour and in some situations
will include an additional charge for transport services.
― Sale of recyclate materials and products from waste: revenue is based on contractually agreed prices and is recognised at a point in time when

the risks and rewards related to the goods have passed to the buyer.

― Income from power generation: from gas produced by processes at anaerobic digestion facilities and landfill sites is recognised at a point in time

based on the volumes of energy produced and an estimation of the amount to be received.

 On-site revenue relates to activities and services provided to the customer on their own site, mainly cleaning services at customer installations. The
transaction price can be a contracted lump-sum or is charged by applying a fixed price by hour, litre or item depending on the nature of the contract.
― Hazardous waste industrial cleaning: revenue is recognised over time by reference to the stage of completion based on services performed

to date.

 Other includes delayed damages in the Municipal Division and other sundry items.

134

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.1 REVENUE RECOGNITION CONTINUED
The timing of payment from customers is generally aligned to revenue recognition and subject to agreed invoice terms. 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 once the Group has an obligation for its disposal. These amounts are shown in deferred revenue or accruals in the
financial statements as appropriate. Further details relating to deferred revenue are given in note 4.8. Accrued income (unbilled revenue) at the
balance sheet date is recognised at fair value based on services provided and contractually agreed prices. It is subsequently invoiced and accounted
for as a trade receivable and further details are set out in 4.7.

The practical expedient available under IFRS 15 has been taken whereby any financing element of the contract has been ignored as the timing difference
between the satisfaction of the obligations under the contract and the receipt of payment due under the contract are expected to be one year or less.

The Group’s Private Finance Initiative/Public Private Partnership (PFI/PPP) contracts in the Municipal Division 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. The part of the service element which covers the obligation to undertake major refurbishments and
renewals to maintain the infrastructure, known as lifecycle, expenditure such that it is handed over to the local authority in good working order is
deferred and only recognised as revenue when the service is provided. Income and costs relating to specific rights and obligations within the contracts
are transferred to deferred revenue or other receivables and either released or charged to the Income Statement over the period of delivery, further
details are given in note 4.4.

The following tables show the Group’s continuing revenue by type of service delivered and by primary geographic markets:

Revenue by type of service
2019
Inbound
Outbound
On-Site
Other
Total revenue
2018
Inbound
Outbound
On-Site
Other
Total revenue

Commercial
Waste
€m

Hazardous
Waste
€m

Monostreams
€m

Municipal
€m

Inter-segment
€m

Total
€m

969.2
151.5
44.2
29.5
1,194.4

919.9
179.3
44.1
14.9
1,158.2

91.5
4.1
115.7
–
211.3

110.5
19.1
101.4
–
231.0

71.7
138.9
–
2.7
213.3

60.8
141.2
–
2.4
204.4

167.3
5.9
–
22.0
195.2

163.8
7.6
–
29.1
200.5

(23.5)
(2.2)
(6.3)
(1.5)
(33.5)

(27.4)
(2.7)
(3.7)
–
(33.8)

1,276.2
298.2
153.6
52.7
1,780.7

1,227.6
344.5
141.8
46.4
1,760.3

135

NOTES TO THE FINANCIAL STATEMENTS

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.1 REVENUE RECOGNITION CONTINUED

Revenue by geographic market
2019
Netherlands
Belgium
UK
France
Other
Total revenue
2018
Netherlands
Belgium
UK
France
Other
Total revenue

Commercial
Waste
€m

Hazardous
Waste
€m

Monostreams
€m

Municipal
€m

Inter-segment
€m

Total
€m

764.0
430.4
–
–
–
1,194.4

736.3
421.9
–
–
–
1,158.2

211.3
–
–
–
–
211.3

231.0
–
–
–
–
231.0

113.9
62.6
–
24.2
12.6
213.3

97.5
71.7
–
23.1
12.1
204.4

–
–
195.2
–
–
195.2

–
–
200.5
–
–
200.5

(31.2)
(2.3)
–
–
–
(33.5)

(29.4)
(4.4)
–
–
–
(33.8)

1,058.0
490.7
195.2
24.2
12.6
1,780.7

1,035.4
489.2
200.5
23.1
12.1
1,760.3

Revenue recognised at a point in time amounted to €1,576.8m (2018: €1,540.3m) with the remainder recognised over time. The majority of the
Commercial, Municipal and Monostreams revenue is recognised at a point in time, whereas for Hazardous Waste the majority is recognised over time.

3.2 OPERATING LOSS
Detailed below are the key amounts recognised in arriving at operating loss for the year:

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) loss on disposal of property, plant and equipment
Non-trading and exceptional items
Net foreign exchange gain
Net impairment losses on financial and contract assets
Operating lease costs:
– Minimum lease payments
– Less sub-lease rental income

Note

7.1

4.2

4.1

3.4

4.7

2019
€m
430.7
89.7
13.3
101.1
(2.3)
151.5
(2.3)
14.7

41.9
(0.5)
41.4

Restated*
2018
€m
417.5
89.7
14.5
91.8
2.4
115.1
–
1.6

39.8
(0.3)
39.5

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

The total remuneration of the Group’s auditors, PricewaterhouseCoopers LLP and its associates, for services provided to the Group during the
year was:

– Audit of parent company and consolidated financial statements
– Audit of subsidiaries pursuant to legislation
Fees payable to the auditors pursuant to legislation

During the year €35,000 of non-audit services were provided by PwC.

136

2019
€m
0.3
1.5
1.8

2018
€m
0.2
1.3
1.5

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.3 OPERATING LEASES
Accounting policy
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.

From 1 April 2019 the Group adopts IFRS 16 Leases and further details on the transition and its impact are set out in section 1.

Minimum lease payments
The future aggregate minimum lease payments under non-cancellable operating leases for continuing operations 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

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

2019
€m
33.2
94.3
136.6
264.1
(3.7)
260.4

Restated*
2018
€m
35.7
77.1
148.3
261.1
(0.6)
260.5

137

NOTES TO THE FINANCIAL STATEMENTS

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.4 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. 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, significant restructuring of the activities of an entity including employee associated severance costs, acquisition
and disposal related transaction costs, integration costs, synergy delivery costs, significant fires, onerous contracts arising from
restructuring activities or if significant in size, profit or loss on disposal of properties or subsidiaries as these are irregular, the change in
fair value of non-hedged derivatives, ineffectiveness of derivative financial instruments, the impact of changing the discount rate on
provisions and amortisation of acquisition intangibles. The Group incurs costs each year in maintaining intangible assets which include
acquired customer relationships, permits and licences and excludes amortisation of these assets from underlying EBIT to avoid double
counting such costs within underlying results.

Exceptional items are considered individually and assessed at each reporting period.

Merger related costs:
Synergy delivery costs – cash
Synergy delivery costs – non-cash
Integration costs – cash
Integration costs – non-cash

Portfolio management activity:
Disposals
Loss on remeasurement of assets held for sale
Acquisition costs
UK Municipal

Other items:
UK Municipal – Derby contract issues
ATM soil issues
UK Municipal – Other contract issues
IAS 19 Employee benefits pension curtailment and past service costs
Income relating to fires
Restructuring charges

Exceptional finance charges – Derby contract issues
Ineffectiveness on cash flow hedges
Change in fair value of derivatives at fair value through profit or loss
Amortisation of acquisition intangibles
Non-trading and exceptional items in loss before tax (continuing operations)
Tax on non-trading and exceptional items
Exceptional tax credit
Non-trading and exceptional items in loss after tax (continuing operations)
Discontinued operations
Total non-trading and exceptional items in loss after tax

138

Note

4.1

6.3

2019
€m

32.1
12.1
12.5
0.1
56.8

(11.0)
19.5
0.2
–
8.7

59.3
6.5
5.0
(0.1)
(0.5)
–
70.2
5.0
4.3
0.1
6.4
151.5
(12.4)
(15.6)
123.5
22.5
146.0

2018
€m

13.9
2.6
8.5
–
25.0

–
–
0.5
25.6
26.1

–
2.9
56.9
–
(2.6)
0.1
57.3
–
–
–
6.7
115.1
(9.3)
(7.8)
98.0
(0.6)
97.4

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.4 NON-TRADING AND EXCEPTIONAL ITEMS CONTINUED
The non-trading and exceptional items include the following:

Merger related costs
Due to the significance of the merger on the Group and the associated synergy delivery projects, these costs are considered to be exceptional. Synergy
delivery costs of €44.2m (2018: €16.5m) and integration costs of €12.6m (2018: €8.5m) were incurred as the Group executes merger plans for generating
value. Synergy delivery costs include €12.1m of non-cash impairments principally relating to businesses in the Monostreams division due to
underperformance of the glass operations in the Netherlands and the simplification of the range of products at Coolrec. The total cost of €56.8m
(2018: €25.0m) was split €29.5m (2018: €4.9m) in cost of sales and €27.3m (2018: €20.1m) in administrative expenses.

Portfolio management activity
The disposals credit includes the profit on the sale of the Group’s share in the UK joint venture, Energen Biogas of €11.1m, the profit on sale of
transferring 50% of a Hazardous Waste ATM subsidiary to a joint venture net of initial fees relating to the ongoing disposal process for the Canada and
Reym businesses.

As announced on 8 November 2018 the Municipal Canada and Hazardous Waste Reym industrial cleaning business are being sold. Active disposal
programmes are underway and the criteria as set out for assets held for sale have been met. As a result, the carrying value of the Reym disposal group
has been assessed which has resulted in a loss on remeasurement of assets held for sale of €19.5m. This remeasurement has been allocated against
goodwill and has been recorded in administrative expenses.

Further transaction costs of €0.2m (2018: €0.5m) relating to the merger of Van Gansewinkel Groep BV (VGG) have been incurred in the year, principally
comprising legal and other advisory costs. These are considered exceptional as part of the overall total transaction costs.

The prior year UK Municipal charge of €25.6m included the exit of its loss-making anaerobic digestion facility at Westcott Park and the decision to
initiate the termination of the D&G PFI operating contract which was completed on 10 September 2018.

The total cost of €8.7m (2018: €26.1m) was split €nil (2018: €9.4m) in cost of sales and €8.7m (2018: €16.7m) in administrative expenses.

Other items
As previously communicated the Derby facility is two years late in commissioning and recognising the significant risk that the facility cannot be
commissioned in a timely manner with the possibility of termination as subsequent to year end an intention to terminate was received, there has
been an impact on the historic investment in this project which includes the original subordinated debt investment of €20.4m, goodwill of €4.3m and
other intangible assets of €10.6m. In addition, we have set up an onerous contract provision for €7.6m to cover ongoing losses and assumed
termination costs in the event that the project fails, a loss allowance against €11.6m of delay damages which we believe are owed to us by the
constructor Interserve but have remained unpaid for a period of time and accelerated the charge in relation to a prepayment of €4.8m.

The charge for ATM soil issues of €6.5m (2018: €2.9m) relates to the soil offset market issue and includes additional costs of logistics, off-site storage,
testing and legal advice.

The charge for UK Municipal other contract issues includes an onerous contract provision of €1.8m in relation to the ELWA contract due to anticipated
additional costs net of a release of €0.9m for the Elstow contract where a renegotiation has resulted in the provision set up in a prior year being no
longer required. In addition, €4.1m (2018: €2.2m) of historic contract right intangibles and plant and equipment relating to the ELWA contract have
also been impaired as these are no longer considered recoverable over the remaining life of the contract. The prior year charge of €59.7m related to
additional provisions of €30.7m and €33.5m at BDR and Wakefield respectively given the financial and operational performance of these assets.

The net IAS 19 Employee benefits credit includes a past service charge of €2.0m for the UK defined benefit pension scheme as a result of the impact of
the 2018 Court ruling for guaranteed minimum pension equalisation along with a curtailment gain of €2.1m which arose as the principal Dutch legacy
VGG defined benefit pension scheme was closed.

The net credit of €0.5m was the result of final insurance settlements relating to significant fires at two Commercial sites in the prior year.

The total charge of €70.2m (2018: €57.3m) was split €15.4m (2018: €58.6m) in cost of sales and €54.8m (2018: €1.3m credit) in administrative expenses.

139

NOTES TO THE FINANCIAL STATEMENTS

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.4 NON-TRADING AND EXCEPTIONAL ITEMS CONTINUED
Items recorded in finance costs
The exceptional finance costs include a loss allowance against the interest receivable on the subordinated debt in relation to the Derby UK Municipal
contract as described above. A revised repayment programme for the Cumbria PFI project borrowings has led to ineffectiveness being recognised for
the related interest rate swap.

Amortisation of acquisition intangibles
Amortisation of intangible assets acquired in business combinations of €6.4m (2018: €6.7m) is all recorded in cost of sales.

Exceptional tax
The exceptional tax credit of €15.6m (2018: €7.8m) relates to the change in tax rates and the recognition of tax losses in the Netherlands and further
details are given in note 3.5.

Discontinued
The carrying value of the Canadian disposal group has been assessed which has resulted in a loss on remeasurement of assets held for sale of €22.5m.
This remeasurement has been allocated against goodwill, intangible assets and property, plant and equipment and has been recorded in
discontinued administrative expenses.

3.5 TAXATION

This section details the accounting polices applied for tax, the current and deferred tax charges or credits in the year, a reconciliation of
the total tax expense to the accounting profit and the movements in deferred tax assets and liabilities.

Accounting policy
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 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.

The Group operates principally in the Netherlands, Belgium, the UK, France and Canada, all of which have their own tax legislation. Deferred tax assets
and liabilities have been calculated based on the substantively 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.

140

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.5 TAXATION CONTINUED
Income statement
The tax credit 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 charge
Deferred tax
– Origination and reversal of temporary differences in the current year
– Adjustment in respect of the prior year
Total deferred tax credit
Total tax credit for the year

2019
€m

Restated*
2018
€m

1.5

10.1
(0.4)
11.2

(23.8)
0.2
(23.6)
(12.4)

1.4

10.4
0.2
12.0

(13.2)
(0.2)
(13.4)
(1.4)

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

The tax on the Group’s loss for the year from continuing operations differs from the UK standard rate of tax of 19% (2018: 19%), as explained below:

Total loss before taxation

Tax credit based on UK tax rate of 19%
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-deductible goodwill impairment
Non-deductible impairment of loan to joint venture
Unrecognised deferred tax assets
Net exceptional credit relating to recognition of tax losses
Exceptional credit relating to change in Netherlands tax rate
Exceptional credit relating to change in Belgian tax rate
Change in tax rate
Total tax credit for the year

2019
€m
(89.0)

Restated*
2018
€m
(52.8)

(16.9)

(10.0)

(0.2)
2.3
0.9
–
4.9
4.8
6.0
(9.3)
(6.3)
–
1.4
(12.4)

–
1.7
2.1
0.2
–
–
12.9
–
–
(7.8)
(0.5)
(1.4)

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

The rate of UK corporation tax rate changed from 20% to 19% on 1 April 2017 and will change to 17% on 1 April 2020. As a result, the UK deferred
tax for the year has been calculated based on the substantively enacted rates.

Net exceptional credit in relation to tax losses
In view of the performance of the integrated Netherlands Commercial business in the current year and the Group’s forecasts for future profitability
of the Netherlands business, an exceptional tax credit of €10.5m has been recognised in relation to the utilisation of tax losses of the legacy Van
Gansewinkel Netherlands businesses included in the Dutch fiscal unity that can reasonably be expected in the coming years. In addition, there is an
exceptional tax charge of €1.2m for the impairment of the deferred tax asset brought forward in respect of Maltha Netherlands fiscal unity losses.

141

NOTES TO THE FINANCIAL STATEMENTS

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.5 TAXATION CONTINUED
Exceptional credit relating to change in Netherlands tax rate
For the accounting period ended 31 March 2019, the standard Netherlands corporate income tax rate was 25% and this will remain the case for the
period ending 31 March 2020. Under the corporate tax reform enacted by the Dutch government on 18 December 2018, the rate will reduce to 22.55%
for the period ending 31 March 2021 and 20.50% for the period ending 31 March 2022 and subsequent periods. As a result, Netherlands deferred tax
has been calculated at the substantively enacted rates depending on when the timing differences are expected to reverse. This has resulted in an
exceptional tax credit of €6.3m in the current year.

Exceptional credit relating to change in Belgian tax rate
For the accounting period ended 31 March 2018, the standard Belgian corporate income tax rate was 33.99%. Under the corporate income tax reform
as enacted by the Belgian government on 22 December 2017, there was be a phased reduction of this tax rate to 29.58% for accounting periods
starting on or after 1 January 2018 and furthermore 25% from 1 January 2020. As a result, the Belgian deferred tax was calculated at the substantively
enacted rates depending on when the timing differences are expected to reverse. This resulted in an exceptional tax credit of €7.8m in the prior year.

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.

The analysis of the net deferred tax liability and the deferred tax credit in the Income Statement is as set out below:

Balance sheet

Income Statement

2019
€m
2.7
33.5
4.8
(49.7)
(8.8)
(17.5)

2018
€m
5.1
21.7
4.2
(59.5)
(14.2)
(42.7)

Retirement benefit schemes
Tax losses
Derivative financial instruments
Capital allowances
Other timing differences
At 31 March

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

The movement in the deferred tax balance during the year is:

Net deferred tax liability at 1 April
Credited to Income Statement
Charged to equity
Transferred to disposal groups classified as held for sale (note 6.2)
Exchange
Net deferred tax liability at 31 March

Analysed in the balance sheet, after offset of balances within countries, as:
Deferred tax assets
Deferred tax liabilities
Net deferred tax liability at 31 March

2019
€m
(0.7)
11.8
0.8
5.8
5.9
23.6

2019
€m
(42.7)
23.6
(2.5)
4.2
(0.1)
(17.5)

38.6
(56.1)
(17.5)

Restated*
2018
€m
(0.6)
4.8
–
4.6
4.6
13.4

2018
€m
(54.0)
14.4
(2.5)
–
(0.6)
(42.7)

28.5
(71.2)
(42.7)

The majority of the €38.6m (2018: €28.5m) deferred tax asset and the majority of the €56.1m (2018: €71.2m) deferred tax liability are expected to be
recovered after more than one year.

142

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.5 TAXATION CONTINUED
As at 31 March 2019, the Group had unused trading losses (tax effect) of €76.2m (2018: €67.5m) available for offset against future profits. A deferred tax
asset has been recognised in respect of €34.1m (2018: €21.7m) of such losses and recognition is based on management’s projections of future profits
in the relevant companies. Certain deferred tax assets are recognised in jurisdictions that made a taxable loss in 2019 and this is principally due to
exceptional costs incurred in 2019 that are not expected to occur going forward. No deferred tax asset has been recognised in respect of the remaining
€42.1m (2018: €45.8m) 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, €15.0m recognised and €13.2m unrecognised, expire after 9 years.

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 2019 amounted to €262.8m (2018: €248.7m) and the
unrecognised deferred tax on the unremitted earnings is estimated to be €0.1m (2018: €0.1m) 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.

143

NOTES TO THE FINANCIAL STATEMENTS

SECTION 3. OPERATING PROFIT AND TAX CONTINUED

3.6 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to the owners of the parent entity by the weighted average
number of ordinary shares outstanding at the year end excluding shares held by the Employee Share Trust.

Diluted earnings per share is calculated by dividing profit for the year attributable to the owners of the parent entity by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of any commitments made by the
Group to issue shares in the future.

Underlying basic and diluted earnings per share excludes non-trading and exceptional items net of related tax. Non-trading and
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. The Directors believe that adjusting earnings per share in this way enables
comparison with historical data calculated on the same basis to reflect the business performance in a consistent manner and reflect how
the business in managed and measured on a day to day basis.

2019

Weighted
average
number of
shares
million

Earnings
per share
cent

Earnings
€m
46.9
0.6

2018 Restated*

Weighted
average
number of
shares
million

Earnings
per share
cent

Earnings
€m
46.6
(0.5)

47.5

796.7

5.9

46.1

799.9

5.8

Continuing operations
Underlying profit after tax
Non-controlling interests
Underlying earnings per share attributable to owners
of the parent
Adjustments:
Non-trading and exceptional items
Tax on non-trading and exceptional items
Exceptional tax
Non-controlling interests
Basic loss per share attributable to owners of the parent
Dilutions
Diluted loss per share attributable to owners of the parent

Underlying earnings per share attributable to owners
of the parent
Dilutions
Underlying diluted earnings per share attributable to
owners of the parent

(151.5)
12.4
15.6
4.3
(71.7)
–
(71.7)

47.5
–

47.5

796.7
0.1
796.8

796.7
0.1

796.8

Discontinued operations
Basic loss per share attributable to owners of the parent
Diluted loss per share attributable to owners of the parent

(21.1)
(21.1)

796.7
796.8

Underlying loss per share attributable to owners of the
parent
Underlying diluted loss per share attributable to owners of
the parent

1.4

796.7

796.8

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

144

(115.1)
9.3
7.8
0.2
(51.7)
–
(51.7)

46.1
–

46.1

(2.5)
(2.5)

(3.1)

(9.0)
–
(9.0)

5.9
–

5.9

(2.6)
(2.6)

0.2

799.9
0.5
800.4

799.9
0.5

800.4

799.9
800.4

799.9

800.4

(6.5)
–
(6.5)

5.8
–

5.8

(0.3)
(0.3)

(0.4)

SECTION 4. OPERATING ASSETS AND LIABILITIES

This section contains balance sheet notes showing the assets and liabilities used to generate the Group’s results and the related
accounting policies.

4.1 INTANGIBLE ASSETS
Accounting policy
Goodwill represents the excess of the purchase consideration over the fair value of the Group’s share of the net identifiable assets at the date of
acquisition and is measured at cost less accumulated impairment losses. 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.

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. 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.

Landfill void represents the acquisition of a landfill operation in the Netherlands in 2006 when 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 16 years.

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

145

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.1 INTANGIBLE ASSETS CONTINUED
Intangible assets are analysed as follows:

Cost
At 1 April 2017
Additions
Acquisition through business combination
Disposals
Exchange
At 31 March 2018
Purchase price allocation adjustment (note 6.1)
At 31 March 2018 – restated
Additions
Acquisition through business combinations
Disposals
Transferred to disposal groups classified as held for sale (note 6.2)
Exchange
At 31 March 2019
Accumulated amortisation and impairment
At 1 April 2017
Amortisation charge
Impairment charge
Disposals
Exchange
At 31 March 2018
Amortisation charge
Impairment charge
Disposals
Transfer to disposal group classified as held for sale (note 6.2)
Exchange
At 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018 – restated
At 31 March 2017

Goodwill
€m

Landfill void
€m

Computer
software and
others
€m

Acquisition
related
intangibles
€m

660.8
–
14.1
–
(0.1)
674.8
8.2
683.0
–
–
(5.1)
(57.3)
0.1
620.7

63.7
–
–
–
–

63.7
–
4.3
–
–
–
68.0

552.7
619.3
597.1

25.6
–
–
–
–
25.6
–
25.6
–
–
–
–
–
25.6

16.7
1.5
–
–
–

18.2
1.0
–
–
–
–
19.2

6.4
7.4
8.9

51.3
10.7
–
(1.5)
(0.6)
59.9
–
59.9
4.9
–
(2.0)
(8.5)
0.6
54.9

16.4
6.3
3.7
(1.5)
(0.1)
24.8
5.9
14.3
(1.9)
(3.6)
–
39.5

15.4
35.1
34.9

74.2
–
0.3
–
(0.2)
74.3
–
74.3
–
0.1
(0.1)
(1.3)
–
73.0

30.2
6.7
–
–

(0.1)
36.8
6.4
–
–
(1.3)
–
41.9

31.1
37.5
44.0

Total
€m

811.9
10.7
14.4
(1.5)
(0.9)
834.6
8.2
842.8
4.9
0.1
(7.2)
(67.1)
0.7
774.2

127.0
14.5
3.7
(1.5)
(0.2)
143.5
13.3
18.6
(1.9)
(4.9)
–
168.6

605.6
699.3
684.9

The additions of €4.9m (2018: €10.7m) include €3.4m (2018: €6.9m) of software and €1.5m (2018: €3.8m) contract rights in relation to Municipal contracts.

Of the total amortisation charge of €13.3m (2018: €14.5m), €6.4m (2018: €6.7m) related to intangible assets arising on acquisition. Of the remaining
amortisation expense of €6.9m (2018: €7.8m), €1.6m (2018: €2.4m) has been charged in cost of sales and €5.3m (2018: €5.4m) has been charged in
administrative expenses.

The goodwill impairment charge of €4.3m (2018: nil) related to the Derby contract in UK Municipal. The other intangibles impairment charge of €14.3m
(2018: €3.7m) related to €13.8m (2018: €2.2m) of contract right intangibles in UK Municipal in relation to the Derby and ELWA contracts as it has been
determined that they are no longer recoverable and €0.5m (2018: €1.5m) of software in the Commercial Division and Group Central Services as part
of the integration programme. Further details are set out in note 3.4.

The net book value of acquisition related intangibles of €31.1m (2018: €37.5m) included customer relationships of €20.8m (2018: €23.0m), permits
of €6.3m (2018: €7.2m) and licences of €3.4m (2018: €6.6m).

146

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.1 INTANGIBLE ASSETS CONTINUED
Goodwill impairment
Impairment testing is carried out at a cash generating unit (CGU) level on an annual basis.

The significant CGUs are Netherlands Commercial Waste, Belgium Commercial Waste, Hazardous Waste and Monostreams which are in line with the
operating segments explained in section 2. A summary is set out below:

Netherlands Commercial Waste
Belgium Commercial Waste
Commercial Waste
Hazardous Waste*
Monostreams
Municipal*
Total goodwill

2019
€m
231.5
136.3
367.8
102.4
82.5
–
552.7

2018
€m
231.5
136.3
367.8
150.8
82.5
18.2
619.3

*An element of the Hazardous Waste and Municipal CGUs goodwill are included within assets held sale

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 are forecast
revenue and underlying EBIT. The forecast revenues in these models are based on management’s predictions of overall market growth rates,
including both volume and price. Underlying EBIT margin is the average EBIT 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.

2019
Revenue (% annual growth rate)
Underlying EBIT margin (average % of revenue)
Long-term growth rate
Pre-tax discount rate

2018
Revenue (% annual growth rate)
Underlying EBIT margin (average % of revenue)
Long-term growth rate
Pre-tax discount rate

Netherlands
Commercial
Waste
3.7%
6.4%
2.0%
8.8%

Netherlands
Commercial
Waste
3.4%
7.9%
2.0%
8.7%

Belgium
Commercial
Waste
3.7%
5.9%
2.0%
9.1%

Belgium
Commercial
Waste
3.8%
6.2%
2.0%
9.1%

Hazardous
Waste
7.0%
9.5%
2.0%
8.6%

Hazardous
Waste
3.4%
11.0%
2.0%
8.6%

Monostreams
(1.9)%
5.1%
2.0%
8.8%

Monostreams
1.7%
7.6%
2.0%
9.1%

Sensitivity to changes in assumptions
The Group performs sensitivity analysis of the impairment testing by considering reasonable changes in the key assumptions used. For the
Commercial Waste and Hazardous Waste CGUs these results demonstrated significant headroom and it is concluded that no reasonably possible
change to the assumptions would result in an impairment charge.

The headroom for the Monostreams CGU is more limited given the recent performance which has resulted in restructuring initiatives being
implemented. At 31 March 2019 the recoverable amount for this CGU exceeds the carrying value by €21m. On a sensitised profit basis applying
a 8% profit reduction in the terminal value or with a 0.5% increase in the discount rate the headroom would reduce to €6m.

147

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.2 PROPERTY, PLANT AND EQUIPMENT
Accounting policy
Property, plant and equipment, except for freehold land and assets under construction, is stated at cost less accumulated depreciation and provision
for impairment. Freehold land is not depreciated. 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. 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.

Depreciation is provided to write off cost (less the expected residual value) on a straight line basis over the expected useful economic lives as follows:

Buildings
Landfill site development costs including engineering works
Plant and installations
Trucks, cars and service vehicles
Other items of plant and machinery
Computer equipment
Fixtures and fittings

Property, plant and equipment are analysed as follows:

Cost
At 1 April 2017
Acquisition through business combination
Additions
Disposals
Exchange
At 31 March 2018
Additions
Disposals
Transfer to disposal groups classified as held for sale (note 6.2)
Reclassifications
Exchange
At 31 March 2019
Accumulated depreciation and impairment
At 1 April 2017
Depreciation charge
Impairment charge
Disposals
Exchange
At 31 March 2018
Depreciation charge
Impairment charge
Reversal of prior year impairment charge
Disposals
Transfer to disposal groups classified as held for sale (note 6.2)
Reclassifications
Exchange
At 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
At 31 March 2017

Up to 30 years
Up to 30 years (over the operational life of the site)
Up to 20 years
Up to 12 years
5 to 15 years
3 to 5 years
Up to 10 years

Land and
buildings
€m

Landfill
sites
€m

Plant and
machinery
€m

523.8
5.6
18.6
(11.0)
(4.7)
532.3
19.9
(15.0)
(72.7)
(1.0)
2.1
465.6

138.0
18.4
2.9
(4.2)
(1.6)
153.5
18.5
–
(0.5)
(5.9)
(28.8)
–
0.9
137.7

327.9
378.8
385.8

54.7
–
0.8
(0.9)
–
54.6
11.8
–
–
1.4
–
67.8

47.4
1.2
–
(0.4)
–
48.2
0.9
–
–
–
–
–
–
49.1

18.7
6.4
7.3

793.1
3.1
74.5
(41.1)
(1.0)
828.6
71.9
(29.8)
(75.8)
0.3
0.6
795.8

466.0
70.1
0.4
(32.8)
(0.7)
503.0
70.3
10.3
–
(25.4)
(45.8)
0.7
0.2
513.3

282.5
325.6
327.1

Total
€m

1,371.6
8.7
93.9
(53.0)
(5.7)
1,415.5
103.6
(44.8)
(148.5)
0.7
2.7
1,329.2

651.4
89.7
3.3
(37.4)
(2.3)
704.7
89.7
10.3
(0.5)
(31.3)
(74.6)
0.7
1.1
700.1

629.1
710.8
720.2

148

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.2 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Depreciation expense of €85.1m (2018: €84.5m) has been charged in cost of sales, €2.2m (2018: €2.8m) in administrative expenses and €2.4m (2018:
€2.4m) in discontinued operations.

The impairment charge of €10.3m (2018: €3.3m) includes €9.3m relating to the Monostreams division due to the underperformance of the glass
operations in the Netherlands and the simplification of the range of products at Coolrec resulting in site closures. In addition €0.9m relates to plant
and equipment for the underperforming ELWA contract and €0.1m of merger related items in Belgium Commercial. In the prior year €2.0m related to
the fires in the Netherlands and Belgium and €1.3m related to the synergy delivery programme in the Commercial Division. The impairment charge
was split €9.3m (2018: €3.1m) in cost of sales and €1.0m (2018: €0.2m) in administrative expenses. The €0.5m reversal of the prior year impairment
relates to a Netherlands Commercial site which has been disposed of in the current year and the impairment credit has been included in exceptional
cost of sales.

Plant and machinery includes assets under construction of €11.6m (2018: €11.5m), land and buildings includes assets under construction of €3.0m
(2018: €11.0m) and landfill sites includes assets under construction of €10.7m (2018: €nil).

Included in plant and machinery are assets held under finance leases with a net book value of €33.2m (2018: €43.4m) and in land and buildings are
assets under finance leases with a net book value of €2.0m (2018: €5.5m).

4.3 INVESTMENTS AND LOANS TO ASSOCIATES AND JOINT VENTURES
Accounting policy
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.

The Group has elected to designate the other unlisted investments as measured at fair value through other comprehensive income. They are initially
recorded at fair value and then remeasured at subsequent reporting dates with the unrealised gains and losses recognised in other comprehensive
income. Short term investments are measured at fair value through profit or loss with unrealised gains and losses recognised in the Income Statement.

Loans to joint ventures and associates are measured at amortised cost and where appropriate a 12 month expected credit loss allowance is recorded
on initial recognition. If there is subsequent evidence of a significant increase in the credit risk the allowance is increased to reflect the full lifetime
expected credit loss.

Key judgements
The Group has a 50.001% interest in the joint venture Wakefield Waste Holdings Limited however the Group does not have control as each partly
jointly controls the entity and as a result it is appropriate to equity account.

Induserve VOF is owned 66.7% by the Group however it does not have control as the contractual agreement requires unanimous consent and
consequently the entity is classified as a joint operation.

149

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.3 INVESTMENTS AND LOANS TO ASSOCIATES AND JOINT VENTURES CONTINUED
The carrying amount of investments and loans to associates and joint ventures are as follows:

At 1 April 2017
Additions
Share of retained profits
Dividend income
Fair value adjustment on cash flow hedges
Impairment charge
Repayments
Exchange
At 31 March 2018
Acquired
Additions
Share of retained (losses) profits
Dividend income
Fair value adjustment on cash flow hedges
Loss allowance
Repayments
Disposal
Exchange
At 31 March 2019

Loans

Loans to
associates and
joint ventures
€m
23.3
0.1
–
–
–
–
(0.3)
(0.6)
22.5
–
–
–
–
–
(20.4)
(1.6)
–
0.4
0.9

Investments

Other unlisted
investments
€m
4.7
–
–
–
–
–
–
–
4.7
–
–
–
–
–
–
–
–
–
4.7

Associates
€m
6.7
–
0.9
(0.6)
0.7
(0.8)
–
(0.1)
6.8
–
–
0.6
(0.6)
0.2
–
–
–
–
7.0

Short term
investments
€m
–
–
–
–
–
–
–
–
–
–
5.9
–
–
–
–
–
–
–
5.9

Total
investments
€m
18.5
–
2.6
(1.4)
0.7
(1.1)
–
(0.2)
19.1
3.8
5.9
0.4
(0.8)
0.2
–
–
(6.8)
–
21.8

Joint ventures
€m
7.1
–
1.7
(0.8)
–
(0.3)
–
(0.1)
7.6
3.8
–
(0.2)
(0.2)
–
–
–
(6.8)
–
4.2

The loss allowance in the current year of €20.4m relates to the UK Municipal Derby contract as explained in note 3.4. The prior year impairment of
investments of €1.1m related to UK Municipal investments. Both charges were recorded in administrative expenses.

The loans to associates and joint ventures are split €0.9m current (2018: €6.8m) and €nil non-current (2018: €15.7m). Total investments are split €5.9m
current (2018: €nil) and €15.9m non-current (2018: €19.1m).

Where investments in joint ventures are held at nil as the Group’s share of losses exceeds the carrying amount, the Group’s share of losses in the year
was €54.7m (2018: €2.7m profit). Cumulatively losses of €67.0m (2018: €12.3m) are unrecognised.

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 associated investments are shown in note 8.1. No joint venture or associate is considered individually material to the
Group for further disclosure.

150

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.4 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.

Accounting policies and key judgements
Financial assets relating to PFI/PPP contracts are classified as financial assets at amortised cost and are initially recognised at the fair value of
consideration receivable and subsequently at amortised cost. These service concession arrangements under IFRIC 12 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 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.

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 reduced.

 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.

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 act as agent
versus principal in the provision of construction services.

In light of these conclusions and the historic 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.

151

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.4 FINANCIAL ASSETS RELATING TO PFI/PPP CONTRACTS CONTINUED
Canadian PPP contract
The Group’s Canadian PPP arrangement involves the construction of waste management facilities 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 the Group acts as principal in this contract. Revenue and costs during the construction were
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.

On 8 November 2018 the Group announced its intention to exit Municipal Canada and at 31 March 2019 it met the definition of a discontinued
operation as stated in IFRS 5 Non-current assets held for sale and discontinued operations, consequently the net results are presented as
discontinued operations in the Income Statement and the assets and liabilities are presented as held for sale. Further details are given in notes 6.2
and 6.3.

Other information for PFI/PPP contracts
The table below sets out the Group’s interest in service concession arrangements as at 31 March 2019.

Contract
Argyll & Bute

Cumbria

Wakefield

Barnsley, Doncaster
and Rotherham

Derby City
and Derbyshire

East London
Waste Authority

City of Surrey Canada
(discontinued operation)

Financial close
September 2001

Full Service Commencement
April 2003

Contract Expiry
September 2026

Interests in Special Purpose Vehicle
Renewi: 100%

June 2009

April 2013

June 2034

Renewi: 100%

January 2013

December 2015

February 2038

March 2012

July 2015

June 2040

August 2014

Mid 2018

March 2042

December 2002

August 2007

December 2027

Renewi: 50.001%
Equitix Infrastructure 4
Limited: 49.999%

Renewi: 75%
SSE Generation Limited: 25%

Renewi: 50%
Interserve Developments No 4
Limited: 50%

Renewi: 20%
John Laing Environmental Assets
Group (UK) Limited: 80%

February 2015

June 2018

May 2043

Renewi: 100%

The Dumfries and Galloway PFI contract was exited on 10 September 2018. This contract was not capable of meeting the waste regulations in
Scotland requiring full diversion from landfill and long-running negotiations were unable to agree the required amendments without materially
increasing risk to Renewi. As noted above the Canada contract is now included in assets of disposal groups classified as held for sale. There have been
no changes to the other arrangements during the year ended 31 March 2019. Further disclosures in respect of service concession arrangements as
required by paragraph 6 SIC 29 are provided on pages 54 to 59 of the Municipal operating review.

152

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.4 FINANCIAL ASSETS RELATING TO PFI/PPP CONTRACTS CONTINUED
The movements in financial assets during the year are as follows:

At 1 April 2017
Income recognised in the Income Statement: Interest Income (note 5.4)
Income recognised in the Income Statement: Discontinued operations (note 6.3)
Advances
Repayments
Exchange
At 31 March 2018
Income recognised in the Income Statement: Interest Income (note 5.4)
Income recognised in the Income Statement: Discontinued operations (note 6.3)
Advances
Repayments
Transfer to disposal groups classified as held for sale (note 6.2)
Exchange
At 31 March 2019
Current
Non-current
At 31 March 2019
Current
Non-current
At 31 March 2018

The table below reconciles the financial asset repayment to the statement of cash flows:

Capital received in respect of PPP financial assets included in cash flows from operating activities*
Capital received in respect of PFI/PPP financial assets included in cash flows from investing activities*
Interest in relation to PFI/PPP financial assets included in finance income in cash flows from investing activities

€m
209.1
9.7
1.3
9.2
(15.2)
(8.8)
205.3
9.5
1.3
2.9
(24.4)
(44.0)
5.2
155.8
6.0
149.8
155.8
15.4
189.9
205.3

2018
€m
–
4.5
10.7
15.2

2019
€m
8.6
4.4
11.4
24.4

*Capital received in respect of PFI/PPP financial assets is an investing cash flow in relation to the UK contracts where the Group acts as agent and as an operating cash flow in relation
to the Canadian contract where the Group acts as principal as previously explained.

4.5 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

2019
€m
0.1
15.7
0.1
–

2018
€m
0.8
19.2
0.3
3.4

153

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.6 INVENTORIES
Accounting policy
Inventories are stated at the lower of cost and net realisable value and are measured on a first in first out basis.

Inventories are analysed as follows:

Raw materials and consumables
Finished goods

2019
€m
14.3
11.7
26.0

2018
€m
14.2
12.4
26.6

There was a write down of €2.3m (2018: €nil) of inventories to net realisable value in the Monostreams division and this was recognised as an
exceptional cost of sale.

4.7 TRADE AND OTHER RECEIVABLES
Accounting policy
Trade receivables and accrued income do not carry interest and are initially recognised at fair value and are subsequently measured at amortised cost
net of impairment loss allowances. Accrued income relates to the Group’s rights to consideration for work completed but not billed at the reporting
date until they become unconditional, at which point they are transferred to trade receivables. Unbilled amounts arise when revenue is recognised
prior to an invoice being raised to the customer; typically, this arises when supporting documentation is required to be delivered with the invoice, the
invoice needs to be agreed with the customer prior to issue or revenue is recognised over time with the invoice only raised on completion of all the
performance obligations.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime expected allowance for all trade
receivables and accrued income. The ECL on trade receivables is estimated using a provision matrix by reference to past default experience of the
debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of
the industry in which the debtor operates and an assessment of both the current and forecast conditions at the reporting date. To measure the ECL,
trade receivables and accrued income have been grouped based on divisional credit risk characteristics and the days past due. Accrued income
relates to unbilled services provided and has substantially the same risk characteristics as the trade receivables for the same types of contracts. The
Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for accrued income.
The expected loss rates are based on the payment profiles of revenue and the corresponding historical credit losses experienced. There have been no
changes in the estimation techniques or significant assumptions during the current reporting period.

The Group has entered into invoice finance facilities whereby certain of its trade receivables are sold to third parties on a regular basis. Trade
receivables subject to these arrangements are derecognised when the Group’s rights to receive cash flows and substantially all the risks and rewards
of ownership 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. This is determined by the extent to which the Group remains exposed to changes
in the value of the transferred asset being 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. Amounts receivable under invoice finance arrangements from the third party
previously classified as amortised cost financial assets are now classified at fair value through profit and loss as they are held within a business model,
the objective of which is to sell contractual cash flows.

154

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.7 TRADE AND OTHER RECEIVABLES CONTINUED
Trade and other receivables are analysed as follows:

Non-current assets
Deferred consideration
Prepayments

Current assets
Trade receivables
Accrued income
Loss allowance
Trade receivables and accrued income – net
Deferred consideration
Other receivables
Prepayments

2019
€m

0.5
–
0.5

178.5
73.8
(18.1)
234.2
0.2
26.5
17.9
278.8

2018
€m

0.7
4.6
5.3

185.1
64.0
(8.3)
240.8
0.2
34.7
18.4
294.1

As at 31 March 2019, the carrying amount included in trade and other receivables representing the Group’s continuing involvement in trade
receivables, subject to invoice finance facilities, totalled €2.4m (2018: €4.3m) in trade receivables and €13.0m (2018: €14.7m) in other receivables. The
other receivables amount is owed to the Group from the financial institutions providing the facilities being the portion of the receivable that has been
sold that is not financed but is covered by credit insurance.

Other receivables also include various indirect tax receivables of €5.1m (2018: €4.1m) and accrued interest of €3.5m (2018: €6.0m). As explained in note
3.4 €5.0m (2018: €nil) of accrued interest receivable was impaired. No other financial assets within other receivables were impaired.

Movement in the loss allowance of trade receivables and accrued income:
The expected credit loss allowance for trade receivables and accrued income is equivalent to 7.2% (2018: 3.3%) of gross trade receivables and
accrued income.

At 1 April
Charged to Income Statement
Utilised
Transfer to disposal groups classified as held for sale (note 6.2)
Exchange
At 31 March

Ageing of trade receivables and accrued income that are past due but not impaired:

Current
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*
Loss allowance

*The 2019 impairment includes €11.6m impairment in relation to the Derby contract as explained in note 3.4.

155

2019
€m
8.3
14.7
(4.8)
(0.1)
–
18.1

2019
€m
195.2
33.4
3.5
2.1
18.1
(18.1)
234.2

2018
€m
9.9
2.5
(3.9)
–
(0.2)
8.3

2018
€m
206.0
29.8
2.0
3.0
8.3
(8.3)
240.8

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.7 TRADE AND OTHER RECEIVABLES CONTINUED
Included in the total loss allowance is a specific loss allowance of €11.7m where the expected credit loss is 100% of the gross receivable balance.
Within the remaining trade receivables and accrued income the concentration of credit risk lies within the overdue balance where the expected credit
loss represents an average of 14% of the gross balance.

The carrying amounts of trade and other receivables are denominated in the following currencies:

Euro
Sterling
Canadian Dollar

2019
€m
251.8
27.5
–
279.3

4.8 TRADE AND OTHER PAYABLES AND OTHER NON-CURRENT LIABILITIES
Accounting policy
Trade and other payables are not interest bearing and are measured initially at fair value and subsequently held at amortised cost.

Trade and other payables and other non-current liabilities are analysed as follows:

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

2019
€m

198.9
40.2
67.7
160.4
51.4
–
518.6

3.3
3.0
–
0.2
6.5

2018
€m
256.6
39.8
3.0
299.4

2018
€m

224.3
43.2
64.3
168.3
46.9
0.1
547.1

3.1
4.0
0.4
0.2
7.7

Deferred revenue primarily relates to waste received or collected which has not yet been processed in accordance with the performance obligations
of the contracts with customers. A month end stock count is undertaken to calculate the unprocessed waste adjustment to revenue with a
corresponding credit to deferred revenue. Additionally, in the Municipal division deferred revenue relates to the service element of the PFI/PPP
contracts known as lifecycle as explained in note 3.1. Of the deferred revenue recognised at 31 March 2018 of €50.9m (2017: €37.7m), €44.7m
(2018: €34.8m) has been recognised in revenue during the following year.

The carrying amounts of trade and other payables and other non-current liabilities are denominated in the following currencies:

Euro
Sterling
Canadian Dollar

2019
€m
451.4
73.7
–
525.1

2018
€m
474.9
74.9
5.0
554.8

156

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.9 PROVISIONS
Accounting policy
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. A discount is applied to recognise the time value of money and is unwound over the life of the provision. 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 and aftercare provisions are recognised at the net present value (NPV) of the estimated future expenditure required to settle the Group’s
restoration and aftercare obligations at its landfill and mineral extraction sites. Full provision is made for the Group’s unavoidable costs in relation to
restoration liabilities. Provision is made for the NPV of post closure costs (aftercare) as the aftercare liability arises. Costs are charged to the Income
Statement based on the quantity of waste deposited in the year and when the obligation recognised as a provision gives access to future economic
benefits an asset is recognised in property, plant and equipment.

 Onerous contract provisions are recognised when the unavoidable costs of meeting the obligation under the contract exceed the economic benefits

expected to be received.

 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.

Provisions are analysed as follows:

At 1 April 2017
Provided in the year
Released in the year
Finance charges – unwinding of discount (note 5.4)
Utilised in the year
Reclassified to deferred revenue
Exchange
At 31 March 2018
Provided in the year
Released in the year
Finance charges – unwinding of discount (note 5.4)
Utilised in the year
Transfer to disposal groups classified as held for sale (note 6.2)
Reclassifications
Exchange
At 31 March 2019
Current
Non-current
At 31 March 2019
Current
Non-current
At 31 March 2018

Site
restoration
and
aftercare
€m
132.5
0.4
–
4.6
(3.9)
–
–
133.6
2.1
–
4.5
(4.3)
–
2.8
0.2
138.9
8.2
130.7
138.9
5.4
128.2
133.6

Restructuring
€m
7.7
9.9
(0.2)
–
(8.4)
–
–
9.0
6.0
(0.1)
–
(7.3)
–
–
–
7.6
7.6
–
7.6
9.0
–
9.0

Onerous
contracts
€m
53.8
74.5
(4.5)
1.6
(15.0)
–
(0.9)
109.5
11.3
(0.9)
3.7
(27.0)
–
(2.8)
1.1
94.9
26.1
68.8
94.9
23.1
86.4
109.5

Other
€m
30.4
3.8
(0.7)
0.1
(4.7)
(3.9)
(0.1)
24.9
10.0
(0.5)
0.2
(4.0)
(0.8)
–
0.1
29.9
13.5
16.4
29.9
9.4
15.5
24.9

Total
€m
224.4
88.6
(5.4)
6.3
(32.0)
(3.9)
(1.0)
277.0
29.4
(1.5)
8.4
(42.6)
(0.8)
–
1.4
271.3
55.4
215.9
271.3
46.9
230.1
277.0

157

NOTES TO THE FINANCIAL STATEMENTS

SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED

4.9 PROVISIONS CONTINUED
Site restoration and aftercare
The site restoration provision at 31 March 2019 related to the cost of final capping and covering of the landfill sites and mineral extractions 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 32 years from the balance sheet date and may be impacted by a number of factors including changes in legislation and
technology. 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 primarily relates to redundancy and related costs incurred as a result of restructuring initiatives including the delivery of
merger related synergies. As at 31 March 2019 the provision is expected to be spent in the following year as affected employees leave the business.

Onerous contracts
Onerous contracts are provided at the net present value 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. Further details of the additions in the year
principally relate to the UK Municipal business and Monostreams and are shown in note 3.4.

Other
Other provisions principally cover dilapidations, long-service employee awards, legal claims, 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.

Sensitivity to changes in discount rates
Landfill provisions have been discounted in both the current and prior year at a real discount rate of either 0.98%, 1.47% or 2.45% depending on the
date for transfer of future obligations to the relevant local authorities. The impact of a 0.5% reduction in the discount rate would result in an increase
in the provisions of approximately €10m.

The significant onerous contract provisions relating to the Municipal UK Division have been discounted at a real rate of 1.96% (2018: 1.96%). A 0.5%
reduction in the discount rate would result in an increase in the provisions of approximately €4m.

158

SECTION 5. CAPITAL STRUCTURE AND FINANCING

This section outlines how the Group manages its capital structure and related financing costs. It includes cash, borrowings, derivatives
and the equity of the Group. The instruments in place enable the Group to maintain the required capital structure in order to finance the
activities both now and in the future.

Total net debt reflects the Group’s cash and cash equivalents, core borrowings and PFI/PPP non-recourse net debt. Core net debt includes
cash and cash equivalents but excludes the non-recourse net debt relating to the UK PFI/PPP contracts.

5.1 MOVEMENTS IN CORE NET DEBT AND TOTAL NET DEBT

2019
Cash and cash equivalents
Bank loans and overdrafts
European private placements
Retail bonds
Finance leases
Total core net debt
PFI/PPP non-recourse net debt
Total net debt

2018
Cash and cash equivalents
Bank loans and overdrafts
Retail bonds
Finance leases
Total core net debt
PFI/PPP non-recourse net debt
Total net debt

Net decrease in cash and cash equivalents
Net (increase) decrease in borrowings and finance leases
Capitalisation of loan fees
Total cash flows in net debt
Finance leases entered into during the year
Amortisation of loan fees
Transferred to disposal groups classified as held for sale
Exchange (loss) gain
Movement in net debt
Net debt at beginning of year
Net debt at end of year

At
1 April 2018
€m
73.0
(335.4)
–
(199.3)
(38.9)
(500.6)
(94.6)
(595.2)

At
1 April 2017
€m
87.5
(331.4)
(199.0)
(52.9)
(495.8)
(101.8)
(597.6)

Cash flows
€m
(23.0)
(15.3)
(25.0)
–
11.8
(51.5)
0.6
(50.9)

Cash flows
€m
(14.4)
(12.6)
–
15.1
(11.9)
4.7
(7.2)

Other
non-cash
changes
€m
–
2.0
0.5
(0.3)
(0.4)
1.8
–
1.8

Transferred to
disposal groups
classified as held
for sale
€m
–
–
–
–
4.2
4.2
–
4.2

Other
non-cash
changes
€m
–
1.0
(0.3)
(1.1)
(0.4)
–
(0.4)

Transferred to
disposal groups
classified as held
for sale
€m
–
–
–
–
–
–
–

Exchange
movements
€m
0.4
(6.3)
–
–
–
(5.9)
(1.4)
(7.3)

At
31 March 2019
€m
50.4
(355.0)
(24.5)
(199.6)
(23.3)
(552.0)
(95.4)
(647.4)

Exchange
movements
€m
(0.1)
7.6
–
–
7.5
2.5
10.0

At
31 March 2018
€m
73.0
(335.4)
(199.3)
(38.9)
(500.6)
(94.6)
(595.2)

2019
€m
(23.0)
(27.9)
3.0
(47.9)
(0.4)
(0.8)
4.2
(7.3)
(52.2)
(595.2)
(647.4)

2018
€m
(14.4)
7.2
1.1
(6.1)
(1.1)
(0.4)
–
10.0
2.4
(597.6)
(595.2)

159

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.2 CASH AND CASH EQUIVALENTS
Accounting policy
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.

Cash and cash equivalents are analysed as follows:

Cash at bank and in hand
Short-term deposits

The carrying amounts of cash and cash equivalents are denominated in the following currencies:

Euro
Sterling
Canadian Dollar

2019
€m
50.3
0.1
50.4

2019
€m
29.7
18.6
2.1
50.4

2018
€m
72.9
0.1
73.0

2018
€m
58.1
14.0
0.9
73.0

5.3 BORROWINGS
Accounting policy
Interest bearing loans and retail bonds are recorded at their initial fair value which normally reflects the proceeds received, net of direct issue costs.
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.

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.

160

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.3 BORROWINGS CONTINUED
Borrowings are analysed as follows:

Current borrowings
Retail bonds
Bank overdrafts
Finance lease obligations
Other loans
Core borrowings
PFI/PPP non-recourse net debt

Non-current borrowings
Retail bonds
European private placements
Term loan
Revolving credit facility
Finance lease obligations
Core borrowings
PFI/PPP non-recourse net debt

2019
€m

100.0
5.4
8.3
5.0
118.7
2.8
121.5

99.6
24.5
132.4
212.2
15.0
483.7
92.6
576.3

2018
€m

–
3.5
11.2
–
14.7
1.3
16.0

199.3
–
135.6
196.3
27.7
558.9
93.3
652.2

Core borrowings
The Group’s core bank loans and retail bonds are unsecured and have cross guarantees from members of the Group.

At 31 March 2019, the Group had a Euro denominated multicurrency green bank facility of €575m (2018: €575m) including a €137.5m (2018: €143.8m)
term loan and a €412.5m (2018: €431.2m) revolving credit facility. The bank facility matures on 18 May 2023 and is subject to two one-year extension
options. At 31 March 2019 the term loan was fully drawn and €212.2m (2018: €196.3m) of the revolving credit facility was drawn for borrowings in
Euros, Canadian dollars and Sterling. In December 2018 a €25m green European private placement facility (EUPP) was incorporated into the main
banking facility and was fully drawn. The remaining €202.4m (2018: €233.9m) was available for drawing under the revolving credit facility of which
€52.6m (2018: €52.6m) was utilised for ancillary guarantee facilities.

At 31 March 2019 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 €100m (2018: €100m) have an annual coupon of 4.23% and the green retail bonds due June 2022 of €100m (2018:
€100m) have an annual coupon of 3.65%.

Included within core borrowings are capitalised loan fees of €3.9m (2018: €1.7m).

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

2019

PFI/PPP non-
recourse net
debt
€m
5.2
20.3
67.1
92.6

Core
borrowings
€m
5.1
467.1
11.5
483.7

Total
€m
10.3
487.4
78.6
576.3

2018

PFI/PPP non-
recourse net
debt
€m
2.9
12.7
77.7
93.3

Core
borrowings
€m
107.6
442.9
8.4
558.9

Total
€m
110.5
455.6
86.1
652.2

161

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.3 BORROWINGS CONTINUED
The carrying amounts of borrowings are denominated in the following currencies:

Euro
Sterling
Canadian Dollar

The Group’s finance lease liabilities are payable as follows:

2019
€m
394.6
234.7
68.5
697.8

2018
€m
365.4
231.5
71.3
668.2

Within one year
Between one and five years
More than five years

2019

2018

Minimum
lease
payments
€m
8.7
14.4
1.4
24.5

Interest
€m
(0.4)
(0.9)
–
(1.3)

Principal
€m
8.3
13.5
1.4
23.2

Minimum
lease
payments
€m
11.9
23.1
8.4
43.4

Interest
€m
(0.7)
(2.0)
(1.8)
(4.5)

Principal
€m
11.2
21.1
6.6
38.9

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 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. 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.

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

2019
Bank Loans
PFI/PPP
non-recourse
net debt
€m
111.6
(16.2)
95.4

2018
Bank Loans
PFI/PPP
non-recourse
net debt
€m
113.2
(18.6)
94.6

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.

162

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.3 BORROWINGS CONTINUED
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 in more than two years

Core borrowings

2019
€m
149.8

2018
€m
181.3

PFI/PPP non-recourse
net debt
2019
€m
2.2

2018
€m
2.2

Total

2019
€m
152.0

2018
€m
183.5

In addition, the Group had access to €14.1m (2018: €4.4m) of undrawn uncommitted working capital facilities.

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.

At 31 March 2019
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 2018
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

Within
one year
€m

Between one
and five years
€m

Over
five years
€m

107.9
22.5
8.4
8.7
1.6
427.5
576.6

7.9
12.6
7.7
11.9
2.0
448.5
490.6

111.0
400.5
41.9
14.4
12.1
0.2
580.1

218.8
361.7
32.7
23.1
12.4
0.7
649.4

–
10.5
98.5
1.4
12.5
2.6
125.5

–
–
117.2
8.4
20.5
3.0
149.1

163

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.4 NET FINANCE CHARGES
Accounting policy
Finance charges, including direct issue costs, are accounted for on an accruals basis in the Income Statement using the effective interest rate method.
Interest receivable on financial assets relating to PFI/PPP contracts is added to the financial asset based on the rate implied at the start of the
PPP/PFI project.

In certain circumstances, finance charges may be classified as non-trading or exceptional due to their size or incidence to enable a better
understanding of the underlying net finance costs. These non-trading or exceptional income or charges include:

 The change in fair value where a derivative financial instrument does not qualify for hedge accounting
 Ineffectiveness incurred by a derivative financial instrument that does qualify for hedge accounting
 A significant impairment of an interest receivable balance

Net finance charges are analysed as follows:

Finance charges
Interest payable on borrowings
Interest payable on PFI/PPP non-recourse net debt
Unwinding of discount on provisions (note 4.9)
Interest charge on the retirement benefit schemes (note 7.2)
Amortisation of loan fees
Other finance costs
Total finance charges before non-trading and exceptional items
Finance income
Interest receivable on financial assets relating to PFI/PPP contracts (note 4.4)
Unwinding of discount on deferred consideration receivable
Interest receivable on other loans and receivables
Total finance income before non-trading and exceptional items
Non-trading and exceptional items
Change in fair value of derivatives at fair value through profit or loss
Ineffectiveness on cash flow hedges
Exceptional finance charges (note 3.4)
Non-trading and exceptional items

2019
€m

17.1
7.8
8.4
0.6
0.8
1.1
35.8

(9.5)
(0.2)
(2.7)
(12.4)

0.1
4.3
5.0
9.4

Restated*
2018
€m

17.7
8.0
6.3
0.7
0.4
2.3
35.4

(9.7)
(0.2)
(2.7)
(12.6)

–
–
–
–

Net finance charges

32.8

22.8

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Accounting policy
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.

The exposure to 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.

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.

164

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES CONTINUED
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. Hedge accounting allows the matching of gains and losses on hedged items and associated hedging instruments in the same
accounting period to minimise volatility in the income statement. In order to qualify for hedge accounting, prospective hedge effectiveness must meet
all the following criteria:

 An economic relationship exists between the hedged item and the hedging instrument
 The effect of credit risk does not dominate the value changes resulting from the economic relationship
 The hedge ratio is the same as that resulting from actual amounts of hedged items and hedging instruments for risk management

Derivatives designated as hedging instruments are classified on inception as cash flow hedges or net investment hedges. 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. Net investment hedges are accounted for in a similar way to cash flow hedges. Any
ineffectiveness is recognised in the Income Statement as a non-trading income or charge. The main source of hedge ineffectiveness in the Group is
where there is a change in the underlying debt profile of a variable rate loan. Certain derivative financial instruments do not qualify for hedge
accounting are held at fair value through profit or loss. Changes in the fair value of such instruments are recognised immediately in the Income
Statement as a non-trading finance income or finance 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.

Derivative financial instruments are analysed as follows:

Relating to core financings:
Cross-currency interest rate swaps – cash flow hedges
Cross-currency interest rate swaps – at fair value through profit or loss
Fuel derivatives – cash flow hedges
Forward foreign exchange contracts – cash flow hedges
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

2019

Assets
€m

Liabilities
€m

2018

Assets
€m

Liabilities
€m

2.0
–
1.0
–

–
–
3.0
2.9
0.1
3.0

3.4
–
0.5
0.6

28.2
0.1
32.8
4.4
28.4
32.8

0.5
–
1.7
–

–
–
2.2
1.6
0.6
2.2

6.0
0.1
–
0.1

27.0
0.2
33.4
0.1
33.3
33.4

All derivatives are initially recognised at fair value and subsequently measured at fair value at each reporting date. 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.

Cross-currency interest rate swaps
The notional principal amount of the outstanding forward cross currency interest rate swaps at 31 March 2019 was €172.6m (2018: €168.5m). The
Group holds three contracts: a floating rate term loan borrowing of Canadian dollar $50.0m swapped to €36.1m at a fixed interest rate of 2.18%
expiring February 2020, a floating rate revolving credit facility borrowing of Sterling £45m swapped to €53.0m at a fixed interest rate of 2.17% expiring
February 2020 and a revolving credit facility borrowing of Sterling £75m swapped to €85.0m at a fixed rate of 1.71% expiring September 2019.

165

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES CONTINUED
Interest rate cap
The notional principal amount of the outstanding interest rate cap contract at 31 March 2019 was €125.0m (2018: €125.0m). Under this contract the
3-month Euribor interest rate payable on €125.0m (2018: €125.0m) of term loan and revolving credit facility borrowings are capped at 0.25% until
February 2020. The value of this instrument is below €0.1m in both the current and prior years.

Fuel derivatives
The value of wholesale fuel covered by fuel derivatives at 31 March 2019 amounted to €16.8m (2018: €14.4m). The Group has annual usage across
the Netherlands and Belgium of approximately 50m litres of diesel per annum of which approximately 32m litres have been fixed at an average of
€0.44 per litre for the year to 31 March 2020 (nominal value €14.0m) and a further 6m litres has been fixed at an average of €0.45 per litre for the year
to 31 March 2021 (nominal value €2.8m).

Forward foreign exchange contracts
The notional principal amount of the outstanding forward foreign exchange contracts at 31 March 2019 was €13.2m (2018: €13.0m). 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 EUR:GBP rate
of €1:£0.91 expiring March 2020.

Interest rate swaps relating to PFI/PPP contracts
The notional principal amount of the outstanding interest rate swap contracts at 31 March 2019 was €110.4m (2018: €110.8m). 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. A revised repayment programme for the Cumbria PFI project borrowing has led to ineffectiveness of
€4.2m (2018: €nil) being recognised for the related interest rate swap which has been charged to the Income Statement as a non-trading and
exceptional finance charge.

Net investment hedge
Renewi plc, a Sterling functional currency company, has Euro borrowings of €200.0m, fair value of €203.6m (2018: €200.0m, fair value of €201.6m),
which have been designated as a net investment hedge of the Group’s investments denominated in Euros. The hedge was 100% effective for the year
ended 31 March 2019 (2018: 100%) and as a result the related exchange loss of €3.4m (2018: €4.9m gain) has been recognised in the exchange reserve
in the consolidated financial statements.

The following table shows the impact of the Group’s cash flow hedges in Other comprehensive income:

At 1 April
Effective element of changes in fair value arising from:

Cross-currency interest rate swaps
Fuel derivatives
Forward foreign exchange contracts
Interest rate swaps relating to PFI/PPP contracts

At 31 March

2019
€m
(28.0)

0.3
(1.2)
(0.5)
3.5
(25.9)

2018
€m
(36.1)

(0.2)
2.7
–
5.6
(28.0)

166

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES CONTINUED
The following tables show the impact of the Group’s cash flow hedges and net investment hedge on the balance sheet, other comprehensive income
and Income Statement:

March 2019
Relating to core financing:
Cross-currency interest rate
swaps/variable rate borrowing
Interest rate cap/variable rate
borrowings
Fuel derivatives/purchase
of diesel
Forward foreign exchange
contracts/
off-take contracts
Relating to PFI/PPP
contracts:
Interest rate swaps/variable
rate borrowings
Net investment hedge
Euro borrowings/ investment in
Euro denominated subsidiaries

March 2018
Relating to core financing:
Cross-currency interest rate
swaps/variable rate borrowing
Interest rate cap/variable rate
borrowings
Fuel derivatives/purchase
of diesel
Forward foreign exchange
contracts/
off-take contracts
Relating to PFI/PPP
contracts:
Interest rate swaps/variable
rate borrowings
Net investment hedge
Euro borrowings/ investment
in Euro denominated
subsidiaries

Hedging instrument
Cumulative cash
flow hedge
movement in
other
comprehensive
income
€m

Change in the fair
value used to
determine hedge
effectiveness
€m

Hedge
ineffectiveness
included
in the income
statement
in the year
€m

Nominal
Amount at
31 March 2019
€m

Cumulative
movement in
exchange reserve
€m

Hedged item

Change in the
fair value used
to determine
hedge
effectiveness
€m

Weighted
average
hedged
rate

Hedge ratio

172.6

125.0

16.8

13.2

2.0

–

1.2

0.5

(0.3)

(0.2)

–

0.6

(0.6)

–

110.4

1.9

(25.4)

(4.1)

–

(2.3)

2.0%

–

(1.2)

–
€0.44
per litre

1:1

(0.5)

€1:£0.91

1:1

2.4

4.07%

1:1

200.0

(3.5)

–

(20.4)

3.5

–

1:1

Hedging instrument
Cumulative cash
flow hedge
movement in
other
comprehensive
income
€m

Change in the fair
value used to
determine hedge
effectiveness
€m

Hedge
ineffectiveness
included
in the income
statement
in the year
€m

Nominal
Amount at
31 March 2018
€m

Cumulative
movement in
exchange reserve
€m

Hedged item

Change in the
value used to
determine
hedge
effectiveness
€m

168.5

125.0

14.4

(5.1)

0.3

(2.7)

(0.1)

–

1.7

13.0

–

(0.1)

110.7

(6.4)

(28.9)

–

Weighted
average
hedged
rate

1.95%

–
€0.36
per litre

€1:£0.89

Hedge ratio

1:1

5.1

(0.3)

2.7

6.4

4.07%

1:1

200.0

7.9

–

(23.8)

(7.9)

–

1:1

167

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.6 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Accounting policy
Following the adoption of IFRS 9, the accounting policies for financial instruments have been updated from 1 April 2018. The Group now classifies and
measures its financial assets at amortised cost or at fair value (either through other comprehensive income (OCI) or through profit or loss).

The classification depends on the entity’s business model for managing the financial assets and the contractual term of the cash flows.
Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured
at amortised cost.

Derivatives are initially recognised at fair value and subsequently measured at fair value at the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being
hedged.

Short term investments are classified and measured at fair value through profit or loss with changes in the fair value recognised in the Income
Statement. Unlisted investments not held for trading are held at fair value and the Group has elected to present subsequent changes in the
investments fair value in Other Comprehensive Income. Dividends on these investments are recognised in the Income Statement when the Group’s
right to receive the dividends is established, it is probable that they will be paid and the amount can be reliably measured.

Financial liabilities are classified and measured at fair value through profit or loss or at amortised cost.

Reclassification of financial assets and financial liabilities into the IFRS 9 categories had no overall impact on the measurement basis applied. The
table below provides details of the classification and measurement of financial assets and liabilities under IAS 39 and IFRS 9 at 1 April 2018, the date
of initial application.

Original IAS 39 measurement category

Revised IFRS 9 measurement category

Loans and receivables

Financial assets at amortised cost

Financial assets
Loans to associates and joint ventures, trade receivables, other
receivables (excluding invoice finance receivables), cash and cash
equivalents and financial assets relating to PFI/PPP contracts
Other receivables relating to invoice finance

Loans and receivables

Unlisted investments

Available for sale financial assets

Derivative contracts – hedge accounted

Derivative financial instruments

Financial assets at fair value through
profit or loss
Financial assets at fair value through
OCI
Derivatives used for hedging

Financial liabilities
Borrowings, trade and other payables

Financial liabilities at amortised cost

Derivative contracts not hedge accounted

Derivative financial instruments

Derivative contracts hedge accounted

Derivative financial instruments

Financial liabilities at fair value
through profit or loss
Derivatives used for hedging

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 2019, there were no transfers between level 1 and level 2 fair value measurements and no transfers into and out
of level 3.

168

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.6 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Valuation techniques used to derive level 2 fair values

 Short term investment valuations are provided by the fund manager
 Unlisted non-current investments comprise unconsolidated companies where the fair value approximates the book value
 Derivative financial instruments are determined by discounting the future cash flows using the applicable period-end yield curve
 Retail bonds, the fair value is based on indicative market pricing

The table below presents the Group’s assets and liabilities measured at level 2 fair values:

Assets
Unlisted non-current investments (note 4.3)
Short term investments (note 4.3)
Derivative financial instruments (note 5.5)

Liabilities
Derivative financial instruments (note 5.5)
Retail bonds

Carrying value of financial assets and financial liabilities

Financial assets
Financial assets at amortised cost
Loans to associates and joint ventures
Trade and other receivables at amortised cost*
Cash and cash equivalents
Financial assets relating to PFI/PPP contracts
Derivatives used for hedging
Fuel derivatives
Cross-currency interest rate swaps
Financial assets at fair value through profit or loss
Short term investments
Other receivables relating to invoice finance
Financial assets at fair value through OCI
Unlisted non-current investments

2019
€m

4.7
5.9
3.0
13.6

32.8
203.6
236.4

2019
€m

0.9
243.9
50.4
155.8

1.0
2.0

5.9
11.7

4.7
476.3

2018
€m

4.7
–
2.2
6.9

33.4
201.6
235.0

2018
€m

22.5
256.7
73.0
205.3

1.7
0.5

–
14.7

4.7
579.1

Note

4.3

4.7

5.2

4.4

5.5

4.3

*Trade and other receivables at amortised cost comprises trade receivables and accrued income net of allowance of €234.2m (2018: €240.8m) and other receivables held at amortised
cost of €9.7m (2018: €15.9m).

The Group considers that the fair value of financial assets is not materially different to their carrying value.

169

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.6 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES CONTINUED

Financial liabilities
Financial liabilities at amortised cost
Bank overdraft
Term loan, revolving credit facility, EUPP and other loans
Retail bonds
Finance lease obligations
Trade and other payables excluding non-financial liabilities
Bank loans – PFI/PPP non-recourse net debt
Financial liabilities at fair value through profit or loss
Interest rate swaps relating to PFI/PPP contracts – at fair value through profit or loss
Derivatives used for hedging
Cross-currency interest rate swaps
Fuel derivatives
Forward foreign exchange contracts
Interest rate swaps relating to PFI/PPP contracts

Note

5.3

4.8

5.3

5.5

2019
€m

5.4
374.1
203.6
23.3
430.3
95.4

2018
€m

3.5
331.9
201.6
38.9
452.3
94.6

0.1

0.2

3.4
0.5
0.6
28.2
1,164.9

6.1
–
0.1
27.0
1,156.2

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.

5.7 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

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.

Interest rate risk
Changes in interest rates could have an impact on the interest cover covenant of the Group’s core 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, EU private placements, fixed rate finance leases,
cross currency interest rate swaps and an interest rate cap. The proportion of the Group’s total core borrowings that were fixed or hedged at 31 March
2019 was €550.0m (2018: €532.4m) or 90% (2018: 93%). Additionally, the PFI/PPP non-recourse floating rate borrowings are hedged using interest rate
swaps which hedge the interest cash flows.

The interest rate swaps and cross currency swaps are accounted for under IFRS 9 with changes in the fair value of interest rate swaps being recognised
directly in reserves, as they are effective hedges. Any ineffectiveness is recognised in the Income Statement as a non-trading income or charge. The
interest rate swap in relation to the Argyll & Bute PFI contract has not been designated as a hedge by the Group therefore it is classified at fair value
through profit or loss.

170

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.7 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Interest rate sensitivity for core borrowings
Interest on the floating rate term and revolving credit facilities 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 €1.1m (2018: €1.2m) based on the average core bank borrowings during the year.

The fair values of cross currency interest rate swaps for hedging the core banking facility 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 €1.3m (2018: €3.1m). 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 €1.3m (2018: €3.1m).

The fair value of the interest rate cap used for hedging the core banking facility 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 €0.5m (2018: €1.2m). A 1% decrease would have no impact on the fair value or pre-tax loss in other comprehensive income (2018: €nil).

Interest rate sensitivity for PFI/PPP non-recourse borrowings
The PFI/PPP non-recourse borrowings are fully covered by interest rate swaps. 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 €10.5m (2018: €11.0m). A 1% decrease in interest
rates would have increased the fair value of the interest rate swap liabilities and led to a pre-tax loss in other comprehensive income of €11.8m
(2018: €12.5m).

Foreign exchange risk
The Group operates in the UK and Canada and is exposed to translation risk on the value of assets denominated in Sterling and Canadian Dollars
into Euros. This exposure is reduced by borrowing in Sterling and Canadian Dollars. Renewi plc, a Sterling functional currency company, has Euro
borrowings which are designated as a net investment hedge of the Group’s investments denominated in Euros.

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 in Euros on the export of processed waste from the UK to Europe which is managed through the use of forward exchange contracts.

Foreign exchange sensitivity
The impact of a change in foreign exchange rates of 10% on the Group’s continuing profit before tax would be €6.6m (2018: €10.1m) and the impact
on continuing underlying profit before tax would have been €0.6m (2018: €1.6m).

The fair values of cross currency interest rate swaps for hedging the core borrowing are determined with reference to spot foreign exchange 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 €16.0m (2018: €15.9m). 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 liability
or created an asset and led to a pre-tax gain in other comprehensive income of €19.5m (2018: €19.4m).

Commodity price risk and sensitivity
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. The impact of a change in unhedged
wholesale fuel prices (excluding duty) of 10% on the Group’s profit before tax would have been €1.1m (2018: €1.0m).

171

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.7 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Credit risk
Credit risk is the risk of financial loss where counterparties are not able to meet their obligations. The Group’s principal financial assets are cash and
cash equivalents, trade and other receivables and financial assets relating to PFI/PPP contracts. The Group’s objective is to reduce its exposure to
counterparty default by restricting the type of counterparty it deals with and by employing an appropriate policy in relation to the collection of
trade receivables.

The Group recognises lifetime expected credit losses at the point of initial recognition for trade receivables and accrued income as set out in note 4.7.
For other financial assets, a loss allowance is recognised for expected credit losses taking into account changes in the level of credit risk. Where credit
risk is considered to be low, the loss allowance is limited to expected losses arising from default events that are possible within 12 months from the
balance sheet date.

At 31 March 2019 the amount of credit risk on cash and short-term deposits totalled €50.4m (2018: €73.0m). The banks and financial institutions used
by the Group are restricted to those with the appropriate geographical presence and suitable credit rating. The Group has an objective to minimise
cash and where possible repay the Group borrowings to manage counterparty credit risk among other objectives. Expected credit losses over cash
and cash equivalents are considered to be immaterial with no losses experienced.

Trade and other receivables mainly comprise amounts due from customers for services performed. Each division monitors the level of trade
receivables on a monthly basis, continually assessing the risk of default by any counterparty with the result that the Group’s exposure to bad debts is
not significant. In addition, the Group uses credit insurance to minimise the credit risk of trade receivables. At 31 March 2019 the amount of credit risk
on trade and other receivables amounted to €243.9m (2018: €256.7m). 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 these to
be very low risk as the counterparties for the future revenues are local authorities or councils. At 31 March 2019 the amount of credit risk on financial
assets relating to continuing operations amounted to €155.8m (2018: €205.3m).

The subordinated loan to Resource Recovery Solutions (Derbyshire) Ltd, the UK Municipal Derby contract, included within loans to joint ventures and
associates has experienced a significant increase in credit risk and as a result a 100% expected credit loss has been recognised as set out in note 3.4.

5.8 CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide optimal returns for
shareholders, maintain an efficient capital structure to reduce the cost of capital and provide appropriate levels of liquidity headroom. In order to
meet these objectives the Group may issue or repay debt, issue new shares or adjust the amount of dividend paid to shareholders.

The following table shows the capital of the Group:

Total core borrowings
Less: cash and cash equivalents
Core net debt
Total equity
Total capital

Note

5.3

5.2

2019
€m
602.4
(50.4)
552.0
319.5
871.5

2018
€m
573.6
(73.0)
500.6
436.3
936.9

The Group monitors its financial capacity by reference to key financial ratios which provide a framework within which the Group’s capital base is
managed. The Group’s core banking facility agreements have covenants including core net debt to comparable adjusted EBITDA and interest cover
in accordance with a frozen GAAP concept. The Group has complied with its banking covenants during the year.

172

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.9 EQUITY
Accounting policy
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. The share premium account represents any excess of the net proceeds over the nominal value
of any shares issued.

Share capital allotted, called up and fully paid
At 1 April 2017
Issued under share option schemes
At 31 March 2018
Issued under share option schemes
At 31 March 2019

Share capital – Ordinary shares
of 10p each

Number

€m

Share premium
€m

799,812,223
321,029
800,133,252
8,284
800,141,536

99.5
–
99.5
–
99.5

473.4
0.2
473.6
–
473.6

During the year 8,284 (2018: 321,029) ordinary shares were allotted following the exercise of share options under the Savings Related Share Option
Schemes for an aggregate consideration of €6,086 (2018: €264,853). Further disclosures relating to share-based options are set out in note 7.3.

The Renewi plc Employee Share Trust owns 5,529,850 (0.7%) (2018: 1,308,652 (0.2%)) of the issued share capital of the Company in trust for the benefit
of employees of the Group. The Trust waives its dividend entitlement.

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.

2019

3SE (Barnsley,
Doncaster &
Rotherham)
€m
19.2
(0.8)

Maltha Groep
€m
55.2
(14.5)

–

(14.5)

(0.6)

(1.4)

(4.8)

(0.4)

23.5
15.6
(11.0)
(20.8)
7.3

2.4

78.6
3.4
(78.2)
(15.8)
(12.0)

(2.9)

Others
€m
24.3
0.4

–

0.4

0.1

3.8
9.6
(0.1)
(5.3)
8.0

1.5

Total
€m
98.7
(14.9)

(0.6)

(15.5)

(5.1)

105.9
28.6
(89.3)
(41.9)
3.3

1.0

2018

3SE (Barnsley,
Doncaster &
Rotherham)
€m
18.6
(1.0)

Maltha Groep
€m
54.4
1.1

–

1.1

0.4

32.8
19.6
(5.1)
(25.4)
21.9

7.3

2.2

1.2

0.3

78.1
2.9
(78.8)
(12.4)
(10.2)

(2.6)

Others
€m
23.1
0.7

–

0.7

0.2

3.9
8.5
(0.2)
(4.7)
7.5

1.4

(0.4)

–

(0.1)

(0.5)

(0.3)

–

0.6

Revenue
(Loss) profit after tax
Other comprehensive (loss)
income
Total comprehensive (loss)
income
Total comprehensive (loss)
profit allocated to the non-
controlling interests

Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets (liabilities)
Accumulated non-controlling
interests

Net (decrease) increase in
cash and cash equivalents

Total
€m
96.1
0.8

2.2

3.0

0.9

114.8
31.0
(84.1)
(42.5)
19.2

6.1

0.3

173

NOTES TO THE FINANCIAL STATEMENTS

SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED

5.10 DIVIDENDS
Accounting policy
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.

Dividends recognised and proposed:

Amounts recognised as distributions to equity holders in the year:
Final dividend paid for the year ended 31 March 2018 of 2.1 pence per share (2017: 2.1 pence)
Interim dividend paid for the year ended 31 March 2019 of 0.95 pence per share (2018: 0.95 pence)

Proposed final dividend for the year ended 31 March 2019 of 0.5 pence per share (2018: 2.1 pence)
Total dividend per share (pence)

SECTION 6. ACQUISITIONS AND DISPOSALS

This section provides details of acquisitions and disposals.

2019
€m

18.9
8.5
27.4

4.6
1.45p

2018
€m

19.0
8.6
27.6

18.9
3.05p

6.1 ACQUISITIONS
Accounting policy
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.

Prior year acquisitions
In December 2017 ATM in the Hazardous Waste division acquired MVO Moerdijk BV, subsequently renamed ATM Terra BV, for a consideration of €7.2m.
At 31 March 2018 the fair values of the total identifiable net liabilities acquired was provisional. These have now been retrospectively adjusted to
reflect new information obtained about the facts and circumstances of the acquisition. The impact of the restatement has been to increase the net
liabilities by €8.2m resulting in final goodwill of €17.2m for the acquisition representing the possibilities for strategic expansion.

Disposals
On 30 August 2018 the UK joint venture Energen Biogas was sold for €20.2m generating a profit on disposal of €11.1m.

On 27 September 2018 the Hazardous Waste division sold 50% of the shareholding of ATM Terra BV for €3.6m. On that date the entity changed
its name to AP4Terra BV.

174

SECTION 6. ACQUISITIONS AND DISPOSALS CONTINUED

6.2 ASSETS CLASSIFIED AS HELD FOR SALE
Accounting policy
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.

At 31 March 2018 the Group had €0.4m of property, plant and equipment held for sale being a piece of land on the Maarheeze site in the Netherlands
which was sold during the year ended March 2019.

On 8 November 2018 the Group announced its intention to exit Municipal Canada and the Hazardous Waste Reym industrial cleaning business. Active
programmes are underway therefore the assets and liabilities are presented as held for sale at 31 March 2019 as the criteria set out in IFRS 5 Non-
current assets held for sale and discontinued operations have been met. Both disposals are expected to be completed within the next 12 months.

Assets classified as held for sale and the related liabilities are as follows:

Goodwill
Other Intangible assets
Property, plant and equipment
Financial assets relating to PFI/PPP contracts
Trade and other receivables
Inventories
Total assets held for sale

Trade and other payables
Provisions
Finance leases
Tax
Total liabilities relating to assets held for sale
Net assets held for sale

Carrying value
transferred to
disposal groups
€m
57.3
4.9
73.9
44.0
23.6
0.7
204.4

Remeasurement
under IFRS 5
€m
(33.5)
(1.6)
(6.9)
–
–
–
(42.0)

Carrying value
under IFRS 5
€m
23.8
3.3
67.0
44.0
23.6
0.7
162.4

(30.6)
(0.8)
(4.2)
(4.9)
(40.5)
163.9

–
–
–
–
–
(42.0)

(30.6)
(0.8)
(4.2)
(4.9)
(40.5)
121.9

The carrying value of the disposal groups has been assessed against the anticipated proceeds less the disposal costs and this has resulted in a loss on
remeasurement of the assets held for sale of €42.0m. The remeasurement has been allocated against goodwill, other intangibles and property plant
and equipment. The charge has been recognised in the Income Statement as an exceptional administrative expense with €19.5m in continuing
operations and €22.5m in discontinued operations.

175

NOTES TO THE FINANCIAL STATEMENTS

SECTION 6. ACQUISITIONS AND DISPOSALS CONTINUED

6.3 DISCONTINUED OPERATIONS
The Municipal Canada disposal meets the definition of a discontinued operation as stated in IFRS 5 Non-current assets held for sale and discontinued
operations, therefore the net results are presented as discontinued operations in the Income Statement and the prior year Income Statement and
Cash Flow Statement comparatives have been restated.

Income Statement in relation to the discontinued operations:

Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit (loss) before non-trading and exceptional items
Non-trading and exceptional items
Operating (loss) profit
Finance income
Finance charges
(Loss) profit before tax on discontinued operations
Taxation
(Loss)profit after tax on discontinued operations

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

Cash flow information in relation to the discontinued operations:

Net cash inflow (outflow) from operating activities
Net cash from investing activities
Net cash outflow (inflow) from financing activities
Net movement in cash

2019
Canada
€m
18.3
(16.0)
2.3
(0.8)
1.5
(22.5)
(21.0)
1.3
(1.5)
(21.2)
0.1
(21.1)

Canada
€m
18.8
(21.0)
(2.2)
(1.8)
(4.0)
–
(4.0)
1.3
(1.2)
(3.9)
1.0
(2.9)

2018 Restated*

UK
€m
–
–
–
(0.2)
(0.2)
0.6
0.4
–
–
0.4
–
0.4

2019
€m
10.5
(1.5)
(8.1)
0.9

Total
€m
18.8
(21.0)
(2.2)
(2.0)
(4.2)
0.6
(3.6)
1.3
(1.2)
(3.5)
1.0
(2.5)

2018
€m
(11.9)
(1.0)
13.2
0.3

176

SECTION 7. EMPLOYEE BENEFITS

7.1 EMPLOYEE COSTS AND EMPLOYEE NUMBERS

This note shows the staff costs and the average monthly number of employees analysed by reportable segment.

Wages and salaries
Social security costs
Share-based benefits
Other pension costs
Total staff costs

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

The average number of employees by reportable segment during the year was:
Commercial Waste
Hazardous Waste
Monostreams
Municipal
Group central services
Total continuing operations
Discontinued operations – Canada
Total average number of employees

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

7.2 RETIREMENT BENEFIT SCHEMES

The Group operates defined benefit and defined contribution schemes in the UK and overseas.

Accounting policy
The Group accounts for pensions and similar benefits under IAS 19 (revised) Employee Benefits.

Note

7.3

7.2

2019
€m
333.6
61.2
0.8
35.1
430.7

2019

4,685
941
490
649
279
7,044
49
7,093

Restated*
2018
€m
324.3
59.7
2.1
31.4
417.5

Restated*
2018

4,742
943
461
654
254
7,054
46
7,100

The pension cost for the defined benefit schemes is assessed in accordance with management’s best estimates using the advice of an independent
qualified actuary and assumptions in the latest actuarial valuation. For defined benefit plans, obligations are measured at discounted present value.
Plan assets in the UK scheme are recorded at fair value and in the overseas schemes the plan assets are calculated as the cash value of all future
insured benefit payments using an appropriate discount rate. 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 and 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 which are accounted for as defined contribution plans as it is not possible to split the assets and liabilities
of the schemes between participating companies. 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.

177

NOTES TO THE FINANCIAL STATEMENTS

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
Retirement benefit schemes costs

UK defined contribution scheme
UK defined benefit scheme
Overseas defined benefit schemes
Other overseas pension schemes

2019
€m
1.4
0.3
2.0
31.4
35.1

2018
€m
1.2
0.4
2.4
27.3
31.3

UK defined benefit scheme
The UK defined benefit pension scheme (called the Shanks Group Pension Scheme) provides pension benefits for pensioners, deferred members and
eligible UK employees and is closed to new entrants. The defined benefit scheme 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 final salary. Plan assets are managed by
Hewitt Risk Management Ltd on behalf of the Trustees. There are four trustees currently, two 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 an independent qualified actuary for the Trustees of the
Scheme, was carried out as at 5 April 2018 and is still being finalised. The Group has agreed that it will aim to eliminate the pension plan deficit with an
annual deficit contribution of €3.5m (£3.1m) for a further period still to be determined. The total estimated contributions expected to be paid to the
scheme in the year ending 31 March 2020 are €3.8m.

The significant actuarial assumptions adopted at the balance sheet date were as follows:

Discount rate
Rate of price inflation
Consumer price inflation

2019
% p.a.
2.5
3.3
2.2

2018
% p.a.
2.7
3.2
2.1

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 22 years if they are male and for a further 24 years if they are female. For a member who retires in 2039 at age 65 the assumptions are that
they will live on average for around a further 23 years after retirement if they are male or for a further 25 years after retirement if they are female. The
weighted average duration of the defined benefit obligation is approximately 17 years.

Overseas defined benefit schemes
The overseas 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 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 schemes in the year ending 31 March 2020 are €1.0m.

178

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
The amounts recognised in the financial statements for all defined benefit schemes are as follows:

Income Statement

Current service cost
Past service cost
Curtailment
Interest expense on scheme net liabilities
Net retirement benefit charge before tax

UK
€m
0.3
2.0
–
0.4
2.7

2019

Overseas
€m
2.0
–
(2.1)
0.2
0.1

Total
€m
2.3
2.0
(2.1)
0.6
2.8

UK
€m
0.4
–
–
0.5
0.9

2018

Overseas
€m
2.4
–
–
0.2
2.6

The past service cost of €2.0m in the UK scheme is a result of the impact of the 2018 Court ruling for guaranteed minimum pension equalisation.
The curtailment in the overseas scheme arose as the principal legacy Van Gansewinkel defined benefit scheme was closed.

Statement of comprehensive income

Actuarial gain (loss) on scheme liabilities
Actuarial gain (loss) on scheme assets
Actuarial gain (loss)

UK
€m
7.0
4.6
11.6

2019

Overseas
€m
(1.8)
1.0
(0.8)

Total
€m
5.2
5.6
10.8

UK
€m
5.2
(3.2)
2.0

2018

Overseas
€m
1.6
(0.2)
1.4

Total
€m
2.8
–
–
0.7
3.5

Total
€m
6.8
(3.4)
3.4

Cumulative actuarial gains and losses recognised in the statement of comprehensive income since 1 April 2004 are losses of €32.8m (2018: €43.6m).

Balance sheet

Present value of funded obligations
Fair value of plan assets
Pension scheme deficit
Related deferred tax asset (note 3.5)
Net pension liability

UK
€m
(202.1)
198.4
(3.7)
0.6
(3.1)

2019

Overseas
€m
(65.0)
56.8
(8.2)
2.1
(6.1)

Total
€m
(267.1)
255.2
(11.9)
2.7
(9.2)

UK
€m
(208.4)
192.0
(16.4)
2.8
(13.6)

2018

Overseas
€m
(63.5)
54.5
(9.0)
2.3
(6.7)

Total
€m
(271.9)
246.5
(25.4)
5.1
(20.3)

The UK scheme’s assets of €198.4m (2018: €192.0m) are invested via Aon’s Delegated Consulting Service which is a fiduciary investment management
platform managed by Hewitt Risk Management Services Limited, a breakdown of the underlying exposures to investment classes is given below:

Equities
Absolute return
Fixed income
Property
Liability driven investment
Cash and others

2019
€m
46.9
46.5
19.8
5.1
73.7
6.4
198.4

2018
€m
48.4
39.7
22.2
8.1
68.6
5.0
192.0

The overseas schemes assets of €56.8m (2018: €54.5m) are insurance contracts managed by insurers in the Netherlands and Belgium.

179

NOTES TO THE FINANCIAL STATEMENTS

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
The movement in the pension scheme deficit recognised in the balance sheet for all defined benefit schemes:

At 1 April 2017
Current service cost
Interest expense
Net actuarial gains recognised in the year
Contributions from employer
Exchange
At 31 March 2018
Current service cost
Past service cost
Curtailment
Interest expense
Net actuarial gains (losses) recognised in the year
Contributions from employer
Exchange
At 31 March 2019

Reconciliation of the defined benefit obligation:

At 1 April 2017
Current service cost
Interest expense
Remeasurements:

Actuarial gain on scheme liabilities arising from changes in financial assumptions
Actuarial (loss) gain on scheme liabilities arising from changes in experience

Contributions from plan participants
Benefit payments
Exchange
At 31 March 2018
Current service cost
Past service cost
Curtailment
Interest expense
Remeasurements:

Actuarial gain on scheme liabilities arising from changes in financial assumptions
Actuarial gain on scheme liabilities arising from change in demographic assumptions
Actuarial gain (loss) on scheme liabilities arising from changes in experience

Contributions from plan participants
Benefit payments
Addition
Exchange
At 31 March 2019

180

UK
€m
(21.9)
(0.4)
(0.5)
2.0
3.8
0.6
(16.4)
(0.3)
(2.0)
–
(0.4)
11.6
3.7
0.1
(3.7)

UK
€m
(225.3)
(0.4)
(5.6)

5.9
(0.7)
(0.1)
12.3
5.5
(208.4)
(0.3)
(2.0)
–
(5.6)

(8.1)
9.4
5.6
–
10.4
–
(3.1)
(202.1)

Overseas
€m
(9.6)
(2.4)
(0.2)
1.4
1.8
–
(9.0)
(2.0)
–
2.1
(0.2)
(0.8)
1.7
–
(8.2)

Overseas
€m
(61.8)
(2.4)
(1.3)

0.8
0.8
(0.7)
1.1
–
(63.5)
(2.0)
–
6.8
(1.4)

(1.4)
–
(0.3)
(0.7)
1.1
(3.6)
–
(65.0)

Total
€m
(31.5)
(2.8)
(0.7)
3.4
5.6
0.6
(25.4)
(2.3)
(2.0)
2.1
(0.6)
10.8
5.4
0.1
(11.9)

Total
€m
(287.1)
(2.8)
(6.9)

6.7
0.1
(0.8)
13.4
5.5
(271.9)
(2.3)
(2.0)
6.8
(7.0)

(9.5)
9.4
5.3
(0.7)
11.5
(3.6)
(3.1)
(267.1)

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
Reconciliation of plan assets:

At 1 April 2017
Interest income
Remeasurements: Return on plan assets excluding interest expense
Contributions from employer
Contributions from plan participants
Benefit payments
Exchange
At 31 March 2018
Curtailment
Interest income
Remeasurements: Return on plan assets excluding interest expense
Contributions from employer
Contributions from plan participants
Benefit payments
Addition
Exchange
At 31 March 2019

UK
€m
203.4
5.1
(3.2)
3.8
0.1
(12.3)
(4.9)
192.0
–
5.2
4.7
3.7
–
(10.4)
–
3.2
198.4

Overseas
€m
52.2
1.1
(0.2)
1.8
0.7
(1.1)
–
54.5
(4.7)
1.2
0.9
1.7
0.7
(1.1)
3.6
–
56.8

Total
€m
255.6
6.2
(3.4)
5.6
0.8
(13.4)
(4.9)
246.5
(4.7)
6.4
5.6
5.4
0.7
(11.5)
3.6
3.2
255.2

Significant defined benefit pension scheme risks
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 UK 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 overseas pension schemes consist of qualifying insurance
policies which match the benefits that will be paid to employees.

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.

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.

181

NOTES TO THE FINANCIAL STATEMENTS

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
Sensitivities for defined pension schemes
The 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.

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
4.1
(7.1)
(7.1)

Decrease in
assumption
€m
(10.7)
0.7
0.7

Change in
assumption
%
0.25
0.25
–

Overseas

Increase in
assumption
€m
3.1
(0.1)
–

Decrease in
assumption
€m
(3.4)
0.1
–

UK
Increase
by 1 year in
assumption
€m
(9.4)

Decrease
by 1 year in
assumption
€m
2.9

Overseas

Increase
by 1 year in
assumption
€m
(0.2)

Decrease
by 1 year in
assumption
€m
0.2

Other overseas schemes
The total cost in the year for other overseas pensions was €31.4m (2018: €27.5m).

In the Netherlands in particular, most 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 Belgium there are a number of pension schemes which are considered as
defined benefit schemes under IAS 19.

182

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.3 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. Further details and performance
metrics of both LTIPs and DABs can be found in the Directors’ Remuneration Report on pages 90 to 107.

Accounting policy
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.

Outstanding options

SRSOS

LTIP

DAB

Outstanding at 1 April 2017
Granted
Forfeited
Expired
Exercised
Outstanding at 31 March 2018
Granted
Forfeited
Expired
Exercised/vested
Outstanding at 31 March 2019
Exercisable at 31 March 2019
Exercisable at 31 March 2018
Weighted average share price at date of exercise
At 31 March 2019:
Range of price per share at exercise
Weighted average remaining contractual life

Number of
options
11,436,140
4,812,000
(311,581)
(3,161,724)
–
12,774,835
4,274,657
(3,340,420)
(2,574,653)
(765,407)
10,369,012

Number of
options
546,521
191,041
–
–
–
737,562
490,640
(680,609)
–
(91,075)
456,518

Number of
options
1,471,107
1,003,765
(236,988)
(70,198)
(321,029)
1,846,657
1,975,433
(941,924)
(99,530)
(8,284)
2,772,352
438,029
9,364

Weighted
average
exercise
price
73p
76p
75p
75p
73p
73p
52p
69p
70p
65p
59p
65p
73p
44p

52p to 76p
1 to 2 years

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 2017/18 and 2018/19
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.

183

NOTES TO THE FINANCIAL STATEMENTS

SECTION 7. EMPLOYEE BENEFITS CONTINUED

7.3 SHARE-BASED PAYMENTS CONTINUED
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

2019
Black-
Scholes
12p
63p
52p
29%
3 years
0.9%
5.2%

2018
Black-
Scholes
22p
95p
76p
29%
3 years
0.3%
3.5%

2019
Share
price
78p
78p
–
–
3 years
–
–

2018
Share
price
95p
95p
–
–
3 years
–
–

2019
Monte
Carlo
40p
78p
–
29%
3 years
0.7%
–

2018
Monte
Carlo
31p
95p
–
28%
3 years
0.3%
–

For the LTIP awards granted, the fair value of the element subject to non-market conditions has been calculated 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 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.

Charge for the year
The Group recognised a total charge of €0.8m (2018: €2.1m) relating to equity-settled share-based payments. The DAB awards for the year ended
31 March 2019 have not yet been granted and therefore the charge is based on an estimate.

184

SECTION 8. OTHER NOTES

8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2019

The structure of the Group includes a number of different operating and holding companies that contribute to the consolidated financial
performance and position.

Subsidiary undertakings
In accordance with section 409 of the Companies Act, a full list of subsidiaries at 31 March 2019 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 directly by Renewi plc, the parent company, are indicated with an asterix.

Subsidiary
Incorporated in the Netherlands
ATM B.V.
A&G Holding B.V.
B.V. Twente Milieu Bedrijven
CFS B.V.
Coolrec B.V.
Coolrec Nederland B.V.
Coolrec Plastics B.V.
EcoSmart Nederland B.V.
Glasrecycling Noord-Oost Nederland B.V. (67%)
IMMO CV
Maltha Glasrecycling Nederland B.V. (67%)
Maltha Glassrecycling International B.V. (67%)
Maltha Groep B.V. (67%)
Mineralz B.V.
Mineralz Maasvlakte B.V.
Mineralz Zweekhorst B.V.
Orgaworld International B.V.
Orgaworld Nederland B.V.
Orgaworld WKK 1 B.V.
Orgaworld WKK II B.V.
Orgaworld WKK III B.V.
Renewi Commercial B.V.
Renewi Europe B.V.* (previously Shanks European Investments 1
Coop WA and Renewi European Investments 1 B.V.))
Renewi Hazardous Waste B.V.
Renewi Icopower B.V.
Renewi Monostreams B.V.
Renewi Nederland B.V.
Renewi Netherlands Holdings B.V.
Renewi Overheidsdiensten B.V.
Renewi Smink B.V.
Renewi Support B.V.
Reym B.V.
Robesta Vastgoed Acht B.V.
Robesta Vastgoed B.V.
Semler B.V.
Shanks Belgium Holding B.V.
Shanks B.V.
Van Gansewinkel Industrie B.V.
Van Gansewinkel International B.V.
Verwerking Bedrijfsafvalstoffen Maasvlakte (V.B.M.) CV
VGIS B.V.

Address of the registered office

Vlasweg 12, 4782 PW, Moerdijk, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Wetering 14, 6002 SM Weert, Netherlands
Van Hilststraat 7, 5145 RK Waalwijk, Netherlands
Grevelingenweg 3, 3313 LB Dordrecht, Netherlands
Van Hilststraat 7, 5145 RK Waalwijk, Netherlands
Spaarpot 6, 5667 KX Geldrop, Netherlands
Columbusstraat 20, 7825 VR Emmen, Netherlands
Loswalweg 50, 3199 LG Maasvlakte Rotterdam, Netherlands
Glasweg 7, 4794 TB Heijningen, Netherlands
Glasweg 7, 4794 TB Heijningen, Netherlands
Glasweg 7, 4794 TB Heijningen, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Loswalweg 50, 3199 LG Maasvlakte Rotterdam, Netherlands
Doesburgseweg 16D, 6902 PN Zevenaar, 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
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands

Computerweg 12D, 3821 AB Amersfoort, Netherlands
Kajuitweg 1, 1041 AP Amsterdam, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Touwslagerstraat 1, 2984 AW Ridderkerk, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, 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
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Loswalweg 50, 3199 LG Maasvlakte Rotterdam, Netherlands
Theemsweg 32, 3197 KM Botlek Rotterdam, Netherlands

185

NOTES TO THE FINANCIAL STATEMENTS

SECTION 8. OTHER NOTES CONTINUED

8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2019 CONTINUED

Subsidiary
Incorporated in Belgium
Belgo-Luxembourgeoise de Services Publics SA
Coolrec Belgium NV
EcoSmart NV
Enviro+ NV
Maltha Glasrecyclage Belgie BVBA
Mineralz ES Treatment NV
Ocean Combustion Services NV
Recydel SA (80%)
Renewi Belgium NV
Renewi Logistics NV
Renewi NV
Renewi Valorisation & Quarry NV
Renewi Wood Products NV

Address of the registered office

Rue de Rolleghem 381, 7700 Mouscron, Belgium
Baeckelmansstraat 125, 2830 Tisselt, Belgium
Nijverheidsstraat 2, 2870 Puurs, Belgium
John Kennedylaan 4410, 9042 Gent, Belgium
Fabrieksstraat 114, 3920 Lommel, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Terlindenhofstraat 36, B-2170 Meerksem, Antwerpen, Belgium
Rue Wérihet 72, 4020 Liège, Belgium
Gerard Mercatorstraat 8, B-3920, Lommel, Belgium
John Kennedylaan 4410, 9042 Gent, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Gerard Mercatorstraat 8, B-3920, Lommel, Belgium
John Kennedylaan 4410, 9042 Gent, Belgium

Incorporated in Germany
ATM Entsorgung Deutschland GmbH (Year end 31 December)
Reym GmbH
Coolrec Deutschland GmbH (Year end 31 December)

Kaldenkirchener Strasse 25, D-41063, Mönchengladbach, Germany
Oldenburg, Germany
Donatusstraße 1, 50259 Pulheim, Germany

Incorporated in France
Coolrec France SAS (90%)
Maltha Glass Recycling France SAS (67%)

Incorporated in Hungary
Maltha Hungary Uvegujrahasznosito Kft. (67%)

Incorporated in Luxembourg
Renewi Luxembourg SA

Incorporated in Portugal
Maltha Glass Recycling Portugal L.D.A. (67%)

Incorporated in the UK
Renewi European Holdings Limited

Renewi Financial Management Limited

Renewi Holdings Limited*

Renewi PFI Investments Limited*

Renewi SRF Trading Limited

Renewi UK Services Limited

Safewaste Limited

Rue Iéna Parcelle 36, 59810 Lesquin, France
Zone Industrielle, 33450 Izon, France

1214 Budapest, Orion utca 14, Hungary

z.a. Gadderscheier, 4501 Differdange, Luxembourg

Parque Industrial da Gala, Lotes 26 e 27, 3081-801 Figueira da Foz, Portugal

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

186

SECTION 8. OTHER NOTES CONTINUED

8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2019 CONTINUED

Subsidiary
Incorporated in Canada
Renewi Canada LTD (previously Orgaworld Canada LTD)
Renewi Design-Builder General Partner LTD (previously Orgaworld
Design-Builder General Partner LTD)
Renewi Design-Builder Limited Partnership (previously
Orgaworld Design-Builder General Limited Partnership)
Renewi Surrey General Partner LTD (previously Orgaworld
Surrey General Partner LTD)
Renewi Surrey Limited Partnership (previously Orgaworld
Surrey Limited Partnership)

Address of the registered office

2940 Dingman Drive, London ON N6N 1G4, Canada
20th Floor, 250 Howe Street, Vancouver, BC VGC 3R8, Canada

20th Floor, 250 Howe Street, Vancouver, BC VGC 3R8, Canada

Subsidiary undertakings holdings UK PFI/PPP contracts
Renewi Argyll & Bute Limited
Renewi Argyll & Bute Holdings Limited*
Renewi Cumbria Limited

Renewi Cumbria Holdings Limited

3SE (Barnsley, Doncaster & Rotherham) Holdings
Limited (75%)
3SE (Barnsley, Doncaster & Rotherham) Limited (75%)

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
Dunedin House, Auckland Park, Mount Farm, Milton Keynes, Buckinghamshire,
MK1 1BU, United Kingdom

187

NOTES TO THE FINANCIAL STATEMENTS

SECTION 8. OTHER NOTES CONTINUED

8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2019 CONTINUED
Joint ventures, joint operations and associates
At 31 March 2019 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 ventures
Incorporated in the Netherlands
AP4 Terra B.V.
PQA B.V.
Recycling Maatschappij Bovenveld B.V.
SQAPE B.V.

Incorporated in Belgium
Marpos NV
Recypel BVBA
Silvamo NV

Incorporated in the UK
Caird Evered Holdings Limited

Caird Evered Limited

Resource Recovery Solutions (Derbyshire)
Holdings Limited
Resource Recovery Solutions (Derbyshire)
Limited
Wakefield Waste Holdings Limited

50%
50%
50%
50%

45%
50%
50%

50%

Group
Holding
%

Most recent
year end

Address of the registered office

31 March 2019
31 December 2018
31 December 2018
31 December 2018

Vlasweg 12, 4782 PW Moerdijk, Netherlands
Bennebroekerdijk 244, 2142 LE, Cruquius, Netherlands
Coevorderweg 48, 7737 PG Stegeren, Netherlands
Bennebroekerdijk 244, 2142 LE Cruquius, Netherlands

31 December 2018
31 December 2018
31 March 2019

L. Coiseaukaai 43, 8380 Dudzele, Belgium
Reinaertlaan 82, 9190 Stekene, Belgium
Regenbeekstraat 7C, 8800 Roeselare, Belgium

31 December 2018

31 March 2019

50.001%

31 March 2019

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
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

Wakefield Waste PFI Holdings Limited

50.001%

31 March 2019

Wakefield Waste PFI Limited

50.001%

31 March 2019

188

SECTION 8. OTHER NOTES CONTINUED

8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2019 CONTINUED

Associates
Incorporated in the Netherlands
Afval Loont Holding B.V.

Afval Loont Barendrecht B.V.

Afval Loont Exploitatie 1 B.V.

Afval Loont Rotterdam B.V.

Afval Loont Shared Service Centre B.V.

Afval Loont Spaarders B.V.

AMP B.V.
Dorst B.V.
Tankterminal Sluiskil B.V.
Zavin B.V.
Zavin C.V.

Incorporated in Belgium
SUEZ PCB Decontamination NV
Valorem SA

Incorporated in Austria
EARN Elektroalgeräte Service GmbH

Incorporated in the UK
ELWA Limited

ELWA Holdings Limited

Resource Recovery Solutions (Derbyshire)
Limited
Shanks Dumfries And Galloway Limited

Shanks Dumfries And Galloway Holdings
Limited

Joint operations
Incorporated in the Netherlands
Baggerspecieverwerking Noord-Nederland V.O.F.
Hydrovac V.O.F.
Induserve V.O.F.
Octopus V.O.F.
Reym HMVT B.V.
Smink Boskalis Dolman V.O.F.
TOP Leeuwarden V.O.F.

Group
Holding
%

Most recent
year end

Address of the registered office

22%

33%
50%
40%
33%
33%

23%
30%

31 December 2018

31 December 2018
31 December 2018
31 December 2018
31 December 2018
31 December 2018

Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Middenbaan-Noord 5, 3191 EM Hoogvliet Rotterdam,
Netherlands
Victoriberg 18, 2211 DH Noordwijkerhout, Netherlands
Wateringveldseweg 1, 2291 HE Wateringen, Netherlands
Oude Haven 44, Oostburg, 4501PA, Netherlands
Baanhoekweg 42, 3313 LA Dordrecht, Netherlands
Baanhoekweg 46, 3313 LA Dordrecht, Netherlands

31 December 2018
31 December 2018

Westvaartdijk 97, 1850 Grimbergen, Belgium
Rue des trois Burettes 65 1435 Mon-Saint-Guibert,
Belgium

33%

31 December 2018

Johannesgasse 15,,1010 Wien, Austria

20%

50%

20%

31 March 2019

Group
Holding
%

Most recent
year end

Address of the registered office

50%
50%
67%
50%
50%
50%
50%

31 December 2018
31 December 2018
31 December 2018
31 December 2018
31 December 2018
31 December 2018
31 December 2018

Newtonweg 1, 8912 BD Leeuwarden, Netherlands
Graafsebaan 67, 5248 JT Rosmalen, Netherland
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Forellenweg 24, 4941 SJ Raamsdonksveer, Netherlands
Maxwellstraat 31, 6716 BX Ede, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
Newtonweg 1, 8912 BD Leeuwarden, Netherlands

189

NOTES TO THE FINANCIAL STATEMENTS

SECTION 8. OTHER NOTES CONTINUED

8.2 RELATED PARTY TRANSACTIONS
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 associates and joint ventures
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
2019
€m
52.0
2.6
0.9
–
5.3
0.6
0.7
–

2018
€m
53.9
1.9
0.8
–
5.5
0.3
0.9
–

Joint ventures

2019
€m
57.1
0.4
1.1
0.1
1.9
–
0.2
0.6

2018
€m
67.6
1.3
0.9
2.6
6.5
0.2
21.6
0.6

The receivables and payables are due one month after the date of the invoice and are unsecured in nature and bear no interest. An expected credit
loss expense of €36.9m (2018: €nil) has been recognised in relation to loans to related parties and other receivables in UK Municipal in relation to the
Derby PFI contract as set out in note 3.4.

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 90 to 107, 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

2019
€m
4.1
0.2
0.1
4.4

2018
€m
5.9
0.2
0.9
7.0

190

SECTION 8. OTHER NOTES CONTINUED

8.3 CONTINGENT LIABILITIES
As we announced in January 2019, there is an ongoing investigation into the production of thermally cleaned soil by ATM. This may or may not result
in a prosecution and if so, we expect such a process will likely take many years, should it proceed. ATM will defend its conduct vigorously in such an
event and, given that it is not even clear whether or what charges might be brought, we do not consider it appropriate at this stage nor is it possible
to quantify a provision in relation to this.

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. None of these other
matters are expected to have a material impact.

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 €238.6m (2018: €235.4m).

8.4 EVENTS AFTER THE BALANCE SHEET DATE
On 1 May 2019 the Group acquired for a nominal sum Rotie Organics, a business that collects, sources, de-packages and pre-treats out of date
food waste.

191

CONSOLIDATED FIVE YEAR FINANCIAL SUMMARY

Consolidated income statement
Revenue1
Underlying EBIT 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 before tax from continuing operations
Taxation
Exceptional tax and tax on exceptional items
Loss 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 interests

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
Exchange reserve and retained earnings

Non-controlling interests
Total equity

2019
€m

1,780.7
85.5
(13.3)
(10.1)
0.4

62.5
(151.5)
(89.0)
(15.6)
28.0
(76.6)
(21.1)
(97.7)

(92.8)
(4.9)
(97.7)

1,439.6
(472.7)
(647.4)
319.5

573.1
(254.6)
318.5
1.0
319.5

Restated*
2018
€m

1,760.3
82.5
(14.0)
(8.8)
2.6

62.3
(115.1)
(52.8)
(15.7)
17.1
(51.4)
(2.5)
(53.9)

(54.2)
0.3
(53.9)

1,669.2
(637.7)
(595.2)
436.3

573.1
(142.9)
430.2
6.1
436.3

2017
€m

927.7
43.7
(9.6)
(5.7)
2.4

30.8
(101.9)
(71.1)
(7.1)
7.5
(70.7)
(0.6)
(71.3)

(70.9)
(0.4)
(71.3)

1,674.3
(565.2)
(597.6)
511.5

572.9
(66.6)
506.3
5.2
511.5

Financial ratios
Underlying earnings per share – continuing operations2 (cents per share)
Basic loss per share – continuing operations2 (cents per share)
Dividend per share (pence per share)

5.9c
(9.0)c
1.45p

5.8c
(6.5)c
3.05p

4.5c
(13.1)c
3.05p

2016
€m

840.2
45.5
(12.7)
(5.6)
1.4

28.6
(31.1)
(2.5)
(3.3)
1.1
(4.7)
0.1
(4.6)

(4.6)
–
(4.6)

845.7
(257.2)
(357.9)
230.6

176.7
56.5
233.2
(2.6)
230.6

5.6c
(1.0)c
3.45p

2015
€m

767.5
43.9
(13.3)
(3.9)
1.1

27.8
(55.4)
(27.6)
(1.9)
5.3
(24.2)
1.8
(22.4)

(22.5)
0.1
(22.4)

1,019.1
(235.8)
(521.9)
261.4

193.3
70.4
263.7
(2.3)
261.4

5.7c
(5.4)c
3.45p

*The year ended March 2018 comparatives for the Income Statement have been restated to classify the Canada Municipal segment as a discontinued operation as explained in
Section 1.
1 Revenue and underlying EBIT from continuing operations is stated before non-trading and exceptional items as set out in note 3.4.
2 Underlying earnings and basic loss per share for continuing operations have been restated for years ended 2015 and 2016 to reflect the bonus factor within the 2016 equity raise.

192

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
Underlying EBIT

Underlying EBIT margin

EBITDA

Underlying profit before tax

Underlying EPS

Return on operating assets

Post-tax return on capital
employed

Underlying free cash flow

Free cash flow conversion

How we define it
Operating profit from continuing and discontinued
operations excluding amortisation of intangible assets
arising on acquisition, fair value remeasurements, non-
trading and exceptional items
Underlying EBIT as a percentage of revenue

Underlying EBIT before depreciation, amortisation and
profit or loss on disposal of plant, property and equipment
for both continuing and discontinued operations
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 underlying EBIT divided by a 13 month
average of total net assets (including assets and liabilities
of disposal groups classified as held for sale) excluding
core net debt, derivatives, tax balances, goodwill and
acquisition intangibles
Last 12 months underlying EBIT as adjusted by the Group
effective tax rate divided by a 13 month average of total net
assets excluding core net debt and derivatives
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 underlying EBIT

Net core cash flow

Cash flow from core net debt excluding loan fee
amortisation and capitalisation, exchange movements
and movements in PFI/PPP non-recourse net debt
Core net debt or core funding Core net debt includes cash and cash equivalents

Net debt to EBITDA

Non-trading and exceptional
cash flow items

Underlying effective tax rate

but excludes the net debt relating to the UK
PFI/PPP contracts
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
Synergy, integration, restructuring and transaction cash
flows are presented in cash flows from operating activities
and are included in the categories in note 3.4, net of
opening and closing balance sheet positions
The effective tax rate on underlying profit before tax

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

Provides a measure of the return on assets across the
Divisions and the Group excluding goodwill and
acquisition intangible balances

Provides a measure of the Group return on assets taking
into account the goodwill and acquisition intangible
balances
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
Provides an understanding of total cash flow of
the Group

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

Provides useful information on non-trading and
exceptional cash flow spend

Provides a more comparable basis to analyse our
tax rate

193

EXPLANATION OF NON-IFRS MEASURES

Reconciliations of certain non-IFRS measures are set out below:

Reconciliation of underlying EBIT to EBITDA

Underlying EBIT from continuing operations
Depreciation of property, plant and equipment
Amortisation of intangible assets (excluding acquisition intangibles)
Non-exceptional (gain) loss on disposal of property, plant and equipment
EBITDA from continuing operations
EBITDA from discontinued operations
Total EBITDA

*The comparatives have been restated to classify the Canada Municipal segment as a discontinued operation.

Reconciliation of underlying free cash flow as presented in the CFO Review

Net cash inflow from operating activities
Exclude non-trading and exceptional provisions, working capital and restructuring spend
Exclude payments to fund UK defined benefit pension scheme
Exclude (decrease) increase in Municipal Canada PPP financial asset
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

2019
€m
85.5
87.3
6.9
(2.3)
177.4
3.9
181.3

2019
€m
73.6
66.0
3.4
(6.9)
(29.4)
11.7
(3.8)
(92.4)
8.1
30.3

Restated*
2018
€m
82.5
87.3
7.9
2.4
180.1
(1.8)
178.3

2018
€m
136.0
40.9
3.5
11.5
(28.6)
11.3
(6.8)
(83.6)
4.2
88.4

The Group splits purchases of property, plant and equipment between replacement and growth as shown in the cash flow in the CFO review. The 2019
replacement spend shown above totalling €96.2m (being €3.8m intangible assets and €92.4m property, plant and equipment) plus the growth capital
expenditure in the cash flow of €11.7m as shown in the CFO review less additions to finance leases of €0.4m (as shown in note 5.1) reconciles to the
purchases of property, plant and equipment and intangible assets cash outflow of €107.5m within investing activities in the consolidated statement of
cash flows.

Reconciliation of net core cash flow as presented in the CFO Review

Net core cash flow
Movement in PFI/PPP non-recourse net debt
Capitalisation of loan fees net of amortisation
Exchange movements
Finance leases transferred to disposal groups classified as held for sale
Total cash flows in net debt (note 5.1)

2019
€m
(51.9)
(0.8)
2.2
(5.9)
4.2
(52.2)

2018
€m
(13.0)
7.2
0.7
7.5
–
2.4

194

PARENT COMPANY BALANCE SHEET
AS AT 31 MARCH 2019

Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Trade and other receivables
Deferred tax assets

Current assets
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents

Total assets
Liabilities
Non-current liabilities
Borrowings
Defined benefit pension scheme deficit

Current liabilities
Borrowings
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
2019
£m

31 March
2018
£m

Note

0.3
0.3
350.0
258.1
6.4
615.1

187.8
–
15.5
203.3
818.4

(85.8)
(3.2)
(89.0)

(86.1)
(0.5)
(27.4)
(0.4)
(2.4)
(116.8)
(205.8)
612.6

80.0
401.4
131.2
612.6

–
0.3
376.2
276.4
9.4
662.3

184.7
0.6
11.8
197.1
859.4

(174.6)
(14.3)
(188.9)

–
(0.1)
(147.7)
(0.4)
(0.6)
(148.8)
(337.7)
521.7

80.0
401.4
40.3
521.7

*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 profit for the year ended 31 March 2019 of £109.6m (2018: £38.3m loss).

The notes on pages 197 to 206 are an integral part of these financial statements.

These Financial Statements were approved by the Board of Directors and authorised for issue on 23 May 2019. They were signed on its behalf by:

Colin Matthews
Chairman

Toby Woolrych
Chief Financial Officer

195

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019

Share
premium
£m
401.4
–

Retained
earnings
£m
40.3
109.6

Balance at 1 April 2018
Profit for the year
Other comprehensive income:
Actuarial gain on defined benefit pension scheme
Tax in respect of other comprehensive income items
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based compensation
Movement on tax arising on share-based compensation
Own shares purchased by the Employee Share Trust
Dividends
Balance at 31 March 2019

Balance at 1 April 2017
Loss for the year
Other comprehensive income:
Actuarial gain 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
Own shares purchased by the Employee Share Trust
Dividends
Balance as at 31 March 2018

Note

Share
capital
£m
80.0
–

–
–
–

–
–
–
–
80.0

79.9
–

–
–
–

–
–
0.1
–
–
80.0

–
–
–

–
–
–
–
401.4

401.2
–

–
–
–

–
–
0.2
–
–
401.4

Note

PARENT COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2019

Cash flows from operating activities
Income tax (paid) received
Net cash inflow from operating activities
Investing activities
Investment in subsidiary
Investment in joint venture
Proceeds from disposal of joint venture
Purchase of intangible assets
Finance income
Net cash inflow from investing activities
Financing activities
Finance charges and loan fees paid
Proceeds from share issues
Investment in own shares by the Employee Share Trust
Dividends paid
Net cash outflow 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

196

Total
equity
£m
521.7
109.6

10.1
(1.7)
118.0

0.8
(0.6)
(3.0)
(24.3)
612.6

582.0
(38.3)

1.8
(0.3)
(36.8)

1.8
(0.2)
0.3
(1.0)
(24.4)
521.7

2018
£m
10.8
0.2
11.0

–
–
–
–
18.2
18.2

(10.4)
0.3
(1.0)
(24.4)
(35.5)
(6.3)
18.1
11.8

10.1
(1.7)
118.0

0.8
(0.6)
(3.0)
(24.3)
131.2

100.9
(38.3)

1.8
(0.3)
(36.8)

1.8
(0.2)
–
(1.0)
(24.4)
40.3

2019
£m
11.1
(0.8)
10.3

(2.6)
(3.7)
18.0
(0.3)
18.9
30.3

(9.6)
–
(3.0)
(24.3)
(36.9)
3.7
11.8
15.5

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES – COMPANY

GENERAL INFORMATION
Renewi 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 208. The nature of the Company’s principal activity is a head
office corporate function.

The financial statements for Renewi plc the Company are presented in Sterling being the functional currency of the entity and are rounded to the
nearest £0.1m unless otherwise stated.

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 2018.

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
The Company has adopted IFRS 9 Financial Instruments from 1 April 2018. This standard has resulted in changes in the accounting policies for
classification, measurement and impairment of financial assets. There has been no adjustment to the amounts previously recognised in the financial
statements or to the classification and measurement of financial liabilities.

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. There were no new standards, amendments to standards or interpretations not yet effective that would be expected to have a
material impact on the Company.

INTANGIBLE ASSETS
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.

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 to write off the cost of fixtures and fittings (less the expected residual value) on a straight line basis over an expected useful
life of up to 10 years.

197

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES – COMPANY CONTINUED

INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Investments in subsidiary undertakings are stated at cost 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.

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.

198

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES – COMPANY CONTINUED

FOREIGN CURRENCIES
The functional 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 rates. 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 using the effective
interest method less any provision for impairment losses. The Company measures impairment losses using the expected credit loss model taking into
account objective evidence of impairment as a result of assessing the estimated future cash flows of the financial asset.

Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with a maturity of three months or less.

External borrowings
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.

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 derivative 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 5.5 and 5.6 of the Group financial statements.

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. The share premium account represents any excess of the net proceeds over the nominal value
of any shares issued.

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.

199

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

2. KEY ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with IFRS requires management to make 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 note.

Defined benefit pension 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 7.2 of the Group financial statements.

Impairment of investments in subsidiary undertakings
Investments in subsidiary undertakings are reviewed for impairment whenever events or circumstances indicate that the carrying value may not
be recoverable. The carrying value is estimated based on projected cash flows which may be long term in nature.

3. EMPLOYEES

Staff costs
Wages and salaries
Social security costs
Share-based benefits
Other pension costs
Total staff costs

2019
£m
3.3
0.5
0.8
0.1
4.7

2018
£m
3.9
0.5
1.8
0.1
6.3

The average number of people (including executive directors) employed by the Company was 17 employees (2018: 17).

See pages 90 to 107 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. Further details on share-based payments are set out in note 7.3 of the Group financial statements.

4. AUDITORS’ REMUNERATION

The auditors’ remuneration for audit services to the Company was £0.1m (2018: £0.1m), there were no fees paid in to PricewaterhouseCoopers LLP
and its associates for non-audit services for the Company.

5. DIVIDENDS

Dividends recognised and proposed:

Proposed final dividend for the year ended 31 March 2019 of 0.5 pence per share (2018: 2.1 pence)
Total dividend per share (pence)

2019
£m

16.8
7.5
24.3

4.0
1.45p

2018
£m

16.8
7.6
24.4

16.8
3.05p

200

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

6. INTANGIBLE ASSETS

Cost
At 1 April 2017
Disposal
At 31 March 2018
Additions
At 31 March 2019
Accumulated amortisation and impairment
At 1 April 2017
Amortisation charge
Impairment
Disposals
At 31 March 2018 and at 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
At 31 March 2017

7. PROPERTY, PLANT AND EQUIPMENT

Cost
At 1 April 2017, 31 March 2018 and 31 March 2019
Accumulated amortisation and impairment
At 1 April 2017, 31 March 2018 and 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
At 31 March 2017

Computer
Software
£m

1.2
(0.2)
1.0
0.3
1.3

1.0
0.1
0.1
(0.2)
1.0

0.3
–
0.2

Total
£m

0.3

–

0.3
0.3
0.3

Land
£m

Fixtures and
fittings
£m

0.1

–

0.1
0.1
0.1

0.2

–

0.2
0.2
0.2

201

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

8. INVESTMENTS

At 1 April 2017
Impairment
At 31 March 2018
Additions
Impairment
Disposals
At 31 March 2019

Investments
in joint
ventures
£m
–
–
–
3.7
–
(3.7)
–

Investments
in subsidiary
undertakings
£m
411.2
(35.0)
376.2
65.2
(91.4)
–
350.0

The Group undertook a restructuring of subsidiaries during the year which included receipt of a dividend in specie of £62.6m from Shanks European
Investments 2 Coop WA now liquidated being the distribution of 50% of the shares in Renewi Europe BV. Following this restructuring the investment in
Shanks European Investments 2 Coop WA of £56.4m was fully impaired. An additional impairment of £35.0m (2018: £35.0m) related to the investment
in Renewi UK Services Limited as a result of the difficult trading conditions being encountered in the UK Municipal division. This investment was
subsequently sold to Renewi Holdings Ltd for £1 on 29 March 2019.

In the opinion of the Directors, the value of investments in subsidiary undertakings is not less than the aggregate amount of £350.0m (2018: £376.2m)
after taking account of the impairment charge in each year. This assessment is based on the value in use calculated with reference to the discounted
cash flow forecasts for each of the reporting segments of the Group as set out in note 4.1 of the Group financial statements. The Group performs
sensitivity analysis of the impairment testing by considering reasonably possible changes in the key assumptions used. The results of sensitivities
performed demonstrated significant headroom and it is concluded that no reasonably possible change to the assumptions would result in an
impairment charge.

9. TRADE AND OTHER RECEIVABLES

Non-current assets
Amounts owed by subsidiary undertakings
Current assets
Amounts owed by subsidiary undertakings
Other receivables
Prepayments

2019
£m

2018
£m

258.1

276.4

186.3
0.3
1.2
187.8

183.9
0.3
0.5
184.7

During the year an expected credit loss allowance of £45.7m (2018: £20.3m) was charged to the Income Statement in relation to loans owed by
subsidiary undertakings in the UK Municipal division. This was as a result of the difficult trading issues and also in relation to the Derby PFI contract
as explained in note 3.4 of the Group financial statements. The Directors do not consider there to be a risk of default in relation to the remaining
receivables.

Interest on amounts owed by subsidiary undertakings is received at rates of between 0% and 14% (2018: 0% and 14%), the balances are unsecured
and repayable either on demand or in accordance with the loan agreement with a final repayment date of 30 September 2039.

The carrying amounts of trade and other receivables are denominated in the following currencies:

Sterling
Euro
Canadian Dollar

2019
£m
157.7
258.0
30.2
445.9

2018
£m
64.0
368.1
29.0
461.1

202

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

10. DEFERRED TAX ASSET

Deferred tax is provided in full on temporary differences under the liability method using the applicable tax rate.

At 1 April 2017
(Charge) credit to Income Statement
Charge to equity
At 31 March 2018
(Charge) credit to Income Statement
Charge to equity
At 31 March 2019

Retirement
benefit
schemes
£m
3.2
(0.5)
(0.3)
2.4
(0.2)
(1.7)
0.5

Tax losses
£m
2.9
3.5
–
6.4
(0.9)
–
5.5

Derivative
financial
instruments
£m
0.2
(0.3)
–
(0.1)
0.2
–
0.1

Other
timing
differences
£m
0.7
0.1
(0.1)
0.7
0.1
(0.5)
0.3

Total
£m
7.0
2.8
(0.4)
9.4
(0.8)
(2.2)
6.4

The majority of the £6.4m (2018: £9.4m) deferred tax asset is expected to be recovered after more than one year.

As at 31 March 2019, the Company has unused tax losses (tax effect) of £5.5m (2018: £6.4m) available for offset against future profits. A deferred tax
asset has been recognised in respect of £5.5m (2018: £6.4m) 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 £15.5m (2018: £11.8m) was denominated in the following currencies:

Sterling
Euro
Canadian Dollar

12. BORROWINGS

Non-current borrowings
Retail bonds
Current borrowings
Retail bonds

2019
£m
15.3
0.1
0.1
15.5

2019
£m

85.8

86.1

2018
£m
11.7
0.1
–
11.8

2018
£m

174.6

–

At 31 March 2019 the Group had two issues of retail bonds to investors in Belgium and Luxembourg which are listed on the London Stock Exchange
which are carried at amortised cost. The retail bonds due July 2019 of £86.1m (€100m) (2018: £87.5m (€100m)) have an annual coupon of 4.23% and
the green retail bonds due June 2022 of £85.8m (€100m) (2018: £87.1m (€100m)) have an annual coupon of 3.65%.

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 Euros.

203

2019
£m
85.8
–
85.8

2018
£m
87.5
87.1
174.6

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

13. DERIVATIVE FINANCIAL INSTRUMENTS

The Company held forward foreign exchange contracts with a current liability of £0.5m (2018: £0.1m) and a notional value of £11.3m (2018: £11.4m).
In the prior year the Company also held a fuel derivative current asset of £0.6m with the notional value of the wholesale fuel of £4.2m.

14. TRADE AND OTHER PAYABLES

Trade payables
Other tax and social security payable
Other payables
Accruals
Amounts owed to Group undertakings

2019
£m
0.3
0.2
0.5
8.3
18.1
27.4

Interest on amounts owed to Group undertakings is charged at rates of between 0% and 2.64% (2018: 0% and 2.65%) and these balances are
unsecured and repayable upon demand.

The carrying amounts of trade and other payables are denominated in the following currencies:

Sterling
Euro

15. PROVISIONS

At 1 April 2018
Additions
Utilised in the year
At 31 March 2019

2019
£m
21.7
5.7
27.4

2018
£m
0.2
0.6
0.2
8.6
138.1
147.7

2018
£m
59.3
88.4
147.7

£m
0.6
2.0
(0.2)
2.4

Provisions principally include warranties, whereby 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.

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. The total estimated contributions expected to be paid to the scheme in the year
ending 31 March 2010 are £3.3m. See note 7.2 of the Group financial statements for further details.

In the year ended 31 March 2019 a past service cost of £1.7m was charged to the Income Statements as a result of the impact of the 2018 Court ruling
for guaranteed minimum pension equalisation.

204

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

17. SHARE CAPITAL AND SHARE PREMIUM

Share capital allotted, called up and fully paid
At 1 April 2017
Issued under share option schemes
At 31 March 2018
Issued under share option schemes
At 31 March 2019

Ordinary shares
of 10p each
£m

Number

Share
premium
£m

799,812,223
321,029
800,133,252
8,284
800,141,536

79.9
0.1
80.0
–
80.0

401.2
0.2
401.4
–
401.4

Renewi plc Employee Share Trust
The Renewi plc Employee Share Trust owns 5,529,850 (0.7%) (2018: 1,308,652 (0.2%)) of the issued share capital of the Company in trust for the benefit
of employees of the Group. The Trust waives its dividend entitlement. Retained earnings include ordinary shares held by the Trust to satisfy future
share awards which are recorded at cost. During the year ended 31 March 2019 5,087,076 (2018: 1,308,652) shares were purchased by the Trust at a
cost of £3.0m (2018: £1.0m).

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
Fuel derivatives

Financial liabilities
Retail bonds
Trade and other payables excluding non-financial liabilities
Forward foreign exchange contracts

Note

2019
£m

444.7
15.5
–
460.2

171.9
27.2
0.5
199.6

2018
£m

460.6
11.8
0.6
473.0

174.6
147.1
0.1
321.8

The fair value of financial assets and financial liabilities is not materially different to their carrying value except for the retail bonds which have a fair
value of £175.4m (2018: £176.6m).

205

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

19. NOTES TO THE STATEMENT OF CASH FLOWS

Profit (loss) before tax
Fair value gain on financial instruments
Finance income
Finance charges
Operating profit (loss)
Amortisation and impairment of intangible assets
Dividend in specie
Exceptional provision against investments in subsidiaries
Exceptional gain on sale of joint venture
Exceptional past service cost in relation to the defined benefit pension scheme
Net increase (decrease) in provisions
Payments to fund defined benefit pension scheme deficit
Share-based compensation
Exchange gain (loss)
Operating cash flows before movement in working capital
Decrease in receivables
(Decrease) increase in payables
Cash flows from operating activities

20. CONTINGENT LIABILITIES

2019
£m
110.5
1.0
(21.6)
9.2
99.1
–
(62.6)
91.4
(12.3)
1.7
(0.2)
(3.1)
0.8
0.9
115.7
17.5
(122.1)
11.1

2018
£m
(41.0)
(1.5)
(20.7)
10.2
(53.0)
0.2
–
35.0
–
–
(0.3)
(3.1)
1.8
(1.9)
(21.3)
4.8
27.3
10.8

In addition to the contingent liabilities as referred to in note 8.3 of the Group financial statements, the Company has given guarantees in respect of the
Group’s subsidiary undertakings’ borrowing facilities totalling £366.4m (2018: £344.2m including the borrowing facility of the joint venture which has
been sold). The Company also has contingent liabilities in respect of both VAT and HM Revenue & Customs group payment arrangements of £1.8m
(2018: £1.6m).

21. RELATED PARTY TRANSACTIONS

A list of the Company’s subsidiaries is set out in note 8.1 of the Group financial statements. Transactions with subsidiaries relate to interest on
intercompany loans, management charges and dividends. Net interest income was £20.8m (2018: £20.0m), management charges were £5.2m
(2018: £6.7m) and dividends received were £231.5m (2018: £0.4m). Total outstanding balances are listed in notes 9 and 14.

206

MORE INFORMATION

SHAREHOLDER INFORMATION

Private shareholders

Corporate shareholders

Total

Holders

Shares held

1,716

641

2,357

72.8

27.2

9,043,656

791,097,880

100.0

800,141,536

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

1,489

506

139

63.2

21.5

3.5

2.3

1.9

1.7

5.9

2,718,517

5,560,786

2,878,979

3,932,321

7,541,304

14,866,314

762,643,315

2,357

100.0

800,141,536

1.1

98.9

100.0

0.3

0.7

0.4

0.5

0.9

1.9

95.3

100.0

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.

General Data Protection Regulation
The EU General Data Protection Regulation
gives individuals more protection and control
over their personal data. Shareholders’
personal data is maintained in accordance
with the Companies Act 2006 and processed
by Renewi’s Registrars, Computershare
Investor Services PLC. The security of
shareholders’ data is of the utmost
importance to Renewi and Computershare,
neither of whom will use shareholders’ data
for marketing purposes. Computershare’s
Privacy Policy and Terms and Conditions can
be found 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
For the financial year 2019/20 dividends
received amounting to less than £2,000 are
tax free for UK tax payers. Dividends in excess
of this allowance will continue to 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.

207
RENEWI PLC
ANNUAL REPORT AND ACCOUNTS 2019

FINANCIAL CALENDAR

27 June 2019
Ex-dividend date for final 2019
dividend

28 June 2019
Record date for final 2019 dividend

11 July 2019
Annual General Meeting

26 July 2019
Payment of final 2019 dividend

November 2019
Announcement of interim results
and dividend

31 March 2020
2020 financial year end

May 2020
Announcement of 2020 results and
dividend recommendation

For updates to the calendar during
the year, please visit the Company
website: www.renewiplc.com

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.

MORE INFORMATION
CONTINUED

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 (from
UK) or 00 44 207 066 1000 (from abroad)
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.
If you have already paid money to share
fraudsters, you should contact Action Fraud
on 0300 123 2040.