RENEWI PLC ANNUAL REPORT AND ACCOUNTS 2020
Group overview
Chairman’s Statement
Business model
Our world view
Engaging with stakeholders
Our enhanced strategy
1/ STRATEGIC REPORT
8
10
12
14
15
18
23 The new structure
24
26
28
32
38
45
46
62 Sustainability strategy focus
76
84
85
85 Section 172(1) statement
Measuring performance
Our new sustainability strategy
Expert view: the circular economy
CEO’s Review
CFO’s Review
Our sustainable business
Operating Review
Risk management
Viability statement
Non-financial information statement
The Board of Directors
The Executive Committee
Corporate Governance Report
2/ GOVERNANCE
88
90
93
102 Audit Committee Report
106 Nomination Committee Report
108 Directors’ Remuneration Report
126 Other disclosures
129 Directors’ Responsibilities Statement
3/ FINANCIAL STATEMENTS
132 Auditors’ Report
140 Financial statements
4/ MORE INFORMATION
230 Shareholder information
231 Company information
232 Glossary
2
Renewi plc Annual Report and Accounts 2020
IN THESE CHALLENGING
TIMES OF CLIMATE CHANGE,
THE PLANET URGENTLY
NEEDS OUR HELP. WE HAVE
MADE IT OUR MISSION TO
TRANSFORM WASTE INTO
ESSENTIAL NEW PRODUCTS.
BY ACTING TODAY TO REUSE
MATERIALS AND PROTECT
OUR ENVIRONMENT, WE ARE
SUSTAINING TOMORROW.
3
Renewi plc Annual Report and Accounts 2020 OUR VISION… TO BE THE LEADING
WASTE-TO-PRODUCT COMPANY
OUR PURPOSE… TO PROTECT
THE WORLD BY GIVING NEW
LIFE TO USED MATERIALS
Sustaining the future
Our new sustainability strategy ensures we operate our business
sustainably. Find out about the strategy’s three key themes:
Enable the
circular economy
Reduce carbon
emissions and waste
Page 63
Page 66
Care for
people
Page 70
Our UN Sustainable Development Goals
We have aligned our business operations and new sustainability strategy with the United Nations Sustainable Development Goals (SDGs).
We have cross-referenced the strategy with six of the 17 UN SDGs that are most relevant to what we do and how we operate. In this report
you will see icons for these SDGs, as we demonstrate how we work to fulfil them wherever and whenever we can.
GOOD HEALTH
AND WELLBEING
CLEAN WATER
AND SANITATION
Keeping employees
safe and well is a
key objective, and
we have the same
responsibility to
local communities.
One of our
key treatment
activities is
cleaning waste
water to make it
available again.
AFFORDABLE AND
CLEAN ENERGY
We lower our
carbon footprint
by using renewable
energy and also
sell green energy
produced on site.
SUSTAINABLE
CITIES AND
COMMUNITIES
We reduce our
carbon and other
emissions in waste
collection in cities
and urban areas.
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
We enable the
circular economy, so
support responsible
consumption and
production.
CLIMATE ACTION
We take action to
protect the climate
by carbon avoidance
and recycling waste
instead of sending
it for incineration
or to landfill.
Learn about Renewi’s sustainability efforts with our Sustainability in Action case studies throughout this Report
4
Renewi plc Annual Report and Accounts 2020 Key figures
Here is a snapshot of Renewi’s financial and sustainability performance for the year. For more
information, see the CFO’s Review on page 38 and our sustainability strategy focus on page 62
FINANCIAL PERFORMANCE
Revenue*
€1,697m
2%
Underlying EBIT*
€72.0m
10%
Underlying profit before tax*
Statutory loss for the year
€44.5m
23%
SUSTAINABILITY PERFORMANCE
€(77.1)m
Prior year €(97.7)m
Carbon avoidance intensity ratio
Recycling rate
0.233
7%
64.7%
2 percentage points
>3-day accidents
% Euro 6 trucks
95
3%
48.5%
14 percentage points
*Financial measures are quoted on an ongoing business basis and exclude all sold businesses (both continuing
and discontinued operations). All comparatives are quoted on an IAS 17 basis and excluding the positive impact
of the implementation of IFRS 16 to enable meaningful comparison. The definition and rationale for the use of
non-IFRS measures are on page 208.
5
Renewi plc Annual Report and Accounts 2020 Innovative and progressive, we’re
in step with society’s concerns.
There are an increasing number of low-emission zones in
cities in the Benelux where all but the greenest vehicles are
banned, which we fully support: 48.5% of our low-emission
waste trucks are Euro 6 standard, with the lowest NOx and
particulates emissions, and we plan to invest in significantly
more. We’re also introducing our first zero-emission electric
trucks. That’s a breath of fresh air for city dwellers…
6
Renewi plc Annual Report and Accounts 2020 1/ STRATEGIC REPORT
7
1234Renewi plc Annual Report and Accounts 2020 GROUP OVERVIEW
Renewi at a glance
A corporate snapshot: our Divisions, our people, where they operate and what
they do – from waste collection and recycling to creating secondary raw materials
Pure-play waste-to-product recycling company
BELGIUM
41
2,051
741
Activities include: collection,
sorting, treatment and recycling
of waste; transitioning plastic,
glass and metal into secondary
raw materials; reprocessing metal
concentrates from bottom ashes;
managing hazardous waste.
FRANCE
4
84
0
Activities: removing plastics
and metals from waste
electrical equipment and
converting them into secondary
materials; recycling glass into
cullet and powder for use in the
glass and building industries.
Formed in 2017 from Shanks and Van Gansewinkel
Listed on London Stock Exchange since 1988
Secondary listing on Euronext Amsterdam in 2020
Benelux market leader: c.85% of revenues in Benelux
90.8% waste recycling and recovery rate
162 operating sites
6,550 employees as at 31 March 2020
UK
30
598
6
Activities: operating waste
treatment facilities for city
and county councils across
the country.
KEY
Number of operating sites1
Number of employees
PORTUGAL
1
22
0
Activities: recycling of glass
(including jars and bottles)
and flat glass (such as mirrors
and windows), turning it
into cullet and powder to
be re-used in the glass, glass
wool and building industries.
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
used on site and similar.
8
Renewi plc Annual Report and Accounts 2020 NETHERLANDS
85
3,793
1,385
Activities include: collection,
sorting, treatment and
recycling of waste; handling
contaminated soil, water and
sludge; transitioning plastic,
glass and metal into secondary
raw materials.
HUNGARY
1
2
0
Activities: recycling of glass
(including jars and bottles)
and flat glass (such as mirrors
and windows), turning it
into cullet and powder to be
re-used in the glass, glass
wool and building industries.
111,746
megawatt hours of green electricity
were generated by Renewi in FY20
13.2m
tonnes of commercial and domestic
waste are handled by Renewi annually
OUR NEW STRUCTURE
From 1 April 2020, we reorganised
our business from four to three
Divisions, giving us a leaner and
more effective structure.
Commercial Waste
The Division operates in the
Netherlands and Belgium.
Activities include waste collection,
sorting, treatment and recycling.
The Dutch part of Commercial
Waste now features organic waste
processing business Organics
from the disbanded Monostreams
Division. Belgian operations remain
unaffected by the restructure.
Mineralz & Water
This new Division has been created
by merging our Mineralz and ATM
businesses, and will increasingly
focus on the secondary building
materials market.
Specialities
Another new Division, Specialities
includes Coolrec, Maltha and
Municipal. Among its operations
are waste treatment, glass recycling
and secondary materials production.
See page 23 for more
on our new structure
9
1234Renewi plc Annual Report and Accounts 2020 CHAIRMAN’S STATEMENT
I THANK THE MEN AND
WOMEN OF RENEWI FOR THEIR
REMARKABLE DEDICATION
AND COMMITMENT…
In these extraordinary times I would like to start
by thanking the men and women of Renewi for
their remarkable dedication and commitment.
Never before have we seen how vital our services
are for the communities we serve. And under the
difficult circumstances of Covid-19 we have seen
the resilience of our organisation. FY20 was a
year of successful further transformation,
both financially and operationally. We delivered
against our targets and made further steps in
the restructuring of our Group.
BOARD CHANGES
Colin Matthews stepped down as Chairman on
31 March 2020 after five years that were of great
importance for our company. We owe him enormous
gratitude for his leadership, wisdom and guidance
both during and after the formation of Renewi.
We were fortunate to have him as our Chairman.
Jacques Petry stepped down in December 2019
after nine years on the Board, with Allard Castelein
becoming Senior Independent Director. I would
like to thank both Colin and Jacques for their great
service and to wish them well in the future. I was
appointed Chairman on 1 April 2020.
IMPRESSIONS AND AMBITIONS
It is a great honour to have the opportunity to join
Renewi as Chairman at this point in time. The circular
economy is taking shape in the strategic plans of
our customers, in legislation and in regulations all
around Europe. Perhaps most importantly, it is
taking shape in the hearts and minds of people.
I think that Renewi is well placed to serve these
expanding market opportunities. We should be
ambitious in our development of new technologies
and services. Digital and automation developments
will greatly enhance our capacity to serve, helping
us provide new solutions for our customers. We have
detailed plans regarding how to improve all aspects
of our business. I am also delighted to see the passion
behind the Renewi 2.0 programme, which will lay
the foundation of a much more agile and customer-
focused Renewi. Our focus and passion go hand in
hand in the delivery of our transformation process.
MANAGING COVID-19
The arrival of Covid-19 at the same time as my
appointment means that I have not yet seen as
much of the company as I would have wished. I
have, on the other hand, been able to appreciate
the determined customer focus of our employees
and the dynamic response of the management
as we have continued to serve our customers and
communities flawlessly through the pandemic. With
significant liquidity in place, backed by appropriate
amendments to our banking facilities, we are
well placed to trade with resilience through any
difficulties ahead and to emerge from this difficult
period as well as any in our industry.
EPS AND DIVIDEND
Total earnings per share from ongoing businesses,
and on a comparable basis, fell in line with
expectations by 25% to 4.1 cents. As a result of the
Covid-19 lockdown, we have decided not to pay a
final dividend for the year, thereby preserving €10m
of cash during the period of disruption. The Board
will keep the dividend under review and looks
forward to being able to resume distributions
once the impact of Covid-19 is behind us.
SAFETY
Safety remains the first of our six values and a
significant focus of this Board. During the year
we established an informal Safety Committee
Ben Verwaayen
Chairman
3%
The reduction in the
number of greater than
three-day accidents
10
Renewi plc Annual Report and Accounts 2020 … BECAUSE IN TIMES OF
CHALLENGE AND CRISIS
THE STRENGTH OF AN
ORGANISATION IS ITS PEOPLE
comprising the Chairman and selected Non-
Executive Directors to support the Executive
Committee in driving change in the safety culture in
the business. During the year to 31 March 2020, the
number of greater than three-day lost time accidents
fell by 3%. This is positive, but significantly less than
our ambitions for a step-change improvement. We
were also deeply saddened by the death of one of
our colleagues when collecting waste.
the circular economy. We are proud to develop
new solutions and more efficient ways to
operate. We are proud to challenge ourselves
to improve on all aspects of our business. Our
ambitions are based on the opportunity in
the market, the dedication of our people and
the continued support of our shareholders. The
Board extends its thanks to all our people and
our other supportive stakeholders.
CORPORATE GOVERNANCE
The Board continues to aim 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 Corporate
Governance Code, are set out in the Governance
section on pages 92 to 100.
A CIRCULAR FUTURE
Renewi directly acts to support six of the United
Nations’ Sustainable Development Goals. Our
business and sustainability strategies are wholly
aligned, supported by our six core values. Our
ambitious new sustainability strategy is outlined
on pages 26 to 27. The pillars of this sustainability
strategy are to enable the circular economy and
to reduce our own carbon footprint, as well as to
care for people – both our communities and our
own employees. Our success in delivering our
sustainability strategy will reinforce our success
in our growth strategy.
PASSION AND DEDICATION
We see in times of challenge and crisis that the
strength of an organisation is its people. And
people like to know what type of company
they work for. We are proud to be a leader in
Ben Verwaayen
Chairman
OUR SECONDARY LISTING FOR GREEN INVESTMENT
Renewi is the largest waste-to-product company
in both the Netherlands and Belgium, which are
two of the most advanced circular economies in
the world, driven by supportive societal passion
for sustainability. Listing on Euronext Amsterdam
was therefore an obvious ambition to create a close
connection between the communities we serve and
an investor base that is focused on sustainability.
Since our listing, we have seen an increase in the
ownership of Renewi from continental European
investors and an overall increase in liquidity for the shares, as illustrated by
increased trading volumes. Having our shares traded in Amsterdam raises our
profile and visibility for our activities in the region, and cements our position
as a national champion of recycling and circularity.
11
1234Renewi plc Annual Report and Accounts 2020 BUSINESS MODEL
Our business: creating
value for stakeholders
DRIVEN BY
IMPACTED BY
HOW WE CREATE VALUE…
… AT THE HEART OF THE CIRCULAR ECONOMY
Our vision
To be the leading
waste-to-product
company.
Our purpose
To protect the
world by giving
new life to used
materials.
The world we live in
We meet the challenges of an evolving
regulatory landscape where consumers seek
climate protection, and governments and
international organisations are expanding
legislative and policy agendas on climate
change and the circular economy. We also
remain agile in the changing waste market.
Read about our engagement
with society on page 14
What we do
We generate revenue from collecting
and processing waste and by selling the
recyclates and energy we produce. Our
focus is shifting towards the downstream
end of the value chain in line with market
value – from collection to processing. We
plan to deliver more and higher-quality
secondary raw materials and biofuels.
COLLECTION
Most efficient
collection
SORTING
Modern automated
sorting lines
The resources we need
• Assets and
technology
• Investment
• Innovation
• Financial
• People
• Service
Read more in our Operating
Review on pages 46 to 61
CUSTOMERS
They separate
their waste
PROCESSING
High-quality
output
PRODUCT SALES
Higher margin
products
Learn more about Renewi in the
CEO’s Review on pages 32 to 36
The views of our stakeholders
By offering our customers first-class
products and services, delivering returns
for our investors, looking after our people,
contributing to communities, and working
closely with governments and regulatory
authorities, we will build an even stronger
and more successful business.
For more about our stakeholders,
see pages 15 to 17
WHAT MAKES US DIFFERENT
1 We are recognised
as a waste-to-product
leader in sustainability
at the heart of the
circular economy.
2 As a pure-play
recycling company
we exclusively focus
on extracting value
from waste rather
than on its disposal
through mass burn
incineration or landfill.
3 Our waste-to-product
approach addresses
social and regulatory
trends, and offers
the most capital-
efficient solution to
the effective recycling
of used materials.
4 We’re the first FTSE
company with a green
framework around all
borrowings, and link
margin of facilities
to environmental,
social and governance
(ESG) targets.
5 We have been
recognised for
our strong ESG
performance. For
example, S&P Global
Ratings scored
Renewi 75 out of 100.
12
Renewi plc Annual Report and Accounts 2020 HOW WE CREATE VALUE…
… AT THE HEART OF THE CIRCULAR ECONOMY
FOR ALL OUR STAKEHOLDERS
Driven by the aims of our new business strategy
LEADER IN RECYCLING
Recycling is central to our waste-to-product mission,
and also answers market demand.
LEADER IN SECONDARY MATERIAL PRODUCTION
Improving the quality and ‘spread’ of the products
we produce increases the value of what we recycle.
SELECTIVELY GAIN MARKET SHARE
Selectively increasing our market share helps
us to grow the total volume of waste treated.
Waste-producing customers
We improve their sustainability by specialist
collections and enhanced separation.
Product customers
We collaborate with them to innovate and
create new products from waste streams.
Capex and opex suppliers
We enter long-term supply contracts and work
to ensure fair treatment in the supply chain.
Our business strategy is underpinned by a strong collection strategy
to provide raw materials, and the Renewi 2.0 improvement programme
to make the company more efficient and customer-focused.
Communities
We use low-emission collection vehicles to limit
the impact of operations on communities.
For more about our new strategy, see pages 18 to 22
Committed to sustainability
Our new sustainability strategy works seamlessly with our enhanced
business strategy to enable the circular economy, reduce emissions
and care for people and for communities.
Enable the
circular economy
Reduce carbon
emissions and waste
Care for
people
For more about our sustainability strategy, see page 26
Underpinned by our values
SAFE
INNOVATIVE
SUSTAINABLE
CUSTOMER-
FOCUSED
ACCOUNTABLE
TOGETHER
For more about our values, see page 71
Employees
We invest in safety and wellbeing, career
development and leadership programmes.
Regulators
We engage with them and give expert advice
on processing difficult waste streams.
Governments
We engage with them on the effects of changes
in regulatory regime on sustainable operations.
Investors
We address market trends and have processes
to reduce the impact of adverse events.
Lenders
We have regular, ongoing discussions with
the relationship banking group.
For more about our stakeholder
engagement, see pages 15 to 17
13
1234Renewi plc Annual Report and Accounts 2020 Our world view
In our mission to sustain tomorrow we actively engage with the world and strive
to address the big issues facing society today – from climate change to emissions
products that can be used in
production processes. Since
this is our entire waste-to-
product focus, we are a
linchpin to make the circular
economy a reality. This is
a key pillar of our sustainability
strategy (see page 26): ‘Enable
the circular economy’. We
prioritise waste recycling and
secondary material production
over energy recovery or landfill
disposal for waste we receive.
POLLUTION
The challenge Society is
increasingly intolerant of
pollution, and improved
detection capabilities now
identify trace levels in smaller
amounts. This gives legislators
more opportunity to set a
higher sustainability standard
on CO2 and other emissions,
and trace residual chemicals
in secondary materials to be
used in industrial processes.
Our solution We upgrade
our operations continually to
stay at the forefront of the very
best practice standards in our
industry, and we work with
regulators to tackle pollution
and raise standards. At our
ATM soil treatment facility, our
testing for pollutants assisted
the Dutch Human Environment
and Transport Inspectorate’s
(IL&T) study of thermally
cleaned soil (TGG) and helped
it reopen the TGG market. We
also support regulators with
advice on treating chemical
waste streams, such as PFAS.
URBAN EMISSION
REGULATIONS
The challenge City authorities
issue legislation to tackle carbon
emissions and air pollution;
low- and zero-emission zones
are increasingly popular and a
perfect response to this need.
Our solution We minimise
our impact from waste truck
movements, have increased
collection route density, and
co-operate with competitors
on shared collection schemes;
we run a largely low-emission
vehicle fleet: already almost
half meet the Euro 6 emissions
standard – the cleanest in
Europe. We have also invested
in our first electric trucks.
THE JOB MARKET
The challenge Labour
markets are tightening for
manual roles in the waste
management industry, such
as driving, loading and sorting.
The pool of people wanting
these roles is shrinking and
ageing, as younger prospective
employees often prefer jobs
with less manual work.
Our solution Reducing
manual intervention and
increasing automation are vital
to counter this trend, and there
are many instances where we
have introduced incremental
automation across our
operations. These include
upgraded optical separation
technologies on our sorting
lines, which replace historically
manual activities.
DIGITISATION
The challenge Many of our
stakeholders – customers,
suppliers and employees –
expect digital access to services
and information, and are less
tolerant of manual processes.
Our solution The Renewi 2.0
improvement programme
(see page 22) has a major focus
on automation and digitisation:
we’re building a front-end
digital interface for customers
so they can place and amend
orders and have clear sight of
our services and costs. We
want to implement digital
waste acceptance, so when
trucks arrive at our sites, the
manual paperwork is replaced
by handheld devices, with
a digital workflow from the
weighbridge to reception
of waste and billing. We’re also
working on a digital product
directory for procurement.
THE WASTE MARKET
The challenge The waste
market is in transition, and is
now focused on the movement
from incineration to recycling
and from recycling to secondary
products, so value and margins
are migrating from collection
activities to processing and
treatment. Industry leaders
will need to invest in innovation,
scale processing technologies
and clean collection.
Our solution We’re focused
on circular innovation and new
technologies, with partnerships
for recycling processes and
sustainable products. These
include new plastic products
from waste plastic wrapping
through pyrolysis, cleaning
asbestos-contaminated waste
steel for re-use in construction,
and making gravel, sand and
filler for the building industry by
treating thermally cleaned soil.
CLIMATE CHANGE
The challenge Climate change
concerns constantly generate
new policy and legislation, by
the UN and EU, and at national
level, which impact Renewi. The
UN Sustainable Development
Goals (SDGs) set environmental
targets. The EU Circular Economy
Action Plan promotes circular
processes. The Dutch
Government has laws to lessen
climate impacts: secondary
product targets, taxation on
incineration and landfill, and
planned carbon taxes.
Our solution Our purpose
addresses climate change and
we’re in step with legislative
and policy agendas. Our activities
address the UN SDGs (see
page 4); driving the circular
economy is at our heart; we
make secondary products
and materials; help customers
reduce waste; and we
create green energy and
biofuels – all of which
address climate change.
THE CIRCULAR
ECONOMY
The challenge Support for
the circular economy is such
a compelling priority that it’s
unstoppable, and waste will
need to be turned into product.
Our solution To achieve
circularity, business must focus
on closing the production loop,
where old products are recycled
into monostreams, and further
refined and reprocessed into
high-specification secondary
14
Renewi plc Annual Report and Accounts 2020 STAKEHOLDERS
Engaging with stakeholders
From customers to communities, lenders to lawmakers, and of course our employees, we constantly
strive to create value for stakeholders by understanding and addressing their priorities and concerns
STAKEHOLDER
HOW WE ENGAGE
THEIR PRIORITIES
HOW WE RESPOND
Waste-
producing
customers
SDG link
Product
customers
SDG link
` Contact with the
sales force.
` Regular engagement
through typical daily
interactions in the
provision of our services.
` Customer events.
` Educational programmes
focused around separation.
` Marketing communications
activities.
` Collaboration to innovate
and create new products
from waste streams.
` Regular engagement
through the process
of delivering products.
Capex
and opex
suppliers
SDG link
` Our procurement team
manages relationships
with the suppliers by
category of spend.
` Engaging with these
suppliers through
face-to-face contact,
contracts, meetings,
site visits and the
course of business.
` Waste-producing customers are
` We offer consulting services to
sustainability- and cost-conscious.
` Operationally they demand good
service that is on time, every time,
and want us to be responsive and
flexible to their needs.
improve customer sustainability
outcomes through collections
points and separation.
` We provide a high-quality, responsive
and cost-effective service.
` We invest in new sustainable solutions.
` We provide reports to customers
that demonstrate our sustainability
performance.
` Product specification is critical,
` Dedicated project teams bring
along with the certainty of supply
in sufficient volumes.
expertise to product development.
` We manage the innovation funnel
` At the innovation stage of the
evaluation, customers need
input to assess both the
technical feasibility and
potential commercialisation.
` Building capability into the
schedule at the pilot stage.
` That, at full production scale,
quality and consistency are
the key requirements against
the required volumes.
` Understanding Renewi’s
strategy and how their
products fit our needs.
` How they can create value
through new and existing
product innovations.
` Creating long-term collaborative
and trusting partnerships.
` That Renewi acts ethically
and lawfully while protecting
the environment and
benefiting society.
actively to ensure new product ideas
become actualised.
` Product manufacturing lines operate
using skilled people and modern
manufacturing quality systems.
` Detailed testing and certification of
outbound product where required.
` We enter long-term supply
arrangements.
` We work with our suppliers to ensure
fair treatment within our supply chains.
` We continually explore innovative
solutions to deliver better
waste collection, waste separation
and waste treatment activities
with improved output and
environmental impact.
15
1234Renewi plc Annual Report and Accounts 2020 STAKEHOLDERS continued
STAKEHOLDER
HOW WE ENGAGE
THEIR PRIORITIES
HOW WE RESPOND
Communities
` We engage with
communities through our
websites, media and other
external communications
channels.
SDG link
` We engage local
communities through
leafleting, site attendance,
meetings and liaison
committees with
special interest groups.
` We hold open days
for local communities
and families.
` At some sites we educate
children about recycling
and sustainability.
` Our communities want the
essential services delivered
consistently with minimal
impact to the local environment.
` Our communities are
environmentally conscious and
support the progression to climate
transition and a circular economy.
` The communities want
clean and green cities free
of environmental pollution.
` We hold around 150 community
events a year.
` We have initiated the first white-
label collections collaboration to
improve the environmental impact
of our activities.
` We invest in zero- and low-emission
vehicles – €60m over the past year
(see page 50).
` Where there is an adverse event, such
as a fire, we communicate intensively
with local people.
Employees
SDG link
` Regular daily interactions
` Their daily work and interactions
with key colleagues.
` Rewards, recognition and
personal development.
` Clarity of communication and
organisational objectives.
` The overall working environment
and conditions, including the best
possible standards of safety
during their work.
with our teams through the
management organisation.
` Cascade meetings: town
halls and leadership calls.
` Formal employee relations
through human resources
and works councils.
` Internal communications:
leadership team calls about
business strategy and
performance; newsletters
on divisional priorities; news
via divisional magazines
and site noticeboards.
` Employee engagement
feedback with Pulse surveys.
Regulators
SDG link
` We engage directly
with regulators
through meetings, site
inspections, testing
and data submissions.
` We engage through trade
and industry associations.
` Meeting the permitted
environmental standards.
` Continuing to evolve and
define standards and address
topical concerns.
` Responding to any breaches
appropriately.
` We continue to focus on and invest
in safety – on site and on trucks.
` Our Fit to the Finish programme
is intended to support physical and
mental wellbeing (see page 72).
` We invest in our LEAD programme
in order to improve our group-wide
leadership skills.
` We are investing in a new talent
organisation to open growth
pathways for colleagues.
` We have a dedicated internal
communications team with
established channels.
` At ATM, our extensive testing
programme has helped the
IL&T reopen the thermally
cleaned soil market.
` We support regulators with
expert advice on handling and
processing significant waste
streams, such as nappies,
and dealing with chemicals,
such as PFAS.
16
Renewi plc Annual Report and Accounts 2020 STAKEHOLDER
HOW WE ENGAGE
THEIR PRIORITIES
HOW WE RESPOND
Governments
SDG link
Investors
SDG link
` We engage directly with
ministers, politicians and
other local and national
government officials, often
at our sites.
` We are keen advocates
of the circular economy,
recycling, secondary
material usage, climate
transition, clean cities
and other topical areas
of legislation, and lobby
in support of these.
` We engage either directly
or through trade and
industry associations
and lobby groups.
` Further stimulating the circular
economy through recycling
and secondary products
manufacturing and usage.
` Meeting national and
international climate change
targets, including CO2 reduction
and energy transition.
` Continually elevating the
standards applied across
the industry.
` A clean environment with
pollution minimised from
industrial processes and vehicles.
` Using fiscal and monetary
incentives, and regulation to
encourage the desired outcomes.
` Understanding the current
performance and future
prospects of the Group.
` Evaluating comparative
performance.
` Understanding the key
industry trends.
` Wanting to see lower risk
and fewer exceptional events.
` Wanting lower debt levels.
` AGM, Annual Report and
regulatory news updates.
` Full-year and interim
results presentations to
investors and analysts,
followed by investor
roadshows.
` Responding to investors
and prospective investors
in bilateral meetings and
group meetings and
at investor conferences.
` Capital Markets Day
and site visits.
` We engage directly on the impact
of changes in regulatory regime on
sustainable operations. This way, we
help shape the legislative agenda to
ensure the proposals are deliverable
and benefit the circular economy.
` We provide solicited as well as
unsolicited expert advice directly
to government, as the national
leader in recycling or indirectly
through industry associations.
` We dynamically address market
trends – for example, our enhanced
strategy for success in our markets
(see page 18).
` Clear reporting and prompt
response to investor questions.
` Clear processes to reduce the
impact of adverse events.
` Sharpened focus with fewer
businesses and divisions
following disposals.
` Reducing debt through
portfolio management.
` Increasing margins through
synergy delivery and Renewi 2.0
(see page 22).
Lenders
SDG link
` Ongoing financial
reporting and covenant
compliance reporting
obligations.
` Ongoing regular
discussions regarding
the financial products
available and deployed.
` Protection of and return on their
capital invested in Renewi.
` Intermediation of available
financial products.
` Reduce risks and manage market
trends and leverage.
` Ongoing regular discussions with
the relationship banking group.
` Optimising debt facilities including
new issuance, such as the recent
Belgian retail bond.
` Implementing improved
treasury management and
cash pooling solutions.
See page 99 for how the Renewi Board considers the interests of stakeholders in its decision-making
17
1234Renewi plc Annual Report and Accounts 2020 Our enhanced strategy
We have enhanced our business strategy – strengthening our vision to be the leading
waste-to-product company in the world’s most advanced circular economies
Renewi’s enhanced new strategy supports its vision to
be the leading waste-to-product company. This further
differentiates Renewi as a pure-play recycler, a company
that focuses on supplying high-quality secondary materials,
which we believe is the best way to extract value from waste.
The strategy is based on three market-facing priorities to build
our leadership position in the circular economy, and two internal
improvement strategies to help us perform more smartly.
MARKET-FACING STRATEGIES
1. Leader in recycling
Recycling is central to our waste-to-product mission,
and also answers market demand.
2. Leader in secondary material production
Improving the quality and ‘spread’ of the products
we produce increases the value of what we recycle.
3. Selectively gain market share
This strategy helps us grow the total volume of waste treated.
INTERNAL IMPROVEMENT STRATEGIES
These strategies, forming our Renewi 2.0 programme,
are making Renewi leaner and more efficient through
digitisation and simplification.
` Digitisation of sales and services to improve the
customer experience.
` Simplification of processes across Renewi’s Divisions
to boost efficiency and reduce costs and errors.
See page 22 for further details of the
Renewi 2.0 improvement programme
HOW INNOVATION DRIVES OUR STRATEGY
Innovation is one of our core values and we are working
on a number of projects to deliver our growth strategy
through increasing focus on the creation of secondary
products. We now have a promising portfolio of these
initiatives in our innovation funnel – a pipeline of projects
that we are advancing.
In the future, we will report on the progress of our innovation
funnel with our results, demonstrating the range of
opportunities for the Group’s growth that we are able
to pursue. The projects we are undertaking are wide-
ranging. For example, Renewi is involved in an operation
to create cellulose and polymers from nappies to be
re-used in new products, and in the creation of upgraded
polyethylene and polypropylene feedstock from the
chemical recycling of discarded plastic wrapping.
For further information about the initiatives in our
innovation funnel, see the CEO’s Review on page 32.
18
STRATEGIC PRIORITY
WHY IT’S IMPORTANT
MEASURING SUCCESS
ACHIEVEMENTS TO DATE
RISKS
NEXT OBJECTIVES
1
Leader in recycling
2
Leader in secondary
material production
3
Selectively gain
market share
Recycling is key to realise
our waste-to-product vision,
and there is a strong market
need that supports this
vision. Customers, society
and regulators are focused
on increasing diversion
from incineration and
landfill because recycling
and re-use reduce CO2
emissions, pollution and
resource depletion.
To build a circular economy,
the usage of secondary raw
materials must increase.
For production companies
currently using primary raw
materials, the best way
to convert is by using
high-quality secondary
raw materials that they can
‘drop in’ – and they will be
prepared to pay a higher
price for those high-quality
secondary raw materials.
Renewi operates in markets
where volumes are mostly
driven by economic activity
– an example is GDP.
The two strategies above
allow us to increase the
margin on volumes we treat,
while selectively gaining
market share. This helps us
to grow the total volume
of waste treated.
Key metrics to track our
` At present we recycle about
progress include our recycling
65% of volumes treated, a
rate (ie the percentage of
our treated volumes that
figure that has declined over
the past year as a result of
are diverted from incineration
lower production at ATM.
or landfill) and the realised
carbon avoidance (ie the
amount of CO2 avoided in
the supply chain by recycling).
We will track innovation
by the amount of waste
treated by cutting-edge
and upgraded processes.
` However, Renewi remains well
above the European average
of 43% and the Benelux
average of 60%.
The biggest threats to
recycling are alternative
treatment methods and
alternatives to secondary
materials. The biggest
competing treatment
method for recycling is
incineration, which we
address by innovation
to keep processing costs
at a competitive level and
recyclates at maximum value.
For recyclates the main
competition is virgin material,
which is dependent on
commodity prices and
government policy.
` We will invest to start or
expand production of
secondary raw materials out
of waste streams currently
going to incineration or landfill.
We are determined to increase
our recycling rate still further,
towards 70% in FY23 and 75%
in FY25. We do so by innovating
with leading partners to find
solutions to ‘close the loop’.
` Some examples of projects
that will fuel our growth are
the recycling of mattresses
and the advanced recycling
of waste plastics and wood.
We currently recycle as much
` The additional processing of
Further processing into
` We aim to continuously
of our incoming volumes as
thermally treated soil is carried
secondary products requires
out at our ATM plant in the
Dutch port of Moerdijk.
investment in innovative
treatment technology and
improve the quality and
‘spread’ of the products
we produce, by investing
and the remainder is treated
products – sand, gravel and
It also requires Renewi to
treatment technologies.
Transitioning it into secondary
working alongside partners.
in new and innovative
possible into secondary
materials. A part of that is
further treated by Renewi
by other parties. We aim to
filler – is a major improvement.
operate and compete in new
significantly increase the value
These building products
of our products by investing
are ready for use in their
markets – secondary product
markets instead of secondary
in advanced processing of
final application and present
raw material markets.
our materials, which we
call ‘spread expansion’.
greater economic value
than soil that is simply
thermally treated.
Our primary focus is on
driving margin expansion
from existing waste flows
through the first two
pillars of our strategy. In
addition, we will continue
to selectively increase
volumes through net
customer gains, niche
acquisitions and, potentially,
in the longer term, through
geographic expansion.
` Renewi has successfully
Renewi is the market
` We are continuously evaluating
acquired and integrated Rotie,
leader in the Benelux and
opportunities for growth.
a player in the Dutch organics
a leader in most of the
market for food products.
` Through this acquisition,
we have increased volumes
and have further strengthened
our market leadership in
Dutch organics.
segments in which the
company operates, which
limits organic growth
opportunities. Entering new
waste streams or inorganic
growth brings inherent risks.
` For inorganic growth, in
the short term we expect to
primarily consider smaller
acquisitions, rather than
larger transformative ones.
Renewi plc Annual Report and Accounts 2020 STRATEGIC PRIORITY
WHY IT’S IMPORTANT
MEASURING SUCCESS
ACHIEVEMENTS TO DATE
RISKS
NEXT OBJECTIVES
1
2
3
Leader in recycling
Leader in secondary
material production
Selectively gain
market share
Recycling is key to realise
our waste-to-product vision,
and there is a strong market
need that supports this
vision. Customers, society
and regulators are focused
on increasing diversion
from incineration and
landfill because recycling
and re-use reduce CO2
emissions, pollution and
resource depletion.
To build a circular economy,
the usage of secondary raw
materials must increase.
For production companies
currently using primary raw
materials, the best way
to convert is by using
high-quality secondary
raw materials that they can
‘drop in’ – and they will be
prepared to pay a higher
price for those high-quality
secondary raw materials.
Renewi operates in markets
where volumes are mostly
driven by economic activity
– an example is GDP.
The two strategies above
allow us to increase the
margin on volumes we treat,
while selectively gaining
market share. This helps us
to grow the total volume
of waste treated.
` At present we recycle about
65% of volumes treated, a
figure that has declined over
the past year as a result of
lower production at ATM.
` However, Renewi remains well
above the European average
of 43% and the Benelux
average of 60%.
Key metrics to track our
progress include our recycling
rate (ie the percentage of
our treated volumes that
are diverted from incineration
or landfill) and the realised
carbon avoidance (ie the
amount of CO2 avoided in
the supply chain by recycling).
We will track innovation
by the amount of waste
treated by cutting-edge
and upgraded processes.
The biggest threats to
recycling are alternative
treatment methods and
alternatives to secondary
materials. The biggest
competing treatment
method for recycling is
incineration, which we
address by innovation
to keep processing costs
at a competitive level and
recyclates at maximum value.
For recyclates the main
competition is virgin material,
which is dependent on
commodity prices and
government policy.
` We will invest to start or
expand production of
secondary raw materials out
of waste streams currently
going to incineration or landfill.
We are determined to increase
our recycling rate still further,
towards 70% in FY23 and 75%
in FY25. We do so by innovating
with leading partners to find
solutions to ‘close the loop’.
` Some examples of projects
that will fuel our growth are
the recycling of mattresses
and the advanced recycling
of waste plastics and wood.
We currently recycle as much
of our incoming volumes as
possible into secondary
materials. A part of that is
further treated by Renewi
and the remainder is treated
by other parties. We aim to
significantly increase the value
of our products by investing
in advanced processing of
our materials, which we
call ‘spread expansion’.
` The additional processing of
thermally treated soil is carried
out at our ATM plant in the
Dutch port of Moerdijk.
Transitioning it into secondary
products – sand, gravel and
filler – is a major improvement.
These building products
are ready for use in their
final application and present
greater economic value
than soil that is simply
thermally treated.
` We aim to continuously
improve the quality and
‘spread’ of the products
we produce, by investing
in new and innovative
treatment technologies.
Further processing into
secondary products requires
investment in innovative
treatment technology and
working alongside partners.
It also requires Renewi to
operate and compete in new
markets – secondary product
markets instead of secondary
raw material markets.
Our primary focus is on
driving margin expansion
from existing waste flows
through the first two
pillars of our strategy. In
addition, we will continue
to selectively increase
volumes through net
customer gains, niche
acquisitions and, potentially,
in the longer term, through
geographic expansion.
` Renewi has successfully
acquired and integrated Rotie,
a player in the Dutch organics
market for food products.
` Through this acquisition,
we have increased volumes
and have further strengthened
our market leadership in
Dutch organics.
Renewi is the market
leader in the Benelux and
a leader in most of the
segments in which the
company operates, which
limits organic growth
opportunities. Entering new
waste streams or inorganic
growth brings inherent risks.
` We are continuously evaluating
opportunities for growth.
` For inorganic growth, in
the short term we expect to
primarily consider smaller
acquisitions, rather than
larger transformative ones.
How we achieved the
strategic goals we set
last year – see page 22
19
1234Renewi plc Annual Report and Accounts 2020 OUR ENHANCED STRATEGY continued
Strategy in action
A selection of sustainable operations and innovative projects
that show our new enhanced business strategy in action
Renewi’s renewable energy programme
Thousands of families, and the planet, benefit from Renewi’s
clean energy production programme. Our Organics business
transforms biogas into green electricity, which provides energy
to over 15,000 households in the Amsterdam area.
Organics’ Amsterdam and Lelystad CHP (combined heat
and power) production plants generate the energy. Every year
Amsterdam’s wet digester system converts more than 100,000
tonnes of pre-processed food waste from its retail industry
customers into 45,000 megawatt hours of electricity.
Lelystad’s dry digester uses 30,000 tonnes of household organic
waste from the Flevoland municipalities to produce 4,000
megawatt hours annually. Organics sells its green electricity
certificates from both locations into the grid via Amsterdam-
based energy broker Vandebron.
Our clean energy programme is an inspiring element in Renewi’s
mission to enable the circular economy. “Organics’ contribution
to the green energy effort is very important,” explains Business
Line Organics Director Klaas van den Berg. “Our customers are
delighted by this optimal conversion of their waste, and for Renewi
this is a perfect example of our ambition to ‘waste no more’.”
15,000
Renewi’s Organics business
generates enough green energy
to supply over 15,000 households
in the Amsterdam area
20
Renewi plc Annual Report and Accounts 2020 Mattresses make circular dreams a reality
We are helping to recycle millions
of old mattresses into furniture
filling, gym floors and more as
part of our vision to be the leading waste-
to-product company. Our investment in
RetourMatras, which creates secondary
products by recycling mattresses, has
allowed the firm to hugely expand its
capacity to process them.
RetourMatras already has two plants in
the Netherlands, which recycle 600,000
mattresses each year. This joint investment
by Renewi and Ingka Group enables
RetourMatras to build a third recycling
plant, in Zeeland, and increase annual
processing capacity by more than 50%:
now one million mattresses a year can
be recycled across the three locations,
which goes a long way to tackling the
Netherlands’ waste mattress problem –
around 1.5 million mattresses are thrown
away there every year.
RetourMatras removes metal parts,
textiles and foam from the mattresses,
which are used as secondary products
in sports mats, gymnasium floors, soft
playground surfaces and furniture filling.
Around 90% of the mattress materials
can be recycled, and the remaining 10%
is used to create energy. All of which means
a contribution to the circular economy
that we can be proud of.
Renewi’s investment was accompanied
by a similar one made by Ingka Investments
(part of the Ingka Group, which includes
the 12 IKEA stores in the Netherlands).
Our involvement is, however, more
than financial. Our Renewi trucks will
be transporting containers of up to 100
discarded mattresses at a time, from
hotels, care homes, cruise ships and
government-owned accommodation,
to RetourMatras. Repurposing one 40m3
container of mattresses, rather than
incinerating them as waste, saves 533kg of
CO2. For RetourMatras’s recycling output of
one million mattresses a year, this means
a CO2 saving of 48kg of CO2 equivalent per
mattress annually. As Renewi CEO Otto
de Bont puts it: “This collaboration fits
perfectly with our role as a connecting
link in the circular economy.”
“This collaboration fits perfectly with our role as a connecting link
in the circular economy” RENEWI CEO OTTO DE BONT
A nappy ending for waste
Renewi is planning to start changing
nappies into valuable raw secondary
materials. Initially we plan to recycle
35,000 tonnes of nappies and
incontinence pads every year. For
the operation, Renewi plans to build
recycling plants in the Netherlands,
the first of which is set to open in 2022.
The resulting materials – cellulose,
plastics and super-absorbent
polymers – will be sold to industry.
They can be used to make a wide
variety of products. Cellulose can
be used in adhesives, bioplastics
and cat litter. The plastics are useful
materials for items such as waste
bins, clothes pegs and bottle caps
for cleaning products. Super-
absorbent polymers can be used
to manufacture flood barriers.
During the recycling, the nappies
and pads undergo sterilisation in
a steam autoclave, in a process that
kills off any harmful pathogens. They
are then shredded, and the resulting
secondary materials separated.
The new business will help tackle
the environmental challenge of
discarded nappies and incontinence
pads – 400,000 tonnes of them are
sent to incineration every year in
the Netherlands. Creating these
secondary materials by recycling,
instead of incinerating them, saves
carbon emissions at the rate of
500kg per tonne of waste.
35,000
tonnes of nappies and
incontinence pads will
be recycled every year
21
1234Renewi plc Annual Report and Accounts 2020 OUR ENHANCED STRATEGY continued
€20m
Expected annual
cost benefits after
completion of
the Renewi 2.0
programme
Renewi 2.0 improvement programme
Making Renewi more efficient with our simplification and digitisation plan
Renewi is a complex business thanks to its
acquisitive history. The Group, the result of
a transformational merger three years ago,
was created out of two legacy companies coming
together – companies that were themselves built on
a mix of organic growth and M&A activity. So Renewi
has industry-leading scale, market position, know-
how and experience, but it has many complexities – in
its structure, services offered, systems and processes,
and data management. The goal of the Renewi 2.0
programme is to make Renewi more streamlined
and more efficient to simplify its overhead, in order
to improve customer experience, increase employee
engagement and satisfaction and deliver cost
benefits. Renewi 2.0 is a three-year transformation
plan covering all Divisions and functions. Each 2.0
initiative is designed to address one or several of
the complexities in Renewi, and to deliver the above
benefits. Renewi 2.0 constitutes the core of our
internal strategy to digitise the customer experience
and to simplify for efficiency and returns.
SIMPLIFYING SERVICE OFFERING
A service management and portfolio team is in place
to simplify our service portfolio and optimise pricing.
This entails focusing our offering to include only
services that add value to customers. The team
will also set guidelines and standards for pricing –
optimising the price level per service offered.
DIGITISING PROCESSES
We are doing an end-to-end review of our
processes, reducing non-value added activities,
automating and digitising. One example is using
direct debit or QR codes for invoicing – making
it significantly easier for customers to pay an
invoice, and for Renewi to collect it.
RATIONALISING SYSTEMS
Key initiatives include digitising our sales and after-
sales service activities using online portals, giving
customers easy self-service 24/7, and reducing the
need for manual input by Renewi employees. Systems
rationalisation of our landscape, to reduce the number
of systems for the same application, will follow.
OPTIMISING OUR ORGANISATION
We’re better organised after consolidating our
top structure, going from four to three Divisions, by
redistributing our business lines (so that all similar
activities fall under the same Division), and by
making better use of centralisation and pooling
of experts in dedicated teams.
IMPROVED DATA MANAGEMENT
Enhanced data management will deliver better
quality data. This will be achieved by implementing
master data management, and by introducing
a dedicated data and analytics team.
Delivering our goals
At a glance: how Renewi achieved its strategic priorities over the past year
This snapshot summarises our
performance in meeting the
strategic objectives we set
ourselves for FY20. Our strategy
centred on integration following
the merger, strategic expansion,
enhancing margins and refining and
consolidating our asset portfolio.
We have achieved in every aspect:
integration and expansion are
safely delivered, the margins in our
Commercial Waste Divisions are
stronger, and we divested Canada
and Reym from the portfolio. For
more details, see the CEO’s Review
on pages 32 to 36.
22
STRATEGIC EXPANSION
We made significant progress
developing our innovation pipeline
across many different projects, including the
completed investments in RetourMatras and
Rotie. We made progress with the separation
of building materials at ATM, and expanded our
innovation funnel, including potential projects
for bio-LNG and chemical recycling of plastics.
MARGIN IMPROVEMENT
We have continued to focus on
restoring margins in our core
Commercial Waste Division, delivering a fifth
consecutive year of growth. We passed on
significant general cost inflation, including
increased incinerator taxes, and dynamically
priced our customer contracts to allow the
pass through of falling recyclate prices.
INTEGRATION COMPLETED
MANAGING THE PORTFOLIO
We have completed our integration
of Shanks and Van Gansewinkel,
bringing together the operations in each Division
to common ways of working and systems and
delivering €40m in synergies. This has enabled
us to optimise routes, consolidate locations,
create consistent billing and management
reporting and improve waste flow.
We sold our two non-strategic
assets: our geographically
remote Canadian operation and non
waste-to-product industrial cleaning
business Reym. These divestments have
simplified our portfolio, reduced the Group
borrowings by 17%, and enabled us to
reduce the number of Divisions.
Renewi plc Annual Report and Accounts 2020 The new structure
We have reorganised our divisional structure to create a more agile,
more focused organisation that will deliver on costs and reduce risk
From 1 April 2020 we have been operating with
a reorganised divisional structure. The new
structure is a logical step after recent disposals
and the reorganisation will help us be a leaner
company with a sharper eye on cost. We are also
centralising Group functions, which will facilitate
greater consistency across the business. Since most
of our Group Central Services costs are caused by
the Divisions’ operating requirements, we will
allocate to the Divisions all costs except those
related to investors, the Board and strategy.
SHARPENING GROUP FOCUS
Following the completion of the sale of our Reym
and Canada businesses, the residual elements
of the three smallest remaining Divisions are being
consolidated into two, thereby sharpening the
Group focus, and reducing costs and risks. The
new Divisions are Specialities and Mineralz & Water.
The Monostreams Division has effectively been
disbanded, with the four businesses of Orgaworld,
Mineralz, Coolrec and Maltha reallocated to
the remaining Divisions. Commercial Waste Belgium
is unaffected by the reorganisation.
NEW DIVISIONAL LINE-UP
Here’s how Renewi is now structured:
` Orgaworld joins our Commercial Waste
Netherlands Division The Orgaworld organic
waste processing activities will combine with the
At a glance: Renewi restructured
organic waste collection business of Semler, and
with the organic waste collection and depackaging
activity of the recent Rotie acquisition, to create
one integrated Renewi Netherlands organics
entity – called Organics. This will create a single
end-to-end market leader in organics waste
collection and processing, which innovates and
invests in technologies for enhanced sustainability.
` ATM & Mineralz combined into the
Mineralz & Water Division This new Division
has a growing focus on the secondary building
materials market. ATM and Mineralz activities
are centred on decontamination, stabilisation
and re-use of highly contaminated materials,
including soils, sludges, waters, bottom and fly
ash, and packed chemical wastes. The Division
produces certified secondary products such
as FORZ and the AP4Terra separated production
from ATM, creating sand, gravel and filler for
the construction industry (see page 55).
` Coolrec, Maltha and Municipal combined into
the Specialities Division Municipal is joined by
Maltha and Coolrec as international businesses
in the new Specialities Division. These are
dedicated businesses based around processing
plants, focusing on recycling and diverting
specific waste streams. The businesses in this
Division have little or no collection activity. The
operations span France, Portugal and Hungary in
addition to the Netherlands, Belgium and the UK.
COMMERCIAL WASTE
(NETHERLANDS and BELGIUM)
MINERALZ & WATER
SPECIALITIES
Orgaworld*
(now Organics)
ATM
Mineralz*
*Businesses formerly in the now disbanded Monostreams Division.
Municipal
Coolrec*
Maltha*
23
1234Renewi plc Annual Report and Accounts 2020 KEY PERFORMANCE INDICATORS
Measuring performance
Renewi’s top-line financial and non-financial results – from revenue and return to recycling,
carbon avoidance and our drive to increase the number of low-emission trucks in the fleet
FINANCIAL
Revenue (€m)
EBIT margin (%)
FY20
FY19
FY18
1,697
1,671
1,647
FY20
FY19
FY18
4.2
4.8
4.7
How it’s measured Ongoing Group revenue, shown for
comparative years on a like-for-like basis, reflecting the
disposals of our Reym industrial cleaning business and
our operations in Canada.
Our performance Revenue has increased slightly, reflecting
price rises in the core Commercial Waste Division offset by
lower income from recyclates and from the temporary closure
of the thermally treated soil market in the Netherlands.
Link to business strategy 1 2 3
How it’s measured Ongoing Group underlying profitability
as a percentage of revenue, shown for comparative years on a
like-for-like basis, reflective of the disposals of Reym and Canada.
Our performance Overall margin has reduced due to the
TGG market closure impacting our soil and water treatment
facility ATM – partially offset by an increase in the Commercial
Waste Division, including the delivery of merger synergies.
Underlying margin excluding ATM has risen, as we have focused
on margin enhancement through increased recycling and
creation of secondary materials by further refinement of waste.
Link to business strategy 1 2 3
Return on capital employed (%)
Leverage ratio
FY20
FY19
FY18
6.6
6.9
6.1
FY20
FY19
FY18
2.98
3.06
2.93
How it’s measured Based on the past 12 months, ongoing
Group underlying EBIT as adjusted for the effective tax rate.
Divided by a 13-month average of total net assets. Excluding
core debt, lease liabilities and derivatives. FY20 presented on
a like-for-like IAS 17 basis.
How it’s measured Based on the bank facility definition
of net debt to adjusted EBITDA. EBITDA is calculated on a
frozen GAAP basis, specifically excluding the impact of IFRS 16,
against the core net debt facilities excluding asset-backed PFI
loans and IFRS 16 lease liabilities.
Our performance The like-for-like ROCE has decreased
year on year as a result of the reduced overall profitability at
ATM. Looking at both Commercial Waste and Monostreams,
underlying return on operating assets increased in the year.
Link to business strategy 1 2 3
Our performance Overall the Group has a target to reduce
leverage through increased profitability, increased cash
generation and the now-completed strategic disposals. Net
debt has been reduced FY19 to FY20 following the disposals
of Reym and Canada. The business was net cash generative
(before income from disposals), one year ahead of schedule.
Link to business strategy 1 2 3
24
Renewi plc Annual Report and Accounts 2020 Key: link to business strategy
1 LEADER IN RECYCLING
2 LEADER IN SECONDARY MATERIAL PRODUCTION
3 SELECTIVELY GAIN MARKET SHARE
NON-FINANCIAL
Carbon avoidance intensity ratio
Recycling rate (%)
FY20
FY19
FY18
0.233
0.218
0.214
FY20
FY19
FY18
64.7
66.9
66.3
How it’s measured Avoidance of CO2 emissions in the supply
chain occurs when primary raw materials are replaced by
materials from waste, or fossil fuels are replaced by waste-
derived fuels. The figures are based on scientifically validated
carbon avoidance factors. The intensity ratio is given as a rate
per tonne of waste handled.
Our performance Our carbon avoidance intensity ratio rose
by 7% compared to FY19, mainly due to an increase in waste-
derived fuels produced and sold in the UK.
Link to business strategy 1 2 3
How it’s measured Volumes of waste recycled or prepared for
recycling as a percentage of the total volume of waste handled.
Our performance The recycling rate dropped by 2 percentage
points to 64.7%, and total waste handled reduced. In both
cases, this was due to a decrease in soil cleaning activities
at our ATM plant. Our performance was also impacted by
a reduction in the total volume of recyclates, and we are
committed to improving this ratio substantially over time.
Link to business strategy 1 2 3
Number of >3-day accidents
EURO 6 trucks in our fleet (%)
FY20
FY19
FY18
95
98
108
FY20
FY19
FY18
48.5
34.9
24.2
How it’s measured Total absolute number of >3-day
accidents involving permanent Group employees. Figures
include the number of accidents for Reym and Canada up
until the point of their sale.
Our performance Renewi improved performance by 3%
over the past year.
How it’s measured Number of Euro 6 compliance standard
trucks in our fleet as a percentage of the total number of trucks.
Our performance Euro 6 vehicles now account for 48.5% of
our total fleet, compared with 34.9% last year. This illustrates
our significant commitment to, and investment in, clean and
green waste collection – one of the six objectives of our new
sustainability strategy (for more details see page 26).
25
1234Renewi plc Annual Report and Accounts 2020 Our new sustainability strategy
Renewi’s future-facing plan directly addresses the climate crisis and makes everything
we do sustainable – from helping to enable the circular economy to reducing emissions
Welcome to Renewi’s green,
clean future – enabled by
a comprehensive, cohesive
new sustainability strategy that drives
everything we do: our business
operations, commercial partnerships,
relations with customers, how we
interact with communities, wider
society and government, and how we
look after the people we work with.
This strategy is so much more
than a statement of intent to be
sustainable. It is a practical action
plan, powered by rigorous metrics,
with a purpose that is wide-ranging
and far-reaching. Indeed the three
main pillars, or themes, of our strategy
articulate the scope of its aspirations:
to enable the circular economy,
to reduce carbon emissions and
waste, and to care for people. These
aspirations will be fulfilled by six
objectives, which are transformational
– for example: to help enable the
circular economy by creating
secondary products and materials
instead of using natural resources; and
to take the lead in reducing the carbon
impact of waste collection. But we are
nothing without our people; that’s why
caring for them, and those in wider
society, is fundamental to the strategy.
Of course, the strategy is firmly
founded in Renewi’s corporate
purpose – sustainability – so it
seamlessly supports the objectives
of our new, enhanced business
strategy: to be a leader in recycling
and leader in secondary material
production (see page 18).
The strategy recognises the urgency
of the climate crisis, and the utmost
importance of energy transition and
circular solutions. As Renewi CFO Toby
Woolrych explains: “This is a coherent,
compelling sustainability strategy that
will improve the way we act, strengthen
our voice as a leader for change, and
ensure we are genuinely doing all we
can to address the climate emergency.”
We believe it is time for action.
For deeds, not words. That is why
our sustainability strategy is a
future-facing plan of action. It
demonstrates that we are acting
today to sustain tomorrow.
26
At a glance: Renewi’s sustainability action plan
THEMES
OBJECTIVES
The new strategy’s themes power our
plan to tackle the climate crisis – circular
solutions, energy transition and reduced
emissions – and to look after communities
in wider society as well as our own people.
We set six objectives that are a practical
translation of the direction set by our
key themes. The progress of these
objectives will be measured by a set of
key performance indicators and metrics.
Enable the
circular economy
We want to be a driving force in
the transition towards a circular
economy, in which waste is no
more but is turned into new
products and materials.
Reduce carbon
emissions and waste
We understand the need not only
to reduce our own carbon footprint,
but also to decrease the negative
impact of carbon emissions and
waste on wider society.
Care for people
We have a responsibility to deliver
our employees home safe and well,
to create a rewarding, equal and
inclusive working environment,
and to have a positive effect on
our communities.
Turn our customers’
waste into new products
We want to enable the circular economy
and drive waste away from incineration
and landfill, turning it into new products and
materials instead and providing secondary
raw materials that replace natural resources.
Be a leader in clean
and green waste collection
We want to take the lead in reducing the
carbon impact and pollution caused by
waste collection, with a focus on urban
areas and cities.
Reduce the carbon impact
of our operations
We want to reduce carbon emissions
from our waste processing and recycling
activities on site and shift towards the
use of renewable energy.
Positively impact our communities
We want to be a positive force in our
communities by engaging in local projects,
spreading our ‘waste no more’ message and
reducing our negative environmental impact.
Deliver people home
safe and well, every day
We want to make sure people stay healthy
and safe during their career at Renewi,
both physically and mentally.
Make Renewi a rewarding, diverse
and inclusive working environment
We are committed to Renewi being a
rewarding place to work – a place where
people can develop themselves in
an equal and inclusive environment.
Turn to pages 62 to 75 for more details on each of the sustainability
strategy themes
Renewi plc Annual Report and Accounts 2020 300
The Trees for All planting
gave a CO2 compensation of 300
tonnes – the annual electricity
usage of over 150 households
SUSTAINABILITY IN ACTION
‘Christmas’ trees: a gift to the planet
Generous Renewi colleagues gave up
their company Christmas box and spent
the value of the gifts on a tree-planting
project to support reforestation and
tackle climate change.
The total donation of more than €7,680,
from almost 200 employees, to the Trees
for All Foundation, paid for 1,230 trees to
be planted – half of them at Maarheeze
in the Netherlands, and half in Uganda’s
Kibale National Park, helping to restore
the rainforest there.
It is customary in the Benelux for
colleagues to receive a Christmas box.
A number of colleagues gave up their
box and donated the value of it to
a cause that is close to our hearts.
Ten billion trees are lost annually, damaging
the environment and communities, so Trees
for All has to date planted more than five
million trees to help tackle the problem.
Planting these trees in Maarheeze and
Kibale will generate a CO2 compensation
of approximately 300 tonnes over 50 years,
which equals the annual electricity usage
of over 150 households. This donation also
supported the Kibale community where
125 villagers are involved in a reforestation
project, planting trees and working in the
nurseries that grow them.
The tree-planting initiative articulates our
mission to protect the planet and the pledges
of our new sustainability strategy, to reduce
carbon emissions and to care for people.
27
1234Renewi plc Annual Report and Accounts 2020 EXPERT VIEW THE CIRCULAR ECONOMY
Our planet is now vulnerable to a
wide variety of threats – including
deforestation on a massive scale
28
Renewi plc Annual Report and Accounts 2020 CLIMATE DISASTER,
ENVIRONMENT
EMERGENCY, THE
CRISIS OF GLOBAL
SUSTAINABILITY…
There are many ways to describe the ecological
challenges we face today. But one thing is
certain: those challenges urgently need
sustainable solutions. And now. That’s why
I know that our drive to enable the circular
economy and energy transition becomes
more and more important every day.
Simply by looking around us, it’s clear
we have to act today. Deforestation,
oceans like plastic soup, melting ice
caps, whole species threatened by rapidly
disappearing biodiversity. Extremes of
weather, yet often no discernible difference
between the four seasons, the natural
rhythms of our existence fading fast.
It wasn’t always like this, of course. At the
age of 48, I now look back at the four proper
seasons of my youth. The summers were
sunny, yet not too dry, not too hot. We had
stormy autumns, deep, cold winters and
lovely springs. And so I grew up not having
to worry about climate change, or how our
disposable economy generated waste and
emissions that threatened our world.
How things have changed, even in
my lifetime. Where are those seasons
now? They seem to have been replaced
by extremes of weather; even in the
Netherlands where I work as Renewi’s
circular economy lead, we have seen
more extreme storms, rain, drought, crop
failures and nature fires. Look at what’s
happening on a global scale, and it’s
even more extreme, more concerning.
No wonder the youth of today are now
worrying about the planet, about climate
change, about tomorrow: what we humans
have done to the planet has now come
back to haunt us. We have very limited
time to tackle this emergency and find a
solution. We cannot, therefore, simply look
into the past and despair. We need to look
to the future by taking action now.
And that’s the great thing about working
for Renewi: along with all my colleagues, I
am doing something about the emergency
– every day. Helping companies reduce
their residual waste and create valuable
and recyclable waste streams powerfully
29
By Gilbert de Raad
Renewi circular
economy lead
Gilbert de Raad reflects
on how the threat of
climate change has
grown in his lifetime –
and why he’s working
towards a sustainable
tomorrow for all
1234Renewi plc Annual Report and Accounts 2020 EXPERT VIEW THE CIRCULAR ECONOMY continued
contributes to the circular economy, and therefore
the reduction of the impact of climate change.
My role also includes creating awareness about
the increasing importance of recycling residual
waste into secondary materials, and using those
secondary materials to manufacture new products.
OUR SUSTAINABILITY MISSION
Although we at Renewi talk about sustaining
tomorrow, we don’t focus simply on future solutions.
We are acting now. And now is our moment: the
signatories of the 2016 Paris Agreement pledged
to work towards a global temperature rise of below
2°C, and to aim for 1.5°C; on climate protection,
citizens and campaigners like Greta Thunberg, with
her millions of young followers, now demand more
of governments, and governments demand more of
business. So we work with businesses to help make
their waste management more circular by slashing
1.5°C
The Paris Agreement
aims to limit a global
temperature increase
to 1.5°C to help
combat the impact
of climate change
Campaigners such as Greta demand more of governments, which in turn demand more
of business. So we work with businesses to make their waste management more circular
residual waste, and achieving zero levels of it too.
For example, the average office building has 60%
to 80% residual waste; with our EcoSmart concept,
where we provide experts – dedicated waste
coaches – and the right waste bins, we can cut that
to under 25% in six to 12 months. Once a business
has achieved a residual waste percentage of less
than 25%, the route to zero waste is a realistic
option. Indeed, this year we realised the first zero-
waste office building in the Netherlands.
We also now run a programme, called the facility
management purchasing coalition, where we bring
companies and their suppliers together and coach
them on how to reduce their (residual) waste. This
is an important consideration, as in our experience
suppliers can make a difference to a company’s
residual waste. They can contribute to those waste
levels significantly, but, with the right guidance,
they can also help companies limit their waste in
terms of the products they supply.
In five workshop sessions, Renewi circular
economy experts will help a company’s procurement
team, facility managers and their suppliers develop
a plan to prevent waste, reduce residual waste, and
start using secondary materials for products and
product packaging. We successfully conducted our
first purchasing coalition programme for Utrecht
University, one of the Netherlands’ biggest with
more than 70 buildings, 30,000 students and 7,000
members of staff. Facilitating change for such
a large institution was a challenge, but it was also
satisfying to help the university find a way to limit
its residual waste.
GOING FULL CIRCLE
Consulting to businesses to raise awareness about
reducing waste and enabling circular activities
is very important to us. But we are also actively
engaged in commercial activities to drive the circular
economy. These will help us fulfil one of the pillars
of our enhanced business strategy – to be a leader
in secondary material production. Our PMD (plastic,
PARTNERSHIP PROJECTS
MAKING WASTE PLASTIC FANTASTIC
Renewi is involved in an innovative circular
production programme to transform waste
plastic into virgin polymers so they can be used
to create new products. We have an exclusive
arrangement with UK firm Plastic Energy to
deliver plastic waste to its plant at Geleen in
the Netherlands, where it will be converted
into ‘Tacoil’ by the process of pyrolysis.
The plastic comes from waste streams that are
difficult to recycle mechanically and therefore
end up in the incinerators or at landfills. Global
chemical company Sabic will then convert
the Tacoil to polyethylene and polypropylene
pellets. These pellets can be used to make a
30
huge variety of products, from food packaging
to vehicle parts. This chemical method results
in products that are ‘purer’ than those created
by mechanical recycling, where plastic is
shredded into flakes: mechanically recycled
plastic may contain contaminants, so cannot
be used for food packaging.
The plastic feedstock we supply will come from
different sources, including our building and
demolition lines in the Netherlands, and possibly
Belgium and the UK too. Renewi will pre-treat
the waste, to remove contaminants such as
metal and PVC. We will deliver 20 kilotonnes
of feedstock to Plastic Energy every year.
Renewi plc Annual Report and Accounts 2020 Renewi’s circular economy aims to
help tackle today’s environmental
challenges – including protecting
our oceans from the indiscriminate
dumping of waste plastic
metal and drink cartons) separation programmes
in the Benelux also limit companies’ residual waste
and make recycling easier. Up to 90% of the PMD
we collect is used as secondary raw materials. The
remaining PMD is transformed into grey energy (see
page 51). We are involved in partnership projects
to enable the creation of secondary products and
materials, and so drive the circular economy –
from transforming waste plastic into Tacoil used to
make new plastic products, to purifying asbestos-
contaminated waste steel so it can be safely
redeployed in new construction projects (below).
We’ve invested in a Dutch mattress recycling
company so it can increase its capacity to convert
mattresses into secondary materials by around
50% (see page 21). We have an online platform that
directs visitors to secondary products converted
from waste we collect from customers, including
compost made from food waste and cat litter
made from old wooden pallets.
During my circular economy work for Renewi, I
often think of today’s youth. In many ways they are
our conscience, our purpose – and we want them to
grow up in a world protected from climate change,
free from fear for Earth’s future. That’s what we
aim for at Renewi: a sustainable tomorrow for all.
RECYCLED STEEL TO BUILD THE CIRCULAR ECONOMY
We are helping to keep the environment clean
and safe with an exciting new programme to
recycle asbestos-contaminated steel. Renewi
has an exclusive agreement to transport the
scrap to Purified Metal Company (PMC), which
will convert it into a premium raw material for
the steel industry.
At its plant in Delfzijl, the Netherlands, opening
in August 2020, PMC will separate the pollutants
by heating the steel to at least 1,500°C, destroying
asbestos and other hazardous contaminants
such as chromium 6 and mercury. The clean steel
is poured into ‘purified metal blocks’ for re-use
in the steel industry. PMC will recycle around
150,000 tonnes of contaminated steel annually,
which Renewi will collect from demolished
industrial sites, decommissioned ships and
office buildings. For every block produced, the
equivalent weight in CO2 is saved – far greener
than iron ore-based steel production. The non-
hazardous slag resulting from the process can be
used in the construction of roads and buildings.
This recycling method stops contaminated steel
going to landfill and creating an environmental
hazard for future generations. The partnership
with PMC supports our sustainability strategy,
which aims to enable the circular economy
and reduce carbon emissions and waste.
31
1234Renewi plc Annual Report and Accounts 2020 CEO’S REVIEW
Otto de Bont
Chief Executive Officer
32
A ROBUST FINANCIAL
PERFORMANCE, KEY
GOALS DELIVERED,
AND THE LAUNCH OF
NEW BUSINESS AND
SUSTAINABILITY
STRATEGIES…
We have enjoyed a successful year, but as ever we
are forward-facing in our drive to deliver growth by
enabling the circular economy. Together our enhanced
business strategy and sustainability action plan will
help establish Renewi as a market leader in green
collection and the production of secondary materials
OVERVIEW
We made robust progress during the year, delivering
financial results in line with our expectations and
a number of strategic and financial objectives,
including: raising €107m through strategic disposals;
receiving permission to resume TGG shipments at
ATM; and delivering our cost synergies and other
restructuring projects. We also made good progress
with a growing pipeline of circular solutions
and partnerships.
Renewi provides an essential service in the
front line of maintaining vital services to hospitals,
businesses and communities, and our dedicated
employees have been able to keep serving our
customers while we have innovated to ensure a safe
working environment. Our specific actions on cost
and cash will preserve our liquidity even in an
extended crisis, and we have secured amendments
to our banking covenants until September 2021.
As a result of these actions, we are well placed
to mitigate the impact of Covid-19.
Looking forward, the momentum towards a
circular economy is unstoppable. Here we announce
our enhanced strategy, which will enable us to
capture the growth opportunities from the circular
economy, and our Renewi 2.0 programme, which will
deliver improved customer service as well as €20m
of cost benefits through digitisation and optimised
internal processes. Aligned with our enhanced
strategy, we have defined our ambitious sustainable
development goals.
GROUP FINANCIAL PERFORMANCE
IFRS 16 is a new reporting standard that has had
a material impact on our reported results. The
application of the modified retrospective approach
has meant that comparative information has not
been restated. For the purpose of like-for-like
comparatives, the FY20 results have also been
presented in accordance with the previous leasing
standard, IAS 17, and all variance analysis shown
is on the IAS 17 basis.
Excluding discontinued and disposed operations
and on an IAS 17 basis, revenues grew by 2% to
€1,697m and, as expected, underlying EBIT decreased
by 10% to €72.0m on an IAS 17 basis. Underlying profit
before tax from ongoing businesses reduced by
23% to €44.5m on a like-for-like basis and underlying
earnings per share fell by 25% to 4.1c (2019: 5.5c).
The Commercial Waste Division grew revenue
by 2% to €1,224m and underlying earnings by 1%
to €87.6m. This was a positive performance, with
stronger inbound pricing and the delivery of
synergies more than offsetting weaker markets
Renewi plc Annual Report and Accounts 2020
Total operations
Commercial Waste
Hazardous Waste
Monostreams
Municipal
Group central services
Inter-segment revenue
Ongoing businesses
Reym
Continuing operations
Discontinued operations
REVENUE
UNDERLYING EBIT
FY20
IFRS 16 basis
€m
FY19
IAS 17 basis
€m
Variance
%
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
Variance
IAS 17 basis
%
1,223.6
1,194.4
91.7
213.6
197.2
–
(29.1)
95.4
213.3
195.2
–
(27.4)
1,697.0
78.4
1,670.9
109.8
1,775.4
1,780.7
10.8
18.3
2%
-4%
0%
1%
2%
0%
89.9
(0.1)
14.5
(2.8)
(26.0)
–
75.5
12.1
87.6
3.1
90.7
87.6
(1.1)
14.1
(2.5)
(26.1)
–
72.0
10.0
82.0
2.5
84.5
86.5
1.7
12.9
0.8
(21.7)
–
80.2
5.3
85.5
1.5
87.0
1%
N/A
9%
N/A
-20%
-10%
-4%
-3%
Total
1,786.2
1,799.0
-1%
The underlying figures above are reconciled to statutory measures in note 2 in the consolidated financial statements.
Reym revenue includes inter-segment revenue between Reym and other Group entities and intra-segment revenue between Reym and other Hazardous Waste entities.
Discontinued operations include the results of the Canada Municipal segment, which meets the criteria as set out in IFRS 5.
2%
Renewi’s growth in
revenues, excluding
discontinued and
disposed operations
(including a slowdown in Dutch construction),
lower recyclate income and an estimated €4m
adverse impact from Covid-19.
The Hazardous Waste Division’s revenues fell by 4%
to €92m and underlying EBIT reduced, as expected,
to a loss of €1.1m due to lower soil volumes
processed, especially in the first half. The waterside
had a good year with robust volumes and pricing.
The Monostreams Division delivered ongoing
benefits from its restructuring programmes, with
a particularly strong second-half performance.
Revenues were flat at €213m and underlying EBIT
increased by 9% to €14.1m.
Municipal performed as expected. Revenues
increased by 1% to €197m and the business
made a small underlying loss of €2.5m, reflecting
a lower contribution from the Derby contract
and one-off items.
Group Central Services increased slightly less
than expected, to €26m. This was primarily due to
the non-recurrence of incentive and other accrual
releases in the prior year.
Total exceptional items of €120m (2019: €146m)
were incurred in the year, of which €35m were cash.
These items included €56m of charges relating
to the disposal of Reym and Canada, the majority
of which were non-cash. It also included €16m of
planned synergy delivery and integration costs. We
also recognised a €26m charge at ELWA as a result
of additional taxation levied on burnable waste
imported into the Netherlands and a €15m legal
provision following an EU State Aid claim against the
Walloon region in respect of our Cetem facility. As a
result, there was a Group statutory loss for the year
of €77.1m (2019: loss of €97.7m). We remain focused
on reducing the exceptional items incurred by the
Group and delivering statutory profits in the future.
The business delivered a positive net cash inflow
of €39m before the benefit of disposals and a total
net cash inflow of €141m as a result of a strong focus
on cash management. Underlying free cash flow on
an IAS 17 basis increased from €30m to €93m, with
improved working capital and tight control of capital
expenditure. Our core net debt at 31 March 2020
was €457m, a 17% reduction on the previous year.
Leverage was 2.98x EBITDA (2019: 3.06x), within our
covenant of 3.50x. As previously announced, the
total dividend for the year is 0.45p (2019: 1.45p),
reflecting our prudent decision not to pay a final
dividend in light of the Covid-19 crisis.
DELIVERING OUR STRATEGIC
AND OPERATIONAL GOALS
During the year we delivered on a wide range
of strategic and financial objectives that have
strengthened and de-risked the Group, including:
` the €40m synergies promised when we completed
the merger three years ago;
` a fifth consecutive year of underlying EBIT growth
in the core Commercial Waste Netherlands
Division despite numerous market headwinds,
including Covid-19;
` the reopening of the TGG market by the
authorities and the first shipments from ATM in
two years, as well as the installation of capacity
to make building materials from cleaned soil;
` the disposal of our Reym and Municipal Canada
businesses for €107m in cash, reducing our net
debt by 17%;
` strengthening the management team, with
four important new hires to lead two of the
Divisions, as well as Human Resources and IT;
33
1234Renewi plc Annual Report and Accounts 2020 CEO’S REVIEW continued
64.7%
Renewi’s recycling
rate – the highest
in the industry
34
` transitioning to a new, profitable contract with
the Derby City and Derbyshire County Councils
to manage their waste;
` €8m investments in our innovation pipeline
and in two niche acquisitions in the growing
circular economy, Rotie and RetourMatras;
and the successful secondary listing on
Euronext Amsterdam.
MANAGING THE IMPACT
OF COVID-19
We announced a full update relating to Covid-19
on 29 May 2020. In summary:
` We are an essential service and we have continued
to provide seamless waste collection and
processing throughout the lockdowns, serving
communities, businesses and hospitals. We
are deeply appreciative of the dedication and
determination of our colleagues who have
provided this excellent service. We have partnered
up with Van Straten Medical/Greencycl for the
collection, recycling and returning of sanitised
PPE to Benelux healthcare workers.
` Renewi had liquidity of €252m as at 31 March
2020, sufficient to trade through the Covid-19
crisis with no need for additional funding
from governments, banks or shareholders.
Appropriate covenant amendments have
been agreed with our banks for the period
to September 2021.
` We have detailed scenarios for the potential
economic impact of the lockdowns and
subsequent market recovery, and we are currently
trading at the positive end of those scenarios.
` We have introduced measures to reduce
operating costs (including a voluntary 20%
reduction in Board salaries and fees, and 10%
reduction in Executive Committee members’
salaries) and capital expenditure and optimise
cash flows, which will save more than €60m of
cash during the next financial year.
OUR ENHANCED STRATEGY FOR
LONG-TERM PROFITABLE GROWTH
Our purpose is to protect our planet by giving new
life to used materials, and our vision is to be the
leading waste-to-product company in the world’s
most advanced circular economies. This
differentiates Renewi as a pure-play recycler,
a company that focuses on supplying high-
quality secondary materials, which we believe
is the best way to extract value from waste.
Our industry is driven by increasing
environmental legislation, particularly in the
European Union which, on 11 March 2020,
published its Circular Economy Action Plan as a
progression of proposals outlined in its plan from
2015. It demonstrated the necessity of tackling
consumption of resources in the EU and the
environmental pressures that such consumption
created. More recently, on 28 April 2020, the Dutch
Government reconfirmed its intent to impose rising
tariffs on CO2 emitters to encourage the carbon
transition. These taxes, to be imposed over the
coming decade, are expected to have a significant
positive impact on demand for secondary products
and will increase the cost of incineration.
After a year of successful repositioning of the
Group, we are pleased to outline our enhanced
strategy to ensure that Renewi captures the
profitable growth opportunities arising from carbon
reduction and the transition to a circular economy.
This strategy will transition Renewi from a waste
collection company to a company focused on
production of secondary raw materials to the
highest possible quality.
Our enhanced strategy and innovation funnel
To expand our position as a secondary raw material
producer, our strategy is based on three pillars:
1. Divert more into products from waste streams
currently being incinerated or landfilled We will
invest to start or expand production of secondary
raw materials out of waste streams currently going
to incineration or landfill. This will further increase
our recycling rate, which we believe is already the
highest in the industry, at 64.7%. Over the next five
years we intend to decrease our incineration and
landfill rate further by a minimum of 25% and
convert this waste into new products. Some
examples of projects that will fuel our growth are
the recycling of mattresses and nappies and the
advanced recycling of waste plastics and wood.
2.Improve the quality of the products we
produce To build a circular economy the usage
of secondary raw materials must increase. For
production companies currently using primary
raw materials, the easiest way to convert is by using
high-quality secondary raw materials that they can
‘drop in’. We aim to significantly increase the value
of our products by investing in advanced processing
of our materials; which we call ‘spread expansion’.
Examples include the AP4Terra project at ATM to
make clean sand and gravel from contaminated
soil, making clean HIPS and ABS plastic from
fridges at Coolrec, and manufacturing bio-LNG
from food waste in Organics.
3. Selectively gain market share Our primary focus
is on driving margin expansion from existing waste
flows through the first two pillars of our strategy.
In addition, we will continue to selectively increase
volumes through net customer gains, niche
acquisitions and potentially, in the longer term,
through geographic expansion.
Innovation is one of our core values and we are
working on a number of initiatives to deliver our
growth strategy. Going forward, we will report on
this funnel with our results, demonstrating the
breadth of opportunities for growth that we are able
to pursue. Given that a number of these relate to
new products or technologies, we do not expect
them all to proceed to commercialisation.
Renewi plc Annual Report and Accounts 2020 €40m
Cost synergies
achieved by the
completion of
integration
Shifting from collection
to secondary material production
We have a large fleet of trucks collecting commercial
waste to supply our recycling operations and today
Renewi is the clear market leader in the Benelux.
The collection provides an essential service to waste
producers and it marks the beginning of Renewi’s value
chain, as we become the owner of the commercial
waste. That waste provides the raw materials for
Renewi to generate value from the products it makes.
Waste collection is expected to transform in the
coming years to reduce carbon emissions and traffic
congestion in cities. This will include white-label
collection collaborations between waste companies
to share logistics, as well as a transition to low- and
ultimately zero-emission collection vehicles. Renewi
will actively drive this transition, securing the waste
streams with smart and innovative collection methods.
This should ultimately lead to a reduced investment
in our own fleet, allowing capital to be deployed
in the production of secondary materials.
Our strategy is underpinned by the Renewi 2.0
programme.
Renewi 2.0
As previously announced, while we have successfully
delivered the €40m of cost synergies following the
merger of Shanks and VGG, we have identified the
opportunity to drive further improvement through
a three-year programme to make the company
simpler, more customer-focused, more efficient and
a better place to work. This comprises multiple
projects, oriented around two key themes:
` Digitisation of the business The waste industry
currently lags behind other industries in providing
a fully digital solution for its customers. We
are developing a new front-end interface for
customers that will allow them to place and amend
orders and have full visibility on our services and
related cost, as well as on the circular benefits their
waste is creating. This digitisation will deliver a
better 24/7 customer experience, while reducing
our cost to serve.
` Simplification and harmonisation of processes
Our core processes can be simplified and
standardised across our divisions to reduce cost,
reduce errors, and improve customer, supplier and
employee experiences. We are implementing global
process owners for our core processes and centres
of excellence to simplify our product offering,
improve our core data and eliminate wasted activity.
The programme is expected to deliver a minimum
of €20m of annual cost benefits on a run-rate basis
after completion of this three-year programme
(March 2023) for a total cash cost of €40m, which will
be split into an exceptional cost (€33m) and capital
investment (€7m).
Our focus on a simpler and lower-risk business
has included a divisional restructuring. We have
created three strong divisions, combining similar
activities into one division, and we have disbanded
the Monostreams Division, reallocating its four
business units. From 1 April 2020, our new divisional
structure comprises:
` Commercial Waste (Belgium and Netherlands)
Unchanged except that Orgaworld is now
Our innovation pipeline
PROJECT
Sand, gravel and filler at ATM for
construction materials
PARTNER
Stand-alone
OPPORTUNITY
€€€€€
Expansion in biogas production
Stand-alone
Expansion of mattress recycling
IKEA
Upgraded feedstock for chemical
recycling of plastics
Transition biogas from electricity
to bio-LNG
SABIC
Shell
ArcelorMittal
€€ – €€€€
Upgraded wood flake supply for
low-carbon steel
Cellulose from nappies and
incontinence products
FMCG major
Next-generation bottom ash
conversion to construction materials
Energy-from-waste
leader
€€ – €€€€€
` Commercial contracts being negotiated with major
STATUS
` Successful trials complete and customers engaged
` Capacity expansion under way
` Permits awaited to construct expanded food waste
processing hall in 2020
` Third facility opening May 2020, increasing capacity to
one million mattresses
plastics producer and technology company
` Engineering designs being finalised for 30kt line
` Commercial contracts signed with Shell and technology
partner Nordsol
` Gas cleaning upgrade under way
` Technical trials and commercial feasibility alongside
major steel producer
` Transition to new technology and commercial partners
` Technical feasibility under way
` Engineering feasibility under way with
waste-to-energy partner
€
€€€
€€
€ – €€€
€€€
Polyurethane
Chemical recycler
€ – €€€
` Development project to purify polyurethane
from mattresses
35
1234Renewi plc Annual Report and Accounts 2020 CEO’S REVIEW continued
included within the combined Organics activities
of Commercial Waste Netherlands;
` Mineralz & Water This new Division comprises
ATM and CFS from Hazardous Waste and
Mineralz from the Monostreams Division. The
focus of all these units is on the creation of clean
mineral products or water, creating commercial
and operational synergy; and
` Specialities, comprising Municipal, Coolrec
and Maltha All three of these businesses are
international in nature and have larger-scale
process-based facilities focused on operational
excellence and recycling. Two of the three
businesses have no collection activities.
Collection activities at Municipal are minimal.
In addition, we are centralising group functions
further to drive consistency across the Group and
leverage expertise and optimise capacity. Central
Services costs will be increasingly recharged to
the Divisions, reflecting that they are the drivers
and causes of these charges. Around €10m of
central costs relating to the Board, strategy and
investor relations will be retained as a separate
reported cost.
SUSTAINABILITY IS AT
THE CORE OF ALL WE DO
We are also launching Renewi’s first long-term
sustainability strategy and our new sustainable
development objectives for the next three and five
years. These have been developed using current best
practice, drawing together our input capital sources
and our business strategy to develop three key themes
for our sustainability strategy, which contribute
towards six of the UN Sustainable Development Goals.
These are: Enable the circular economy, Reduce carbon
emissions and waste, and Care for people. From these
three themes, we have developed six key objectives:
` Turn our customers’ waste into new products
By doing so we reduce carbon emissions and reduce
depletion of the world’s finite natural resources.
The key metric for this is the recycling rate.
` Be a leader in clean and green waste collection
The collection of waste is essential and we aim
to reduce the pollution and carbon emissions it
causes through deployment of low- and ultimately
zero-emission trucks, white-label collection
and route optimisation.
` Reduce the carbon impact of our operations
By their nature, our operations reduce total
carbon emissions elsewhere by returning
materials for re-use. Nevertheless, we aim to
reduce our own energy consumption where
we can and increase use of renewable energy.
` Positively impact our communities Providing
an essential service to our communities as the
national champion of recycling and circularity,
we seek a positive impact in the locations where
we work, engaging closely with communities,
supporting them, and minimising any negative
aspects of the work that we do.
36
OUR FOCUS ON CUSTOMERS
We have created a ‘customer-centricity’ strategy
in our Belgian operations to ensure that those we
serve receive the very best experience. The aim is
to increase customer satisfaction by making our
operations as efficient as possible – from handling
customer calls to ensuring waste collection teams
empty bins as agreed with clients and on time.
We are focusing on customer feedback and have
established clear sets of KPIs for operations and
processes, so we can monitor progress and constantly improve our service.
For example, we have rolled out our automatic call handling distribution system
to smartly allocate incoming customer calls to free operators. KPIs will help
us reduce the time callers wait to be connected and the number of lost calls.
A monthly net promoter score system has also been set up so we can measure
customer advocacy. We email 4,500 SMEs for their opinion of our performance,
so increasing our ability to respond with service enhancements.
` Deliver people home safe and well, every day
Safety is our first value and we continue to strive to
improve our accident rates and to avoid all serious
incidents. In addition, we wish to support the
health and mental wellbeing of all our employees.
` Make Renewi an even more rewarding, diverse
and inclusive working environment We seek
an engaged workforce, drawing on a wide range
of backgrounds, all with the opportunity to thrive
and achieve their potential in our organisation.
Each of these objectives has challenging targets set
against them, which are detailed in full in this Annual
Report and in our Sustainability Report.
OUTLOOK
Based on our experience in March and April, we
expect Covid-19 to cause a potential earnings and
cash shortfall of up to €20m in the first quarter
against our previous expectations. This outflow is
comfortably contained within our €252m of liquidity
as at 31 March 2020 and our revised banking
covenants. The outlook for the remainder of the year
will be dependent on the speed of recovery of the
economy and the extent of ongoing restrictions
on certain sectors such as hospitality. Longer term,
waste volumes are resilient through cycles and
the transition to increased recycling is expected
to continue to support our business model. The
recovery of earnings at ATM and our Renewi 2.0
programme are expected to further support
sustained future earnings growth.
Otto de Bont
Chief Executive Officer
Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY IN ACTION
Reaching out to people and society
Renewi is connecting with society and building
long-lasting relationships through an employee
ambassador programme and a campaign to recruit
people distanced from the job market. Via the
Proudnewi online ambassador platform, colleagues
receive an email twice a month, updating them on
recent posts about the company, explaining why
current ones should be shared and offering tips
on how to do so in an interesting way.
Some 200 employees in Belgium can now share
information and news about Renewi on their personal
social media channels, and so become proud ‘narrators’
of our sustainable story. Proudnewi encourages
colleagues to urge others in society to rethink waste
management by giving them a glimpse of life at Renewi
– from activity at our many locations and our fleet
of vehicles, to how we’re helping to give life to new
materials and enabling the circular economy.
In fact, many of the relationships we proactively build
are with people who have found themselves distanced
from the labour market, whether due to continued
unemployment, or because they study part-time,
or face physical or mental challenges. In February
2019, we received our Level 1 Performance Ladder
for Social Enterprise certification. This is a
national accreditation in the Netherlands, granted
following an audit that demonstrates social
contribution through providing these individuals
with opportunities in the workplace.
So far, 130 Renewi colleagues have been recruited
under this standard, and are deployed all over the
company, from loading our vehicles to working in
our offices in the HR and Finance teams.
“We have always believed that, as a big employer,
we should be a reflection of society,” says Wendy
Wernert, Renewi’s Global Talent Manager.
“So many of these people are creative because
they’ve needed to be. They’ve had to learn
to look at things differently, to overcome the
challenges they face. They think in solutions,
and that really supports the can-do mentality
in our organisation.”
37
1234Renewi plc Annual Report and Accounts 2020 CFO’S REVIEW
Toby Woolrych
Chief Financial Officer
38
A SOLID YEAR OF
ACHIEVEMENT –
WITH A STRONGER
BALANCE SHEET,
BETTER UNDERLYING
MARGINS AND
INCREASED CASH FLOW
We made substantial progress on a number of fronts.
Our balance sheet was supported by disposals and
a bond issue, giving us valuable liquidity in these
challenging times of Covid-19. Margins and returns
also received a boost. Our Euronext listing connects
us with an investor base focused on sustainability
and we have received more investment from funds
that have a strong environmental mandate
INTRODUCTION
FY20 was a successful year in which we made
good progress in strengthening the balance sheet,
improving underlying margins and returns, and
increasing free cash flow.
` We successfully strengthened the balance sheet
through disposals and the issuance of a new
€75m green bond. This resulted in our reducing
core net debt from €552m to €457m, and having
€252m of liquidity as at 31 March 2020.
` We delivered underlying growth of 30 bps to 7.4%
in our operating margin and 180 bps in our return
on operating assets to 24.1% (19.8% on an IFRS 16
basis) in our Commercial Waste and Monostreams
Divisions (83% of revenue).
` We increased our free cash flow by €85m
to €96m and, excluding the benefit of the
disposals, we generated net positive cash,
a year ahead of schedule.
` We completed our secondary listing on Euronext
Amsterdam and we have seen increasing investment
by funds with a significant environmental mandate.
Exceptional items were again significant. The majority
were non-cash, such as disposals (€56m), or related
to value-creating activities, such as synergy delivery
(€13m). The introduction in the Netherlands on
1 January 2020 of a €32 per tonne tax on the import
of burnable waste from the UK necessitated a €26m
charge at our ELWA municipal contract. We have also
taken a provision of €15m following the ruling by the
European Union in February 2020 that it will be
further investigating alleged state aid provided by
the Walloon region of Belgium to our landfill site at
Cetem in the period 2010-2015. The Walloon region
and Renewi remain confident in our case, which
is expected to take several years to resolve.
Looking forward, our financial strategy for Renewi
is centred on:
` improving margins and returns through
increased diversion, higher-value products and
more efficient processes, including through the
Renewi 2.0 programme;
` increasing free and net cash flows and reducing
leverage towards the Board’s target of 2x, taking
into account the challenge of Covid-19; and
` eliminating unplanned exceptional items.
Renewi plc Annual Report and Accounts 2020 Financial performance
Continuing operations
Revenue
EBITDA
Underlying EBIT
Underlying profit before tax
Non-trading and exceptional items
Loss before tax
Total tax (charge) credit for the year
Loss for the year from continuing operations
Loss for the year from discontinued operations
Total operations: loss for the year
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
1,775.4
1,775.4
1,780.7
199.7
87.6
54.1
(113.5)
(59.4)
(1.1)
(60.5)
(16.6)
(77.1)
167.5
82.0
54.3
(113.5)
(59.2)
(1.1)
(60.3)
(17.0)
(77.3)
177.4
85.5
62.5
(151.5)
(89.0)
12.4
(76.6)
(21.1)
(97.7)
FINANCIAL REVIEW
IFRS 16 is a new reporting standard that has
had a material impact on our reported results:
for continuing operations, increasing EBITDA by
€32.2m, EBIT by €5.6m and interest costs by €5.8m,
as well as increased year-end assets and debt.
The full impact is shown in note 9 to the financial
statements. As we have applied the modified
retrospective approach, prior year comparatives
are not restated. The above table shows the
reported performance on an IFRS 16 basis along
with IAS 17 to provide a comparative with 2019.
As well as IFRS 16, the performance in the year
has been impacted by the disposals. Reym is
recorded as part of continuing operations with
seven months in FY20 compared to the full year
in 2019. The Canadian business, however, met the
definition of a discontinued operation. Group
revenue on a continuing operations basis increased
marginally to €1,775m. Underlying EBIT from
continuing operations decreased by €3.5m or
4% to €82.0m on an IAS 17 basis.
our expectations, primarily due to reduced output at
ATM, the profitable legacy Derby contract last year
and the reinstatement of bonus and LTIP provisions
as forecast.
Non-trading and exceptional items
excluded from pre-tax underlying profits
To enable a better understanding of underlying
performance, certain items are excluded from
underlying EBIT and underlying profit before tax
due to their size, nature or incidence. The Group
reported significant non-trading and exceptional
items, under the main headings as follows:
` Merger and integration costs: items that were
known and planned for in relation to the costs
of integrating Renewi. These costs are one-off
relating to the merger with VGG and exceptional
in nature
` Portfolio costs: items associated with the
acquisition or disposal of assets, including
profit or loss on sale, goodwill impairments
and transaction costs
IFRS 16 also has a significant impact on underlying
` UK Municipal contract issues: including onerous
EBITDA given the depreciation on right-of-use
assets, which amounted to €27m in the year. The
table overleaf sets out the EBITDA by Division on
both an IFRS 16 and IAS 17 basis for the current year.
As both disposed businesses were reported as
assets held for sale at March 2019, the current year
results have been favourably impacted by the
suspension of depreciation at Reym and Canada
for the periods up to sale. The table overleaf bridges
the year on year performance excluding IFRS 16.
This shows that for the ongoing businesses,
underlying EBIT fell by €8.2m or 10%, in line with
contract provisions and impairments
` Other changes in long-term provisions, including
significant legal provisions and changes in
discount rates
` Other items
Total non-trading and exceptional items amounted
to €120.2m (2019: €146.0m) as set out in the table
on page 41 with cash items of €35m. Further
details are provided in note 3.3 to the consolidated
financial statements.
The portfolio management activity charge of
€29.8m includes the final charge for the loss on
39
1234Renewi plc Annual Report and Accounts 2020 CFO’S REVIEW continued
disposal of the Reym business. Credits of €6.1m
were recorded relating to previous transactions.
As previously announced, €25.9m relates to an
impairment and onerous contract provision for the
ELWA contract in UK Municipal, and €17.9m relates
to the reduction in discount rates used for long-term
provisions and a €15.1m legal provision for the
recent Belgian state aid litigation. The exceptional
finance costs include a current year credit for
ineffectiveness of interest rate derivatives.
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
opposite shows how this has been incurred since
the merger date and is in line with initial indications.
As noted previously, branding spend has been
expensed rather than capitalised. A final €4m
of spend will be incurred in FY21 to complete
outstanding IT integration.
The discontinued operations charge of €18.9m
reflects the final loss on disposal of the sale of the
Municipal Canada business. In line with accounting
requirements as a result of uncertainty of receipt,
the contingent proceeds from this disposal will only
be recognised if more certain.
EBIT from continuing operations, after taking
account of all non-trading and exceptional items,
was a loss of €28.1m (2019: €56.6m loss).
Net finance costs
Net finance costs from continuing operations,
excluding exceptional items, increased by €11.0m
to €34.4m (2019: €23.4m). The largest driver was the
adoption of IFRS 16 from 1 April 2019, resulting in a
€5.8m increase in lease interest. Interest payable on
borrowings increased by €2.2m due to higher levels
of debt compared to the prior period and a higher
margin payable due to higher leverage in the first
part of the year. Other finance costs increased by
Underlying EBITDA
Commercial Waste Netherlands
Commercial Waste Belgium
Commercial Waste
Hazardous Waste (excluding Reym)
Monostreams
Municipal
Group Central Services
Ongoing businesses
Reym
Continuing operations
Discontinued operations
Total
Underlying EBIT
Underlying EBIT: Continuing operations
Impact of Reym
Underlying EBIT: Ongoing businesses excluding IFRS 16 impact
Impact of IFRS 16
Underlying EBIT: Ongoing businesses
40
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
Variance
IAS 17 basis
%
107.3
60.7
168.0
10.7
28.1
(0.9)
(18.3)
187.6
12.1
199.7
3.1
202.8
FY20
€m
87.6
(12.1)
75.5
(3.5)
72.0
93.8
53.8
147.6
7.1
25.5
(1.8)
(20.9)
157.5
10.0
167.5
2.5
170.0
92.5
53.6
146.1
9.9
24.1
1.9
(16.5)
165.5
11.9
177.4
3.9
181.3
1%
0%
1%
-28%
6%
N/A
-27%
-5%
-6%
-6%
FY19
€m
85.5
(5.3)
80.2
-
80.2
Variance
€m
Variance
%
2.1
(6.8)
(4.7)
(3.5)
(8.2)
2%
-6%
-10%
Renewi plc Annual Report and Accounts 2020 €1.1m, principally due to higher interest charges
on invoice financing as referenced at the half year.
items of €113.5m given a significant proportion
of these are non-taxable.
Share of results from associates and joint ventures
An increased profit of €0.9m (2019: €0.4m) due
to one-off income, which is not expected to recur.
Loss before tax
Loss before tax from continuing operations on a
statutory basis, including the impact of non-trading
and exceptional items, was €59.4m (2019: €89.0m).
Taxation
Total taxation for the year on continuing operations
was a charge of €1.1m (2019: credit of €12.4m).
The effective tax rate on underlying profits from
continuing operations was 24.5% at €13.3m, lower
than last year’s 25.0% and driven by enactment of
lower tax rates in Belgium. A tax credit of only €12.2m
is attributable to the non-trading and exceptional
As reported previously, both the Dutch and
Belgian Governments implemented a number of
corporate tax reforms in recent periods which have
resulted in exceptional tax credits from reductions
in future tax rates. In the current year, the Dutch
Government has made further revisions and reversed
some of the planned tax rate falls, which has resulted
in an exceptional tax charge of €1.6m being recorded
this year. The total exceptional tax credit of €2.4m
also includes a credit for the release of provisions
in relation to pre-merger tax issues (€2.5m) and an
enacted lower tax rate in the UK (€1.5m).
Looking forward, we anticipate the underlying tax
rate may fall slightly to around 24% in the next few
years as no further tax rate changes are anticipated.
The Group statutory loss after tax, including all
discontinued and exceptional items, was €77.1m
(2019: €97.7m).
Non-trading and exceptional items
Merger-related costs
Portfolio management activity
UK Municipal contract issues
Other changes in long-term provisions
Other items
Amortisation of acquisition intangibles
Exceptional finance costs
Non-trading and exceptional items in loss before tax
Tax on non-trading and exceptional items
Exceptional tax
Discontinued operations
Total
Merger-related P&L charges
FY20
€m
16.3
29.8
25.9
33.0
4.3
6.4
(2.2)
113.5
(9.8)
(2.4)
18.9
120.2
FY19
€m
56.8
8.7
64.3
-
5.9
6.4
9.4
151.5
(12.4)
(15.6)
22.5
146.0
Integration costs*
Synergy delivery
Branding capex
Initial merger programme
Monostreams restructuring
Non-cash costs
Total
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
2.3
13.8
–
16.1
(0.5)
0.7
16.3
Total
€m
Original
€m
Difference
€m
20.0
50.0
12.0
82.0
(6.7)
(4.6)
12.0
0.7
26.7
54.6
–
81.3
10.0
15.5
106.8
*Including branding capex now expensed rather than capitalised.
41
1234Renewi plc Annual Report and Accounts 2020 CFO’S REVIEW continued
Earnings per share (EPS)
Underlying EPS from ongoing businesses, excluding
non-trading and exceptional items, was 3.9 cents
per share, a decrease of 25% on a like-for-like basis.
Basic EPS from continuing operations was 7.7 cents
loss per share compared to a loss of 9.0 cents per
share in the prior year.
Dividend
As announced previously, and in response to
Covid-19, the Board has decided not to pay a final
dividend for the year ended 31 March 2020. The
interim dividend of 0.45 pence per share was paid
on 10 January 2020.
CASH FLOW PERFORMANCE
A summary of the total cash flows is shown in the
table (right). Free cash flow conversion on an IAS 17
basis was strong at 110% compared to the 35% in
FY19. Working capital was an inflow of €22.9m based
on the timing of payables, recovery on receivables
delayed in the last quarter last year and increased
efficiency on the sale of receivables programme.
Some of this benefit is expected to reverse in the
new financial year. Replacement capital spend,
excluding new IFRS 16 leases, was well controlled
at €64.2m (2019: €88.1m), representing c.75% of
depreciation. Capital spend was restricted in the
first half pending the completion of the disposals
of Canada and Reym, which has resulted in a lower
spend across the full year. In addition, a number
of leases previously considered operating leases
before the introduction of IFRS 16 totalling €61.8m
have been entered into, and these are now recorded
as right-of-use assets and are shown separately
in the above cash flow. As previously reported,
we are investing in a rejuvenation of our truck fleet
through leases that spread the cash costs of the
trucks over a six-year period.
UK Municipal contracts reflect the cash spend
on UK onerous contracts of €23.6m, including a
significant amount for the final months of the legacy
42
Cash flow
EBITDA
Working capital movement
Movement in provisions and other
Net replacement capital expenditure
Interest, loan fees and tax
Underlying free cash flow
UK Municipal contracts
Free cash flow
Growth capital expenditure
Synergy, integration and restructuring spend
Other
Disposals net of acquisitions
Dividends paid
Net core cash flow
Net debt disposed/acquired
Replacement capital expenditure
– new IFRS 16 leases
Total
Opening net debt excluding UK
PPP net debt
Loan fee amortisation
Transfer to disposal group
IFRS 16 transition adjustment
Net debt movement excluding UK
PPP net debt
Exchange
Closing net debt excluding UK
PPP net debt
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
202.8
170.0
181.3
22.9
(4.5)
(64.2)
(37.1)
119.9
(23.6)
96.3
(10.1)
(24.3)
(8.4)
95.7
(8.6)
140.6
(6.4)
(61.8)
72.4
(552.0)
0.9
–
(177.3)
72.4
22.9
(4.5)
(64.2)
(31.2)
93.0
(25.2)
67.8
(10.1)
(24.3)
(9.6)
95.7
(8.6)
110.9
(12.8)
–
98.1
(552.0)
0.9
–
–
98.1
(3.9)
(4.2)
(22.2)
(9.8)
(88.1)
(30.9)
30.3
(19.0)
11.3
(11.7)
(38.7)
(9.5)
24.1
(27.4)
(51.9)
–
–
(51.9)
(500.6)
2.2
4.2
–
(51.9)
(5.9)
(659.9)
(457.2)
(552.0)
Free cash flow conversion
132%
110%
35%
All numbers above include both continuing and discontinued operations.
Free cash flow conversion is underlying free cash flow as a percentage of underlying EBIT.
Renewi plc Annual Report and Accounts 2020 Derby contract before it was terminated, along with
spend on the ELWA contract, which is onerous as
from 1 January 2020. The cash outflow on all other
contracts was as expected.
The growth capital spend includes the Ottawa
expansion (now disposed of) and the completion
of the expansion of the Maasvlakte landfill site.
Synergy, integration and restructuring spend of
€24.3m included €22.3m for synergy delivery and
merger-related integration costs. In addition, €2m
of spend has arisen for initial restructuring and fees
relating to Renewi 2.0.
Other cash flows include the ATM spend on
additional logistics and other associated costs
of €4m, €3.5m funding for the closed UK defined
benefit pension scheme and €2.4m relating to
the purchase of short-term investments in the
insurance captive.
The disposals and acquisitions inflow includes
the net proceeds from the sale of our Canadian and
Reym businesses, along with €4.3m spend on the
acquisition of the Rotie organic waste collection
business and the 32% stake in RetourMatras B.V.,
a mattress recycler, alongside IKEA.
Net cash generated from operating activities
increased from €73.6m in the prior period to
€157.7m in the current year. A reconciliation to the
underlying cash flow performance as referred to
above is included in note 8.3 in the consolidated
financial statements.
RENEWI 2.0
As reported in the CEO’s Review, we have launched
our Renewi 2.0 programme, which is intended
to complete the creation of a modern waste-
to-product company with digital interfaces to
customers and suppliers, supported by modern,
lean and efficient core processes. These include
the introduction of a cloud-based source-to-
pay system and the creation of global process
owners for core processes to standardise and
reduce inefficiency.
We believe that Renewi 2.0 will deliver cost
benefits at an annualised run rate of €20m by March
2023. The cost of the programme is expected to
be €40m, split between capital and an exceptional
charge as shown in the table (above right).
Renewi 2.0: expected costs and benefits
Net benefit
Exceptional costs
Capital spend
Net cash flow
FY21
€m
1
(14)
(1)
(14)
FY22
€m
5
(10)
(4)
(9)
FY23
€m
12
(6)
(2)
4
FY24
€m
20
-
-
20
In addition to the above cash spend certain non-cash impairments of c.€3m are anticipated.
Return on assets
The Group return on operating assets (excluding
debt, tax and goodwill) from ongoing businesses
increased from 26.7% at 31 March 2019 to 27.5 at
31 March 2020 on an IAS 17 basis. IFRS 16 adoption
has increased assets by c.€175m, with a significant
proportion reflecting very long-term leaseholds
of Dutch waterside locations which cannot be
owned under Dutch law. Under IFRS 16 the Group
return on assets as at 31 March 2020 was 19.0%.
The reported Group post-tax return on capital
employed from ongoing businesses was 6.6%
(31 March 2019: 6.9%).
TREASURY AND CASH MANAGEMENT
Core net debt and gearing ratios
Core net debt excludes the net debt relating to the
UK PFI/PPP contracts, which is non-recourse to the
Group and is secured over the assets of the special
purpose vehicles (SPVs) and excludes IFRS 16 related
leases. Core net debt at €457.2m (2019: €552m) was
better than management expectations, with working
capital and capital expenditure well controlled and
cash received from the disposals. Liquidity was also
very strong with cash balances of €195m and total
liquidity of €252m. Net debt to EBITDA was 2.98x,
comfortably within our covenant limit of 3.5x. On
29 May 2020 we announced a new structure of higher
covenant test levels to ensure solvency through the
Covid-19 crisis. These peak at 6.0x during 2020, falling
steadily back to 3.5x in September 2021.
INVESTMENT PROJECTS
Expenditure in FY21
The Group’s long-term expectations for replacement
capital expenditure remain around 80% of
depreciation. This level may from time to time
be supplemented with larger-scale replacement
projects. As a result of the current pandemic, total
capital spend for FY21 is now estimated to be
c.€75m, similar to the previous year and lower than
our previous expectations. This spend will include
the new infrastructure for the construction materials
at ATM and a new de-packaging hall in Organics in
Commercial Waste Netherlands.
Debt structure and strategy
Borrowings, excluding PFI/PPP non-recourse
borrowings, are mainly long-term as set out in
the table overleaf.
The facility has been hedged with five cross
currency swaps totalling €243.1m at fixed euro
interest rates of between 1.27% and 1.41%, which
expire between July 2022 and December 2022.
A €100m retail bond with a coupon of 4.23%
was repaid in July 2019 and replaced by a €75m
five-year green retail bond with a coupon of 3.00%.
The remaining €100m green retail bond has a
coupon of 3.65%. All of our borrowings are now
43
1234Renewi plc Annual Report and Accounts 2020 CFO’S REVIEW continued
green financed. As at 31 March 2020, 99% of our
core net debt was fixed or hedged.
The Group operates a committed invoice
discounting programme. The cash received for
invoices sold at 31 March 2020 was €88.0m
(March 2019: €68.2m).
The introduction of IFRS 16 on 1 April 2019
brought €177.3m of additional lease liabilities onto
the balance sheet with an associated increase in
assets. Additional leases have been entered into
during the year and mostly relate to the truck
replacement programme. Covenants on our main
bank facilities remain on a frozen GAAP basis.
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 2020 this debt amounted
to €90.0m (31 March 2019: €95.4m).
Treasury initiatives
During the year we issued a new €75m bond at 3%
to 2024 and repaid the previous €100m 4.23% bond
at maturity. This completed our transition to become
entirely green financed across all our main banking
facilities. After the year end we adjusted the banking
covenants of our facilities to reflect the potential
impact from Covid-19. We entered into various cross
currency swaps during the year consistent with our
hedging strategy, both to manage interest cost and fix
our exposure to interest rates across a large proportion
of the variable rate borrowings. We also extended
the use of an invoice discounting programme as we
integrated the IT systems supporting the Commercial
Waste Division. We established and utilised additional
green leasing facilities to fund our ongoing investment
in our Clean and Green Fleet, increasing the
proportion of Euro 6 trucks substantially, which
are right-of-use assets under IFRS 16.
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. As
referenced earlier, the Group has completed its
detailed triennial review of long-term discount
rates this year, which has resulted in a decrease of
discount rates and an associated increase of €18m
in the carrying value of provisions at 31 March 2020.
The current provisions amount to €38m, including
€4m for exceptional restructuring, €16m for
Municipal onerous contracts and €5m for landfill-
related spend. Municipal cash outflows are
expected to reduce in subsequent years.
Details of contingent liabilities are set out in note 8.4
of the financial statements and the Group does not
expect any of these to crystallise in the coming year.
44
Debt structure
€100m Belgian Green retail bond
€75m Belgian Green retail bond
€495m Green RCF and term loan
Green EUPP
Historic IAS 17 finance leases and other
Loan fees
Cash and money market funds
Core net debt (as per covenant definitions)
IFRS 16 finance leases
Net debt excluding UK PPP net debt
Drawn
€m
100.0
75.0
437.1
Term
June 2022
July 2024
May 2023/2024
25.0 December 2023/2025
637.1
19.3
(4.7)
(194.5)
457.2
202.7
659.9
Retirement benefits
The Group operates a defined benefit pension
scheme for certain UK employees, which has been
closed to new entrants since September 2002
and was closed to future benefit accrual on
30 November 2019. At 31 March 2020, the scheme
had moved into an accounting surplus of €16.0m
(31 March 2019: €3.7m deficit). The move into
surplus was a result of a change in the scheme’s
investment strategy, which led to a higher return
on assets along with a decrease in the discount
rate assumption and lower inflation. During the
year, pension increase exchange exercises were
actioned which resulted in a past service saving
of €1.4m. The latest actuarial valuation of the
scheme was at 5 April 2018 and the future funding
plan has been maintained at the current level
of €3.5m per annum until February 2022.
There are also several defined benefit pension
schemes for employees in the Netherlands and
Belgium, which had a retirement benefit deficit of
€7.5m at 31 March 2020, a €0.7m decrease from
31 March 2019.
Toby Woolrych
Chief Financial Officer
Renewi plc Annual Report and Accounts 2020 GREEN FINANCE
Our sustainable business
Sustainability is at the heart of everything we
do – and that goes for the financials as well
as protecting the environment and people
Sustainability is our purpose and a core value.
We seek to protect the planet by giving new
life to used materials. Everything we do is
focused on delivering our vision to be the leading
waste-to-product company in the world’s most
advanced sustainable economies. We are proud
of our contribution to sustainability and our
ambitious new sustainability objectives (see page
26) across the scope of environmental, social and
governance (ESG) topics. This is rightly an area
of increased focus and attention from investors,
communities and governments and across the
broad range of our stakeholders.
STRONG S&P ESG RATING
ESG was an important consideration in our recent
listing on Euronext Amsterdam. Many investors
have adopted the UN Principles for Responsible
Investment and look to positive impact, green,
ESG and sustainability-focused investments such
as Renewi. We are increasingly seeing our investor
base coming from thematic funds dedicated to
these principles, which themselves are expected
to generate superior long-term investor returns.
In January 2020 we were awarded an ESG rating
of 75 from S&P Global, including its highest rating
to date for assessment around the environmental
component. Its report (free to access from our
website) was published after S&P Global Ratings
completed detailed consultation with the company
to understand our policies and the management
focus on all ESG aspects. Given the reputation
for independence of S&P Global’s ratings, this is
a distinguished recognition for Renewi.
FULLY GREEN-FUNDED
During FY20 we completed our transition to become
entirely green-financed, encompassing all our core
borrowing of bonds and loans. This followed the
issuance of our latest green bond in line with our
best practice perpetual Green Finance Framework,
which applies the Green Bond and Green Loan
principles. The framework links Renewi’s activity
to the UN Sustainable Development Goals and we
report against our key green performance indicators
each year. Our main banking facility was one of the
first RCFs to be green principles-based and to apply
a pricing that varies directly with our sustainability
performance, thereby aligning our sustainability
interests with our relationship lending banks. The
financing structure continues to be a benchmark
that has inspired other green bonds and loans.
AWARD-WINNING PERFORMANCE
Our dedication to sustainability and the green
economy has been broadly recognised with
many industry awards, index inclusions and other
recognitions. During the year we were awarded
several sustainability and sustainability finance
awards, and we were also awarded the prestigious
Green Economy Mark from the London Stock
Exchange, which is in addition to our FTSE4Good
inclusion and a Level 4 certification with the Dutch
CO2 Performance Ladder, demonstrating our strong
commitment to reduce carbon emissions directly
and more broadly in our sector.
Expert recognition for sustainability
GREEN ECONOMY MARK
FTSE4GOOD
S&P ESG REPORT
Given to companies with
50% or more of their total
annual revenues from
products and services
that contribute to the
global green economy.
The FTSE4Good Index
Series was created to
measure the performance
of companies that are
able to demonstrate
strong ESG practices.
S&P assessed our
ESG strategy and our
preparedness for ESG
risks and opportunities,
and awarded us a
score of 75/100.
45
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW
RENEWI’S OPERATIONS
AND PERFORMANCE
ACROSS THE DIVISIONS,
FROM WASTE COLLECTION
AND TREATMENT
TO RECYCLING AND
CIRCULAR PRODUCTS
In FY20 we operated four Divisions covering a range of activities
related to the collection, treatment and recycling of waste materials
COMMERCIAL WASTE page 47
Collection, sorting, treatment and recycling
of waste materials from a range of sources
HAZARDOUS WASTE page 53
Treatment of contaminated soil and water and
disposal of a broad range of hazardous wastes
MONOSTREAMS page 56
Four businesses producing materials for specific
markets from waste streams
MUNICIPAL page 59
Operating waste treatment facilities for local
authorities in the UK
The Operating Review reports on the business using the historic divisional structure.
A reconciliation of the historic performance to the new divisional structure, including
a reallocation of central services cost, is shown on our website. All percentage comparatives
to the prior year in the following section exclude the positive impact of IFRS 16, which
amounted to €3.5m EBIT in the year to March 2020 for the ongoing businesses.
46
Renewi plc Annual Report and Accounts 2020 Commercial Waste
The Commercial Waste Division is located
in the Netherlands and Belgium. It provides
a wide range of waste-to-product solutions
and represents around 72% 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 production of quality secondary
materials and the ultimate disposal of waste
streams that cannot be recycled.
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 that can then be converted into
high-quality raw materials and energy.
Our market is divided into four segments: Industrial
and Commercial (I&C); Domestic; Construction
and Demolition (C&D) within Netherlands only; and
Hazardous within Belgium only. In each segment our
unique business model allows us to focus on the
value that we can recover from specific waste streams.
Our process begins using our clean and green Euro
6 fleet to collect a large proportion of our inbound
waste, thereby securing volumes as a valuable source
of future materials. Our customers increasingly
support the re-use potential by source segregating
waste, encouraged by legislation, society, corporate
sustainability targets and good practice.
The waste is then processed through one of our
108 sites where we have dedicated capacity to sort
and treat specialist waste such as paper, cardboard,
wood, plastics, metals and rubble among others,
in addition to mixed waste processing and sorting
capacity. This enables us to produce high-quality
secondary materials and recyclates.
We are the market leader in recycling and
production of secondary materials. We optimise
reuse based upon the quality of the waste we collect,
and we dispose only of the residues that we are
unable to convert into products or recyclates. In this
way, we ‘waste no more’, which increases margins
and makes a significant environmental contribution
by minimising the depletion of the natural resources
to extract and refine virgin materials. Our general
business model is set out in the graphic on page 48.
MARKETS
The I&C segment meets the needs of specific
markets, sectors and businesses covering the broad
activities of the total economy, including hospitals,
factories, offices, shops and restaurants among
others. Waste streams, such as segregated paper or
plastic, food waste or glass, are preferably separated
at the source to retain quality. However, within this
sector there is still a significant flow of mixed waste.
HIGHLIGHTS
Revenues increased
by 2% to €1,224m and
EBIT increased by 1%
to €87.6m
Invested €1.7m
in RetourMatras,
a company that
has technology to
recycle mattresses
Successfully
completed our
synergy programme,
with the €40m target
delivered on time
TECHNOLOGIES
• Balers
• Composting
• Crushers
• Eddy current separators
• Float baths
• Magnets
• Optical sorters
• Shredders
• Processing lines
• Trommels
NEW (still in progress):
• Circular plastic project
• Nappy recycling
PRODUCTS
• Biogas
• Essential oils
• Digestate/compost
• Glass
• Granules
• ICOPOWER® pellets
• Metal
• Metal blocks
• Paper
• Plastic
• Recovered fuels
• Wood chips
NEW OUTLETS
• Mattress recycling
• PMD separation
• Decontaminating steel
• Sterilising medical
face masks
For specific situations such as office buildings we
have developed specific concepts such as EcoSmart
in the Netherlands, which provides collection bins
and services to maximise source separation,
supplemented by workforce education activities.
Overall recyclate prices have been challenging
with several recyclates reaching historic lows,
particularly paper, which was at its lowest levels at
the end of our financial year. Plastics prices have also
decreased since the alternative virgin plastic prices
are correlated with oil prices, which have fallen.
Ferrous metals prices have been broadly flat.
However, non-ferrous aluminium prices have fallen
as a result of international trade disputes. The wood
market is dominated by regional supply and demand
imbalances that have driven down the market price
of wood, particularly in Belgium, which fell to €30 a
tonne, significantly lower than the beginning of the
year. Despite this, Renewi generated positive margins
through the application of relatively high gate fees.
In the future we expect an increase in demand
as a result of additional processing capacity for
subsidised energy production and increased interest
in recycling by the panel board industry. Earlier this
year OVAM, the public waste agency of Flanders,
announced a new residual biomass action plan
that includes waste wood, encouraging recycling
of wood before using it for energy production.
Commercial Waste Belgium will adapt its processes
to align with the new strategy and expectations
of customers.
Increasing use of dynamic pricing contracts
has reduced risk to the business operating model.
We pass on monthly movements in the value
of paper, for example, by changing the gate fee.
Otherwise our standard annual contracts to
small- and medium-sized customers are repriced
on an annual basis to reflect the underlying
changes experienced in the market.
The Commercial segment relies on waste-to-
energy companies to recover energy from the
c.20% residual waste generated. The pricing of
incineration capacity is linked to supply and demand
dynamics both regionally and internationally,
mitigated by long-term supply agreements. During
the year there was significant disruption to the
regional market following an extended shutdown
of the AEB incinerator in Amsterdam, in addition
to the extension of Dutch domestic incineration
taxation being applied to imported burnable waste
streams. The market adapted to the AEB shutdown
with alternative outlets and storage sites secured,
and the market is returning to normal as stockpiled
inbound waste inventory is cleared.
The Domestic segment provides clean and
efficient ‘hands and wheels’ services in door-to-door
47
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – COMMERCIAL WASTE continued
Commercial Waste business model
COLLECT
OR RECEIVE
• Eddy current
separators
• Food and
supermarket
SORT
• Green waste
• Industrial fats
• Magnets
• Optical sorters
• Sludges
• Sorting lines
• Trommels
PRODUCE
• Balers
• Composting
• Crushers
• Pelletisers
• Shredders
DISPOSE
• Incineration
• Landfill
RECYCLATES AND SECONDARY MATERIALS
• Aggregate
• Compost
• Essential oils
• Glass
• Green electricity
• ICOPOWER® pellets
• Metal
• Metal blocks
• Paper
• Plastic
• Solid recovered fuel
• Wood chips
Customers
pay us to take
their waste
Customers
purchase our
products
We minimise
the cost
of disposing
of the residues
We aim to process, sort and make products from waste but there is a small residual amount that has to be landfilled or sent to incineration.
Commercial Waste financial performance
REVENUE
UNDERLYING EBIT
FY20
IFRS 16 basis
€m
FY19
IAS 17 basis
€m
Variance
%
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
Variance
IAS 17 basis
%
Commercial Waste Netherlands
Commercial Waste Belgium
Intra-segment revenue
Total
786.0
439.1
(1.5)
764.7
430.8
(1.1)
1,223.6
1,194.4
3%
2%
2%
56.0
33.9
–
89.9
54.3
33.3
–
87.6
53.2
33.3
–
86.5
2%
0%
1%
UNDERLYING EBIT MARGIN
RETURN ON OPERATING ASSETS
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
Commercial Waste Netherlands
Commercial Waste Belgium
Total
7.1%
7.7%
7.3%
6.9%
7.6%
7.2%
7.0%
7.7%
7.2%
15.9%
29.5%
19.2%
19.0%
38.8%
23.6%
18.7%
37.3%
23.1%
Note
The return on operating assets for Belgium excludes all landfill related provisions.
48
Renewi plc Annual Report and Accounts 2020 municipal collection, before delivering the waste as
instructed by the authority, which retains responsibility
for the sorting, treatment and disposal. This can be
through a direct service agreement or partnerships
in which Renewi also manages the service provision
for a fee. The Hazardous segment in Belgium is
comparable to the combined Reym and ATM
activities, on a smaller scale.
The C&D segment is core for Renewi in the
Netherlands and arises from residential, commercial
or infrastructure construction. After strong growth
since 2014, the C&D market slowed significantly
in 2019, driven by two environmental challenges.
The first related to a ruling on the levels of per-
and polyfluoroalkyl substances (PFAS) that were
permitted. These levels were amended in December
2019, resolving the majority of the issue. The second
related to concerns over nitrogen deposition. This
is expected to continue to slow the market until the
Dutch Government can issue a broader approach
to manage national nitrogen emissions.
The Commercial Waste Division also operates
in several 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, a landfill, mattress recycling, confidential
paper management, as well as a leading position
collecting medical waste from hospitals.
DIVISIONAL STRATEGY
The Commercial Waste Division creates value
from its leadership position in waste collection
and treatment in the Netherlands and Belgium.
Its national coverage, density, operational scale
and advantaged technology position it strongly
in its core markets. The Division will deliver
long-term growth and attractive returns by
increasing diversion from incineration and landfill
and through increasing demand for its wide range
of recycling services and products. This will be
reinforced through the delivery of the benefits
of Renewi 2.0 and the application of margin-
enhancing initiatives such as commercial
effectiveness and continuous improvement.
FINANCIAL PERFORMANCE
The Commercial Waste Division performed well in
FY20, given weaker markets and the €4m estimated
impact of Covid-19 in the second half of March.
Revenues increased by 2% to €1,224m and
underlying EBIT increased by 1% to €87.6m. Margins
were constant at 7.2% and the return on operating
assets rose a further 50 basis points to 23.6% on an
IAS 17 basis (19.2% on an IFRS 16 basis).
Revenues in the Netherlands grew by 3% to
€786.0m and underlying EBIT by 2% to €54.3m.
Margins fell by 10 basis points to 6.9%. Return
on operating assets increased by 30 basis points
to 19.0% (15.9% on the IFRS 16 basis).
As previously reported, the core market has been
softer this year. Dutch construction was slower after
four strong growth years and was further impacted
from July 2019 by regulatory rulings about the
chemical PFAS in soil, an issue partially resolved
in December, and by limitations being imposed
to manage nitrogen deposition near sites of
environmental importance. Recyclate markets have
also been weaker, with generally lower volumes
and prices. The Covid-19-related lockdown in
the second half of March has primarily affected roller
bins (commercial waste) and food waste. Core
volumes fell by 2% in the year, with construction
and bulky waste down by 3.5%. Recyclate volumes
fell by 1%, with paper down 1.6% and metals down
11%. Other volumes were down by 5%, mainly lower
value rubble and soil/sludges. Pricing per tonne
for inbound waste increased by more than 12% as
we successfully passed on significant increases in
incinerator taxes, other disposal costs and higher
than usual labour cost increases, and saw the
positive impact of dynamic pricing adjustments
to offset lower recyclate income, which fell by 23%.
The stable operating margin was encouraging,
particularly given the headwind from lower volumes,
lower recyclate prices, the increasing costs of
disposal of residues and a €1m year-end provision
for potential Covid-19-related bad debts. Total
synergies were €17.7m, with additional synergies
of €6.4m delivered during the year.
Belgium revenues increased by 2% to €439.1m
and underlying EBIT was flat at €33.3m. Margins were
49
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – COMMERCIAL WASTE continued
2%
Growth in revenues,
to €1,224m, despite
weaker markets and
the impact of Covid-19
at the end of the year
broadly flat at 7.6%, which was encouraging given
the cost pressures and the closure in the year of the
landfill at Cetem. Underlying volumes were flat, in
line with the market. Market trends were similar
to those in the Netherlands, with price increases
offsetting inflation in disposal and labour costs
and a reduction in recyclate income. The impact
of Covid-19 in March was greater than in the
Netherlands as a result of a more severe lockdown.
Total synergies were €10.6m, with additional
synergies of €2.8m delivered during the year.
OPERATIONAL REVIEW
Our Commercial Waste Division has made good
progress in all its market-facing strategies and also in
completing integration and preparing for Renewi 2.0.
Clean and green collection
The efficient collection of waste provides an
essential service to customers and provides us
with the raw materials from which to create new
products. However, the process of collection creates
pollution and traffic. We expect that waste collection
will transform in the coming years to be cleaner,
greener and more efficient. Renewi will be a leader
in that transformation.
It starts with reducing pollution using today’s
technologies. During the past year we invested
€64m in purchasing 423 trucks with the latest
Euro 6 emission technologies. Euro 6 trucks reduce
pollutants by over 90% compared to the older trucks
they are replacing, significantly improving the air
quality of the cities in which they operate. Over
45% of our fleet is now Euro 6 and we are targeting
100% by 2025. Our route optimisation software
further minimises the number of collection
kilometres driven and in the past year our lifts/km
metric improved by 27% in the Netherlands. We
expect that governments will soon ban or fine
more polluting trucks in inner cities and that our
investments will give us a strong operating position.
Over the next decade, we expect a step change
in the reduction of carbon emissions from waste
collection through two approaches. The first is
a requirement that waste companies combine to
collect waste in single white-label truck fleets per
town, increasing route efficiency and reducing the
number of vehicles operating in urban areas. Initial
trials in Gouda and Haarlem have now been
expanded in the areas of Roosendaal and Bergen
op Zoom in the Netherlands and Oost-Vlaanderen
‘We expect to continue to drive our
margin expansion by increasing the
diversion of waste we collect away
from landfill and incineration’
50
in Belgium, and several projects in other city centres
in the Netherlands are in the preparation phase. The
second will be a transition to use of zero-emission
vehicles (ZEVs), likely electric- or hydrogen-powered.
During the past year we ordered the first two ZEV
waste trucks in the Netherlands for trials. We will
continue working with all major truck manufacturers
to develop this technology. Given that ZEVs are
much more expensive than current diesel models,
we anticipate that, once the technology is proven,
governments will need to mandate their use
in order to stimulate the transition.
Increasing diversion from
landfill and incineration
Waste volumes overall are relatively flat, with
modest further growth for Renewi expected from
share gain or tuck-in acquisitions. We expect to
continue to drive our margin expansion by increasing
the diversion of waste we collect away from
landfill and incineration.
An example of this was our €1.7m investment
in June 2019 in RetourMatras, a company that
has technology to recycle mattresses. Mattresses
are difficult to handle, prone to cause fires, and
are expensive to transport and to incinerate. The
RetourMatras technology separates mattresses into
textiles, foam and metals for recycling, creating a
full circular solution. We were pleased to co-invest
in this technology with IKEA, a leading seller of
mattresses with a strong commitment to
sustainability. Our initial goal is to complete
coverage in the Netherlands by installing sufficient
capacity to recycle all waste mattresses – at which
point we anticipate that regulators will mandate that
they should no longer be incinerated. In parallel, we
are assessing international expansion opportunities.
In Belgium we have an unparalleled range of
sorting capabilities. In the past year, we have installed
a new 60kt sorting line in Liège to cycle waste into 11
different product streams and our wood sorting line
at Eeklo is separating up to 35% to 40% of waste
wood for re-use in furniture instead of as biomass.
Investing in added-value
secondary materials production
Having diverted waste from landfill and incineration,
our second strategy is to increase the value we add
from the products we make through increased
quality. We call this ‘spread expansion’. Examples
of spread expansion include the final commissioning
of our Wateringen stone crusher and the wood
treatment line in Vlaardingen. We have also
consolidated some of our materials processing
capabilities to our Gent master plant, including a
new, higher-quality plastics sorting line. A new baling
press in Vilvoorde is improving the quality and value
of our recycled paper and cardboard streams.
Our innovation funnel contains numerous other
projects to increase the value-add from our
materials. For example, at RetourMatras we are
Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY IN ACTION
PMD separation – a circular solution
We have launched an exciting venture to turn tonnes of waste into new
products. This circular economy solution is the first time we have been
able to recycle the plastic bottle, metal packaging and drink carton
(PMD) waste we handle in the Netherlands. Now all the PMD waste Renewi
collects is transported to German recycling company Hubert Eing where
it is transformed into secondary materials for manufacturing.
This ensures that the Dutch companies and other organisations we
serve can hugely limit their residual waste and, like Renewi, play
a part in enabling the circular economy.
We supply businesses with containers and bags for the collection
of PMD, and support them with a digital toolkit that explains how to
sort and separate the different kinds of waste. We then collect the
PMD and take it to Hubert Eing, as part of the deal we signed with Eing
in October 2019. Renewi has been transporting an average of 65 tonnes
of PMD a month, but this is rising as more customers buy into the
project. No less than 80% to 90% of the PMD is recycled, and the rest
is recovered to generate energy.
In Germany, the PMD is separated using techniques such as water baths,
blowers, infrared devices and vibrating sieves. The metal – including tins
and cans – is used again as a raw material, and the recycled drink cartons
are bought by paper manufacturers to turn into new products. The
plastic is washed and, depending on the grade, converted into agglomerate
or regranulate. Agglomerate is used for items such as children’s play
equipment and garden benches, while regranulate can be used to make
items such as hosepipes, cable sheathing and injected moulded products.
See pages 28 to 31 for more details
of our circular economy projects
undertaking research to extract additional value
by bonding the foam to create carpet underlay
or, alternatively, reprocessing the foam to create
polyurethane. We have signed a commercial
contract to repurpose part of our anaerobic
digestion site in Amsterdam to produce bio-LNG
for Shell as a higher value-add alternative to green
electricity. We are also in commercial discussions
to build a sorting line near Eindhoven to produce
a high-quality plastics feedstock for chemical
plastics recycling in partnership with a leading
global plastics manufacturer.
Integration, synergies and Renewi 2.0
FY20 also saw the successful completion of our
synergy programme with the €40m target delivered
on time. Most of the synergy benefits in the year
were the full-year effects of major projects from
the year before, especially site rationalisation and
route optimisation. New projects that were
completed towards the end of the year included
the harmonisation of collective labour agreement
(CLA) terms and conditions in Belgium, the roll-out
of the E-hour time registration system across all
employees, and the implementation of digital
acceptance of waste. Site migration of the former
Shanks construction business onto the Renewi
operations platform and the harmonisation of Dutch
CLA terms and conditions are expected to take place
during 2020, completing the integration with a final
further exceptional cost of €4m.
Focus turned in the second half towards projects
that would form part of Renewi 2.0, the Group-
wide programme to modernise Renewi. A large
part of Renewi 2.0 focuses on the customer and
in Belgium a customer-centric project has been
rolled out to engage and enthuse our employees
in how to look after customers, and to measure
customer satisfaction more deeply. At the
heart of the new customer experience will
be MyRenewi – a portal where customers can
place, amend and review orders, and manage
51
1234Renewi plc Annual Report and Accounts 2020
OPERATING REVIEW – COMMERCIAL WASTE continued
€40m
Total amount of
synergies delivered,
on target and on time
their accounts. This meets a clear demand in terms
of service, while improving the data quality that
flows into our systems.
Internally we will be investing in automation
of many core processes. We will be implementing
a Renewi source-to-pay system, starting with
the shared service centre and preparation for
Commercial Waste Belgium during the next year. We
are also creating a global process management team,
centres of excellence for product management and
reporting, and a team to improve data quality. These
teams, funded by other efficiencies, are expected to
transform the efficiency of our core processes over
the coming three years, improving customer and
employee satisfaction and reducing cost.
Managing headwinds
As reported earlier, the year has contained its
headwinds. Recyclate prices hit multi-year lows,
especially paper, which has fallen by 75% from
peak to trough. There have also been significant
inflationary pressures from the increased
incinerator taxes, higher disposal costs and
increased labour costs. We have successfully
mitigated these headwinds, passing on these cost
pressures in full in the form of higher prices for
inbound waste. Dynamic pricing contracts for
recyclates provide a mechanism to automatically
adjust for changes in paper, plastic and metal
prices for up to 75% of our volumes.
The year was also made more complex when AEB,
one of the largest incinerators in the Netherlands,
closed unexpectedly for four months in the summer
of 2019 for technical reasons. This sudden loss of
capacity could have caused a severe disruption
to our customer service and a material economic
loss for Renewi. However, using our crisis protocols,
we were able to react swiftly to lobby governments
to open new outlets and storage, to communicate
with customers and to redirect waste to new
locations. A €3m provision for uncovered costs
taken at the half year was not required as all
additional costs were settled and our business
and our customers were unaffected.
DIVISIONAL OUTLOOK
As stated previously, during the lockdown period
waste volumes have fallen by up to 35% in Belgium
and up to 15% in the Netherlands, the latter
supported by resilience in construction waste
volumes. We anticipate a gradual recovery from
these lows after lockdowns eased through the first
quarter. We predict that volumes for the remainder
of the next financial year will be lower than previously
expected, dependent upon the easing of lockdown
restrictions, including in specific sectors such as
hospitality, and the speed of economic recovery.
Construction may also reduce somewhat in the
near future in response to lower GDP. Recyclate
prices are expected to remain low as a result of
reduced demand and lower oil and commodity
prices, but other inbound and outbound pricing
has remained stable. Swift cost actions have been
taken to reduce any impact and additional plans
are in place should volumes reduce further. Longer
term, waste volumes are historically resilient and
we expect governments to continue to stimulate
recycling and the use of secondary materials.
52
Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – HAZARDOUS WASTE
Hazardous Waste
HIGHLIGHTS
Resolved regulatory
issue affecting ATM’s
ability to process
thermally treated
soil in the Netherlands
Installed capacity
to make building
materials
Successfully sold
the Reym industrial
cleaning business
in October 2019
TECHNOLOGIES
• Biological
• Chemical
• Gasification
• Pyrolysis
• Separation
• Thermal treatment
PRODUCTS
• Cleaned water
• Clean soil
• Metal
• Gravel
• Sand
• Filler
The Hazardous Waste Division includes our
soil and water treatment activities at ATM
and, prior to its divestment on 31 October
2019, the industrial cleaning business Reym.
ATM is one of Europe’s largest sites for the
treatment of contaminated soil and water, as well
as for the treatment of a broad range of hazardous
waste such as waste paints and solvents. In addition
CFS provides comparable services at Weert, and
together they give the Hazardous Waste Division a
leading position in the market. The business model
is shown in the graphic on page 54.
ATM is a leader in water and soil treatment and
packed hazardous waste 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 in
this section, ATM has been heavily impacted during
the year by specific discussions with the regulators
on constraints in the soil cleaning process.
MARKETS
The typical underlying market drivers for inbound
waste to ATM arise from industrial activity in Benelux,
including the oil and gas sectors, which drive the
waterside activities, coupled with construction and
site remediation activity across Europe, which drives
the inbound and outbound soil materials.
During 2019, the market for ATM was materially
impacted by an investigation by the Human
Environment and Transport Inspectorate (IL&T) into
the characteristics of thermally treated soil (TGG) and
the process capability to remove potentially harmful
contaminants. Following this investigation, the
market was reopened with regulations unaltered.
Typically, TGG is an attractive material with an
attractive price differential to alternatives and we
expect this market to recover from 2020 onwards.
ATM also has scale capability to separate TGG into
three building materials: gravel, sand and filler. There
are substantial end markets for these products and
the production process is expected to meet the
customers’ specifications.
As a result of the market closure there is a backlog
of road surfaces and other contaminated soils
domestically and across Europe, which are expected
to provide significant feedstock for our processes
going forwards.
DIVISIONAL STRATEGY
Our initial focus is to return ATM to normal
operation on the soil line. In the future we intend
to refine soil outputs further into higher-value
secondary raw materials. Following the successful
sale of the Reym industrial cleaning business,
we are merging ATM (and the smaller treatment
site CFS) with our Mineralz business to create the
Mineralz & Water Division from 1 April 2020.
FINANCIAL PERFORMANCE
ATM performed as expected as a result of the
ongoing restrictions on the shipments of thermally
cleaned soil in the Dutch market, which ended in
December 2019. Revenues fell by 4% to €92m and
underlying EBIT fell to a loss of €1.1m. An exceptional
item of €3.1m (2019: €6.5m) was additionally
reported in relation to the ATM soil issue. Now that
the TGG market has been reopened, the cost of
storing TGG stocks (currently €3m per annum) will
in future be taken in ordinary trading.
OPERATIONAL REVIEW
FY20 has been an important year of turnaround for
ATM. During the year, ATM worked closely with IL&T
and other local regulators such as DCMR to specify
and then conduct detailed tests on our stockpiles
in order to fully characterise the soil beyond the
usual norms of the industrial code (BRL) under
which it was shipped. These tests demonstrated
clearly that our TGG can be applied in the right
industrial locations and poses no risk to health
or to the environment. The IL&T confirmed these
results and in December 2019 reported that they
provide a thorough representation of the TGG
quality and that the TGG can be applied in
industrial locations, subject to the usual review
for the intended application by the local regulators.
At the end of the year, we started shipment of up to
53
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – HAZARDOUS WASTE continued
200kt of TGG for a project in Amsterdam. We
maintain an encouraging pipeline of potential
customers for TGG, both domestically and
internationally, and we are working through
permitting requirements with respective local
authorities to allow its shipment. At the same time,
we are reviving the inbound soil pipeline, which will
take some time to recover to historic levels as it is
generally project/contract based.
ATM has also been investing in a new process
to convert TGG, hot from the kiln, into gravel, sand
and a filler that can be used in the manufacture of
asphalt, concrete and cement. Following successful
pilot-scale trials, a full-size separator was installed at
the end of 2019 which is being progressively
commissioned. The quality of the products appears
to be in line with expectations and customer trials
have gone well. Product certification is also under
way for different grades of product. We believe that
a market for these secondary construction materials
exists that will, over time, absorb most or all of ATM’s
production, at a positive selling price compared to
the negative consideration for placing TGG.
Production of these construction materials is
constrained by a lack of logistics and storage, for the
filler in particular, and a lack of space on site pending
the shipment of more TGG. We are investing during
2020 to increase functional capacity.
Hazardous Waste business model
CUSTOMER
• Petrochemical industry
• Shipping
• Government
• Construction
PRODUCE
• Bio water
treatment
• Gasification
• Pyrolysis
• Thermal
treatment
DISPOSE
• Cleaned water
• Clean soil
GROWING REGULATION
Hazardous Waste financial performance
ATM and others
Reym
Total
ATM and others
Reym
Total
REVENUE
UNDERLYING EBIT
FY20
IFRS 16 basis
€m
FY19
IAS 17 basis
€m
Variance
%
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
Variance
IAS 17 basis
%
91.7
81.3
173.0
95.4
115.9
211.3
-4%
-30%
-18%
(0.1)
12.1
12.0
(1.1)
10.0
8.9
1.7
5.3
7.0
N/A
89%
27%
UNDERLYING EBIT MARGIN
RETURN ON OPERATING ASSETS
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
-0.1%
14.9%
6.9%
-1.2%
12.3%
5.1%
1.8%
4.6%
3.3%
-0.2%
-8.6%
9.5%
Note
Reym revenue includes intra-segment revenue between Reym and other Hazardous Waste entities.
54
Renewi plc Annual Report and Accounts 2020 The other core waste treatment processes for the
Division performed well. Water intake and treatment
at ATM increased slightly compared to the previous
year. Treatment of packed chemical waste through
the ATM pyro plant was slightly lower than the
previous year due to significant maintenance
activities, and the new inbound warehouse was
commissioned during the second half of the year.
The CFS water treatment facility in the southern part
of the Netherlands did well, maintaining flat revenue
against lower volumes.
DIVISIONAL OUTLOOK
We expect to increase throughput on the TRI line
from 20% to circa 40% of capacity, as previously
forecast, mainly supported by increased offtake
of the new products to construction customers.
Capacity will continue to be constrained for these
products during FY21 as additional silos and
handling capacity are being installed. We expect
TGG outlets to be secured during the year, which
will initially be used to reduce excess inventory,
particularly of soil produced before 2018. Following
the reopening of the end market, the €3m of
annual storage costs for this inventory will now be
accounted for in ordinary trading rather than as an
exceptional item. Covid-19 has had a lower impact
on ATM as water volumes are not directly
affected by the lockdown and we have soil stocks
sufficient to keep processing. However, the low
oil price is expected to reduce water volumes
during the year and we anticipate delays in some
construction projects, slowing the recovery of
inbound contaminated soil volumes. Over the
longer term we continue to target a recovery
to historic levels of profitability at ATM.
SUSTAINABILITY IN ACTION
Turning soil into cement, concrete and asphalt
Significant investment in the ATM waste
treatment plant has positioned Renewi well
to transition thermally treated soil (TGG)
into gravel, sand and filler.
ATM, located in the Port of Moerdijk,
Netherlands, receives contaminated
soil from a number of projects including
industrial building, site reclamation and
road reconstruction. Through our AP4Terra
project, we are now in a good position
to process one million tonnes of soil a year
into gravel, filler and sand. Gravel and filler
can be used in the production of concrete,
cement and asphalt. By delivering a solution
that will transition contaminated soil
for use by the construction industry and
road building, Renewi is contributing to
the circular economy.
“This innovation has brought the construction
sector an opportunity to replace primary
raw materials with high-quality secondary
materials. This is a real waste-to-product
success story for Renewi and ATM,” says
Teus Brand, Project Manager at AP4Terra.
55
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – MONOSTREAMS
Monostreams
The Monostreams Division comprises
four businesses: Coolrec, Mineralz,
Orgaworld and Maltha. The Division
operated throughout the year, but these
four business segments have been reallocated
to new Divisions and the Monostreams Division
has been disbanded effective from April
2020 (see page 23).
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. Inbound
supply comes from so-called producer schemes
on long-term supply contracts, and outbound
products provide industry partners with secondary
materials to make closed-loop circular products.
The Mineralz business produces building
materials from incinerator bottom ashes, extracting
both minerals and metals as part of the process.
It provides services to incinerators to enable their
compliance with the Dutch Green Deal requirement
to recycle bottom ashes. Mineralz produces building
materials such as concrete tiles. It also continues
to operate unique landfill services to manage
HIGHLIGHTS
Underlying EBIT
increased by 9%
to €14.1m, on flat
revenues at €213.6m
Coolrec, Maltha,
Mineralz and
Orgaworld all
delivered strong
earnings growth
The Monostreams
Division has been
disbanded as part of a
reorganisation and the
separate businesses
have been reallocated
to other Divisions
TECHNOLOGIES
• Anaerobic digestion
• Composting
• Electrical and electronic
equipment
• Glass recycling
• Specialist landfill
PRODUCTS
• Aggregate
• Binder
• Clean soil
• Digestate/compost
• Glass cullet
• Glass powder
• Green electricity
• Industrial organics
• Metals
• Plastics
56
specialist waste streams such as fly ashes
at the Maasvlakte landfill site in Rotterdam.
Orgaworld is a leader in organic waste
treatment and produces green electricity and soil
enhancing materials. Its facilities deploy tunnel
composting, anaerobic digestion and waste water
treatment technologies. During the year the Group
acquired the out-of-date food waste collections
and depackaging business Rotie at the adjacent site
to our Greenmills facility. This vertical integration
secures the inbound feedstock for the digester and
is complementary to our Semler business within
Commercial Waste Netherlands, where the Organics
business is managed from April 2020.
Maltha is a European leader in glass recycling,
focused primarily on recycling flat and container
glass into cullet and glass powder for re-use 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
at 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.
In Coolrec we have focused our activities on the
segments of fridges and small domestic appliances.
Both inbound markets were stable during the year.
Outbound pricing saw continued pressure, in
particular with falling prices for non-ferrous metals.
The Mineralz business saw stable markets in
the year, with one-off projects offsetting margin
pressure from lower market prices for landfill due
to regulatory rulings announced last year.
The Orgaworld business saw ongoing steady
growth in volumes.
Our Maltha glass recycling business sources flat
and container glass across Europe. Glass supply was
broadly stable. The cullet and powders produced are
sold to leading glass manufacturers, including our
partner Owens-Illinois, where demand is also
broadly stable. Offtake markets for ceramic stone
and porcelain (CSP) have improved, allowing
inventories to be reduced.
DIVISIONAL STRATEGY
Monostreams incorporates Coolrec, Mineralz,
Orgaworld and Maltha. All four focus on producing
high-quality products from specific source
Renewi plc Annual Report and Accounts 2020 Monostreams business model
INPUT
PROCESSES
OUTPUT
COOLREC
MINERALZ
• Electronics
• Fridges
• Plastics
• Washing machines
• WEEE plastics
• Ashes
• Industrial waste
• Soil
ORGAWORLD
• Food waste
• Green waste
MALTHA
• Flat glass
• Packaging glass
• De-pollution
• De-gassing
• Shredding
• Sorting
• Reprocessing of plastic
• Soil washing
• Metal extraction
• Cleaning and grading
• Immobilisation
• Landfill
• Composting
• Anaerobic digestion
• Cleaning
• Drying
• Milling
• Shredding
• Sorting
• Granulates
• Metals
• Plastics
• Plastic flakes
• Raffinates
• Recovered gas
• Aggregate
• Binder
• Clean soil
• Landfill locations
• Digestate/compost
• Green electricity
• Industrial organics
• Glass cullet
• Glass powder
Monostreams financial performance
REVENUE
UNDERLYING EBIT
FY20
IFRS 16 basis
€m
FY19
IAS 17 basis
€m
Variance
%
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
Variance
IAS 17 basis
%
Total Monostreams
213.6
213.3
0%
14.5
14.1
12.9
9%
UNDERLYING EBIT MARGIN
RETURN ON OPERATING ASSETS
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
Total Monostreams
6.8%
6.6%
6.0%
17.9%
21.3%
18.1%
Note
The return on operating assets excludes all landfill-related provisions.
57
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – MONOSTREAMS continued
9%
Increase in underlying
EBIT, to €14.1m, on flat
revenues at €213.6m
segregated input streams. Following acquisitions
and disposals during FY20, the Monostreams
Division was disbanded on 31 March 2020.
Maltha and Coolrec form part of the new Specialities
Division, Mineralz joins ATM as the Mineralz &
Water Division and Orgaworld becomes part
of an Organics business unit in Commercial
Waste Netherlands.
FINANCIAL PERFORMANCE
Monostreams recovered well in FY20, particularly
with a strong second half as restructuring benefits
were realised. Underlying EBIT increased by 9%
to €14.1m, on flat revenues at €213.6m. Margins
increased by 60 basis points to 6.6% with return
on operating assets up by 320 basis points from
18.1% to 21.3% (17.9% on an IFRS 16 basis). Coolrec,
Maltha and Orgaworld all delivered strong earnings
growth, offset by an expected decline in Mineralz
due to previously announced margin pressures in
the landfill sites.
OPERATIONAL REVIEW
The Coolrec business recycles e-waste and white
goods into plastics and metals. As announced last
year, we have significantly simplified the business
offering, exiting loss-making product lines and
territories. Profits increased as a result, while
revenues were significantly reduced. We are
investing to improve quality and capacity in the
core fridge recycling lines and in improving plastic
quality at our Waalwijk facility.
Maltha, jointly owned with Owens-Illinois, also
made good progress in recovering margin in the
year. New management has driven a sustained
improvement in commercial and operational
performance, especially at the Dintelmond site. The
overall glass market is set for growth due to a shift
from plastic packaging towards glass products.
Mineralz showed a decline in margins, as expected,
following the increased landfill tax in the Netherlands,
which could not fully be passed on to customers, as
well as lower volumes in soil cleaning following the
nitrogen deposition concerns in the Netherlands.
Orgaworld had another strong year, with organic
revenue growth boosted by the acquisition of Rotie,
a collection and depackaging business adjacent
to our Amsterdam digester. Good volumes were
supported by increased electricity generation
at improved prices.
DIVISIONAL OUTLOOK
All business units were significantly impacted in
April by the lockdown, due to a combination of lower
volumes, lower demand for product and loss of
production capacity, but performance was expected
to improve through May. Thereafter performance
will be driven by the speed of economic recovery
and easing of lockdown restrictions. No long-term
impact is expected on any of the business units.
SUSTAINABILITY IN ACTION
New life for old fridges – very Coolstar
From the wreckage of old fridges, Renewi salvages waste plastic
and transforms it into a secondary material suitable for a huge
variety of applications. The high-impact polystyrene (HIPS)
regranulate, called Coolstar, is made by our subsidiary Coolrec.
With a purity of more than 98%, HIPS is providing a sustainable
economic solution to reduce the use of virgin plastics, and is
currently used in the manufacturing of toys and tokens.
After collecting discarded fridges from across Europe, Coolrec
dismantles them, separating metal and plastic. It uses sink/float
techniques to sort different polymers according to their density,
which are then converted into three types of high-quality
regranulate: Coolstar Circular, which can be used for most injection
moulding applications; Coolstar Plus, further purified and so ideal
for thin wall applications as sheet extrusion and 3D printing
filament; and Coolstar Master, which features enhanced impact
strength and can be tailor-made to customer specifications.
The many applications of HIPS include: fridge linings, vending cups,
bathroom cabinets, instrument panels and control knobs, buttons
and computer housings. This 100% recycled compound brings new
life to materials that would otherwise have been discarded, helping
to create a cleaner, greener future. As Director at Coolrec Dieter
Avonds explains: “Coolrec has reached an important circular
milestone with the introduction of Coolstar, which demonstrates
our sustainability vision at the heart of the circular economy.”
Our circular economy lead offers powerful insights into the climate crisis: see pages 28 to 31
58
Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – MUNICIPAL
Municipal
HIGHLIGHTS
Current year
performance
saw underlying
improvement
Successful transition
to a new contract
directly with Derby
City and Derbyshire
County Councils
Municipal has been
combined with
Coolrec and Maltha
to create the new
Specialities Division
TECHNOLOGIES
• Anaerobic digestion
• In-vessel composting
• Magnets
• Mechanical biological
• Optical sorters
• Shredding
• Sorting lines
• Trommels
PRODUCTS
• Digestate/compost
• Glass
• Green electricity
• Metal
• Paper
• Plastic
• Refuse-derived fuel
• Solid recovered fuel
The Municipal Division operates waste
treatment facilities for UK councils. The
facilities form part of long-term 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.
In September the Group completed the disposal
of the discontinued Canadian activities, with the
remaining divisional activities being the five UK
contracts. These PPP contracts are with Argyll and
Bute, Cumbria, Barnsley, Doncaster and Rotherham
(BDR), East London (ELWA) and Wakefield councils.
All of these contracts are in full operation. Within
the year, following the insolvency of the EPC
contractor, Interserve, the PPP contract for
Derby City and Derbyshire County Councils
was terminated, and Renewi was separately
re-contracted to provide ongoing waste processing
service for the councils for two years.
These contracts provide guaranteed volumes
under agreed terms, typically with some form of price
indexation. However, the contracts are not always
linked to the variable offtake cost of the disposal
for sorted and treated materials. Changes in these
offtake markets can result in margin pressure.
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 60.
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. In line with our stated strategy, the
majority of these disposal routes are now secured
under long-term agreements, which has reduced
this price volatility risk for most contracts.
The offtake for residual fuels for our ELWA facility
is exported to continental European incinerator
capacity, given the current structural lack of
domestic capacity in the UK. The European market
was impacted by the reduced capacity at AEB
following the extended maintenance shutdown,
and alternative capacity was found, often at
higher prices. Additionally, these exports to the
Netherlands became more expensive with the
extension of Dutch burnable waste taxation,
which included imported waste from January 2020.
This increases offtake costs until domestic UK
incineration capacity is increased or alternative,
cost-effective European outlets can be sourced.
The Division also supplies various recyclate
materials into the offtake market. Typically,
pricing for these waste and product streams
is secured against market indices. The prices
for paper and plastic recyclate remain
suppressed following the Chinese import policy
changes in the prior year.
Looking forward, the UK remains a dynamic
marketplace beyond the Municipal sector, poised
for further transition towards better recycling and
product production as and when the UK increasingly
adopts the EU Circular Economy Package.
DIVISIONAL STRATEGY
We have greatly simplified the Municipal portfolio,
including the disposal of our Canadian assets during
FY20. The core focus is on continuing to improve the
operating performance of the remaining assets to
reduce cash losses and create a platform for future
growth. Municipal has been combined with Coolrec
and Maltha to create the new Specialities Division
going forward, an international division with a strong
focus on operational and margin improvement.
FINANCIAL PERFORMANCE
The Municipal Division made a small underlying loss
of €2.5m, as expected, compared to a profit of
€0.8m in the prior year, on revenues 1% higher at
€197m. The prior year included higher profits on the
original Derby contract before it was terminated,
and one-off items such as rates rebates.
Current year performance saw underlying
improvement, particularly at Cumbria, BDR and
ELWA. The introduction of a €32 per tonne import
tax on burnable waste to the Netherlands from
1 January 2020 added significantly to the cost base
of ELWA, resulting in an exceptional charge of
€25.9m reflecting an onerous contract provision
of €15.5m and an asset impairment of €10.4m.
59
1234Renewi plc Annual Report and Accounts 2020 OPERATING REVIEW – MUNICIPAL continued
Municipal business model
INPUT
• Residual black bag
• Dry recyclates
• Green waste
PROCESSES
• Mechanical sorting
• Bio drying
• Picking lines
• Wet sorting
• Anaerobic digestion
• In-vessel composting
• Electricity generation
RECYCLATES
• Cardboard
• Glass
• Metals
• Paper
• Plastics
PRODUCTS
• Aggregates
• Digestate/compost
• Green electricity
• Refuse-derived fuel
• Solid recovered fuel
Unprocessable waste to landfill
Municipal financial performance
Total UK Municipal
197.2
195.2
1%
(2.8)
(2.5)
0.8
REVENUE
UNDERLYING EBIT
FY20
IFRS 16 basis
€m
FY19
IAS 17 basis
€m
Variance
%
FY20
IFRS 16 basis
€m
FY20
IAS 17 basis
€m
FY19
IAS 17 basis
€m
Total UK Municipal
UNDERLYING EBIT MARGIN
FY20
IFRS 16 basis
FY20
IAS 17 basis
FY19
IAS 17 basis
-1.4%
-1.3%
0.4%
Note
Underlying EBIT includes utilisation of €12.2m (2019: €10.0m) from onerous contract provisions.
OPERATIONAL REVIEW – UK
Municipal delivered significant operational
improvements and a successful transition to
a new contract with Derby City and Derbyshire
County Councils. The impact of the Dutch
import tax on ELWA cast a shadow over what
was otherwise a positive 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 offtake markets. In the past year we have
delivered 36 projects across our contracts, including
a project increasing the gas generation and
performance of our AD composting process in BDR;
and in ELWA, a focus on asset maintenance delivered
a reduction in spend on parts, decreased our reliance
on third-party contractors and improved the
condition and performance of our assets. Looking
forward, an expanding continuous improvement
programme will deliver further improvements.
New contract at Derby
We had for some years a contract to be the long-
term operator of Sinfin Lane, a gasification facility,
as part of a PPP contract between Renewi and
the constructor, Interserve, and Derby City and
Derbyshire County Councils. Last year, we wrote
60
Renewi plc Annual Report and Accounts 2020 WE’RE ALWAYS IMPROVING
Municipal’s continuous improvement (CI)
programme helps ensure operations are as
efficient as possible. CI is not simply a one-off
project Municipal colleagues run before returning
to the ‘day job’ – it’s about challenging the way
they work every day and everywhere in the UK
business. Indeed, at any one time, Municipal is
running up to 10 projects around the country.
In the past year, the Division has completed 36
CI projects across three contracts; these included
a scheme that enhanced the performance of our
anaerobic digestion composting process at the
BDR (Barnsley, Doncaster and Rotherham) site.
This resulted in an increased capacity to accept
third-party tonnage and a higher yield per
tonne of green gas for the on-site CHP plant.
In our ELWA (East London Waste Authority) operation, our focus on the
maintenance of assets boosted their condition and performance, delivered a
reduced spend on parts and decreased our reliance on third-party contractors.
off our investment in the contract as Interserve was
more than two years behind schedule delivering
the project, and in August 2019 the contract was
terminated by the lenders. We have continued to
work with and support Derby City and Derbyshire
County Councils and have entered into a continuity
services contract directly with them to manage their
waste. This contract no longer carries the long-term
operational or financial risk associated with the
original contracts.
Incinerator taxes, Brexit and ELWA
Our ELWA facility has for many years exported the
majority of its 200,000 tonnes of burnable waste
per year to the Netherlands. The unexpected
introduction of a €32 per tonne import tax on
burnable waste from 1 January 2020 has added
up to €6m per annum of extra costs, which makes
the ELWA contract onerous. An exceptional charge
of €25.9m was announced in January to address
the increased future costs of disposal. We have
also included expected additional future costs
of haulage and tariffs relating to Brexit once
the transition period ends.
DIVISIONAL OUTLOOK
Covid-19 had a moderate impact on Municipal
during the lockdown period due to the closure of
household waste recycling centres (HWRCs) and
lower recyclate income. This loss of profitability
should be restored to previous levels as HWRCs
reopen, with no long-term impact expected.
61
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS
DRIVE THE CIRCULAR
ECONOMY, REDUCE
WASTE, LOOK AFTER
OUR PEOPLE AND WIDER
SOCIETY… HERE’S
OUR PLAN TO PROTECT
EVERYONE’S TOMORROW
Discover how the three pillars of our sustainability strategy will help
fulfil the goals of our environmental mission:
Enable the circular economy
Page 63
Reduce carbon emissions and waste
Page 66
Care for people
Page 70
62
Renewi plc Annual Report and Accounts 2020 OBJECTIVES
Turn our customers’
waste into new
products
HIGHLIGHTS
• 2020 recycling
and recovery rate
target exceeded
• Carbon avoidance
intensity ratio
target exceeded
• Commercial
partnerships formed
to create secondary
materials and products
and help drive the
circular economy
SDG LINK
Enable the circular economy
Our purpose is to protect the world by giving new
life to used materials. We recognise the value
of waste. We collect it and create something
new out of it. Turning residual materials into
secondary raw materials helps protect the world’s
natural resources and preserve the planet for future
generations. This puts us at the heart of the circular
economy, while creating value for our stakeholders.
That’s why one of the three central themes of our
new sustainability strategy, working together with
our enhanced business strategy, is to ‘enable the
circular economy’. The business strategy also affirms
our support for the circular economy: two of its main
objectives are for Renewi to be a leader in recycling
and in secondary material production.
Our purpose is entirely in step with developments
in the countries where Renewi operates and beyond:
the circular economy is growing, and more
businesses are exploring sustainability, driven by
the wider economy, legislation and social pressure.
There is growing market demand for more
sustainable products and services and increasing
government incentives in the form of legislation and
regulations. This means more businesses are taking
sustainability seriously and realise they should
be contributing to society. Much more needs to
happen, however, to tackle the big challenges the
world is facing. Large businesses play an important
role here and need to upscale and accelerate
changes in their production, sourcing and output.
But it’s not just a business issue; we need a wider
system change towards an economy that is driven
by purpose and by profit. For that, we need active
involvement and co-operation between business
and industry, politics, science and the public.
At Renewi, we’re helping customers design their
products, to make it easy for materials to be extracted
for re-use or recycling at the end of product life. We
also work with them to develop their own circular
business models, so that scarce materials stay
within the chain for as long as possible. In this
way we want to enable the circular economy.
TRANSFORMING WASTE
INTO NEW PRODUCTS
The single focus of our sustainability strategy’s
enabling the circular economy theme is to turn
our customers’ waste into new products, for we
believe that today’s waste materials are tomorrow’s
resources. After products have been used for as
long as possible, the loop needs to be closed and
valuable raw materials must be brought back into
the product value cycle. More businesses are looking
to us for guidance and advice about circular thinking
and practices – on how, for example, their own used
materials can be used again for new products, or
how customers can make their own procurement
practices more circular. By giving such guidance, we
promote greater environmental responsibility, both
within our supply chain and in society as a whole.
We prioritise waste recycling over energy recovery
or landfill disposal for all the waste we receive.
We plan to divert more residual waste from energy
recovery to recycling solutions in the coming years.
We do this first by communicating with our upstream
clients, encouraging them to sort and separate their
waste streams so that we can provide the highest
recycling output. One example is our commercial
PMD (plastic bottles, metal packaging and drink
cartons) collection. Our Commercial Waste Division
in Belgium and the Netherlands deploys part of its
own sorting and recycling operations for, among
other things, paper, cardboard, wood, plastics,
metals, and construction and demolition waste. We
have partnerships with other recyclers to make sure
that we can offer our customers the solutions that
are best suited to their specific waste streams.
Specific recycling activities for glass, electric and
electronic waste, and hazardous waste are clustered
within our Specialities and Mineralz & Water Divisions.
More and more low-quality residual waste gets a
new life instead of being incinerated – and we invest
in innovative technologies and business models
for circular products, and place these products
into markets where their sustainability benefits
can be maximised. For example, together with IKEA,
we have invested in Dutch company RetourMatras,
which transforms old mattresses into secondary
products, so it can expand its recycling operations
(see page 21); we have an exclusive delivery
partnership with Purified Metal Company, which
decontaminates waste steel for re-use in the
construction industry (see page 31); we have
a similar arrangement to transport waste plastic
to chemical recycling specialists, who transform
it into oil that can be used to make new plastic
products (see page 30).
Waste streams that can’t be recycled are given a
useful purpose as high-quality fuel products such as
refuse-derived fuel (RDF) or solid recovered fuel (SRF),
biomass fuels and Renewi’s ICOPOWER® pellets. We
also expect the amount of waste to landfill to further
drop as more landfill sites are decommissioned.
CARBON AVOIDANCE FROM
RECYCLING AND RECOVERY
Our recycling and recovery activities also have a
carbon avoidance benefit. By recycling materials and
making them available as a secondary raw material,
the use of primary raw materials is avoided. By doing
so, less carbon is emitted in the life cycle of these
materials, hence carbon avoidance in the supply
63
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS – ENABLE THE CIRCULAR ECONOMY continued
chain of products made out of these materials. And,
of course, when waste materials are used as fuel,
carbon emissions that would otherwise occur by
using fossil fuels are partly avoided. Finally, we turn
landfill gas into electricity at our biggest landfill
sites, partly avoiding so-called diffuse carbon
emissions (CO2 and methane) to air. We expect these
emissions to decrease over time as less landfilling
takes place. Our sustainability objective here is
measured by these headline metrics, each with
a target for 2025:
` Recycling rate (% of all handled waste recycled
or prepared for recycling). Target 75.0%
Recycling and recovery performance
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
FY18
14.02
9.30
3.19
FY19
13.85
9.27
3.20
FY20 2020 target
13.18
8.53
3.44
12.49
12.47
11.97
66.3%
89.1%
66.9%
90.0%
64.7%
90.8%
70.0%
89.9%
` Carbon avoidance (kg CO2 per tonne waste
handled). Target 275
1. Recycling is materials given a ‘second life’ for reprocessing into new goods/materials. Recovery
is waste used for energy production such as production of waste-derived fuels, biomass and similar.
2. Includes water recovery and moisture loss during treatment for some technologies employed.
PERFORMANCE
(OVER THREE YEARS)
Next to carbon avoidance, recycling and recovery
rates have always been key indicators of our
sustainability performance. In the past we set
ourselves objectives for our combined recycling
and recovery rate, as well as our recycling rate.
For both measures, the higher the percentage,
the better our performance (see table, top). Carbon
avoidance benefit has been reported in total and
as an intensity ratio per tonne of waste handled.
This ratio accounts for the weight of waste we
handle, and tracks our performance. The higher
the number, the better our performance (see
table, right).
In FY20 our overall recycling and recovery rate
continued to increase, ending the reporting cycle
with an achievement of the target. The improvement
was mainly caused by a decrease of landfill in the UK.
The recycling rate dropped two percentage points
to 64.7% and so our 70% target wasn’t achieved.
The amount of materials recycled in million tonnes
reduced from 9.27 to 8.53, mainly due to a decrease
in soil cleaning activities at our ATM plant in the
Netherlands and less waste sent to recycling from
our Commercial Waste Belgium Division and the
Municipal UK Division. This counteracted the
increase of recyclate volumes in our Commercial
Waste Netherlands Division and Monostreams
Division. Another driver was the rise of volumes of
waste sent to energy recovery, mainly caused by an
increase in RDF/SRF production in the UK and more
residual waste sent to incineration in the Netherlands.
By increasing the volumes of waste sent to
recycling and producing waste-derived fuels, we can
create a positive carbon benefit in the supply chain.
Our carbon avoidance intensity ratio rose by 7%
compared to FY19, clearly achieving our 2020
objective target. The strong growth of this intensity
ratio was mainly due to an increase in waste-derived
fuels produced and sold in the UK. The decrease
in waste used as a fuel at our ATM site in the
Netherlands and increase in volumes of residual
64
Carbon avoidance performance
CARBON AVOIDANCE AS A RESULT OF OUR ACTIVITIES1
Source
Renewable energy generated
Waste-derived fuels produced and sold
Materials separated for re-use/recycling
Energy from waste used on site as a fuel
FY18
FY19
FY20
56
946
1,699
305
47
970
1,764
241
42
1,081
1,749
201
Total potential avoided emissions
3,006
3,022
3,073
1. Figures rounded to nearest 1,000 tonnes – totals may reflect rounding. Data based on carbon ‘factors’.
These vary from country to country and are periodically updated – as by government agencies, for example.
CARBON AVOIDANCE INTENSITY RATIO
Ratio
Million tonnes greenhouse gases avoided
by our activities (CO2 equivalent) per million
tonnes waste handled
FY18
0.214
FY19
0.218
FY20 2020 target
0.233
0.217
90.8%
Renewi’s recycling
and recovery rate
as a percentage of
all waste handled
waste sent to incineration – which has a negative
carbon avoidance effect – counteracted part of
the positive development in the UK.
CONCLUSION AND OUTLOOK
We hit the recycling and recovery rate and carbon
avoidance intensity ratio targets, but not the recycling
rate target. We expect a further decrease in waste
sent to disposal, due mainly to more landfill sites
closing down. That’s why we are dropping the
recycling and recovery rate metric, and are focusing
on increasing our recycling rate, in line with strategy.
We aim to do this by reducing volumes of residual waste
incinerated. We will still supply waste-derived fuel. We
expect an increase in the carbon avoidance benefit
from our activities. We will continue to measure this
parameter, aiming to increase it in the years to come.
Renewi plc Annual Report and Accounts 2020 The circular economy – how Renewi plays its part
RE-USE
Renewi endorses the
manufacture of products
that can be re-used.
MANUFACTURING
We collaborate with
manufacturers to
source and design
feedstocks that meet
their requirements
and make secondary
products.
PRODUCT SALES
Our secondary
products are sold
as inputs into
industrial-scale
manufacturing.
WASTE PRODUCERS
Renewi experts advise
companies on how
they can generate
less residual waste.
COLLECTION
Our fleet comprises
low-emission trucks.
We optimise routes
to reduce emissions
and fuel use.
ENERGY
After recyclates have been
separated, burnable residues
that cannot create products
are sent for energy recovery.
PROCESSING
At our specialist facilities
we refine products to high
customer specifications.
DISPOSAL
We minimise waste sent to
landfill, supported by legislation
prohibiting usable waste streams
from this kind of disposal.
SORTING
We use technology
such as optical
sorting lines to
segregate specific
recycling materials
for further use.
65
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS – REDUCE CARBON EMISSIONS AND WASTE
OBJECTIVES
Be a leader in clean
and green waste
collection
Reduce the carbon
impact of our
operations
HIGHLIGHTS
• Euro 6 low-emission
truck goals exceeded
so far, but not finished
• Transport energy
efficiency objective
achieved
SDG LINK
Reduce carbon emissions and waste
Time is running out for us to change the way
we live. Our climate is on the verge of changing
irreparably, with enormous consequences
for our wellbeing – indeed, our very existence. In
addition, the ongoing destruction and pollution of
natural habitats turns our world into a hostile place
to live for a lot of species, including our own. As a
company, our purpose is wholly aligned to being
a part of the solution: reducing carbon emissions
through the re-use of secondary materials and
reducing contamination in our eco-systems.
Our business model is oriented around
sustainability by improving the carbon and waste
footprint of our customers, and naturally we
carefully consider our own environmental impact
and behaviour. But we face challenges: our waste
collection is performed by a fleet of diesel trucks
which, while complying with European emissions
standards, also send nitrogen and particulate
matter into the air, as well as using carbon. The
collected waste is then stored or treated at our
sites – activities that use energy, mostly electricity.
Moreover, some of the waste treatment activities
also cause direct process carbon emissions. In
addition, events such as fires and environmental
spills can cause unwanted emissions of substances
to soil, water and air. This is why we have identified
‘reduce carbon emissions and waste’ as one of the
three pillars of our new sustainability strategy.
So while we strive to maximise the carbon
avoidance benefit in our value chain, simultaneously
we want to reduce our own environmental impact
and carbon footprint as much as possible – and
make sure our emissions to soil, water and air
stay well within the legally permitted boundaries.
We have identified three areas of improvement:
WASTE COLLECTION
Collection remains an important part of our
activities, and we need to reduce its carbon,
nitrogen and particulate matter emissions. Thus
our objective here is to be a leader in clean and
green waste collection. Looking forward, we
expect our collection fleet to become smaller and
cleaner. Given the public focus on nitrogen
deposition because of environmental and health
concerns, the conversion of the fleet to Euro 6
emission standards – the highest in Europe – is
itself an important goal, one for which we already
have publicly declared targets. But we want to
take this a step further and focus on zero-emission
vehicles (ZEVs) for waste collection in inner cities,
though this presents a greater challenge both
operationally and financially. Our current research
and development on this issue is limited, so we are
going to step up our engagement with the major
vehicle manufacturers to ensure that we are at the
front of the queue for prototypes to test. In fact,
our first zero-emission electric collection trucks
take to the road in Amsterdam in August 2020
(see page 68). We will also develop a lobbying and
marketing strategy to ensure that the roll-out
of ZEVs is either mandated or subsidised by
customers and government.
Next to growing the number of clean, Euro 6
standard trucks or ZEVs in our fleet, we are
continually optimising our collection routes,
reducing the amount of kilometres driven.
Additionally, white-label collection trials are
under way for many inner-city customers. These
use non-branded trucks operated by multiple
waste management companies, reducing urban
traffic and kilometres driven as well.
66
Renewi plc Annual Report and Accounts 2020 Our objective to be a leader in clean and green
collection is measured by the following headline
metric, with a target for 2025:
` Carbon intensity of collection
(kg CO2 per tonne waste collected). Target <9.00
Besides this strategy and target, other projects are
also expected to have the potential to positively
impact the carbon reduction of waste collection.
Among these are the revitalisation of our eco-drive
programme, and researching the use of alternative
fuels such as bio-LNG and hydrogen.
SITE OPERATIONS
Secondly, our aim is to reduce the carbon impact
of our operations. Carbon and energy use are
inextricably linked. For most organisations, carbon
sustainability means energy use reduction and
efficiency. For us the situation is more complex.
Our main goal is to move our activities up the
waste hierarchy ladder, creating more secondary
products from waste. But the higher up we move,
the more energy we will need for operating
plants and machinery and for on-site transport.
This is the same whether energy use is considered
overall, or as an intensity ratio such as per
tonne of waste managed.
While recycling and recovery activities have a
carbon avoidance benefit (see box, right), we
acknowledge the need to reduce the carbon impact
of our own operations as much as possible – hence
its importance in our sustainability strategy. We
want to achieve this mainly by investing in renewable
energy production at our sites, displacing fossil
energy use. We are investing in solar panel roofs,
and are investigating the placement of wind turbines
at our sites. Where this is not sufficient, we will
purchase green energy. For this we aim to
collaborate with frontrunner green energy providers.
Another area of development is the
electrification of our company car fleet. Renewi
managers need to travel between our sites, many
of which are remotely located far from public
transport hubs – hence the need for company
cars. Renewi has a fleet of about 800 cars, so
the carbon impact is considerable. That’s why
we encourage the use of electric and hybrid
cars (fuelled by green energy). We have therefore
made arrangements with lease car suppliers,
and are also going to increase the number of
charging stations at our sites.
This second objective, to reduce the carbon
impact of our operations, is also measured
by a headline metric with a 2025 target:
` Carbon intensity of our sites (tonnes CO2 per
tonne waste handled). Target 9.42
Although we have identified energy efficiency as a
challenging area for improvement, we will continue
RECYCLING AND RECOVERY – DRIVERS OF CARBON AVOIDANCE
Recycling and recovery activities result in carbon avoidance. For example:
• Sorting centres and materials recycling facilities separate waste into
individual components such as paper, card, plastics and metals. This allows
these components to be used again in products, so avoiding the resource
use and emissions associated with extraction and virgin raw material
use. Waste is also diverted from incineration – another environmental
advantage, as incineration also directly causes carbon emissions.
• Mechanical biological treatment facilities shred residual waste and
then dry it to produce a solid recovered fuel. This is used to power
production and industrial processes, displacing fossil fuels and so
resulting in an emissions avoidance benefit.
• Organic treatment facilities such as anaerobic digestion plants and
composting plants take food, green and other similar waste and turn
it into green compost, reducing emissions associated with chemical
and similar fertiliser production. Anaerobic digestion plants also
produce green electricity directly.
So while energy use may have increased from the reduction of waste
to landfill and more sustainable methods, this is more than offset by
the amount of carbon avoidance benefit obtained by recycling or
recovering the waste instead. This is why we concentrate on carbon
avoidance in the supply chain as a key measure.
to invest in this. We have already conducted
independent, external energy efficiency audits
at our largest plants, and continue to pursue the
outcomes and recommendations. Examples
include replacing traditional lighting with LED lights,
improving energy efficiency of our static and mobile
plant, and replacing diesel motors and aggregates
with efficient electrical ones. We will also promote
efficient energy use behaviour.
RESIDUAL WASTE ON SITES AND
SITE ENVIRONMENTAL IMPACT
Finally, our purpose, vision and strategy also oblige
us to practise what we preach. And that includes
eliminating or reducing residual waste at our sites,
and limiting the environmental impact the sites
have. We have set into motion some ‘just do it’
actions to demonstrate that we intend to shift
gear on our own waste footprint:
` End the use of single-use plastics on our sites:
not selling or providing drinks in disposable PET
bottles and replacement of plastic coffee cartons
by recyclable paper ones
` Improve and make consistent our own recycling
policy across all sites, reducing the amount of
residual waste and sorting organics, PMD (plastic
bottles, metal packaging and drink cartons),
paper and cardboard among other items. We
48.5%
of Renewi’s truck fleet
comprises Euro 6
low-emission vehicles
67
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS – REDUCE CARBON EMISSIONS AND WASTE continued
SUSTAINABILITY IN ACTION
Electric trucks – a breath of fresh air
New emission-free electric trucks take to the roads in summer
2020 as part of our mission to lead the way in environmentally
friendly collection operations. Renewi’s Commercial Waste
Netherlands Division has invested €700,000 in two electric
trucks – our first – for industrial waste collection in Amsterdam.
The Volvo FE Electric 6x2s will be deployed by the end of August.
This places Renewi ahead of the curve regarding future
environmental regulations: Amsterdam’s Clean Air Action Plan
will only allow emission-free vehicles in built-up areas of the
city by 2025, with even wider restrictions by 2030. And with
the likelihood of an increasing number of zero-emission areas
in the Netherlands, we are gaining important early experience
of collecting waste with electric vehicles.
Each 27-tonne truck is equipped with four 50kW lithium-ion
batteries. The batteries are powered up overnight or with DC
fast charging, as well as during braking, which makes the vehicles
particularly suitable for collection in cities.
The Commercial Waste Netherlands fleet of 1,385 vehicles is
already impressively green; 48.5% of the Group’s trucks meet the
highest emissions standard – Euro 6. All the trucks now purchased
by Renewi are second-generation Euro 6s. Euro 4 vehicles make
up just a small fraction, and they are being phased out.
Renewi is also considering using DAF hydrogen-electric trucks,
which can very efficiently store energy, enabling greater
range. “We believe in sustainable trucks,” says Commercial
Waste Netherlands Asset Manager Adrie van Duyvenboden, who
manages the Volvo truck project. “We see them as the future.”
€700,000
Renewi’s investment in electric
waste collection trucks to date
1,385
Total vehicles in the Commercial
Waste Netherlands fleet
68
Renewi plc Annual Report and Accounts 2020 also continually focus on avoiding environmental
impacts from fires and spills. This area is also
highlighted in more detail in our Care for people
section on page 70.
PERFORMANCE
(OVER THREE YEARS)
Although electricity and fuel use decreased, the
increase in gas use – together with a decrease in
the total amount of waste handled – caused the
site energy used rate per tonne of waste handled to
increase compared to last year, bringing us no closer
to achieving the target we set for this objective. Site
efficiency will continue to be an area of importance.
At the same time, however, we know that improving
site energy will be hard, given the fact that with
increasing recycling activities, the amount of energy
needed per tonne of waste handled will also rise.
That’s why we decided to drop this measurement
as a key sustainability metric.
As for our truck fleet efficiency, the route
optimisation initiatives and continuous investment
in Euro 6 waste collection vehicles have helped
us meet our transport energy efficiency objectives
from last year. This year, truck fuel use improved
further by 0.3%. With Euro 6 vehicles now
accounting for 48.5% of our total fleet, compared
with 34.9% last year, we have continued to increase
the proportion of cleaner vehicles and retire older
collection trucks. This has also meant that we
have now beaten our 2020 target of 34.4% Euro 6
fleet compliance.
Green electricity production reduced over
the past year, largely as a result of the continuing
decrease in energy production in the UK and
a steady level of energy production in the other
Divisions. We had expected a positive contribution
from our new Derby plant this year, which will no
longer occur. Our target of 213,170 megawatt hours
for 2020 included this likely contribution. We expect
positive developments again as we are increasingly
investing in additional methods of renewable energy
production on site, via wind turbines and the
installation of solar panels.
CONCLUSION AND OUTLOOK
Renewi fulfilled its fuel efficiency and percentage
Euro 6 truck targets, but didn’t achieve the
energy efficiency on site and electricity production
targets. While we continue our efforts to increase
the energy efficiency of our waste collection and
site activities, we also acknowledge that future
improvements are likely to be marginal. And
above all, the main concern for the future is carbon
emissions. That’s why we are shifting our focus to
efforts to decrease our total carbon impact from
our activities, regardless of how much energy
we use. We want to accomplish this by investing
more in renewable energy production and purchase,
and further increase the share of fuel-efficient
and zero-emission trucks in our fleet.
Carbon footprint performance
EMISSIONS FROM OUR ACTIVITIES (CO2 EQUIVALENT 000 TONNES)1
Source
FY18
FY19
FY20
Process-based emissions
Emissions from green composting
Emissions from hazardous waste treatment
Emissions from landfill
Other emissions (mechanical biological treatment
– MBT – and anaerobic digestion – AD)
Transport-based emissions
Fuel used by waste collection and
transport vehicles
76
256
101
67
90
204
91
50
42
199
85
45
120
120
108
Business travel (cars, trains, flights and similar)
5
5
6
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
121
16
36
117
17
36
110
23
35
Total emissions from significant sources
799
732
653
1. Figures rounded to nearest 1,000 tonnes – totals may reflect rounding.
GREENHOUSE GAS EMISSIONS INTENSITY RATIO
Ratio
Million tonnes greenhouse gases emitted (CO2
equivalent) per million tonnes waste handled
FY18
0.057
FY19
0.053
FY20
0.050
Resource use and spills performance
SITE AND VEHICLE RESOURCE USE AND SPILLS PERFORMANCE
Indicator
FY18
FY19
FY20 2020 target
Electricity consumption (megawatt hours)
195,735
192,091 176,935
Gas used at sites and offices
(megawatt hours)
81,820
90,082 118,525
Fuel such as diesel used at sites and offices
(megawatt hours)1
118,962
120,238 116,102
Total energy use at sites (megawatt hours)
396,517
402,411 411,563
Energy use on sites in kWh per tonne
of waste handled
Fuel used by waste collection vehicles
(000 litres)
Litres of fuel used per tonne of waste
collected/transported
% of waste collection/transport truck fleet
compliant with Euro 6 standard
28.3
29.1
31.2
26.6
34,296
34,042
33,141
3.15
3.12
3.11
3.12
24.2%
34.9%
48.5%
34.4%
Green electricity generated (megawatt hours)
143,462
124,582 111,746
213,170
Significant spills at sites – number of reported
spills required by permits2
50
34
43
1. Includes diesel used in heavy mobile plant and static plant and machinery, plus oil etc used for heating.
2. Spills are those as required to be reported by environmental permits.
69
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS – CARE FOR PEOPLE
Care for people
Ensuring colleagues are healthy, happy and
safe at work is a key objective of ‘Care for
people’, the third pillar of our new sustainability
strategy. The plan also aims to make Renewi a
rewarding workplace, where a diverse workforce
feels included, listened to and valued. This overview
of the past year’s progress shows that even as the
strategy was being developed, we were helping our
people to progress and thrive.
RENEWI PEOPLE
Our people are core to achieving our ambition. Every
day, no matter what the circumstances, our front-line
teams keep communities and businesses waste-free
by going out to collect waste and bring it ‘home’
to our 162 operating facilities. Their colleagues on
site work to ensure collected waste is efficiently
separated and stored ready for recycling. Behind our
front-line heroes are innovative teams who come up
with new ways to get value from waste. In some
cases, this transformation occurs in situ at Renewi
– as is the case at ATM in the Netherlands where our
211-strong workforce receives waste from customers
and converts it into thermally treated soil or new
high-grade gravel, sand and filler (see page 55).
In other parts of the business our people identify
partners such as RetourMatras, which recycles
discarded mattresses into secondary materials.
Renewi has invested in the business, which will
allow RetourMatras to expand its recycling capacity.
We also collect the discarded mattresses from
a variety of locations and deliver them to the
RetourMatras facilities for processing (see page 21).
HELPING OUR PEOPLE THRIVE
As our business develops, so too should our people.
To this end, we work closely with our leaders to
give them the tools needed to take Renewi into
the future and help them support our wider talent
pool to embrace our ‘new normal’ – agility.
Over the past 12 months, we rolled out a
programme that clearly outlines what is expected
of leaders. Through this training, 139 leaders in the
Netherlands learned more about how to be role
models. These leaders will live and breathe our
Renewi values and behaviours and promote them
to their team. They will also provide direction by
translating our strategy, creating a vision for the
team and inspiring its members, developing them by
drawing on their diverse strengths and perspectives.
They also learned that a prerequisite to lead
successfully at Renewi is to develop yourself –
through self-awareness, authenticity and openness
– while also driving for results in a way that is fast
and agile but in line with Renewi values. Another
90 leaders in Belgium and the UK will undertake
this training in the coming financial year.
In FY20 we changed the way we listen
to our people. Historically we conducted one
lengthy Pulse/people survey per year. Last
year, we introduced multiple shorter surveys
that are giving leaders faster, real-time insight
into what is important to employees, and to
make it easier for managers to create a plan to
increase engagement in their team. By listening
and acting, we aim for improved employee
satisfaction, greater productivity and better
retention rates, and we hope to put ourselves
in a stronger position to recruit. For these reasons,
two of the most important questions on the
Pulse surveys are: “How do you feel at Renewi?”
and “How likely is it that you would recommend
Renewi as an employer?”
Rebalancing our workforce
Attracting and retaining talent is a priority.
Balancing our ageing workforce with young talent
remains key to our future success. As our business
evolves, we are moving from a history of waste
management towards a future focused on recycling
and the production of secondary raw materials,
which help to address the climate crisis. We will
find it easier to attract recruits from all walks
of life into our business, as people across career
bands are increasingly choosing to work in
companies and sectors that make a difference
to society and the world. To this end, each year
we have more success in attracting bright
young graduates – from engineers to computer
scientists, financiers to marketers.
OBJECTIVES
Deliver people
home safe and
well, every day
Make Renewi a
rewarding, diverse
and inclusive working
environment
Positively impact
our communities
HIGHLIGHTS
• Programme launched to
develop inspiring leaders
who drive results
• Education schemes in
UK and Benelux teach
children sustainability
SDG LINK
70
Renewi plc Annual Report and Accounts 2020 Our values
WHAT WE ARE
HOW WE ACT
Safe
SAFETY ABOVE ALL ELSE
Accountable
DO WHAT WE SAY WE’LL DO
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.
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 are 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
Co-operation 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.
71
Ethics, compliance and people
One of our sustainability strategy ‘people’ objectives
is to make Renewi a rewarding, diverse and inclusive
working environment, and we can state with pride
that we employ a diverse workforce, people from
a wide range of backgrounds and cultures. They are
attracted by our code of conduct, which prioritises
the creation of a safe and healthy work environment,
diversity, equality, non-discrimination and
accountability and doing the right thing even when
nobody is watching. Behaving in a way that keeps
our people and our company safe online is an
element of our IT code of conduct. Renewi is also
an equal opportunities employer; for example, full
and fair consideration is given to applications
from disabled people, their continuing employment,
career development and training.
Our UK trading entity, Renewi UK Services Ltd,
is obliged to disclose annual male and female pay
details under the UK gender pay gap reporting
legislation. It looks at average pay based on gender,
regardless of job role, geographic location, market
forces, grade or other influences on rates of pay.
While we employ significantly more men than
women, our female employees are concentrated in
non-manual support and managerial roles that are
typically paid more than the broader-based manual
roles. It also shows we have more men in senior
leadership positions, and that their salaries balance
out the data, which may otherwise show higher
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS – CARE FOR PEOPLE continued
average pay for the female section of our workforce.
Our overall pay gap is not significant, but we
recognise that we must continue to address the
gender balance across the business.
With regard to human rights, we have embraced a
policy to combat the possibility of human trafficking
and slavery in our business and supply chain. In
compliance with the UK Modern Slavery Act 2015,
our statement on this matter is considered and
approved by the Board annually, and is on our
website, renewi.com.
This objective is tracked by the following headline
metric, with a target for 2025:
` Employee satisfaction (Pulse survey employee
net promoter score). Target +30
NURTURING HEALTH
AND WELLBEING
Safety is a key value and a top priority for Renewi.
There is nothing more important than getting our
people home safely at the end of each working day,
and this is a key objective of our new sustainability
strategy. Two years ago, we launched a new safety
culture initiative – and over the past year rolled
it out to all employees through our leadership
teams. During the year we have focused on
engagement: as a result, the number of incident
reports made by colleagues increased by 67%,
indicating a heightened sense of risk awareness
and employee engagement. Beyond safety we also
prioritise health and wellbeing. Our Fit to the Finish
programme (see box, below), launched a year ago in
SUSTAINABILITY IN ACTION
Care for colleagues’ health and happiness
In 2019 Renewi engaged in programmes
to support and help improve employees’
physical and mental health in the UK and
Benelux. Colleagues at Renewi’s UK offices took
part in Mental Health Awareness Week in May,
which included a psychologist-led session on
mindfulness, outdoor games and activities, and
a quiz, which is now a weekly event.
We also promoted our 24-hour mental health
support helpline (the Employee Assistance
Programme) and the Renewi YOU portal, an
online platform with an area dedicated to
mental health. The platform features videos
on a wide range of topics, from stress,
anxiety and breathing and sleep techniques
to advice on managing your money.
“We gave colleagues an environment in which
to talk and highlighted the fact that mental
health is being experienced by many, many
people,” explains Angela Banks, Training
Co-ordinator at Renewi UK. In Belgium,
colleagues formed teams to compete in the
Global Challenge programme, which, in a fun
atmosphere, encourages people to improve
their physical and psychological wellbeing
with a healthy and active lifestyle.
In September 2019, Commercial Waste
Netherlands launched the Fit to the Finish
health programme, which is based on six
key themes: more moving, no smoking, no
alcohol, eat healthy food, relax and better
sleep. Employees receive updates on activities
taking place, online and in person. So far 234
employees have participated, and we have
plans to expand the programme into the UK
and Belgium.
“We want to keep our employees healthy
because we value them, and we want them
to have a healthy and happy life,” says Marjet
van Vroenhoven, Manager Health Management.
“And, of course, colleagues who are fitter and
happier contribute to Renewi’s success.”
72
Renewi plc Annual Report and Accounts 2020 the Netherlands, has actively supported our people
to increase their levels of fitness and health to
reduce levels of sickness. In the UK, our online
platform Renewi YOU offers a wealth of resources to
support our employees’ wellbeing (see box, below).
Colleagues are able to access a variety of exercise
classes, videos and blogs on mental health and
resilience, and a range of resources on healthy
eating and diet. In addition, Renewi YOU is a platform
where employees can access discount schemes
and information on benefits, and we can recognise
people for their exceptional contributions. This
objective is tracked by the following metric, with
a target for 2025:
` >3-day accident rate (number of 3-day accidents
/ total number of FTE x 100,000). Target 600
ENABLING POSITIVE CHANGE
Renewi is on a journey to become the leading
European waste-to-product company. To achieve
our goal, our business continues to evolve and
change remains a constant. It is therefore important
to bring our people on the change journey with us.
From continuous improvement to integration
programmes and Renewi 2.0, change is far-reaching
across Renewi. During the past financial year, we
created Renewi 2.0, a programme to simplify
Renewi’s overhead, to improve our customer
experience, to increase employee satisfaction and
to deliver cost benefits. This three-year programme
covers all divisions and functions (see page 22).
To help leaders deliver change effectively, we will
continue to deliver change management training and
support change through internal communications.
As part of our post-merger integration programme,
which is now in its final stages, 18 months ago we
undertook to harmonise our reward structure in
order to remunerate our people fairly and in a way
that can stand up to scrutiny. During the past year
we worked closely with a Central Union delegation
in Belgium and the Central Works Council in the
Netherlands to harmonise blue collar pay. During
FY21 we will complete the harmonisation of white
collar pay across the Group and in the Divisions.
PERFORMANCE
(OVER THREE YEARS)
Although the total number of accidents with
more than three days’ absence has dropped 3%
from 98 to 95, the greater than three-day accident
rate, which is the 12-month rolling rate per number
of FTEs, increased. However, the general lost-time
injury frequency rate did decrease significantly,
which shows that our efforts to reduce the average
number of accidents per employee are paying
off. A continuing matter of concern is the severity
rate, which again moved negatively. This means that
the absence as an effect of the injuries our people
suffer has grown, urging us to continue our journey
to raise safety awareness and to increasingly
Health and safety performance
OUR ACCIDENT AND NEAR-MISS RESULTS PERFORMANCE
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
FY18
FY19
FY20
2020 target
1
108
0
98
1
95
1,505
1,404
1,504
1,355
172
12.5
17.4
10,934
9,097
83%
168
10.8
18.8
17,927
12,293
69%
147
9.6
20.8
29,898
23,911
80%
8.7
13.1
85%
Key
>3-day accident: Accident that results in a person being off work for more than three days.
>3-day accident rate: Number >3 day accidents/FTE x 100,000 = rate.
LTI (lost time injury): Accident that 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 that 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 %.
shield our people from the dangers around them.
A positive development has been near-miss
reporting. This year we have reported more than
29,898 near misses – a 67% rise; at the same time
we have increased the close-out rate by 11% to
a total of 80%.
CONCLUSION AND OUTLOOK
Renewi is all about new beginnings. Our HomeSafe
campaign, which started this year, is a new beginning
for our SHEQ (safety, health, environment and quality)
efforts. It’s a move away from traditional methods of
solely tracking accident rates and incident numbers; it
emphasises potential reporting hazards and closing
them out as a team. By doing this, we are raising risk
perception and closing out minor events before they
turn into a major situation. We also have a new
global system that gives every employee the ability
to report any incident instantaneously.
We are disappointed that we weren’t able to
achieve all of the ambitious 2020 objective targets.
We do, however, see improvements in our
fundamental approach to safety, which convinces
us that we are also going to see improvement in
our headline metric, greater than three-day accident
rate, over the coming years. For this reason, our
long-term ambition – to reduce our accident level
across the business to ‘zero accidents’, not merely
to an ‘acceptable level’ – still stands. We are only at
the beginning of this safety journey, but taking our
people with us ensures that we are very much
heading in the right direction.
1,173
The number of women
employed by Renewi
23%
of senior managers
at Renewi are female
73
1234Renewi plc Annual Report and Accounts 2020 SUSTAINABILITY STRATEGY FOCUS – CARE FOR PEOPLE continued
COMMUNITY
Being a positive force in communities is also
a fundamental part of our sustainability strategy’s
‘Care for people’ pillar. As well as ensuring we
minimise the environmental impact of our
operations, we take part in community engagement
projects and spread the message of ‘waste no more’.
One of the new strategy’s metrics will be to log the
number of community projects undertaken and
report on progress.
Start them young:
a Renewi teaching
package on recycling;
Renewi’s safety day
in the Netherlands
ENGAGING WITH LOCAL PEOPLE
Working in partnership with the communities is
a foundation for success at Renewi. That’s why we
actively engage with communities, providing them
with insight into our activities, educating them
about our purpose and our mission, and showing
how these fit into the evolving circular economy.
During the year we opened up our facilities to
the public. We welcomed 1,750 people onto our
Vlaardingen site in the Netherlands and sought to
inspire young and old on recycling opportunities.
In the UK, where we collect household waste, we
partner with local authorities to inform and educate
schoolchildren on the importance of pre-sorting
waste at home, reducing waste and recycling.
We also partner with environmental charity
Keep Britain Tidy to deliver workshops to schools
and youth groups in East London on recycling
awareness, waste prevention and composting.
In the Netherlands and Belgium we have also
developed lessons for pupils. We entered into
a co-operative scheme with five primary schools
in Zeeuws-Vlaanderen, the Netherlands, to help
reduce the volume of residual waste and pollution
in their area. Renewi created teaching packages
on recycling and tackling waste for primary and
secondary schools in the Netherlands, one of
which was adapted for Belgium. Renewi also created
waste management plans for school leaders in
the Netherlands, so education institutions could
‘practise what they preach’.
KEEPING COMMUNITIES SAFE
We also work tirelessly to minimise the impact of
our operations on local communities and remain
committed to managing and reducing emissions
to air, land and water, and pollution of any kind.
There are times when we must proactively protect
communities from the impact of our work on our
sites. This may be due to odours, fires or leakages
and spills of contaminants.
Fires are a major issue in our industry. Often
these occur as a result of inadequate sorting of
waste before arrival on site. Common offenders
are batteries thrown into general waste. We have
invested in high-tech fire equipment across all
sites, to minimise the risk of fire in the community.
74
Renewi plc Annual Report and Accounts 2020 139
colleagues took
part in Renewi’s
new leadership
programme
234
Number of participants
in Renewi’s Fit to the
Finish health scheme
However, from time to time fires can have an
impact, as was the case at the Forest site in Belgium
in 2019, when a blaze caused disruption to the
nearby railway service. In another case, fire
extinguishing water flowed into the public sewer.
While we respond swiftly and responsibly when
such safety issues occur, we work hard to prevent
hazards happening in the first place. We actively
engage with the public to alert them to potential
dangers caused by waste. For example, in
October 2019 Renewi attended a safety day
at Naaldwijk in the Netherlands to highlight the
hazards of batteries in waste, as well as cycling in
the blind spots of waste collection trucks. Lithium-
ion batteries are found in hundreds of items,
from toys to phones, and when damaged can
combust and ignite waste around them. Our
experts’ advice received a very positive response
from visitors to the safety day.
This objective is tracked by the headline metric
below, with a target for 2025:
` Community engagement projects (total
number of projects annually). Target 180
PERFORMANCE (OVER THREE YEARS)
Although we managed to lower the average number
of complaints per site down to 2.7, we didn’t achieve
our 1.4 target. The main focus area was the amount
of odour complaints received at some of our UK
operational sites. We did see positive developments
in this area, however – an improvement partly
due to the relatively stable amount of complaints
received in the other Divisions.
CONCLUSION AND OUTLOOK
While we reduced the average number of
complaints per site received last year compared
to the previous year, we weren’t able to achieve
our 2020 target. This is all the more reason to
continue our efforts. By doing this, we want
to increase our active engagement, which will
improve our positive relations with our neighbours
and positively impact our communities.
For full details of our sustainability
strategy, please see our dedicated
Sustainability Report at renewi.com
Community performance
OUR COMMUNITY COMPLAINTS PERFORMANCE1
Indicator
Number environmental complaints
received by our sites/operations
FY18
306
FY19
576
Average number of complaints per site
1.5
2.9
FY20
2020 target
443
2.7
1.4
1. Includes all complaints, both substantiated and unsubstantiated.
SUSTAINABILITY IN ACTION
Protecting healthcare heroes
Courageous Renewi colleagues supported health
workers battling to save lives in the Covid-19 crisis
by delivering protective face-masks to hospitals.
Despite the dangers, our people stayed calm and
professional as they collected used masks from
hospitals and nursing homes in the Netherlands,
and transported them to a sterilisation centre to
be made safe to wear again. Renewi truck teams
then ferried tens of thousands of sterilised masks
back to medical centres every day.
The operation was a collaboration between
Renewi and medical equipment supplier Van
Straten Medical/GreenCycl, which manufactures,
repairs and sterilises surgical instruments. Our
Commercial Waste Division set up the dedicated
transportation operation in April 2020, to tackle
the shortage of face-masks that followed the
Covid-19 outbreak. Renewi logistics colleagues
worked to strict safety procedures when collecting
and handling the masks, as they could potentially
be infected by Covid-19.
The teams collected containers of worn masks
and took them to the Van Straten Medical/
GreenCycl facility in De Meern-Utrecht for
sterilisation. There the company has a capacity
to handle 48,000 masks a day, sterilising them
at 121°C to deactivate any virus present. This
method follows tests by the Delft University of
Technology on the benefits of mask sterilisation.
Renewi’s support during the Covid-19
outbreak powerfully demonstrates its pledge
to care for people as part of its sustainability
strategy. Recycling masks, instead of sending
them for medical incineration, is also an
excellent example of collaboration between
partners who share the same ambition –
to increase circularity and reduce carbon
emissions: Van Straten/GreenCycl refurbishes
medical instruments, and they are also leased
out. This reduces the need to make more
instruments, and therefore decreases the
carbon footprint associated with industrial
production. The data collected from the
face-mask operation is also being used
for further research on sustainability.
75
1234Renewi plc Annual Report and Accounts 2020 RISKS AND UNCERTAINTIES
Risk management
The successful execution of our strategy relies on our risk management and internal control
approaches. While the overall responsibility for risk management resides with our Board,
our employees have an important role to play in our daily management of risk
INTEGRATED RISK MANAGEMENT
Risk is continually reviewed by the Board and the Executive
Committee, who recognise they have a critical responsibility
to anticipate potential threats. Such threats could impact our
operational activities – our working environment, customers
and employees – and thereby influence the company’s ability
to deliver against its strategy.
The Board and Executive Committee are closely aligned on
our strategy and risks that may impact it and, where required,
work quickly to mitigate against 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 and face specific
industry, commercial, regulatory and other risks, some of which are
beyond our control. Our risk management strategy, risk framework
and internal control processes are important to the delivery of our
strategy and objectives, and are critical to the achievement of
sustainable shareholder value, the protection of our reputation,
good corporate governance and ethical conduct.
During the year we have completed a risk assessment
across the Group. Our most significant risks remain output-
market related, such as recyclate pricing, incinerator costs
and capacity. Key adverse developments to our risk profile
include changes in laws and policies, talent development,
input volumes and cyber threats. Starting in early 2020, a
key risk was driven by the public health crisis of Covid-19
and the uncertainties it has created.
RISK APPETITE
Renewi’s risk appetite for environmental, regulatory and health
and safety risks is low. The Executive Committee and senior
management have dedicated significant resources and attention
to these risk areas.
Other risks are reviewed on an ongoing basis. For each risk,
controls and mitigations are aligned within Renewi’s risk appetite.
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 business
adopts the appropriate risk culture, identifies the risks, recognises
the importance of them, designs and implements effective
mitigations to control those that are key, and monitors
effectiveness. The output of this process is a summary of all
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
Five objectives of our risk management framework
1
KNOW WHAT RISKS
WE FACE
Identify and evaluate
our universe of
potential risks to
allow the creation
and management of
registers of risks faced
by the Group.
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.
3
MANAGE OR
MITIGATE OUR
RISKS
Ensure that all
identified key risks are
effectively mitigated
or, where appropriate,
transfer risks
through insurance.
4
TRAIN OUR
PEOPLE IN RISK
MANAGEMENT
Ensure that
management is
trained in the effective
identification,
assessment and
management of risk.
5
CONTROL
SYSTEMIC RISK
Maintain and improve
a system of internal
controls to manage
risks in decision-
making, contract
management and
financial transactions.
76
Renewi plc Annual Report and Accounts 2020 responsibility for risk management is positioned with divisional
management teams and is co-ordinated by 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 that controls and
actions are reported effectively;
` the management of change through project management and
approval processes, with embedded risk management in project
management activities;
` risk management systems embedded in our day-to-day
operations. These underpin the effectiveness of our risk
management processes by involving a wide audience in risk
systems. These include divisional registers that ensure all risks
are considered and ranked appropriately and that mitigations
are informed and practical;
` enhanced risk assessment for all major capital requests. Capital
requests follow a dedicated capital committee review and
approval procedure. 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
` key risk review undertaken at each divisional review meeting,
ensuring that key risks are monitored and mitigations taken
at an appropriate level. It also supports risk management
as an embedded feature of our decision-making process.
REVIEW OF THE RISK
ENVIRONMENT DURING FY20
In this section we review risk highlights and assess how well
our risk detection and mitigation processes worked.
Covid-19
The health and wellbeing of our people is our key priority.
We initiated a full range of measures to mitigate the impact of
Covid-19 on our people, customers and operations. These are
aligned with guidance given by national governments. The impact
of this public health crisis cannot be accurately quantified as of
the date of this Annual Report. However, we recognise it will have
a material impact on Renewi, our revenues and financial position.
We have prepared cost reduction measures and plans to preserve
cash for progressive implementation.
The main risk factors related to the pandemic are being
monitored and are included in our key strategic risks. They
are primarily related to:
` health and safety;
` product pricing, demand and quality;
` residue pricing and capacity;
` labour availability;
` input volumes; and
` cyber threat.
Shortly after virus measures were undertaken by governments in
our operating countries, we established a Renewi Virus Response
Team consisting of senior leaders across the group. We set up
clear response principles to protect our company and ensure:
` business continuity;
` protection of our people;
` continued collection of customers’ waste to cause minimal
disruption to society;
` alignment (timing and nature of response) with the advice
of governments and experts;
` acting as one company, sensitive to different infection levels
in different areas;
` responses are timely, measured and proportionate; and
` effective communication.
The Group Virus Response Team additionally supports the
Divisional response teams who managed the implementation
and daily management of Covid-19 implications and measures.
ATM soil restrictions lifted
The Dutch Human Environment and Transport Inspectorate (IL&T)
imposed a ban on the use of thermally treated soil (TGG) in 2018.
This was pending a period of testing by market participants in
order to understand its full chemical composition. This external
process was completed alongside an extensive testing programme
undertaken by ATM. The testing has demonstrated that TGG is
safe to use in an industrial environment. As a result, in December
2019 IL&T lifted the ban on the use of TGG in the Dutch market.
ATM has maintained a strong pipeline of customers who intend
to use TGG at their locations. These specific uses will require
approval by local regulators, as before.
AEB crisis
In June 2019, four out of six incinerator lines of one of our key
offtakers, AEB in the Netherlands, ceased operation. The next
day we secured some buffer capacity to store our waste streams
in the very short term. During the next month, we signed several
contracts with alternative offtakers to ensure our production
was not jeopardised.
In August 2019, the Dutch Government restricted the
importation of waste into the Netherlands and the problem
became international. Due to a swift response, and close
collaboration across our Commercial Waste and UK Municipal
Divisions, we overcame the challenges this presented, although
we incurred substantial costs that were settled with AEB.
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 the risk culture in Renewi and the
management of risk in all its forms through 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 mitigations in place;
` reviews occurrences of risk management failure to identify root
cause, and identifies and shares lessons learned to mitigate risk
of repetition;
` drives consistency in approach, use of tools and risk appetite
across Renewi; and
` 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
77
1234Renewi plc Annual Report and Accounts 2020 RISKS AND UNCERTAINTIES continued
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.
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 Co-Chairs
Risk management responsibilities
RENEWI PLC BOARD
INDEPENDENT REVIEW
AUDIT COMMITTEE
EXECUTIVE COMMITTEE
RISK REPORTING
RISK COMMITTEE
RISK
• Co-ordination
• Consistency
• Culture
• Best practice review
• Systems
• Policy
• Processes
OPERATING DIVISIONS
BUSINESS UNIT MANAGEMENT
RISK
• Assessment
• Management
• Responsibility
• Reporting
78
Renewi plc Annual Report and Accounts 2020 OUR PROGRESS AGAINST 2019 OBJECTIVES AND THE FUTURE
In our 2019 Annual Report we committed to further actions to improve our risk management processes in FY20. Despite
the potential distractions of integration, good progress has been made. A summary of this progress as well as our objectives
for FY21 is shown below.
WHAT WE SAID WE WOULD DO IN FY20
HOW WE DID
Further improve our Divisional Risk Registers and revise
more frequently
Risk Registers and related processes are well established and revision intervals are
formalised. Key control is in place and adhered to in order to monitor 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 the structured use of key risk indicators for
the first selected areas of risk
Additional investments made across several sites.
Fire standards are covered in internal audits. Separate taskforce Safety and Compliance
completed within SHEQ. Dedicated fire management audit programme in progress.
We have made limited progress with key risk indicators (KRIs). Key macro-economic
indicators such as GDP, unemployment and consumer confidence are considered and
reported. Further investigation into the structured use of KRIs will be continued.
Create and embed divisional authorisation documents
that sit within and below Group authorisation document
All Divisions except Commercial Waste Belgium have completed and implemented their
divisional authorisation document. Commercial Waste Belgium is progressing well to
create its divisional authorisation document.
Monthly webinars to deliver structured learnings for
Risk Committee and senior management by executing
post investment reviews, sharing outcomes and making
improvements in investment processes and decisions
Structured learnings for Risk Committee and senior
management through other risk-focused learning
exercises, such as on inventory, being shared through
monthly webinars
Post investment, post closure and post issue review calendar established and complied
with, including pipeline and planning for upcoming reviews.
Operating rhythm for the Risk Committee established with two full-day meetings this year
and monthly calls started in the second half.
Roll out risk-based decision-making training
Risk training completed at the Renewi Senior Leadership Conference.
Broaden the scope of internal audits to cover key
business risks in addition to core processes
Complete the roll-out of a key control framework
and implementation of supporting software
Limited availability for further training. We can now integrate this with fundamentals
put in place over the past half year, such as the Finance Academy and the HR
training programme.
Key business risks included in the approved audit plan for FY20.
Key control framework implemented, supported by our track and trace software.
In summary, we have made an important step forward with completion of most of our risk management objectives and carried over
the risk training objective. The risk indicators will be considered based on availability of tooling and improved data capture capabilities.
Risk management objectives for FY21
Based on Audit Committee, Executive Committee and Risk Committee evaluations, we have identified a list of risk management topics.
We have selected our priorities for next year and will keep this list up to date, prioritising our resources and initiatives by level of importance.
For next year we have selected the following items from the list and set out what we will set as objectives.
PRIORITY
Risk culture framework
Risk training
Communication
OBJECTIVE
Embed the risk culture model into the organisation where key decisions are made and/or key
reviews take place (investment decisions, post investment reviews and internal audits).
Develop structural risk training, aligned with existing training platforms such as HR
Learning & Development and the Finance Academy.
Further improve communication of Risk Committee output such as key learnings from
risk reviews.
Crisis management
Refine our crisis management protocol and appoint crisis managers across the Divisions.
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1234Renewi plc Annual Report and Accounts 2020 RISKS AND UNCERTAINTIES continued
KEY RISKS AND MITIGATIONS
Our key risks are outlined in the heat diagram below and in the table on the following pages. For FY20 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 levels of mitigation. A description of each risk can
be found in the table on the next page.
Key risks
1. Product pricing, demand and quality
2. Residue pricing, capacity and specification
3. Changes in law and policy
4. Environmental compliance
5. Long-term contracts
6. Unsustainable debt
7. Labour availability and cost
8. Brexit
9.
Input pricing
10. Digitisation
11. Talent development, leadership and diversity
12. Health and safety
13. Major plant failure or fire
14. Input volumes
15. ICT failure and cyber threat
16. Covid-19
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.
Risk position:
Last year
This year
h
g
H
i
t
c
a
p
m
I
w
o
L
6
6
14
10
4
13
9
11
5
12
8
1
16
3
7
2
2
3
5
11
8
13
14
15
15
Low
Likelihood
High
SUMMARY OF KEY RISKS
Reference numbers are consistent with those used in the heat diagram
Risk direction key:
Increase
Stable
Decrease
KEY RISK
KEY MITIGATION
COMMENTARY
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.
RISK DIRECTION
` By focusing on improving product quality we optimise
the value we receive for our products.
` Investments in technologies that fit with market needs
for products.
` Sustainable technologies used align with market needs
and international and national policy.
` Renegotiation of long-term and fixed-price offtake
contracts where appropriate.
` We apply dynamic pricing that aligns between input and
output prices, which leads to better margins.
` We thoroughly understand and closely monitor the
capacity-driven markets to mitigate risk and leverage
opportunities that are presented.
` We use multiple product offtakers to spread the risk
where appropriate.
Product pricing, demand and quality remains 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.
80
Renewi plc Annual Report and Accounts 2020 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
4. Environmental compliance
That we fail to comply with
environmental permits and/
or environmental laws and
regulations.
RISK DIRECTION
5. Long-term contracts
KEY RISK
KEY MITIGATION
COMMENTARY
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.
RISK DIRECTION
` We have experienced employees dedicated to product
offtake markets.
` We apply cost control measures to offset the impact of
lost revenue.
` A diversity of residue offtakers is used to spread the risk.
` Quality control systems are in place to ensure
specification of residues is as required.
` Revised and improved offtake strategy process is
designed and implemented.
` Horizon scanning by competent internal specialists
to ensure changes are planned for and managed, and
potential opportunities captured.
` Alignment of business model with national and
international policy and law towards more sustainable
waste management practices.
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.
Recent input volume drops due to Covid-19 effects result
in a slightly lower pressure on outlets.
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.
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.
` Effective management of all environmental matters
arising through environment management systems and
regular inspections and audits.
` Monthly environmental issues reporting across all levels
of organisation with adequate follow-up.
` Experienced and competent environmental specialist
employees in place.
` Community environmental engagement performance in
place as a key business objective.
Internal management of compliance through
competent specialists is recognised as key.
Pressure on environmental permits through
increasingly strict regulation has grown over recent
years. Compared to last year, environmental
compliance remains a stable but high risk.
That we enter into long-term
contracts at disadvantageous
terms or we rely on a small
number of large contracts.
` Selective bidding on contracts, combined with
strict Board controls on entering into any new major
contracts, are in place.
` Detailed risk assessments and due diligence on
RISK DIRECTION
contracts are conducted.
` Tight controls and reviews on build programmes to
ensure they remain on track.
The Board’s caution with regard to complex long-term
contracts remains.
Selected long-term PPP/PFI contracts exited.
Ongoing operational improvements for remaining
contracts continue.
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
` Our treasury programmes are reducing our financing
cost, continuously improving cash control and
increasing headroom.
` Re-invest only where profitable.
` Strong budget control on capital projects.
` Good balance of leased and owned assets.
` We apply a diverse range of financing options and timings.
` Quality external advice.
` An EUPP is in place.
` Credit facilities have been extended and improved.
We are strategically planning to ensure we have
access to existing and new forms of capital. We have
successfully completed a secondary listing on Euronext
Amsterdam. Trading commenced on 30 January 2020.
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1234Renewi plc Annual Report and Accounts 2020 RISKS AND UNCERTAINTIES continued
KEY RISK
KEY MITIGATION
COMMENTARY
7. Labour availability and cost
That there are shortages of
certain labour types, leading
to unavailability or severe
wage inflation.
RISK DIRECTION
` We measure employee engagement and satisfaction
through surveys.
` We offer competitive wages.
` Successful recruitment programmes for
drivers continued.
` Renewed HR and recruitment leadership.
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.
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. Digitisation
That a disruptive technology
or business model deployed by
a competitor or new entrant
impacts our ability to compete.
RISK DIRECTION
` Scenario planning for hard Brexit capacity management.
` Flexible/prudent approach to hedging strategies.
` Identified potential new offtake solutions in the UK.
Brexit has limited impact on export of waste and
recyclates. We have successfully put in place mitigators,
including a revised and improved offtake strategy
to significantly bring down the Brexit-related risks
for Renewi.
` Prices are constantly monitored and reported on via
operational systems.
` To deliver cost leadership in core markets we effectively
manage our costs, both structural and operational.
` Where appropriate, we use longer-term contracts to
limit exposure.
` Targeted price increases and dynamic pricing are used
to optimise margins.
We have delivered reduced costs and increased price
competitiveness and margins.
We are increasingly moving towards pricing new
business for margin over volume and in line with
product offtake demand.
Integration continues to optimise and digitise Renewi
as per plan.
Monitoring of competitor threats and fast follower
principle has already identified opportunities and
active projects being investigated within Renewi.
Numerous digitisation 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 those emerging in the
global waste-to-product markets.
` A newly appointed CIO, part of the Executive Committee
with a remit to identify future opportunities and risks.
` Active monitoring across the Divisions and Group of new
digital entrants, technology or services from competitors.
` Renewi takes a fast follow approach to emerging threats
to keep expenditure proportionate to threat.
` Diversification of business, core operational services
and products limits threat and impact from disruptive
business models and technology.
` Renewi’s innovation programme identifies
opportunities ahead of competitive threats and
generates competitive advantage proactively.
` Renewi has several digital developments under
investigation to retain 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.
` Partnerships in place and continue to increase, which
allow for collaboration on industry innovations with key
existing, as well as new, players in the industry.
11. Talent development, leadership and diversity
That we fail to meet the
(future/anticipated) required
management capabilities.
RISK DIRECTION
` Key objectives set for employee development.
` Performance appraisal processes are in place.
` Engagement surveys are conducted and followed up.
` Leadership development programmes in place.
` Newly implemented software brings increased
structure and capabilities to learning and development
management and initiatives.
The recovering economy, as well as elevated
uncertainty around the impacts of Covid-19, means
that talent is in increasingly short supply.
Our reinforced HR department drives retention and
optimisation of internal talent and the recruitment
of external talent.
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Renewi plc Annual Report and Accounts 2020 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. Input volumes
That incoming waste volumes
in the market may fall.
RISK DIRECTION
` Corporate Health and Safety Managers and competent
internal specialists in place.
` Safety is the top agenda item at all management meetings.
` Defined and tracked health and safety priorities plan
under way and delivering.
` We actively and openly engage with regulators.
` Safety leadership programme in place.
` Coherent targets in place for accident, near-miss
and other key safety performance parameters.
Safety remains top priority for management and
the Board.
We have competent internal specialists in place and
continue to fortify our SHEQ teams. A Group SHEQ
Compliance Manager was appointed to drive the safety
culture and ensure compliance.
` Effective insurance programmes supported by
experienced brokers.
` Improvements in fire control through new and stricter
fire control standards.
` Fire risk survey process in place including engagement
with insurers, and with competent external advice.
` Business continuity planning in place at all major sites.
` Mechanical breakdown insurance in place for at-risk
facilities and reviewed on a regular basis for adequacy.
` Highly experienced operational teams with in-depth
knowledge of processes.
` Regular annual and other shutdowns at key facilities
to ensure they remain well invested and maintained.
` Business continuity planning includes breakdown risk
and mitigation measures.
We are optimising the insurance captive which we
introduced in the previous financial year.
Resilience at our major unique facilities remains our
concentration, with high-quality maintenance and life
cycle 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.
` Strong reporting of incoming waste volumes across the
Group for rapid response to market changes.
` Continued investment to secure new waste streams
and volumes.
` Market-facing, customer-focused organisation.
` Major capital deployed only if backed by
long-term contracts.
We handle 14 million tonnes of waste each year. Our wide
geographical spread provides access to multiple markets.
The public health crisis of Covid-19 has resulted in
dropping input volumes. There is increased uncertainty
to volumes in the short term.
Public opinion continues to shift towards increased
recycling rather than incineration, which is favourable
for Renewi given our assets and partnerships.
15. ICT failure and cyber threat
That ICT failure and/or
cyber crime causes business
interruption or loss.
RISK DIRECTION
16. Covid-19
That the recent outbreak
of Covid-19 has severe
consequences for our
incoming waste streams
and workforce, causing
business interruption or loss.
RISK DIRECTION
N/A
` Business continuity planning and testing in place for ICT.
` Assessment of ICT resilience conducted by insurers with
high-quality results.
` Continued investment in upgraded systems and
The internal risk for ICT failure is limited. However, the
external cyber threat landscape continues to rise and
the related risks increase. We continuously introduce
new security measures to mitigate.
infrastructure.
` Regular external security tests and improvements
throughout the year.
` Security planned for at design stage in all
projects/programs.
` Cyber resilience software in place.
Group Virus Response Team in place with weekly reporting
to the Executive Committee. Key highlights include but not
limited to:
` Monitor changes in government and health adviser
advice within our operating countries.
` Dedicated risk register of key Covid-19 risks and
mitigations and assigned mitigation owners able
to execute in the Divisions.
` Response matrix developed so we have plans in place
ahead of a worsening situation.
` Business continuity plans in place.
` Scaled-down operations and staff where required.
We have identified the potential threats Covid-19 brings
to Renewi at an early stage and have a structured
approach to address the evolving situation. As we
expect prolonged effects, we have multiple scenarios
in place to respond and mitigate. In parallel, we are
planning ahead for scaling operations and offices back
up when the situation changes favourably.
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1234Renewi plc Annual Report and Accounts 2020 RISKS AND UNCERTAINTIES continued
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 and cross
currency interest rate swaps. At the end of March
2020, circa 99% 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 is exposed to
translation risk on the value of assets denominated
in sterling into euros; this exposure is reduced
by borrowing in sterling. Up to 30 September
2019 the Group also operated in Canada and
any associated translation risk was reduced by
borrowing in 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.
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 offtake 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.
84
Viability statement
In accordance with Provision 31 of the UK Corporate Governance Code, the
Board has assessed the prospects of the Group over a period of more than
12 months and has adopted a period of three years for the assessment. This
assessment was considered in the context of the Group’s strategic planning
process. The annual strategic planning cycle includes a five-year forecast
model; however, for this viability assessment only the first three years are
used, as this is the period over which the Group’s risks would have the most
adverse impact and is the period that the Group gives most focus to in the
forecasting process. These financial models and assessments have been
updated to include an estimated impact of Covid-19 based on our experiences
in the last two weeks of March and in the month of April, along with volume
indicators in May. This revised base case plan incorporating the impact
of Covid-19 does reduce profitability in the short term but it is expected
to be temporary and does not affect the longer-term growth assumptions,
cash flow and resilience of the business.
The key assumptions made in Renewi’s long-term financial model are:
continuing growth opportunities and the transition to a circular economy,
leading to further margin improvements in the Commercial Waste Division;
returning to full soil production levels at ATM along with the development of soil
outputs into higher-value secondary raw materials; and the delivery of Renewi’s
2.0 three-year programme, which will deliver a minimum of €20m of annual cost
benefits in FY23 for a total cash cost of €40m.
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 explicitly modelled separately and as a combination of two
happening together. The scenario modelling initially included further
challenges in the offtake markets, a sustained period of shutdown at ATM
due to delays in finding offset solutions for products, an economic slowdown
and the impact of a disruptive and hard Brexit. In addition, a Covid-19 related
scenario was included, which assumed the possibility of further country
lockdowns later in FY21 and into FY22, and a slow economic recovery given
delays in vaccine availability.
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 scenarios assume that external debt is repaid as it becomes
due and committed facilities renewed as they become due. A €100m retail
bond matures in June 2022.
The Group’s liquidity and financial headroom have 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 the scenarios occurring.
It should be noted that, in the case of the severe Covid-19 scenario with
subsequent lockdown periods and weak economic growth, despite the Group
maintaining a high level of liquidity, it would be necessary to seek a further
period of leverage amendment from lenders in September 2021. This is
considered achievable, as in the recent refinancing process a number of lenders
had already offered increased leverage levels to June 2022, but with others a
five-quarter extension period was preferred given the current uncertainties
around the Covid-19 pandemic.
Having considered all of the elements of the assessment, 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 for the period of
assessment, assuming the anticipated impact of Covid-19 and the ability to
refinance and obtain increased covenant headroom in the later periods.
Renewi plc Annual Report and Accounts 2020 Non-financial
information statement
Section 172(1)
statement
In accordance with the EU non-financial reporting directive
(NFRD) and sections 414CA and 414CB of the Companies
Act 2006, which outline new requirements for non-financial
reporting, the table below is intended to provide our stakeholders
with the content they need to understand our development,
performance, position and the impact of our activities with regard
to specified non-financial matters.
REPORTING
REQUIREMENT
Environmental
matters
Employees
Social matters
ANNUAL REPORT AND ACCOUNTS
PAGE REFERENCE
` Chairman’s Statement – environment p10
` CEO’s Review – circular economy p32
` Our role at the heart of the circular
economy p28
` Engaging with, and delivering value for,
our stakeholders p15-17
` Environment and sustainability p62
` Chairman’s Statement – people p10
` CEO’s Review – people p32
` Engaging with, and delivering value for,
our stakeholders p15-17
` Being a sustainable employer p70
` Business model – purpose p12
` Chairman’s Statement – purpose p10
` Our role at the heart of the circular
economy p28
` CEO’s Review – partnerships and
communities p32
` Engaging with, and delivering value for,
our stakeholders p15-17
` Society and community p74
Human rights
` Engaging with, and delivering value for,
our stakeholders p15-17
` Care for people, ethics, compliance
and people p71
Anti-bribery
and corruption
` Engaging with, and delivering value for,
our stakeholders p15-17
Business model
` Business model p12
Non-financial KPIs
` KPIs p25
Principal risks
` Principal risks and uncertainties p76-83
` Viability statement p84
` Audit Committee Report p102-105
When making decisions, the Directors of Renewi plc must
act in the way they consider, in good faith, is most likely
to promote the success of the Company for the benefit
of its members as a whole, while also considering the broad
range of stakeholders who interact with and are impacted by our
business. Throughout the year, while discharging their duties,
section 172(1) requires a Director to have regard to, among other
matters, the:
` likely consequences of any decisions in the long term;
` interests of the Company’s employees;
` need to foster the Company’s business relationships with
suppliers, customers and others;
` impact of the Company’s operations on the community
and environment;
` desirability of the Company maintaining a reputation for high
standards of business conduct; and
` need to act fairly as between members of the Company.
In discharging their section 172(1) duties the Directors have
had regard to the factors set out above, as well as other factors
relevant to the decision being made. The Board as a whole
acknowledges that every decision made will not necessarily
result in a positive outcome for all stakeholders. By considering
our purpose and values, together with our strategic priorities, the
Board aims to ensure that the decisions made are consistent and
intended to promote the Company’s long-term success.
The Group engaged with key stakeholders throughout the year
to understand the issues and factors that are significant for these
stakeholders, and a number of actions were taken as a result
of this engagement. How we engage with stakeholders at the
operational level is set out within the Strategic Report from page
15. The Board’s interactions with stakeholders, and the impacts
of these interactions, is set out in the Connecting with our
stakeholders section on page 99 of the Corporate Governance
Report. Examples of how Directors discharged their section 172(1)
duties when making principal decisions during FY20 are set out
on page 99 of the Corporate Governance Report.
Renewi is a waste-to-product company and so environmental
and sustainability matters are at the heart of what we do. The
consideration and impact of the Group’s operations on the
environment are contained throughout the Sustainability Report
found on our website.
Our Sustainability Report contains case studies about the
positive impact of our operations on the environment and
our stakeholders:
` Turn our customers’ waste into new products
` Be a leader in clean and green waste collection
` Reduce the carbon impact of our operations
` Positively impact our communities
85
1234Renewi plc Annual Report and Accounts 2020 As demand grows for sustainability,
we’re always ready to deliver.
The European Union’s 2022 recycling rate target
is 55% – thanks to our innovation, the Renewi rate is
already 64.7%, so we are close to achieving the EU’s
2030 target of 65%. And as Benelux landfill regulations
have become more stringent, we have been perfectly
placed to prioritise recycling over landfill – great
news for the environment…
86
Renewi plc Annual Report and Accounts 2020 2/ GOVERNANCE
87
1234Renewi plc Annual Report and Accounts 2020 The Board of Directors
Renewi’s Board Directors support the company with an impressive
range of skills and extensive experience across many disciplines
Ben Verwaayen,
MSC
Chairman
Allard Castelein,
MD
Senior Independent
Director
Marina Wyatt,
MA, FCA
Non-Executive Director
Jolande Sap,
MSC
Non-Executive Director
Appointed April 2020.
Appointed January 2017.
Appointed April 2013.
Appointed April 2018.
Skills and experience Ben
has been CEO of a number of
companies, including Alcatel-
Lucent SA and BT plc. He held
the position of vice chairman and
chief operating officer of Lucent
Technologies Inc, was president
of KPN and a non-executive
director of Bharti Airtel. He has
also been chairman of a number
of companies and industry
bodies including the CBI Energy
and Climate Change Board in
the UK. Ben currently serves
as a Non-Executive Director on
the boards of Ofcom, Akamai
Technologies Inc and Akzo Nobel
N.V. He is a Founding Partner
at venture capital company
Keen Venture Partners LLP.
Ben graduated from Utrecht
University with a Master’s degree
in Law and International Politics.
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 an international career
in the energy sector, holding
a number of senior positions
at Shell in various countries,
culminating in becoming the
vice president, environment,
of 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 in Rotterdam.
He is a senior member of several
Dutch trade organisations
including the Economic
Board Zuid-Holland and the
Confederation of Netherlands
Industry and Employers.
Skills and experience Marina
currently holds the position
of Chief Financial Officer of
Associated British Ports. She
is also a Fellow of the Institute
of Chartered Accountants.
Following nine years with Arthur
Andersen LLP in London and
the US, she 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
Between 2008 and 2012, Jolande
represented the Dutch Green
Party, GroenLinks, in the lower
house of the Dutch parliament,
leading the party from 2010.
Before that she worked as an
economist in the fields of science,
policy and business. Between
1996 and 2003 Jolande worked
at the Dutch Ministry of Social
Affairs and Employment and
among 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, and 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 – a
mental healthcare institution,
and Fairfood International, and
chairs the Board of the Dutch
Sustainable Fashion Week.
Jolande graduated from Tilburg
University in Economics having
specialised in political economy
and philosophy.
88
Renewi plc Annual Report and Accounts 2020 Luc Sterckx,
MSC, PHD
Non-Executive Director
Neil Hartley,
MA, MBA
Non-Executive Director
Otto de Bont,
MSC
Chief Executive Officer
Toby Woolrych,
MA, ACA
Chief Financial Officer
Appointed September 2017.
Appointed January 2019.
Appointed April 2019.
Appointed August 2012.
Skills and experience Luc
started his career at Exxon
Chemicals, before becoming the
CEO of Indaver and subsequently
joining the executive committee
of PetroFina where 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 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. 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. 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 Otto
succeeded Peter Dilnot as
Chief Executive Officer in April
2019. Prior to becoming Chief
Executive Officer, Otto was the
managing director of Renewi’s
Commercial Waste Netherlands
Division, and a member of the
Executive Committee, playing
a central role in the integration
of Shanks Group plc with Van
Gansewinkel Groep B.V. 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 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.
Key: Board Membership Committee
AUDIT
NOMINATION
REMUNERATION
CHAIR
89
1234Renewi plc Annual Report and Accounts 2020
The Executive Committee
Committee members are a strong combination of industry experts and talented leaders from
other sectors – benefiting Renewi with deep knowledge and exciting new perspectives
Helen
Richardson
Human Resources
Director
Maarten
Buikhuisen
Chief Information
Officer
Patrick
Deprez
Product Sales
Director
Baukje
Dreimuller
General Counsel
Bas
Van Ginkel
Strategy and Business
Development
Director
Appointed April 2019.
Appointed Jan 2020.
Appointed Dec 2012.
Appointed Sep 2017.
Appointed Sep 2018.
Skills and experience
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.
Skills and experience
Maarten joined Renewi
in January 2020 with
more than 20 years of
IT experience, having
worked in a number of
global IT leadership roles.
Prior to joining Renewi,
Maarten had various
international business
and IT roles at Heineken,
an internet B2C start-
up and at Alcatel in
telecommunication.
During this period he
delivered business and IT
transformations, global
ERP programmes, digital
innovations and data-
driven organisations.
Maarten has a Bachelor’s
degree in Information
Technology and an MBA
from the University
of Bradford.
Skills and experience
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. From 2006,
Patrick 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.
Skills and experience
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 International
and European Law from
Radboud University
in Nijmegen.
While the Executive Committee does not have 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, which meets monthly and comprises the Chief Executive Officer,
Chief Financial Officer, Divisional Managing Directors and Corporate Function Directors.
90
Skills and experience
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
and Bain & Company.
He holds an MBA from
Harvard Business School
in the US, plus an MSc in
Business Administration
(with a specialisation
in corporate finance)
and a BSc in Economics
from the University
of Groningen.
Renewi plc Annual Report and Accounts 2020 Meinderdjan
Botman
Managing Director,
Commercial Waste
Netherlands
Wim
Geens
Managing Director,
Commercial Waste
Belgium
Theo
Olijve
Managing Director,
Mineralz & Water
James
Priestley
Managing Director,
Specialities
Appointed Oct 2020.
Appointed Nov 2012.
Appointed June 2019.
Appointed Nov 2016.
Skills and experience
Meinderdjan joined
Renewi on 1 October
2019 as Managing
Director, Commercial
Waste Netherlands. He
has more than 20 years’
experience in supply
chain and logistics
management. He’s had
global responsibility for
multiple work streams,
including business
development, key
account management,
sales, marketing and
product development.
Prior to Renewi, he had
roles in engineering,
project management,
IT, operations and
regional management.
He was logistics manager
Benelux at Nutricia and
senior project manager
at Frans Maas, where he
progressed to director
of logistic operations,
becoming a key member
of the team involved in
the merger to DSV A/S. He
holds a Master’s degree in
Logistics Engineering and
Distribution Management
from the Technical
University of Eindhoven.
Skills and experience
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 worked for VGG
from 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. He
has an MBA and Master’s
degree in Commercial
and Financial Sciences.
Skills and experience
Theo joined Renewi on
1 June 2019 as Statutory
Director of Renewi
Hazardous Waste B.V.
with a 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 vice president
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.
Skills and experience
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
that 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.
CEO and CFO
Our CEO and CFO are
also members of the
Executive Committee.
See their biographies
on page 89.
Otto de Bont
Chief Executive
Officer
Toby Woolrych
Chief Financial Officer
91
1234Renewi plc Annual Report and Accounts 2020 Governance at a glance
A snapshot guide to corporate governance at Renewi – committee reporting to the Board
of Directors, and Board membership, attendance and meetings calendar during FY20
Our corporate governance reporting management framework
RENEWI PLC BOARD
Principal Board
Committees
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
Executive
Management
EXECUTIVE
COMMITTEE
Specialist
Committees
RISK
COMMITTEE
INVESTMENT
COMMITTEE
SUSTAINABILITY
COMMITTEE
GREEN FINANCE
COMMITTEE
SHEQ
(Safety, Health,
Environment
and Quality)
COMMITTEE*
Divisional
Management
OPERATING
DIVISIONS
*Additional reporting line to Renewi plc Board.
Board membership
Ben Verwaayen (Chair)
Luc Sterckx
Allard Castelein
Neil Hartley
Marina Wyatt
Otto de Bont
Jolande Sap
Toby Woolrych
Board meeting attendance FY20
Colin Matthews (Chair) 12 (12)
12 (12)
Allard Castelein
8 (8)
Jacques Petry
12 (12)
Marina Wyatt
11 (12)
Jolande Sap
12 (12)
Luc Sterckx
12 (12)
Neil Hartley
12 (12)
Otto de Bont
12 (12)
Toby Woolrych
Bracketed figures indicate maximum
potential attendance of each Director.
Jacques Petry and Colin Matthews
retired from the Board on 31 December
2019 and 31 March 2020 respectively.
Jolande Sap was absent from the meeting
held in February 2020 because it was not
possible to find a date to accommodate
attendance of the full Board.
Ben Verwaayen succeeded Colin Matthews
as Chairman of the Board on 1 April 2020.
Calendar of meetings of the Board and its Committees for FY20
APRIL
MAY
JUNE
JULY
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MARCH
Board
Audit Committee
Remuneration Committee
Nomination Committee
Shareholder (AGM)
In addition, 15 duly authorised Board Committee meetings, comprising at least two Directors, were held during the year.
92
Renewi plc Annual Report and Accounts 2020 Corporate Governance Report
This Report explains the structures, processes and procedures employed by the Board to ensure
that Renewi’s high standards of corporate governance are maintained throughout the Group
Ben Verwaayen
Chairman
On behalf of the Board, I am pleased to
present our Corporate Governance Report
and confirm our compliance with the UK
Corporate Governance Code published in July
2018, for the year ended 31 March 2020.
We believe that both the Board collectively and
Directors individually have a responsibility to set
and demonstrate high standards of corporate
governance. The following pages outline the
structures, processes and procedures by which
the Board ensures that these high standards are
maintained throughout the Group.
The Board has paid particular attention to the
Companies (Miscellaneous Reporting) Regulations
2018 and the revisions to the Corporate Governance
Code that came into effect for all companies with
financial year ends beginning on or after 1 January
2019. In response to these changes, the Report
includes a statement disclosing its compliance with
the UK Corporate Governance Code 2018, which can
be found on pages 96 to 99, and a disclosure of how
the company engages with its stakeholders, which
can be found on pages 99 to 100.
The Non-Executive Directors, all of whom the
Company regards 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 102 to 105.
During the year, both the Nomination and
Remuneration Committees were focused primarily
on considering Board composition and succession in
preparation for the stepping down of the Chair, Colin
Matthews, and the Senior Independent Director,
Jacques Petry. The full reports can be found on
pages 106 to 107 and 108 to 125 respectively.
Having recently joined the Company I look
forward particularly to meeting with many
more shareholders and other stakeholders over
the coming months.
Ben Verwaayen
Chairman
4 June 2020
93
1234Renewi plc Annual Report and Accounts 2020 CORPORATE GOVERNANCE REPORT continued
The Board fully supports the principles of good corporate governance. This Corporate Governance
Report, together with the Directors’ Remuneration Report on pages 108 to 125, explains how
the Group has applied and complied fully with the provisions of the UK Corporate Governance
Code 2018 for the year to 31 March 2020.
THE BOARD
The Board comprises the Chairman, a further five independent
Non-Executive Directors, the Chief Executive Officer and Chief
Financial Officer.
The Chairman, who is independent, has primary responsibility
for running the Board. The Chief Executive Officer is responsible for
the operations of the Group and for the development of strategic
plans and initiatives for consideration by the Board. The formal
division of responsibilities between the Chairman and the Chief
Executive Officer has been agreed by the Board and documented,
a copy of which is available on the Group’s website.
The Non-Executive Directors bring a wide range of experience
to the Group and are considered by the Board to be independent
of management and free from any business or other relationship
that 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.
Allard Castelein holds the position of Senior Independent
Director after Jacques Petry stepped down from the role at the
end of August. The Senior Independent Director will be available
to shareholders should they have concerns that contact
through the normal channels of Chairman, Chief Executive Officer
or Chief Financial Officer has failed to resolve, or where such
contact is inappropriate.
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 12 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
‘Board appointments are based on
the diversity of contribution and
required competencies, irrespective
of gender, age, nationality or any
other personal characteristic’
94
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 (SHEQ) 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 Executive Committee assists the Chief
Executive Officer in the performance of his duties. 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 a number
of specialist committees covering Risk, Investment, SHEQ
and Sustainability 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 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 LLP’s non-executive database and
course programme. During the year there was 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.
Renewi plc Annual Report and Accounts 2020 Gender diversity
Board balance
FEMALE
MALE
Number
% Number
Board
Executive Committee
Group
Senior Managers
2
2
1,173
69
25
18
18
23
6
9
5,377
233
%
75
82
82
77
Total
Executive Directors
Non-Executive Directors
8
11
6,550
302
FEMALE
MALE
0
2
2
4
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 108 to 125 contains particulars of Directors’ remuneration
and their interests in the Company’s shares.
NOMINATION COMMITTEE
The Nomination Committee met five times during the year and
is formally constituted with written terms of reference, which are
available on the Group’s website. Since 1 April the Committee
has been chaired by Ben Verwaayen and is comprised solely of
Non-Executive Directors: Allard Castelein, Marina Wyatt, Neil
Hartley and Luc Sterckx.
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 106 to 107 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 126 to 128.
Appointments to the Board and throughout the Group continue
to be based on the diversity of contribution and required
competencies, irrespective of gender, age, nationality or any
other personal characteristic.
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
Sustainability Report, which is available on the Renewi website.
Further summary details, in addition to those shown below
including those on gender pay gap reporting, can also be found
in the Care for people section from page 70.
AUDIT COMMITTEE
The Audit Committee met three times during 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, Neil Hartley, Luc Sterckx and Jolande Sap.
As required under the UK Corporate Governance Code, Marina
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 Executive Directors and representatives from the external
auditors are regularly invited to attend meetings. The Committee
also has access to the external auditors’ advice without the
presence of the Executive Directors.
The Audit Committee Report on pages 102 to 105 sets out the
role of the Committee and its main activities during the year.
REMUNERATION COMMITTEE
The Remuneration Committee met six times during 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: Neil Hartley, who chairs
the Committee, Allard Castelein and Luc Sterckx. The Committee
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.
95
1234Renewi plc Annual Report and Accounts 2020 CORPORATE GOVERNANCE REPORT continued
HOW WE HAVE COMPLIED WITH THE
UK CORPORATE GOVERNANCE CODE
Our statement of compliance, together with the wider Corporate
Governance Report and other sections of this Annual Report,
describes how we apply the main principles of good governance
in the UK Corporate Governance Code published by the UK
Financial Reporting Council in July 2018, a copy of which is
available on its website, frc.org.uk.
We have complied throughout the accounting period with the
provisions of the UK Corporate Governance Code.
BOARD LEADERSHIP AND COMPANY PURPOSE
A. The Board’s role
The Board is comprised of Directors from a diverse range of skills,
nationalities and professional backgrounds, as set out in their
biographies on pages 88 and 89 and on page 107 of the Nomination
Committee Report. It is this diversity of experience and ability
to exercise independent and objective judgement that helps the
Board to operate effectively and establish a governance framework
to assist the Group in the delivery of its strategy.
The Board discharges its responsibilities as set out in the
Corporate Governance Report on pages 94 to 95, through a
programme of Board and Committee meetings that includes
reviews of financial performance, critical business issues, and
short- and long-term planning and strategies.
B. Renewi’s purpose, values and culture
Renewi’s purpose and ambition is to protect the world by giving
new life to used materials. Renewi’s vision is to be the leading
waste-to-product company in the world’s most advanced circular
economies – contributing to a sustainable society for all our key
stakeholders: customers, employees, our local communities and
our shareholders. We are positioned higher up the value chain in
the segments expected to show the highest structural growth. We
focus on making valuable products from waste, rather than on its
disposal through mass burn incineration or landfill. We believe our
business meets the growing need to deal with waste sustainably
and cost-effectively. Our values set out on page 71 are the
foundation for everything we do and have helped us build a culture
of togetherness and ‘One Renewi’. 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.
The Board has designated Non-Executive Director Jolande Sap
with responsibility for monitoring workforce culture and employee
engagement, and together with the Group HR Director to make
regular reports to the Board. For more information, see the
Engaging with our workforce section on page 100.
The Audit Committee received regular updates on a range of risk
and compliance matters including reports and presentations on
whistle-blowing and integrity issues as well as the results of
internal audits, which provided insight into the risk and control
environment both within the Group and within individual areas
of the business. The Committee reviewed the steps taken by
senior management to address weaknesses identified. Where
concerns remained, the Committee ensured further action
was taken, including requesting further information monitoring
and, if required, follow-up audits. For more information, see
pages 102 to 105.
As part of its considerations, the Remuneration Committee also
reviewed the Company’s approach to rewarding the workforce.
96
C. Resources and controls
The Board ensures that necessary resources are in place to help
the Company to meet objectives and measure performance.
The system of internal control is based on a continuous process
of identifying, evaluating and managing risks, including the risk
management framework outlined on pages 76 to 84. The Risk
Committee is a critical component of our risk management and
controls architecture. It provides direct assurance to the Audit
Committee on a number of matters, including the preparation
and review of risk registers and the promotion of risk awareness.
Complementing this, our Internal Audit function aims to improve
Renewi’s overall control framework and evaluate and improve the
design and effectiveness of control processes, reporting the results
of its activities to the Audit Committee. The Risk Committee works
with the operating Divisions of our organisation to share outcomes
and to co-ordinate reporting on compliance matters. The Board
has a formal system in place for Directors to declare any conflicts,
or potential conflicts, of interest.
D. Shareholder engagement
The Board aims to engage with shareholders and understand
their issues and concerns. Renewi aims to present a balanced
and understandable assessment of our strategy, financial
position and prospects when reporting to shareholders and
other interested parties. The investors pages of renewiplc.com
contain a wide range of information of interest to institutional
and private investors.
Board members are kept informed of any issues and receive
regular reports and presentations from executive management
and our brokers to assist them in developing an understanding
of our major shareholders’ views about Renewi.
All Board members ordinarily attend the AGM to answer questions
raised by shareholders, including private investors. Details of proxy
voting by shareholders, including votes withheld, are given at the
AGM and are posted on our website following the AGM.
All resolutions were approved by shareholders at the
Company’s 2019 AGM. The Company’s 2020 AGM will be held
on 16 July 2020 but will be subject to restrictions necessitated
by the Covid-19 pandemic. A Notice of AGM, setting out detailed
arrangements, will be sent to all registered holders of ordinary
shares and, where requested, to the beneficial holders of
shares, in advance and will also be available on our website
at renewiplc.com.
Wider stakeholder engagement
The Directors recognise the fundamental importance of promoting
the long-term success of the Company. Clear communication
and proactive engagement to understand the issues and factors
that are most important to stakeholders are fundamental to this.
A summary of our approach to stakeholder engagement
and impact on decision-making is set out on pages 99 to 100.
Our section 172(1) statement is set out on page 85.
Renewi has an active investor relations programme to engage
with institutional investors, analysts, press and other stakeholders.
The Company uses several channels to do this, including its results
presentations, reports, regulatory news announcements, press
releases, AGM, face-to-face meetings including roadshows,
videos, the corporate website and social media channels.
During FY20, the Remuneration Committee consulted
major institutional shareholders to understand their views on
remuneration matters, including the updated Remuneration
Renewi plc Annual Report and Accounts 2020 Policy. Details of this engagement are set out in the Remuneration
Report from page 110.
Workforce engagement
We rely on our workforce and their commitment to uphold our
values, deliver our strategic priorities and make the changes
necessary to sustain our performance. Engagement with the
workforce is key to ensuring that the Board understands the
employee voice.
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.
E. Our workforce policies
Renewi operates a Code of Conduct, based on our core values,
expected behaviours and key policy principles. This includes
creating a safe and healthy working environment, diversity,
equality, non-discrimination and accountability. Renewi is an
equal opportunities employer and publishes an annual Modern
Slavery Statement.
DIVISION OF RESPONSIBILITIES
F. The role of the Chairman
Ben Verwaayen, our Non-Executive Chairman, is responsible for
leadership of the Board and promoting a culture of openness and
constructive debate. He was independent upon his appointment
as Chairman on 1 April 2020.
G. Composition of the Board
The Board comprises six Non-Executive Directors, including
the Chairman, and two Executive Directors. The Board’s
responsibilities are set out on pages 94 to 95 of the Corporate
Governance Report.
The roles of the Board, Board Committees, Chairman and
CEO are documented, as are those matters reserved to the Board.
They can be found on our website at renewi.com/en/investors/
corporate-governance. The CEO is responsible to the Board for the
management, development and performance of our business for
those matters for which he has been delegated authority from the
Board. Although the CEO retains full responsibility for the authority
delegated to him by the Board, he has established, and chairs,
the Executive Committee, which is the vehicle through which
he exercises that authority in respect of our business.
During the year, the Board considered the independence of
each Non-Executive Director for the purposes of the UK Corporate
Governance Code and finds that all the Non-Executive Directors
are independent.
The membership of the Board as at 31 March 2020 can be
found on page 92 of the Corporate Governance Report, and
biographical information about individual Directors can
be found on pages 88 to 89.
H. Role of the Non-Executive Directors
The role of the Non-Executive Directors is to provide constructive
challenge and strategic guidance, offer specialist advice and hold
management to account. 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 that 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. The Chairman also meets and
communicates regularly with the Non-Executive Directors
without the presence of the Executive Directors.
Time commitment
Generally, Non-Executive Directors commit 24 days a year to the
Group’s business. In practice, Board members’ time commitment
exceeds this minimum expectation when all the work that they
undertake for the Group is considered, particularly in the case
of the Chairman of the Board and the Chairs of the Board
Committees. As well as their work in relation to formal Board and
Board Committee meetings, the Non-Executive Directors also
commit time throughout the year to meetings and conference calls
with various levels of executive management, visits to Renewi’s
sites throughout the world and, for new Non-Executive Directors,
induction sessions and site visits.
If a Director is unavoidably absent from a Board or Board
Committee meeting, they receive and review the papers for the
meeting and typically provide verbal or written input ahead of the
meeting, usually through the Chairman of the Board or the Chair
of the relevant Board Committee, so that their views are made
known and considered at the meeting.
Given the nature of the business to be conducted, some Board
meetings are convened at short notice, which can make it difficult
for some Directors to attend due to prior commitments.
Subject to specific Board approval, Executive Directors and
other Executive Committee members may accept external
appointments as non-executive directors of other companies,
and retain any related fees paid to them, provided that such
appointments are not considered by the Board to prevent or
reduce the ability of the executive to perform his or her role
within the Group to the required standard.
Senior Independent Director
Allard Castelein, who joined the Board as a Non-Executive Director
in January 2017, was appointed Senior Independent Director with
effect from 1 September 2019. The role of the Senior Independent
Director is to serve as a sounding board for the Chairman and as
an intermediary for the other Directors when necessary. The Senior
Independent Director will be available to shareholders should
they have concerns that contact through the normal channels
of Chairman, Chief Executive Officer or Chief Financial Officer
has failed to resolve, or where such contact is inappropriate.
I. The Company Secretary
The Company Secretary is responsible to the Chairman for
ensuring that all Board and Board Committee meetings are
properly conducted, that the Directors receive appropriate
information prior to meetings to enable them to make an
effective contribution, and that governance requirements
are considered and implemented.
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1234Renewi plc Annual Report and Accounts 2020 CORPORATE GOVERNANCE REPORT continued
COMPOSITION, SUCCESSION AND EVALUATION
J. Appointments to the Board
and succession planning
The Nomination Committee regularly reviews the composition of
the Board and the status of succession for both senior executive
management and Board-level positions. Directors have regular
contact with and access to succession candidates for senior
executive management positions.
The Nomination Committee’s role is to recommend to the
Board any new Board appointments and to consider, more
broadly, succession plans for both senior executive management
and Board-level positions. As part of its consideration, the
Nomination Committee evaluates the balance of skills, knowledge,
experience and diversity on the Board. Any decisions relating to
the appointment of Directors are made by the entire Board based
on the merits of the candidates and the relevance of their
background and experience, measured against objective criteria,
with care taken to ensure that appointees have enough time to
devote to our business.
During FY20, a new Non-Executive Director, Ben Verwaayen,
was recruited to succeed Colin Matthews who retired as Chairman
of the Board on 31 March 2020. For information, please see the
Nomination Committee Report from page 106.
Re-election of Directors
In accordance with Article 94 of the Articles, all Directors retire
at each AGM and may offer themselves for re-election by
shareholders. Accordingly, all the Directors will retire at the AGM in
July 2020. The Notice of AGM will contain details of all Directors
seeking election or re-election.
For more information, see the Other disclosures from page 126.
K. Skills, experience and
knowledge of the Board
As part of its role, the Nomination Committee is responsible
for reviewing the composition of the Board, to ensure that
it has the appropriate expertise while also recognising the
importance of diversity.
L. Board evaluation
As an external evaluation was carried out in FY18, the Board
agreed that the FY20 review would be carried out through a
structured online survey. The findings are set out in the Nomination
Committee Report on page 107.
The Committee maintains a policy for the pre-approval of all
permitted non-audit services undertaken by the external auditor.
The principal purpose is to ensure that the independence of
the auditor is maintained. The Audit Committee also reviews the
independence and effectiveness of the Internal Audit function.
For more information, see the Audit Committee Report
on pages 102 to 105.
N. Fair, balanced and
understandable assessment
The Board as a whole is responsible for the Company’s financial
and business reporting including reviewing the Company’s
financial results announcements.
The Board considers this Annual Report, taken as a whole,
to be fair, balanced and understandable, and provides the
information necessary for shareholders to assess Renewi’s
position, performance, business model and strategy.
O. Risk management and internal controls
The Board has overall responsibility for our system of internal
controls and risk management policies and has an ongoing
responsibility for reviewing their effectiveness. During FY20, the
Directors continued to review the effectiveness of our system of
controls, risk management (including a robust assessment of the
emerging and principal risks, including those that would affect the
business model, future performance, solvency or liquidity) and
high-level internal control processes. These reviews included an
assessment of internal controls and financial, operational and
compliance controls, and risk management and their effectiveness.
These were supported by management assurance of the maintenance
of controls reports from internal audit, as well as the external
auditor on matters identified in the course of its statutory audit work.
The system of controls is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and
can only provide reasonable (not necessarily absolute) assurance
of effective operation and compliance with laws and regulations.
The Directors believe that the Group maintains an effective,
embedded system of internal controls and complies with the
FRC’s guidance entitled ‘Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting’.
For more information about the ways in which we manage
our business risks, our procedures for identifying our emerging
risks, how we describe our principal risks and uncertainties
and our Viability Statement, see the Risks and Uncertainties
section from page 76.
AUDIT, RISK AND INTERNAL CONTROL
REMUNERATION
M. Internal and external audit
The Audit Committee reviews the Company’s relationship
with its external auditors, including the independence of the
external auditors. In 2019, the Audit Committee carried out a
comprehensive tender process to select new auditors and allow
the rotation of the external auditor, PricewaterhouseCoopers LLP.
Subject to approval by shareholders at the AGM, BDO LLP
will conduct the audit of the Company’s and Group’s
consolidated financial statements for the financial year
ending 31 March 2021. As part of a handover process
BDO LLP has been shadowing PricewaterhouseCoopers LLP
until they resign as auditors of the Company following
completion of the 31 March 2020 audit.
P. Policies and practices
The Remuneration Committee is responsible for determining,
approving and reviewing the Company’s remuneration principles
and frameworks, to ensure they support the strategy of the
Company and are designed to promote long-term success.
For more information on the Remuneration Committee’s
work during FY20, see the Directors’ Remuneration Report
from page 108.
Q. Procedure for developing
remuneration policy
During FY20, the Remuneration Committee reviewed the Directors’
Remuneration Policy to ensure it continues to: align with corporate
98
Renewi plc Annual Report and Accounts 2020 governance best practice; support the Company’s ability to recruit
and retain executive talent to deliver against its strategy; and
promote the delivery of long-term strategy. As part of the process
for developing the Directors’ Remuneration Policy, a consultation
of major institutional shareholders was undertaken during the year.
Details of this engagement are set out in the Directors’
Examples of workforce engagement are set out on page 100.
The CEO, CFO and Chairman met with investors throughout the
year to understand their views on a range of issues. In February
2020, the Remuneration Committee Chair led a shareholder
consultation exercise in connection with the triennial
Remuneration Policy Review.
Remuneration Report from page 110.
The Directors’ Remuneration Policy, which is to be put to
shareholders for approval at the 2020 AGM, can be found from
page 111.
R. Exercising independent judgement
The Remuneration Committee exercises independent
judgement when determining remuneration outcomes. The
Committee takes into account factors such as wider business
and individual performance during the year, including health
and safety performance and environmental, social and governance
(ESG) objectives.
For more information on FY20 performance, decisions and reward
outcomes, see the Directors’ Remuneration Report from page 110.
CONNECTING WITH OUR STAKEHOLDERS
How we engage as a company
Renewi’s purpose and ambition is to protect the world by
giving new life to used materials. Our vision is to be the leading
waste-to-product company in the world’s most advanced
circular economies, contributing to a sustainable society for all
our key stakeholders. Renewi touches the lives of many people
and as a result we have a number of key stakeholder groups.
Considering the interests of our stakeholders is fundamental to
the way in which Renewi operates. Our values and Code of Conduct
empower employees to make the best decisions in the interests
of the Group and our stakeholders, helping to ensure that these
considerations are made not only at Board level, but throughout
our organisation.
A stakeholder matrix can be found on pages 15 to 17 of the
Strategic Report, illustrating how we engaged and responded
to stakeholder concerns over FY20. Renewi has refreshed
its stakeholder groupings in response to the Companies
(Miscellaneous Reporting) Regulations 2018.
How our Board understands
the interests of our stakeholders
To promote and facilitate Directors’ understanding of the
interests of our stakeholders, the Board will regularly review
the stakeholder matrix, which sets out management’s engagement
with stakeholders and highlights the most significant issues
to each group. This provides assurance to the Board that
management has engaged with stakeholders, allowing the
Board to consider stakeholder impact, as well as other factors,
when making decisions.
Over FY20, the Board received updates on various engagement
initiatives designed to promote waste and recycling and
understand sustainability goals among stakeholders.
This provided the Directors with an understanding of the various
initiatives that the Group leads, and the relationship between
the Group, its customers, suppliers and the communities in
which it operates.
Throughout FY20, Directors also engaged with various
stakeholders, including the workforce via the Pulse surveys,
to understand the issues that concern and impact them most.
How our Board considers stakeholders’
interests in decision-making
Throughout the year, Directors recognised their responsibility
to act in good faith to promote the success of the Company for
the benefit of shareholders, while also considering the impact of
their decisions on wider stakeholders and other factors relevant
to the decision being made. Clear communication and proactive
engagement to understand the issues and factors that are
most important to stakeholders is fundamental to this.
The Board acknowledges that every decision made will not
necessarily result in a positive outcome for all stakeholders. By
considering our purpose and values, together with our strategic
priorities, the Board aims to ensure that the decisions made are
consistent and intended to promote the Company’s long-term
success. See pages 15 to 17 for full details of how Renewi engages
with stakeholders and responds to their needs and concerns.
PRINCIPAL DECISIONS IN FY20
We define ‘Principal Decisions’ as decisions and discussions
that are material or strategic to the Group, and also those
that are significant to any of our stakeholder groups. We consider
the following items to be examples of Principal Decisions made
by the Board during FY20.
Secondary listing
In January 2020, Renewi successfully applied for admission
to trading of its shares on Euronext Amsterdam. The Board
determined this to be beneficial to the Company and its
stakeholders for a number of reasons including: easier access
for shareholders choosing to invest in euros in Amsterdam, the
alignment of Renewi’s brand with Dutch economic and societal
interest in the circular economy, and the brand’s visibility to
Benelux investors. In addition, the secondary listing is expected
to contribute to liquidity in the Group’s shares through its
increased profile in the Benelux and expanded research
coverage. Following the listing, we have seen a material increase
in the daily volumes traded. Renewi also retains its premium
listing on the London Stock Exchange.
Sale of Renewi Canada and Reym businesses
During the year, Renewi sold its operations in Canada and
Reym industrial cleaning business in the Netherlands, resulting
in total cash proceeds of up to €115m. The disposal of these
businesses both strengthened the Group’s balance sheet and
sharpened the focus on core Benelux recycling operations.
Long-term contracts were also agreed with Reym’s purchaser
to ensure continued customer service and waste inflows to
ATM. The impact of these sales on the employees has been
carefully considered.
Renewi 2.0
The goal of the Renewi 2.0 programme is to simplify Renewi’s
overheads, in order to improve customer experience, to increase
employee satisfaction and to deliver cost benefits. It comprises
99
1234Renewi plc Annual Report and Accounts 2020 In addition to direct engagement with the workforce, the
Board is able to receive updates from the HR Director to
understand the workforce’s views on a wide variety of topics.
The Board also receives a number of company-wide reports
providing insight into the views of the entire workforce,
regardless of location and role, allowing for a breadth of
views to be understood when making key decisions.
CASE STUDY
Dutch Works Council members had expressed an interest
in understanding more about the governance process within
Renewi plc, and so in October 2019 members were invited
to attend a governance workshop delivered by Non-Executive
Director Jolande Sap. The workshop included a briefing
about governance and enabled Works Council members
to directly ask questions about governance to a member
of the Renewi plc Board.
Investing in and rewarding our workforce
Although the Remuneration Committee does not consult
directly with employees, the Committee considers general
basic salary increases for our workforce, aiming to ensure the
global total reward offering is competitive, compelling and aligned
to our business performance; while supporting a culture where
everyone feels valued and included. For more information see
the Remuneration Report – page 117.
Employee Pulse surveys
Renewi conducts regular Pulse surveys to understand the mood
of employees and their attitude towards Renewi as an employer.
The data analysis includes the calculation of a net promoter score
estimating the likelihood of staff to recommend Renewi as an
employer. The results and analysis of Pulse surveys are reported
to the Board to allow it to monitor any changes in attitudes. For
more information about Pulse surveys, see the Care for people
section on pages 70 to 75.
CORPORATE GOVERNANCE REPORT continued
a number of initiatives that will be executed over the next
three years, each selected and designed to positively impact
one or multiple of these stakeholders (ie customers, employees
and stakeholders).
ATM thermally treated soil
In 2018, Dutch regulators imposed a ban on the thermally treated
soil (TGG) produced by ATM for the Dutch market. An extensive
testing programme was undertaken with regular dialogues with
the Dutch regulator, in order to understand the issue and get the
restrictions lifted. Throughout the TGG ban the Board received
regular reports on the progress of TGG testing and discussions with
the regulator. In December restrictions were lifted on the use of
TGG in the Dutch market, allowing TGG produced by the ATM
facility to be used for industrial purposes at appropriate sites
in the Netherlands and abroad, albeit subject to local regulators’
approval. By the end of FY20 the first shipment of TGG had been
made. The Board believes that engagement with the regulator has
contributed to a resolution and has been to the benefit of ATM staff
and investors who were keen for TGG production to resume.
The strategic importance of developing
waste-to-product facilities
The Board considers it to be of strategic importance to further
develop waste-to-product services and implement cleaner and
greener methods of collection and recycling and to increase the
quantity and quality of secondary products produced. It holds
regular discussions on how best to work with customers, suppliers,
technology providers, regulators and other stakeholders to
improve recycling services, facilities and processes. The Board
understands that utilising the latest technological developments
in collection, recycling and secondary product production
will make Renewi more competitive in the marketplace, and
better able to provide a superior service to its customers,
at a higher margin.
For more information please see our Sustainability in Action
case studies throughout this Annual Report.
ENGAGING WITH OUR WORKFORCE
Renewi is committed to being a great place to work. Engagement
with employees is an important element in fostering a positive
environment in which all employees are respected, openness is
valued, diversity celebrated and every voice heard. We recognise
and value our people as our most important asset in achieving our
goals, upholding our values and delivering our strategic priorities.
In 2019, in response to the provision in the 2018 UK Corporate
Governance Code prescribing certain methods that the Board
could use to engage with the workforce, the Board designated
Non-Executive Director Jolande Sap to assist the Board with
workforce engagement. Over the course of the year, Jolande has
been involved in a number of workforce engagement activities
which are outlined in the following table.
WORKFORCE ENGAGEMENT ACTIVITIES
Participated in the annual general consultation meeting between
management and the Works Council in January 2020
Held three meetings with the Chair of the Works Council
Participated in a governance workshop for the Dutch Works Council in
October 2019
The Board attended five site visits
100
Renewi plc Annual Report and Accounts 2020 101
1234Renewi plc Annual Report and Accounts 2020 Audit Committee Report
On behalf of the Board, I am pleased to
present the Audit Committee Report for
the year ended 31 March 2020.
At its meeting in May 2019, the Committee considered
corporate governance compliance, taxation and the 2019
financial statements. The October 2019 meeting was
concerned primarily with the interim results, review of the
non-trading and exceptional items policy, the annual audit process
effectiveness review and the outcome of the competitive audit
tender process. The February 2020 meeting considered Group risk
management strategy and policy, preparation of the 2020 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, certain additional
disclosures with regard to provisions, estimates and judgements
and alternative performance measures were included in the
2019 financial statements. A letter confirming the closure of
the enquiries was received in October 2019. 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 its
preparation of the Viability Statement as required by Provision
31 of the UK Corporate Governance Code. The Group’s Viability
Statement on page 84 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 2024.
COVID-19 AND GOING CONCERN
The impact of Covid-19 on the Group’s prospects has been
considered by reforecasting an assumed potential impact
of Covid-19 which includes the period of 12 months from the
date of this report. A further downside scenario was prepared.
The Committee has reviewed these models and has focused
on the key assumptions of the continued cash generation
of the Group and the compliance with covenants. After careful
consideration, the Committee has confirmed to the Board
that sufficient headroom exists and that the adoption of the
going concern principle remains appropriate.
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, 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 and
March 2019, reviews of expected future cash flows and
assumptions on a contract-by-contract basis, and discussions
with management, are conducted as part of the interim and
year-end procedures. During the year, an additional charge was
Marina Wyatt
Chair of the Audit Committee
Committee membership
Marina Wyatt (Chair); Neil Hartley; Luc Sterckx; Jolande Sap
FY20 Committee meeting attendance
Marina Wyatt (Chair)
Neil Hartley
Allard Castelein
Luc Sterckx
Jacques Petry
3 (3)
3 (3)
3 (3)
3 (3)
2 (2)
Bracketed figures indicate maximum potential attendance of each Director.
Jacques Petry retired from the Committee and Board on 31 December 2019.
On 31 March 2020, following a restructuring of Board Committee membership, Allard
Castelein stepped down from the Audit Committee and Jolande Sap was appointed
to the Committee on 1 April 2020.
Role of the Committee
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, internal
controls and any other matters referred to it by the Board. This covers:
monitoring the integrity of the financial statements including
annual and half-yearly reports;
reviewing and challenging the consistency of and changes to
significant accounting policies, the methods used to account for
significant or unusual transactions and appropriate estimates
and judgements;
keeping under review the adequacy and effectiveness of
internal financial controls and internal control and risk
management systems;
reviewing the adequacy of procedures for detecting fraud and
ensuring that appropriate arrangements are in place to allow
for Company employees to raise concerns, in confidence, about
possible wrongdoing in financial reporting or other matters;
monitoring and review of the effectiveness of the internal audit
function in the context of the overall risk management system;
the appointment, terms of engagement, effectiveness, objectivity
and independence of the external auditors and the nature and
scope of the audit; and
the development and implementation of policy on the engagement
of the external auditor to supply non-audit services.
For terms of reference go to renewiplc.com/audit
102
Renewi plc Annual Report and Accounts 2020 reflected for increased disposal costs at one of the contracts.
Following this process, the Committee has concluded that an
appropriate level of provisions has been reflected in the balance
sheet as at 31 March 2020.
` 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
and presentation from the Financial Reporting Council. Based
on a review of the supporting papers from management, the
Committee considers that these items have been appropriately
classified and are in line with the non-trading and exceptional
items policy which is reviewed annually by the Committee.
` 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 annual impairment review is submitted to the February
meeting. Given the current Covid-19 pandemic, revised
modelling has been prepared during March and April, and all
impairment models have been updated. The Committee has
reviewed the 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 from discussions
with management that there are no risks of impairment for
property, plant and equipment or other intangibles as a result
of the ongoing pandemic.
` Landfill-related 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
considered and confirmed that assumptions and the period of
liability are appropriate. Given recent declines in risk-free rates
used to determine the discount rates, it was considered
appropriate to reduce discount rates by between 0.5% and 2%,
which has resulted in an exceptional charge and increase in
landfill provisions of €11.6m. Key sensitivities are considered
and appropriate disclosures are given in the provisions note
in the financial statements.
` Accounting for various tax-related matters including the
level of provisions The most significant judgements for tax
relate to deferred tax asset recognition. The Committee received
verbal and written reports from senior management that there
have been no significant changes during the year and the level of
balances recognised at March 2020 remains appropriate.
` Disposal of businesses As determined at March 2019, the
sale processes for the Canada Municipal and Reym businesses
were sufficiently advanced, which resulted in the criteria as
set out in IFRS 5 being met and the businesses were held
for sale, with Canada meeting the definition of a discontinued
operation. Both disposals have been completed in the year
and the resultant losses on disposal have been reviewed
and appropriate disclosures given in the disposals note in
the financial statements. Given the disposals, metrics have also
been presented on an ongoing business basis to highlight the
remaining Group operations.
` Lease accounting The new leasing standard became effective
from the beginning of the current year. A detailed assessment of
the impact and the approach was undertaken last year and this
has been fully implemented in the year. The first year impact
disclosures, as set out in section 9 of the financial statements,
have been reviewed and are considered appropriate.
The Committee is satisfied that the judgements made by
management are reasonable and the appropriate disclosures
in relation to key judgements and estimates have been included
in the financial statements.
FAIR, BALANCED AND UNDERSTANDABLE
The Committee has assisted the Board in 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 2020, the Committee was able to confirm
this to be the case.
EXTERNAL AUDIT
PricewaterhouseCoopers LLP (PwC) was appointed as the
Company’s external auditor by shareholders at the AGM in
1994. A comprehensive tender process for the external audit
was completed during the year and BDO LLP has been selected
as the new auditor and will conduct the audit for the financial
year ending 31 March 2021. The appointment is subject to
approval by shareholders at the forthcoming AGM.
The Committee reviews the performance, effectiveness and
independence of the auditors on an annual basis. PwC rotates
its lead audit engagement partner, as required by its 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 10 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.
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 FY20 audit
process was based on PwC’s standard procedures reflecting
its understanding of the business and focusing on scoped
areas determined to be of highest risk.
The Committee’s responsibility to monitor and review
the objectivity and independence of the external auditor is
supported by a non-audit services policy. During the year
the Revised Ethical Standard was published by the Financial
Reporting Council, which set out new requirements including
a ‘blacklist’ of non-permitted services, a ‘whitelist’ of permitted
services and a percentage cap for non-audit services compared
to the average statutory audit fee over the previous three years.
Permitted services include those required by law and regulation
and other assurance services closely linked to the audit or annual
report and reporting accounting services. The new regulation
103
1234Renewi plc Annual Report and Accounts 2020 AUDIT COMMITTEE REPORT continued
came into effect on 15 March 2020. These recent changes have
been incorporated into the 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. The
approval process of any new engagement remains in place with
the CFO able to approve any new engagement up to the value
of €25,000, with anything in excess of that limit requiring
Committee approval.
In determining whether or not to engage the external auditor
to provide any non-audit services, consideration will be given
to whether doing so would create a threat to the auditor’s
independence. Similarly, the external auditor will not be permitted
to undertake any advocacy role for the Group such that the
auditor’s objectivity may be compromised and, as per the new
regulation, no internal audit services, secondments or contingent
fee arrangements are permitted.
During the year €96,000 of non-audit services were provided
by PwC, which is comparable with €35,000 in the prior year. The
total audit fees, as disclosed in note 3.2 of the financial statements,
amounted to €1.8m (2019: €1.8m).
During the year, tax and other professional services have
also been provided to the Group by the audit firms Deloitte,
EY and KPMG.
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 of 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 internal audit. The Committee monitors and
reviews the effectiveness of its work and approves its annual plan.
During the year, the key control framework was finalised and
rolled out to all Divisions with compliance reporting consistently
above 90%. Significantly more internal audit reviews were
undertaken this year.
Consistent with previous years, internal audit services from
suitably qualified external providers were also engaged during the
year. In a new co-sourcing model, subject matter experts from
KPMG assisted with the fieldwork on the robotic automation
processes implemented at the shared service centre in Lommel
and a data analytics review on input pricing.
The detailed findings from all reviews were presented to and
considered by the Committee. Any necessary actions, including
improvements, are acted upon by local divisional teams with
revisits from Internal Audit as required and 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 page 129.
RISK MANAGEMENT
The Group risk management framework, major risks and the steps
taken to manage these risks are outlined on pages 76 to 84.
104
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 76 to 78.
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 29 of the UK Corporate Governance Code.
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 register 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 used to help management
of the business and to provide early warning of potential
additional risk factors
` Monthly meetings and visits to key operating locations by
the Executive Directors and most senior managers to discuss
performance and plans
` Appointment and retention of appropriately experienced
and qualified staff to help achieve business objectives
` An annual risk-based internal audit plan approved by the
Committee. Summaries of audit findings and the status of action
plans to remedy significant failings are discussed at Group Board
and Committee meetings on a regular basis
` A range of quality assurance, safety and environmental
management systems 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
` Prompt review by the Committee of any fraudulent activity
or whistle-blowing reports with appropriate rectifying action
Renewi plc Annual Report and Accounts 2020 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
` Biannual certification by divisional managing and Finance
Directors and Executive Directors on compliance with
appropriate policies and accuracy of financial information
` The Committee receives regular reports from the Group
Tax Manager on the Group’s tax policy, tax management
and compliance
ANTI-BRIBERY AND CORRUPTION
The Renewi Code of Conduct and Reporting and Investigation
Protocol introduced in the prior year has operated throughout
the year and integrity reporting is a standing item at all
committee meetings.
Marina Wyatt
Chair of the Audit Committee
4 June 2020
105
1234Renewi plc Annual Report and Accounts 2020 Nomination Committee Report
On behalf of the Board, I am pleased
to present the Nomination Committee
Report for the year ended 31 March 2020.
Ben Verwaayen
Chair of the Nomination Committee
Committee membership
Ben Verwaayen (Chair); Allard Castelein; Marina Wyatt; Neil Hartley;
Luc Sterckx
FY20 Committee meeting attendance
Colin Matthews
Allard Castelein
Marina Wyatt
Neil Hartley
Luc Sterckx
Jolande Sap
Jacques Petry
5 (5)
5 (5)
5 (5)
5 (5)
5 (5)
5 (5)
4 (4)
Bracketed figures indicate maximum potential attendance of each Director.
Ben Verwaayen succeeded Colin Matthews as Chair of the Nomination Committee on 1 April
2020 following Colin Matthews’ retirement from the Committee and the Board.
Jacques Petry retired from the Committee and Board on 31 December 2019.
On 31 March 2020, following a restructuring of Board Committee membership, Jolande Sap
stepped down from the Nomination Committee.
Role of the Committee
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
For terms of reference go to renewiplc.com/nomco
106
The Committee met five times during the year and details
of members’ attendance are shown opposite. As
announced at last year’s AGM, the Committee launched
a search for a new Chairperson as part of an orderly
succession process. In addition, the Committee was
particularly focused on recruitment for two key Executive
Committee positions.
SUCCESSION PLANNING
The Committee worked closely with independent search
consultants Heidrick & Struggles during the year to recruit
a new Chairperson.
Searches were undertaken based on a prepared profile of
the necessary skills, experience and requisite capabilities to
lead the next stage of the Company’s development in
supporting Europe’s transition towards a circular economy.
A comprehensive process involved shortlisting of candidates
followed by interviews by the Senior Independent Director,
other Committee members and the Chief Executive
Officer, before a final recommendation was made by the
Committee to the Board.
Ben Verwaayen was appointed as Non-Executive Chairman
to succeed Colin Matthews on 1 April 2020. Ben brings a
wealth of skills and experience to the Chairmanship of Renewi,
including those gained from leading public companies in
both the UK and the Netherlands. He has particularly relevant
experience in energy and climate change policy and in
growing companies in dynamic markets.
Search consultants Spencer Stuart were engaged in the
year in the Benelux to assist with a further two important
appointments to the Executive Committee. Meinderdjan
Botman was appointed Managing Director, Commercial Waste
Netherlands in October 2019 and Maarten Buikhuisen was
appointed Chief Information Officer in January 2020. Each
has more than 20 years’ experience in their respective fields.
Over the course of the year we have seen some changes
to the composition of our committees. At the end of August,
Jacques Petry stepped down from his role as Senior
Independent Director in preparation for his retirement from
the Board in December. Allard Castelein has stepped down
from his role as Chair of the Remuneration Committee to fill
the Senior Independent Director vacancy, and Neil Hartley
has taken on the Remuneration Committee Chair role.
The Committee believes these Directors have the most
appropriate skills and experience to fill these vacancies.
Biographies of the current Directors and Executive
Committee members are set out on pages 88 to 91 of
the Governance section and are also 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 also required under the
Company’s Articles of Association to stand for re-election
at each AGM.
Renewi plc Annual Report and Accounts 2020 BOARD EVALUATION
As an external evaluation was carried out in FY18, the Board
agreed that the FY19 review would be carried out via a structured
questionnaire survey. The survey identified some areas for
development, which included a closer involvement with
technological developments and emerging themes in the
recycling and waste-to-product markets and circular economy.
Key findings from the FY19 review and subsequent actions
are detailed below.
FINDING
ACTION
Continue the strategy
review process with
a greater emphasis
on technology and
emerging trends
Refresh the risk
management
processes
Bring a broader range
of employee and
cultural issues to
the Board
Schedule more time
for talent review and
succession planning
discussions
The Board has reviewed divisional strategies
with the assistance of the Strategy and
Business Development Director, allowing
a re-prioritisation of capital expenditure.
Risk registers and mitigation plans have
been revised for the Divisions and the Risk
Committee supplemented with more frequent
monthly review meetings.
Jolande Sap was appointed as the Board’s
designated ‘workforce engagement’ Director,
establishing a stronger link between staff and
the Board and improving Board oversight of HR
matters. Stronger working relationships have
been built between the HR Executive Team
and HR matters have been reported directly to
the Board more frequently, including the results
of employee Pulse surveys.
A new Renewi Talent Model and Review
Process is being rolled out and a new role
of Group Talent Manager has been created.
Further development of formal succession
plans at Board and Executive Committee level
is to be undertaken, although the Board has
successfully appointed a new Chief Information
Officer and Managing Director, Commercial
Waste Netherlands over the course of the year.
Since the financial year end, the former UK
Municipal Division Managing Director has been
promoted to lead the new Specialities Division.
FY20 EVALUATION
The Board again agreed that, as an external evaluation
was carried out in FY18, the FY20 evaluation would be
carried out via a structured questionnaire survey.
A number of themes emerged from the evaluation,
including the need for continued focus on technological
developments, talent management and the importance
of further developing communications with Renewi’s
stakeholders and wider society.
Having considered the results of the evaluation, the Board
agreed specific FY20 action plans across three main areas.
1. Continue strategic emphasis on technology and
emerging trends.
2. Refresh and, where possible, formalise structured succession
plans for the Board, Executive Committee and senior
management levels.
3. Continue to foster communications between the Board and
all the Group’s stakeholders, including customers, employees,
investors, regulators and wider communities/society.
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. The Board was therefore able
to recommend the election and re-election of all those Directors
standing at the forthcoming AGM.
Ben Verwaayen
Chair of the Nomination Committee
4 June 2020
Board tenure
Background/experience of Non-Executive Directors
<2 years
2-5 years
>5 years
Male
Female
Total
3
2
1
1
0
1
4
2
2
Energy/chemicals
Politics/socio-economics
Telecoms
Transport
Private equity/investment
Male
Female
Total
1
0
1
1
1
0
1
0
1
0
1
1
1
2
1
107
1234Renewi plc Annual Report and Accounts 2020 Directors’ Remuneration Report
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 Companies (Miscellaneous Reporting) Regulations 2018 and
the Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019. 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 132 and those aspects of the Report that have
been subject to audit are clearly marked.
SUMMARY
The key elements of the Directors’ Remuneration Report are
outlined below.
The Annual Statement
Summarises performance and reward in the year ended 31 March
2020 and how, subject to shareholder approval, the Remuneration
Policy will be operated for the year ending 31 March 2021.
Remuneration Policy
Details the Remuneration Policy, which will be put to shareholders
for approval at the 2020 AGM given that the 2017 Policy is reaching
the end of its three-year life.
Annual Report on Remuneration
Details how the Remuneration Policy was implemented during
the year ended 31 March 2020 and how the Committee intends the
Policy to apply for the year ending 31 March 2021.
WORK OF THE COMMITTEE DURING THE YEAR
The Committee met six times during FY20 and details of members’
attendance at meetings are shown above left. 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
FY19 annual bonus awards;
` setting the performance targets for the FY20 annual bonus;
` agreeing the vesting levels for the 2016 LTIP awards which were
due to vest in 2019;
` agreeing the award levels and performance targets for the 2019
LTIP awards;
` agreeing Executive Director base salary increases and the
Chairman’s fee from 1 April 2020;
` considering regulatory/disclosure developments and
shareholder views during FY20;
` reviewing and consulting shareholders on the new
Remuneration Policy; and
` reviewing the impact of Covid-19 and resultant temporary
changes to remuneration arrangements for Executive Directors
and below Board members of the Executive Team.
In addition, the Committee has considered how the Remuneration
Policy and practices are consistent with the six factors set out in
Neil Hartley
Chair of the Remuneration Committee
Committee membership
Neil Hartley (Chair); Allard Castelein; Luc Sterckx
FY20 Committee meeting attendance
Neil Hartley
Allard Castelein
Luc Sterckx
Marina Wyatt
Jolande Sap
Jacques Petry
Colin Matthews
6 (6)
6 (6)
6 (6)
6 (6)
5 (6)
3 (3)
6 (6)
Bracketed figures indicate maximum potential attendance of each Director.
Neil Hartley succeeded Allard Castelein as Chair of the Committee on 1 September 2019.
Jacques Petry and Colin Matthews retired from the Committee and Board on 31 December
2019 and 31 March 2020 respectively.
Also on 31 March 2020, following a restructuring of Board Committee membership, Marina
Wyatt and Jolande Sap stepped down from the Committee.
Jolande Sap was absent from the meeting held in February 2020 due to it not being
possible to find a date to accommodate attendance of the full Committee.
Role of the Committee
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 and below Board members of
the Executive Team
Determine the terms on which LTIP, Deferred Annual Bonus
and Sharesave awards are made to employees
Determine the policy for and scope of pension arrangements
for the Executive Directors and below Board members of the
Executive Team
For terms of reference go to renewiplc.com/remco
108
Renewi plc Annual Report and Accounts 2020
Provision 40 of the 2018 UK Corporate Governance Code:
` Clarity Our policy is well understood 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.
` Risk Our Remuneration Policy is based 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 (in terms of both deferred
bonus and LTIP awards); and
(iii) a number of shareholder protections (ie bonus deferral,
shareholding guidelines, malus/clawback provisions) which
have been designed to mitigate the impact 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.
` 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.
` 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.
109
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
The Annual Statement
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year ended 31 March 2020.
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.
COVID-19
In response to the pandemic, the Remuneration Committee has
been proactive in taking appropriate measures. These include:
(i) aligning the bonus payout for Executive Directors and Executive
Committee members with shareholders’ interests by changing the
cash payout of the FY20 bonus to payout wholly in shares; (ii) a
voluntary 20% salary/fee reduction was agreed for at least three
months from 1 April 2020 for all Board members and a 10%
reduction for Executive Committee members; and (iii) the
suspension of FY21 bonus arrangements across the Group,
which will be reintroduced at the discretion of the Committee
when the Company is ready to give forward guidance.
FY20 PERFORMANCE, DECISIONS
AND REWARD OUTCOMES
FY20 annual bonus
Achievement of profit and net debt/EBITDA leverage targets
were substantively met, contributing to the financial target element
of the bonus measures. Personal objectives were also largely met
save for the health and safety improvement target. This resulted
in bonus awards of 132% and 130.5% of the base salary for the
Chief Executive Officer and Chief Financial Officer respectively.
As detailed below, in response to Covid-19, the Committee has
determined this year to deliver in shares the two-thirds proportion
of their bonus usually paid up-front in cash, in addition to the
usual one-third delivered as deferred share awards through the
Deferred Annual Bonus Scheme. Further details are set out on
pages 120 and 121.
2017 LTIP vesting in 2020
The Long-Term Incentive Plan (LTIP) granted in 2017 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 2020. Although the threshold
share price target was not met, threshold targets for both EPS
and ROCE were exceeded and as a result 43.3% of the 2017
LTIP will vest. Further details are set out on page 121.
Use of Remuneration Committee discretion
The Committee has used its discretion to deliver all of Executive
Directors’ annual bonus for FY20 in shares. The FY21 bonus
has been suspended and will be reintroduced at the discretion
of the Committee when the Company is ready to give forward
guidance. The Committee also supported the voluntary Board
and Executive Committee fee/salary reductions in light of
Covid-19 as referenced above.
Policy Review
As a result of the current Remuneration Policy reaching the end of
its three-year life, and following consultation with the Company’s
110
largest shareholders and the major representative bodies,
the following changes to the policy are being proposed:
` The maximum pension contribution rate of 25% of salary
has been removed
` The approach to bonus deferral has been simplified
` The exceptional LTIP award limit of 200% of salary has
been removed
` The ‘in-employment’ shareholding retention guideline has
been tightened to accelerate achievement of the target
shareholding level
` A post-cessation shareholding guideline has been introduced
` Malus and clawback provisions in the bonus, deferred bonus
and LTIP have been reviewed and additional triggers included
` Minor changes have been made to the Remuneration Policy
to ensure that there is sufficient flexibility to reflect relevant
employment regimes for non-UK Directors
For full details of the Remuneration Policy Review, see page 111.
Implementing the Remuneration Policy for FY21
Executive Directors’ basic salaries were increased in line with
the general workforce rate of increase from 1 April 2020. The
Chief Executive Officer and Chief Financial Officer will continue
to receive a cash supplement in lieu of pension of 12.5% and 20%
of salary respectively. The maximum annual bonus opportunity
for Executive Directors in FY21 will remain unchanged at 150%
of salary. LTIP grants for 2020 will be considered in due course
although award levels will be reduced from normal levels to
reflect the Covid-19 affected share price. For full details of the
Remuneration Policy, see page 111.
LOOKING FORWARD
At the 2019 AGM, the Annual Statement and Annual Report on
Remuneration received the support of more than 99.9% of votes
cast. The Committee thanks shareholders for their continued
support and asks that they similarly support the 2020
Remuneration Report and new Remuneration Policy AGM
resolutions. In addition to the above, a resolution will be tabled
to renew the current LTIP, which is nearing the end of its 10-year
life. The terms of the new plan will broadly mirror the existing
plan, other than the removal of the exceptional award limit
noted above and the incorporation of a number of developments
in good practice (including updating the malus and clawback
provisions referred to above).
Neil Hartley
Chair of the Remuneration Committee
4 June 2020
Renewi plc Annual Report and Accounts 2020 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
Given that the current Directors’ Remuneration Policy Report
(approved at the AGM on 13 July 2017, receiving 96.9% support) will
shortly reach the end of its three-year life, a new Policy will be put
to shareholders for approval at the 2020 AGM and shall apply from
such approval. Subject to approval, the new Policy will apply from
that date for a maximum of three years until the AGM in 2023.
Changes from the current Policy
Following consultation with the Company’s major investors
and the main representative bodies, the Policy changes being
proposed, and which are included in the summary table on the
following pages, are:
` The maximum pension contribution rate of 25% of salary
has been removed. Going forward, pension provision for
new Executive Directors and employees promoted to the
Board will be aligned, in percentage of salary terms, with
the local workforce contribution rate
` The approach to bonus deferral has been simplified from:
– 33% of any bonus deferred into shares, with 50% vesting after
three years, 25% after four years and 25% after five years; to
– 50% of any bonus awarded in shares, with half vesting
immediately and the other half vesting after three years. This
change has been made to increase the share component of
any bonus award relative to cash and ensure that executives
move more quickly towards the target shareholding level
` The exceptional LTIP award limit of 200% of salary
has been removed
` The ‘in-employment’ shareholding retention guideline has
been tightened to accelerate achievement of the target
shareholding level. Subject to the Policy being approved by
shareholders, 100% of any share awards that vest (net of taxes)
will be retained (rather than the current 50%) until the 200% of
salary shareholding guideline is met
` A post-cessation shareholding guideline has been introduced.
Going forward, Executive Directors will need to retain shares
equal to 200% of salary (ie 100% of the shareholding guideline)
until the second anniversary of cessation. Own shares
purchased, shares acquired through buyout awards and
share awards granted prior to the 2020 AGM will be excluded
from the post-cessation guideline
` Malus and clawback provisions in the bonus, deferred bonus
and LTIP have been reviewed and additional triggers included
` Minor changes have been made to the Policy in respect of
recruitment to ensure that there is sufficient flexibility in
terms of recruitment to reflect relevant employment regimes
for non-UK Directors
111
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
POLICY TABLE
OPERATION
OPPORTUNITY
PERFORMANCE METRICS
BASE SALARY To pay a competitive basic salary to attract, retain and motivate the talent required to operate and
develop the Group’s businesses
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.
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
Executive Directors may receive a pension contribution and/or
cash allowance in lieu of pension.
BENEFITS To provide market-competitive benefits
Benefits include life assurance, medical insurance, income
protection and car/travel allowances.
None.
None.
New Executive Directors:
In line with the local workforce
contribution rate (as a %
of salary).
Current Executive Directors:
` CEO: 12.5% of salary
` CFO: 20% of salary
Benefits may vary by role.
However, the total cost of
taxable benefits will not
normally exceed 10% of salary.
The Committee retains
discretion to approve a
higher cost in exceptional
circumstances (eg relocation
or expatriation) 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
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.
112
Renewi plc Annual Report and Accounts 2020 OPERATION
OPPORTUNITY
PERFORMANCE METRICS
ANNUAL BONUS To motivate senior executives to maximise short-term performance and help drive initiatives that
support long-term value creation
150% of salary.
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.
50% of any bonus is awarded in shares, with half vesting
immediately and the other half deferred into an award over
Renewi plc ordinary shares which vests after three years.
Dividend equivalents may accrue over the vesting period to
the extent awards vest.
MALUS AND CLAWBACK
The Committee may at its discretion not pay bonuses/reduce
deferred share awards and/or recover bonuses which have
been paid or shares which have vested under deferred share
awards in the following circumstances: misstatement of the
Company’s financial results, an error calculating the vesting
result, misconduct, material corporate failure, material risk
management failure, serious reputational damage or material
loss caused by the participant’s actions.
Executive Director performance is assessed by
the Committee on an annual basis by reference
to Group financial performance (eg 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,
eg in the event of unforeseen circumstances
outside management control.
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
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.
150% of salary.
Awards are in the form of Renewi plc ordinary shares. Dividend
equivalents may accrue over the vesting period and any holding
period to the extent that awards vest.
Awards made under the LTIP have a performance and vesting
period of at least three years. If no entitlement has been earned
at the end of the relevant performance period, then the awards
will lapse.
A two-year post-vesting holding period applies to LTIP awards
granted to Executive Directors since the 2017 AGM.
MALUS AND CLAWBACK
The Committee may at its discretion decide that LTIP awards are
reduced and/or clawback vested LTIP awards in the following
circumstances: misstatement of the Company’s financial results, an
error calculating the vesting result, misconduct, material corporate
failure, material risk management failure, serious reputational
damage or material loss caused by the participant’s actions.
Vesting of LTIP awards will be subject
to continued employment and financial,
strategic, environmental and/or share
price-related performance targets normally
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.
Threshold performance will result in vesting
of no more than 25% of maximum under
each element.
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.
SHAREHOLDING GUIDELINES To align executive and shareholder interests
The Committee recognises the importance of Executive Directors
aligning their interests with shareholders through building up
significant shareholdings in the Group.
Executive Directors are required to retain 100% (net of tax) of any
LTIP, annual bonuses awarded in shares which vest immediately
(applicable to bonus awards for FY21 awards – see above) and
deferred bonus shares acquired on vesting until they reach the
ownership guideline.
The guideline will not normally apply to shares acquired or as a
result of the exercise of the Committee’s discretion to deliver any
salary and/or cash part of the annual bonus in shares (deferred
or otherwise) over and above the normal Policy.
In employment:
200% of salary.
None.
Post employment:
200% of salary up until the second
anniversary of cessation.
Own shares purchased, shares
acquired through buyout awards
and share awards granted prior
to the 2020 AGM will be excluded
from the post-cessation guideline.
113
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
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 or the promotion of
any internal candidate to the Board, 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 Group performance, the Committee may
adjust up or down (including to zero) 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 – ie 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 and strategic 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,
relative total shareholder return (TSR) and a sustainability target as
proposed currently for the 2020 LTIP awards 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
114
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 (ie the targets used
and/or whether performance targets apply for some or all
of the awards). All UK employees are eligible to participate
in the Sharesave Scheme on the same terms although
other all-employee share arrangements may be introduced
if considered appropriate.
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. The maximum
limits for variable pay (excluding buyouts) will be as for existing
Executive Directors.
In determining the appropriate remuneration for a new Executive
Director, the Committee will take into consideration all relevant
factors (including the overall quantum and nature of remuneration,
and the jurisdiction from which the candidate is being recruited)
to ensure that all such arrangements are in the best interests
of Renewi and its shareholders.
The Committee may also make an award in respect of a
new appointment to buy out incentive arrangements forgone
on leaving a previous employer on a like-for-like basis, in
addition to providing the normal remuneration elements. In
constructing a buyout, 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 buyout awards will typically be made under
the existing annual bonus and LTIP schemes, although the
Committee may exercise the discretion available under the FCA
Listing Rule 9.4.2R to make awards using a different structure. Any
buyout 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.
Renewi plc Annual Report and Accounts 2020 Non-Executive Director recruitment
In recruiting a new Non-Executive Director, the Committee will use
the policy as described in the Policy Table. 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 Chair of a Committee, as appropriate.
PAY SCENARIO CHARTS
The charts below 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 2020 pre Covid-19 reduction. The projected values
exclude the impact of any dividends.
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 (or less if required by local employment law) and one year’s
notice from the individual (or less if required by local employment
law). The contracts provide for an obligation to pay salary plus
contractual benefits for any portion of the notice period waived by
the Group where permitted by local employment law. The Group
has the ability to pay such sums in instalments, requiring the
Director to mitigate loss (for example, by gaining new employment)
over the relevant period.
Executive Director
Date of service
contract
Notice period
(Company)
Notice period
(Individual)
Otto de Bont
27 March 2019
12 months
6 months*
Toby Woolrych
27 August 2012
12 months
12 months
*Dutch law limits the maximum notice the Chief Executive Officer can be required to provide.
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,
including 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 entered into only 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.
Pay scenario charts for FY21
CHIEF EXECUTIVE OFFICER (£000)
CHIEF FINANCIAL OFFICER (£000)
Minimum
100%
480
Minimum
100%
455
Target
46%
47%
1,053
Target
48%
46%
948
7%
6%
Maximum
34%
Maximum with
share price growth
30%
43%
39%
23%
1,422
Maximum
36%
44%
20%
1,233
21% 10%
1,586
Maximum with
share price growth
34%
40%
17% 9%
1,350
0
400
800
1,200
1,600
0
400
800
1,200
1,600
Fixed pay
Annual bonus
LTIP
Share price growth
Notes
` The Minimum scenario shows basic salary, pension and estimated benefits (ie fixed remuneration). These are the only elements of the Executive
Directors’ remuneration packages that are not at risk.
` 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.
` The Maximum with share price growth scenario is as per Maximum but with a 50% share price growth assumption.
115
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
TREATMENT OF AWARDS ON EXIT
SCENARIO
TIMING OF VESTING
TREATMENT OF AWARDS
Annual Cash Bonus
Ill-health, disability, death, retirement (with Group
consent) or any other reasons the Committee may
determine in its absolute discretion.
Normal payment date, although
the Committee has discretion
to accelerate.
Change of control.
Immediately.
Cash bonuses will be paid only 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. 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 normally 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, subject to the
Committee’s discretion.
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 normally lapse.
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors do not have service contracts as their terms of engagement are governed by letters of appointment. These
letters and the Company’s Articles of Association make provision for annual renewal at each AGM. Details of the Non-Executive Directors’
terms of appointment are shown in the table 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
Ben Verwaayen (Chairman)
Allard Castelein
Jolande Sap
Luc Sterckx
Marina Wyatt
Neil Hartley
Colin Matthews*
*Colin Matthews retired on 31 March 2020 and was succeeded as Chairman by Ben Verwaayen on 1 April 2020.
116
Initial agreement date
8 March 2020
10 November 2016
13 March 2018
3 August 2017
2 April 2013
17 January 2019
7 March 2016
Renewal date
1 August 2020
1 August 2020
1 August 2020
1 August 2020
1 August 2020
1 August 2020
–
Renewi plc Annual Report and Accounts 2020 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.
PERFORMANCE
METRICS
None.
OBJECTIVE
OPERATION
OPPORTUNITY
To attract
and retain
Non-Executive
Directors of
the highest
calibre
with broad
commercial
and other
experience
relevant to
the Group.
Fee levels are normally reviewed annually, with any adjustments
normally 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 additional responsibilities
– eg 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).
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. As at the date of this report, neither Otto de Bont nor Toby Woolrych has
taken up any external appointments.
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 2018 UK Corporate Governance Code, Jolande Sap is the designated Non-Executive Director with the responsibility
of assisting the Board with workforce engagement and reporting. Over the course of the year Jolande has been involved in a number of
workforce engagement activities, including participation in the annual general consultation meeting between management and the Dutch
Works Council, three meetings with the chair of that Works Council, and participation in a governance workshop for that Works Council. In
addition to direct engagement with the workforce, the Board and Remuneration Committee are able to receive updates from the Group HR
Director to understand the workforce’s views on a wide variety of topics through the employee Pulse surveys.
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 undertaking 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 and the 2017 AGM Remuneration Policy vote are provided below.
ANNUAL REPORT ON REMUNERATION
2019 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
503,809,331
423,408
504,232,739
316,926
99.92%
0.08%
100%
–
547,859,771
17,407,656
565,267,427
106,316,482
96.92%
3.08%
100%
–
117
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
Annual Report on Remuneration
The following section provides details of how our Remuneration Policy will be implemented during the year ending 31 March 2021 and how
it was implemented during the financial year ended 31 March 2020.
IMPLEMENTATION OF REMUNERATION POLICY FOR FY21
Basic salary
Executive Directors’ basic salaries were increased in line with the general workforce rate of increase from 1 April 2020.
Otto de Bont
Toby Woolrych
1. Equivalent to £409,662 at an exchange rate of €1:£0.872.
1 April 2019
€457,000
£351,900
1 April 2020
€469,7961
£361,753
% Increase
2.8%
2.8%
Both Executive Directors agreed to a 20% voluntary salary reduction effective from 1 April 2020 for at least three months, subject to review
of cessation of the lockdown measures in place in connection with the Covid-19 pandemic.
Pension
The Chief Executive Officer and Chief Financial Officer will continue to receive a cash supplement in lieu of pension of 12.5% and 20% of
salary respectively.
Annual bonus
FY21 bonus arrangements across the Group have been suspended and will be reintroduced at the discretion of the Committee when
the Company is ready to give forward guidance. Quantum will be reduced pro-rata to reflect the delay in target-setting and performance
metrics are expected to be in line with those operated for FY20.
LTIP
LTIP award levels for 2020 will be considered at the time of grant although they will be reduced from the normal award levels to reflect the
prevailing share price. In respect of the proposed LTIP performance metrics, the Committee will:
` continue to operate EPS and ROCE metrics;
` adopt a relative TSR target to be measured against the constituents of the FTSE 250 (excluding investment trusts) in place of the
existing absolute share price growth target; this change is in response to previous feedback received in respect of the existing share
price measure;
` introduce an ESG metric from the Group’s sustainability reporting that incentivises and rewards an improvement in Renewi’s recycling
rate; and
` equally weight the four proposed measures.
Precise targets have yet to be set although full details of the metrics and targets will be disclosed by stock market announcement
immediately following grant.
Chairman and Non-Executive Director fees
Chairman and Non-Executive Director fees were also increased in line with the general workforce rate of increase from 1 April 2020.
Base fees
Chairman
Non-Executive Director
Audit Committee Chair additional fee
Remuneration Committee Chair additional fee
Senior Independent Director additional fee
Fee from 1 April 2019
Fee from 1 April 2020
£153,000
£48,960
£8,670
£8,670
£6,120
£157,284
£50,330
£8,912
£8,912
£6,291
The Chairman and Non-Executive Directors have agreed to a voluntary 20% fee reduction with effect from 1 April 2020 for at least three months subject to review of cessation of the lockdown
measures in place in connection with the Covid-19 pandemic.
118
Renewi plc Annual Report and Accounts 2020 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 2020
and the prior year.
Basic salary
Taxable benefits2
Pension3
Single-year variable4
Multiple-year variable5,6
Other7
Total
OTTO DE BONT1
TOBY WOOLRYCH
PETER DILNOT1
FY19
£000
–
–
–
–
–
–
–
FY20
£000
399
19
50
526
82
9
1,085
FY19
£000
352
21
70
0
35
3
481
FY20
£000
352
21
70
459
73
8
983
FY19
£000
510
27
128
0
–
9
674
1. Otto de Bont was appointed Chief Executive Officer from 1 April 2019. Peter Dilnot stepped down from the Board as Chief Executive Officer on 31 March 2019.
2. Taxable benefits comprise car allowance/lease and medical insurance.
3. Otto de Bont and Toby Woolrych received cash supplements in lieu of pension contribution of 12.5% and 20% of salary respectively.
4. Payment for performance during the year under the annual bonus including any deferred annual bonus. (See following sections for further details.)
5. Based on the estimated value of LTIPs granted in 2017 to Otto de Bont (granted prior to his appointment to the Board) and to Toby Woolrych (Peter Dilnot’s award lapsed at cessation)
assuming 43.3% vesting, dividend equivalent shares and a three-month share price to 31 March 2020 of 33.62 pence. The value of LTIP awards for FY19 for Toby Woolrych was based on
23% vesting and a three-month share price to 31 March 2019 of 27.26 pence and included dividend equivalents. The actual value of the awards at vesting was £37,441.
6. 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 2020 (33.62 pence) and the
93.25 pence share price at grant and ignoring dividend equivalents, is as follows:
Otto de Bont
Value of awards expected to vest (500,000 shares x 33.62 pence x 43.3% vesting) £72,787
£201,886
Face value of proportion of awards expected to vest
(500,000 shares x 93.25 pence x 43.3% vesting)
Impact of share price movement on vesting value
-£129,099
Toby Woolrych
Value of awards expected to vest (443,000 shares x 33.62 pence x 43.3% vesting) £64,489
£178,871
Face value of proportion of awards expected to vest
(443,000 shares x 93.25 pence x 43.3% vesting)
Impact of share price movement on vesting value
-£114,382
7. Includes Sharesave awards, valued based on embedded gain at grant, life assurance, accident insurance and income protection.
8. 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 Commercial
Waste Netherlands Division. In connection with the contractual commitments provided as part of that original 2017 appointment he was entitled to receive a final deferred joining fee of
€75,000 in June 2019.
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
2020 and the prior year.
Colin Matthews (Chairman)1
Allard Castelein2
Jacques Petry3
Luc Sterckx
Marina Wyatt4
Jolande Sap
Neil Hartley5
BASE FEE
ADDITIONAL FEES
TOTAL
FY19
£000
153
49
49
49
49
49
10
FY20
£000
153
49
49
49
49
49
49
FY19
£000
FY20
£000
–
9
6
–
9
–
–
–
7
3
–
9
–
5
FY19
£000
153
58
55
49
58
49
10
1. Colin Matthews retired from the Board on 31 March 2020.
2. Allard Castelein’s additional fee is in respect of his role as the Chair of the Remuneration Committee until 30 August 2019 and Senior Independent Director from 1 September 2019.
3. Jacques Petry’s additional fee is in respect of his role as the Senior Independent Director until 30 August 2019. He retired from the Board on 31 December 2019.
4. Marina Wyatt’s additional fee is in respect of her role as the Chair of the Audit Committee.
5. Neil Hartley was appointed to the Board on 17 January 2019. His additional fee is in respect of his role as the Chair of the Remuneration Committee from 1 September 2019.
FY20
£000
153
56
39
49
58
49
54
119
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
INCENTIVE OUTCOMES FOR THE YEAR ENDED 31 MARCH 2020
Performance-related annual bonus in respect of FY20 performance
The annual bonus was measured against underlying profit before tax (50% weighting), net debt/EBITDA leverage ratio (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’ FY20 annual bonus are shown below.
Measure
Underlying profit before tax
Net debt/EBITDA leverage ratio
Weighting
50%
25%
FY20
final outcome
€43.4m
2.98x
Threshold
Maximum
€33.8m
>3.3x
€41.4m
<2.85x
Potential bonus
payout (% of max)
100%
80%
Underlying profit before tax is set based on the Group’s expected budget outcome for the year as adjusted for disposals and acquisitions in
the year. All non-euro denominated entity values are converted to euros at the budgeted rate of exchange and actual performance is also
measured at this constant exchange rate. The leverage ratio is based on the net debt to EBITDA covenant level as determined in the main
banking facilities.
Personal element outcomes
The personal performance measures were based on individual objectives, as detailed below.
Committee’s
assessment
of performance
Potential
bonus payout
(% of max)
Target
Otto de Bont
1. Safety culture improvement
2. Ensure recovery of ATM soil production and sale of AP4Terra building materials
3. Municipal performance improvement
4. Successfully launch secondary listing on Euronext
5. Prepare and commence implementation of Renewi 2.0 programme
6. Employee engagement improvement
Toby Woolrych
1. Safety culture improvement
2. Prepare and commence implementation of Renewi 2.0 programme
3. Successfully launch secondary listing on Euronext
4. Enhanced financial reporting capability
5. Deliver the disposals of Reym and Canada
6. Employee engagement improvement
5%
4%
4%
4%
4%
4%
25%
5%
4%
4%
4%
4%
4%
25%
0%
4%
3.5%
4%
3%
3.5%
18%
0%
3%
4%
3%
3.5%
3.5%
17%
72%
68%
FY20 annual bonus
Financial targets were largely met with Group profit before tax achieving budget maximum payout for a 110% performance. The leverage
ratio was above 2.85 but less than 3.00 times, resulting in a 20% payout of the leverage target. Personal targets were also largely met,
resulting in a bonus award of 132% and 130.5% of the maximum for Chief Executive Officer and Chief Financial Officer respectively.
Financial element
bonus outcome
(% of salary)
Personal element
bonus outcome
(% of salary)
105%
105%
27.0%
25.5%
Overall bonus
outcome
(% of salary/£)
132%/£526,025
130.5%/£459,230
Overall bonus outcomes
Executive Director
Otto de Bont
Toby Woolrych
120
Renewi plc Annual Report and Accounts 2020 In light of Covid-19 it was agreed by the Committee that the FY20 bonus would be delivered fully in shares with the normal DAB provisions,
including holding periods and share dealing restrictions, only applying to the one-third of the value of the bonus. No restrictions, conditions
or holding period will apply to the two-thirds of the value of the bonus delivered in shares that would have been paid in cash ordinarily.
2017 LTIP vesting in 2020
Otto de Bont was granted an LTIP award in 2017 over 500,000 shares upon his appointment as Managing Director of the Renewi Commercial
Waste Netherlands Division which would vest in 2020 based on three-year performance to 31 March 2020. Toby Woolrych was also granted
an LTIP award in 2017 over shares equal to the value of circa 120% of salary which would vest in 2020 based on three-year performance to
31 March 2020. Vesting for both awards 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%
Share price CAGR
Improvement in ROCE
Total vesting
25%
25%
Targets
Actual
performance
% of this part of award
(% of maximum)
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
8.5%
<9%
1.8%
41.5%
(20.8%)
0%
(0%)
90%
(22.5%)
43.3%
Share price growth was calculated using three-month average share prices immediately prior to the start and end of the performance period.
Based on the above, the vesting of the 2017 LTIP on 5 June 2020 for Otto de Bont and Toby Woolrych will be:
Executive Director
Otto de Bont
Toby Woolrych
Awards
granted
500,000
443,000
Shares vesting based
on performance
(43.3% of maximum)
Dividend
equivalent shares
(estimated)
216,500
191,819
27,413
24,288
Total shares
expected
to vest
243,913
216,107
Estimated value
at vesting
(£000)1
82
73
1. Based on the average three-month share price to 31 March 2020 of 33.62 pence.
SHARE AWARDS GRANTED IN FY20 (AUDITED)
Long-Term Incentive Plan
The Executive Directors were granted LTIP awards on 3 June 2019 as follows:
Executive Director
Otto de Bont
Toby Woolrych
Date of grant
Basis of award
Share price1
Face value
3 June 2019
100% of salary
3 June 2019
40% of salary
34.58p
34.58p
£403,584
£143,856
1. Based on the three-day average dealing price prior to the grant date.
Details of the performance targets are as follows:
Number of
shares
1,167,104
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 25% 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
121
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
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.
DEFERRED ANNUAL BONUS (DAB)
No awards were granted under the Renewi plc Deferred Annual Bonus Plan in 2019 given that the Remuneration Committee determined
that no annual bonus award be paid to the incumbent Executive Directors in respect of the year ended 31 March 2019.
EXIT PAYMENTS AND PAYMENTS MADE TO PAST DIRECTORS MADE IN THE YEAR (AUDITED)
No termination payments were made to Jacques Petry or Colin Matthews who retired from the Board during the year.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table shows the percentage change in total employee pay expenditure and shareholder distributions (ie dividends) from the financial
year ended 31 March 2019 to the financial year ended 31 March 2020.
Distribution to shareholders
Employee remuneration
1. Employee remuneration of €430.7m at exchange rate of €1:£0.895.
2. Employee remuneration of €424.0m at exchange rate of €1:£0.872.
FY19
£m
24.3
385.51
FY20
£m
7.6
369.72
%
change
-69%
-4%
PAY FOR PERFORMANCE
The graph shows the TSR of Renewi plc over the 10-year period to 31 March 2020. 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 2010.
)
0
0
1
o
t
d
e
s
a
b
e
r
(
n
r
u
t
e
r
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
T
300
250
200
150
100
50
0
31 MAR
2010
Renewi plc
FTSE All-Share
Support Services Index
FTSE All-Share Index
Source: Datastream
(Thomson Reuters)
31 MAR
2011
31 MAR
2012
31 MAR
2013
31 MAR
2014
31 MAR
2015
31 MAR
2016
31 MAR
2017
31 MAR
2018
31 MAR
2019
31 MAR
2020
CEO single figure remuneration over the 10 years to 31 March 2020
TOM DRURY1
PETER DILNOT2
Executive Director
Chief Executive Officer single
figure of remuneration (£000)
Annual bonus outcome
(% of maximum)
LTIP vesting outcome
(% of maximum)
FY11
840
69%
0%
FY12
284
0%
0%
FY12
157
FY13
657
FY14
860
FY15
902
FY16
1,063
FY17
924
FY18
1,481
87%
19%
66%
47%
69%
48%
88%
–
0%
0%
0%
0%
0%
21.5%
OTTO DE
BONT3
FY20
1,085
88%
43.3%
FY19
674
0%
0%
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. Otto de Bont was appointed as Chief Executive Officer on 1 April 2019.
122
Renewi plc Annual Report and Accounts 2020
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.
Salary
Taxable benefits
Single-year variable
CHIEF EXECUTIVE
OFFICER1
OTHER
EMPLOYEES
FY19
£m
510
27
0
FY202
£m
399
19
526
%
change
-22%
-29%
100%
%
change
2%
0%
39%
1. Otto de Bont was appointed Chief Executive Officer on 1 April 2019. (Peter Dilnot resigned as Chief Executive Officer on 31 March 2019.)
2. Otto de Bont’s base salary for FY20 was €457,000 (£398,504 at an exchange rate of €1:£0.872).
CEO PAY RATIO
The CEO pay ratio data for FY20 is presented below. The data shows how the CEO’s single figure remuneration for FY20 (as taken from the
single figure remuneration table) compares to equivalent single figure remuneration for full-time equivalent UK employees ranked at the
25th, 50th and 75th percentile.
Year
FY20
Method
Option B
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
41 : 1
38 : 1
23 : 1
No components of pay and benefits have been omitted for the purpose of the above calculations. Option B (UK gender pay gap data) was
selected, given that this method of calculation was considered to be the most efficient and robust approach in respect of gathering the
required data for 2019. The respective quartile salary and total pay and benefits numbers are as follows:
Year
FY20
25th percentile
Median
75th percentile
25th percentile
Median
75th percentile
£24,569
£26,680
£42,407
£27,043
£29,281
£46,951
SALARY
TOTAL PAY AND BENEFITS
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 4 June
2020 were as shown below. Details of Directors’ interests in shares and options under the long-term share schemes are set out on the
following page.
Ordinary shares at
1 April 2019
Ordinary shares at
31 March 2020 and 4 June 2020
Otto de Bont
Allard Castelein
Neil Hartley
Colin Matthews (retired 31 March 2020)
Jacques Petry (retired 31 December 2019)
Jolande Sap
Luc Sterckx
Ben Verwaayen (appointed 1 April 2020)
Toby Woolrych
Marina Wyatt
40,000
–
–
450,000
–
–
150,000
–
373,404
11,600
220,000
–
–
500,000
–
–
285,000
–
495,936
11,600
123
1234Renewi plc Annual Report and Accounts 2020 DIRECTORS’ REMUNERATION REPORT continued
DIRECTORS’ SHAREHOLDING (AUDITED)
The table below shows the shareholding of each Executive Director, against their respective shareholding requirement as at 31 March 2020.
Unvested
but subject
to holding
period
Unvested
and
subject to
performance
conditions
–
366,408
1,792,104
1,275,024
Owned
outright
or vested
220,000
495,936
Vested
but not
exercised
Exercised
during
the year
Unvested
and
subject to
continuous
employment
Shareholding
requirement
(% salary)
Current
share-
holding1
(% salary)
Requirement
met?
–
–
–
–
–
47,842
200%
200%
13% In progress
33% In progress
Otto de Bont
Toby Woolrych
1. Shareholdings were calculated using the number of outright shares, at 23.45 pence, as percentage of salary as at 31 March 2020.
DIRECTORS’ INTERESTS IN SHARE AWARDS
The Executive Directors have been made the following conditional awards under the Renewi Deferred Annual Bonus Plan:
Outstanding
awards at
31 March 2019
Awards
made during
the year
Awards
lapsed during
the year
Awards vested
during the
year2,3
Outstanding
awards at
31 March 2020
Date of
award
Share price on
date of award
(pence)
Restricted
period end1
Toby
Woolrych
36,038
144,183
74,636
201,661
–
–
–
–
–
–
–
–
18,019
72,091
–
–
18,019
72,092
74,636
201,661
29.05.15
23.11.16
01.06.17
01.06.18
108.92
93.50
93.25
78.10
29.05.20
23.11.21
01.06.22
01.06.23
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 Toby Woolrych’s 18,019 awards which vested under the Deferred Annual Bonus Plan, an additional 3,042 shares were awarded in respect of dividend equivalents, totalling
21,061 shares.
3. In addition to Toby Woolrych’s 72,091 awards which vested under the Deferred Annual Bonus Plan, an additional 8,901 shares were awarded in respect of dividend equivalents, totalling
80,992 shares.
The Executive Directors have been made the following conditional awards of shares under the Renewi Long-Term Incentive Plan:
Outstanding
awards at
31 March
20191
Awards
made during
the year
Awards
lapsed
during
the year1
Awards
vested
during
the year4
Outstanding
awards at
31 March
20202
500,000
125,000
–
–
–
1,167,104
504,000
443,000
416,012
–
–
–
–
416,012
–
–
–
–
–
–
388,080
115,920
–
–
–
–
–
–
500,000
125,000
1,167,104
–
443,000
416,012
416,012
Share price
on date
of award
(pence)
Performance
period end
Restricted
period end3
93.25
78.10
34.583
93.50
93.25
78.10
34.583
31.03.20
31.03.21
31.03.22
31.03.19
31.03.20
31.03.21
31.03.22
01.06.20
01.06.23
03.06.22
23.11.19
01.06.20
01.06.23
03.06.22
Date of
award
01.06.17
01.06.18
03.06.19
23.11.16
01.06.17
01.06.18
03.06.19
Otto de Bont
Toby
Woolrych
1. Awards lapse to the extent the performance conditions are not met.
2. The performance conditions relating to the vesting of outstanding awards are shown on page 121.
3. For LTIP awards made in 2016 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.
4. 23% of Toby Woolrych’s 2016 LTIP award vested in 2019. In addition to the 115,920 awards which vested, an additional 14,312 shares were awarded in respect of dividend equivalents,
totalling 130,232 shares.
The Executive Directors held the following options to subscribe for ordinary shares under the Renewi Sharesave Scheme:
Date of
grant
24.09.15
13.09.17
12.09.19
Normal
exercise
dates from
01.11.18
01.11.20
01.11.22
Normal
exercise
dates to
30.04.19
30.04.21
30.04.23
Option price
(pence)1
Number at
1 April 2019
Granted
in year
65.18
76.00
25.00
13,806
11,842
36,000
–
–
–
Lapsed
in year
13,806
–
–
Exercised
in year
Number at
31 March
2020
–
–
–
–
11,842
36,000
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.
124
Renewi plc Annual Report and Accounts 2020 The highest closing mid-market price of the ordinary shares of Renewi plc during the year was 45 pence and the lowest closing mid-
market price during the year was 22 pence. The mid-market price at the close of business on 31 March 2020 was 23.45 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.
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. During FY20, 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 FY20 were £45,309 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 remunerationconsultantsgroup.com.
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
Neil Hartley
Chair of the Remuneration Committee
4 June 2020
125
1234Renewi plc Annual Report and Accounts 2020 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 renewiplc.com.
STRATEGIC REPORT
The Strategic Report set out on pages 6 to 85 provides a
fair review of the Group’s business for the year ended 31 March
2020. 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 4 June 2020 and signed on its behalf
by the Company Secretary.
DIRECTORS’ REPORT
The Directors’ Report comprises pages 88 to 129. The Directors’
Report was approved by a duly authorised committee of the Board
on 4 June 2020 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
108 to 125, 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 88 to 89.
All served on the Board throughout the financial year under review
with the exception of Ben Verwaayen who was appointed Chairman
on 1 April 2020. Ben will be standing for election and all other
Directors will be offering themselves for re-election at the AGM.
Jacques Petry and Colin Matthews retired from the Board
on 31 December 2019 and 31 March 2020 respectively.
During the year a number of other changes were made. On
1 September 2019, Allard Castelein was appointed as the Senior
Independent Director, taking over from Jacques Petry ahead
of the latter’s retirement from the Board at the end of the calendar
year. Also on 1 September 2019, Neil Hartley succeeded
Allard Castelein as Chair of the Remuneration Committee. On
31 March 2020, following a review of the composition of the
Board Committees: Allard Castelein stepped down from the
Audit Committee and Jolande Sap was appointed to the Audit
Committee on 1 April 2020; Marina Wyatt and Jolande Sap stepped
down from the Remuneration Committee; and Jolande Sap
stepped down from the Nomination Committee. On 1 April
2020, Ben Verwaayen was appointed both Group Chairman
and Chair of the Nomination Committee.
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
126
` 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
` 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 £4,000,707. This authority lasts
until the earlier of the AGM in 2020 or 30 September 2020.
` 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 80,014,153 ordinary
shares. This authority lasts until the earlier of the AGM in 2020
or 30 September 2020.
` Borrowing powers The Directors are empowered to exercise
all the powers of the Company to borrow money and to
mortgage or charge all or any part of the Company’s assets,
provided that the aggregate amount of borrowings of the
Group outstanding at any time does not exceed the limit
set out in the Articles, unless sanctioned by an ordinary
resolution of the Company’s shareholders.
DIRECTORS’ INDEMNITIES
As at the date of this Report, the Company has granted indemnities
to the extent permitted by law, in respect of certain liabilities
incurred as a result of carrying out the role of a Director of the
Company. The indemnities are qualifying third-party indemnity
provisions for the purposes of the Companies Act 2006.
Renewi plc Annual Report and Accounts 2020 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 92 to 125.
SUSTAINABILITY
Renewi plc is a leading international waste-to-product
company. Information on sustainability matters, including
those on environment, social, community and employment
policies and health and safety, are set out in the sustainability
strategy focus section on pages 62 to 75 of the Strategic
Report. Further details on the Company’s approach to carbon
avoidance and the benefits of sustainable waste management,
including disclosures on Streamlined Energy and Carbon
Reporting (SECR), can also be found in the Group Sustainability
Report and Sustainability Policy, both of which are available on
the Company’s website.
RESULTS AND DIVIDENDS
The Group’s Consolidated Income Statement, which appears
on page 140 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 €77.1m (2019: loss of €97.7m).
The Directors are not recommending that a final dividend be
paid (2019: 0.5 pence). The interim dividend of 0.45 pence (2019:
0.95 pence) per share already paid on 10 January 2020 therefore
comprises a total dividend for the year of 0.45 pence per share
(2019: 1.45 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 sets out on page 84 how it has
assessed the prospects of the Company. In compliance with the
provisions of the UK Corporate Governance Code, the Board also
confirms that it has a reasonable expectation that the Company
and the Group will be able to continue in operation and meet
their liabilities as they fall due over the three-year period ending
31 March 2023.
SHARE CAPITAL
The Company’s share capital comprises ordinary shares of
10 pence each par value.
Renewi plc’s ordinary shares were admitted to trading on
Euronext Amsterdam on 30 January 2020. No new shares were
placed in connection with the application for the secondary
listing and the Company continues to remain listed on the
premium segment of the Official List in London.
As at 31 March 2020 and as at the date of this Report, there
were 800,141,536 ordinary shares in issue. During the year ended
31 March 2020 no new ordinary shares were issued.
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 in part
by distribution of assets, including fully paid shares or
debentures of any other company. The Directors may
deduct from any dividend payable to a member all sums
of money (if any) payable by such member to the Company
in respect of their ordinary shares.
` Voting rights On a poll, every shareholder who is present in
person or by proxy or represented by a corporate representative
has one vote for every share held by that shareholder. In the case
of joint holders of an ordinary share, the vote of the senior who
tenders a vote shall be accepted to the exclusion of the votes of
the other joint holders. Seniority is determined by the order in
which the names of the joint holders appear in the Company’s
register of members in respect of the joint holding. The deadline
for appointing proxies to exercise voting rights at any general
meeting is set out in the notice convening the relevant meeting.
The Company is not aware of any agreements between holders
of its shares that may result in restrictions on voting rights.
` Return of capital In the event of the liquidation of the
Company, after payment of all liabilities and deductions
taking priority, the balance of assets available for distribution
will be distributed among the holders of ordinary shares
according to the amounts paid up on the shares held by them.
A liquidator may, with the sanction of a special resolution of the
shareholders and any other sanction required by law, divide
among the shareholders in kind the whole or any part of
the Company’s assets or vest the Company’s assets, but no
shareholder may be compelled to accept any assets upon
which there is any liability.
SHARE RESTRICTIONS
There are no limitations under the Company’s Articles of
Association that restrict the rights of members to hold the
Company’s shares. Certain restrictions may, from time to time,
be imposed on the transfer of the Company’s shares by laws
and regulations such as insider trading laws. In limited situations,
as permitted by the Articles, the Board may also decline to
register a transfer. The Company is not aware of any agreements
between holders of its shares that may result in restrictions
on the transfer of securities.
EMPLOYEE SHARE SCHEMES –
CONTROL RIGHTS
The Company operates a number of employee share schemes.
Under some, 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. Trustees have full discretion to
vote or abstain from voting at general meetings of the Company
in respect of such shares.
127
1234Renewi plc Annual Report and Accounts 2020 OTHER DISCLOSURES continued
RETAIL BONDS
As at 31 March 2020 the Company had in issue two retail bonds: the
first, comprising €100m 3.65% guaranteed notes due 16 June 2022;
and the second, comprising €75m 3.00% guaranteed notes due
19 July 2024. There are no restrictions under the instruments
governing these notes that restrict the rights of investors to hold
or transfer them. The Company is not aware of any agreements
between the holders of the notes that may result in restrictions
on their transfer.
CHANGE OF CONTROL –
SIGNIFICANT AGREEMENTS
The Group’s principal financing instrument at 31 March 2020 is
a €520m banking facility, consisting of a €495m 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 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 2020,
would have required the repayment of €433.5m (2019: €340.1m)
in principal and interest relating to the revolving credit facility
and term loan, along with a make-whole payment amounting to
€1.8m (2019: €2.1m), which is not provided for in these financial
statements, payable to EUPP investors based on market yields
at 31 March 2020.
The Group’s retail bonds issued in June 2015 and in July 2019
require notice to be given to bondholders within seven business
days of a change of control following which the holders have
an option to seek repayment at a 1% premium, within 60 days
of that notice. Such repayment must be made within 10 business
days of the expiry of the option period. If exercised at 31 March
2020, repayment of €175m (2019: €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.
RESEARCH AND DEVELOPMENT
The Group spent £130,000 (2019: £251,000) on research and
development during the year. This primarily related to the
broader investment in Renewi’s Innovation Centre in Lelystad
in the Netherlands, with a focus on bioplastics research.
POLITICAL DONATIONS
No donations were made by the Group for political purposes
during the financial year (2019: £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.
NOTIFICATIONS RECEIVED
UP TO 4 JUNE 2020
Number
of shares
Issued share
capital %
Paradice Investment Management LLC
46,530,355
Avenue Europe International
Management LP
Sterling Strategic Value Fund
Pettelaar Effectenbewaarbedrijf N.V.
in its capacity as the legal owner of
ASN Aandelenpool, ASN Milieupool
and ASN Small & Midcappool
45,946,642
41,986,595
24,337,233
5.82
5.74
5.25
3.04
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 on Thursday
16 July 2020 will be made available to shareholders and will
be published on the Company’s website at renewiplc.com.
Shareholders should be aware that there are likely to be
restrictions as regards attendance at this year’s AGM due to
Covid-19 and that they are encouraged to lodge their votes in
advance by proxy. Further details as regards arrangements will
be included in the AGM Notice and will also be made available
on the Company’s website at 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 lodge votes in favour, as they intend to do in
respect of their own shareholdings.
By order of the Board
Philip Griffin-Smith
Company Secretary
4 June 2020
Renewi plc
Registered in Scotland no. SC077438
128
Renewi plc Annual Report and Accounts 2020 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 parent company financial statements, subject
to any material departures disclosed and explained in the
financial statements;
` make judgements and accounting estimates that are reasonable
and prudent; and
` prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and parent
company will continue in business.
The Directors are 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 88 to 89 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 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 they face.
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
4 June 2020
Renewi plc
Registered in Scotland no. SC077438
129
1234Renewi plc Annual Report and Accounts 2020 We’re helping to build a
better tomorrow today.
The EU 2020 Circular Economy Action Plan’s built
environment strategy calls for sustainable construction
products and excavated soils – aims we share. We already
decontaminate construction soil, turning it into sand
and gravel for the building industry, and plan to create
a million tonnes of these secondary materials every year.
130
Renewi plc Annual Report and Accounts 2020 3/ FINANCIAL STATEMENTS
131
1234Renewi plc Annual Report and Accounts 2020 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF RENEWI PLC
Report on the audit
of the financial statements
OPINION
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 2020 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 and Accounts (the “Annual Report”), which
comprise: the consolidated and parent company balance
sheets as at 31 March 2020; the consolidated income statement,
the 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.
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 2019 to 31 March 2020.
132
OUR AUDIT APPROACH
Overview
Materiality
` Overall Group materiality: €8.88m (2019: €8.90m), based
on 0.5% of revenue.
` Overall parent company materiality: £6.21m (2019: £6.13m),
based on 1% of net assets, restricted for the purposes of
Group reporting.
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 Monostreams reporting unit.
` We obtained coverage of over 80% of the Group’s revenue and
approximately 80% 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.
` Deferred tax assets.
` Presentation of non-trading and exceptional items.
` Impact of Covid-19.
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;
Renewi plc Annual Report and Accounts 2020 ` identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations;
` held meetings with internal legal counsel and compliance
officers and review of correspondence with regulatory
authorities;
` for procedures in relation to exceptional items, see Key Audit
Matter below
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.
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.
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 2020 the Group has
€55.1m of deferred revenue on its balance sheet. See note
4.9 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.
We assessed the accuracy of management’s calculation of deferred revenue, which is
calculated based on waste tonnages and pricing, by:
` Attending by videoconference the year-end inventory counts of unprocessed waste
to test the existence and completeness of waste tonnages at year end;
` Considering the reasonableness of management’s assumptions included in the
calculation of deferred revenue by benchmarking data points used by management
to external sources of information;
` Performing substantive tests of detail on the pricing of individual waste components
by tracing to invoices raised to customers; and
` 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.
Our audit work over the risk that the revenue recorded within the current year did not
occur involves:
` identifying and testing journal entries with unusual account combinations that impact
revenue; and
` Tracing revenue recorded to supporting documents and/or proof of payment.
Based on this testing we are satisfied that there are no material misstatements
within revenue.
133
1234Renewi plc Annual Report and Accounts 2020 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF RENEWI PLC continued
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
For all CGUs with goodwill, 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.
We evaluated the reasonableness of the future cash flow forecasts by comparing them with
the latest Board approved budgets and considering the historic accuracy of management’s
forecasts by comparing prior year forecasts to actual outturn.
Further, we challenged management on:
` Forecast revenue growth rates and trading margins for the CGUs over the period of the
forecasts, including the impact of Covid-19;
` The key assumptions for long-term growth rates in the forecasts by comparing them
with historical results;
` 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; and,
` the disclosure of sensitivities included in the financial statements.
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 2020.
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 was required.
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. We concluded
that intangible and tangible assets are appropriately recognised in the financial statements
and no additional impairment charges are required at 31 March 2020.
Impairment of tangible and intangible assets
At 31 March 2020, the Group had €610.1m of goodwill and
intangible assets and €790.9m of tangible assets on the Group
balance sheet. See notes 4.1, 4.2 and 4.3 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
we note that there are no impairment charges recorded in
relation to goodwill by the Group for the year ended 31 March
2020. 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
growth rates, trading margin, the long-term growth rate and
discount rate assumptions. We specifically focused on the
Monostreams’ goodwill given the lower headroom, compared
to the other CGUs, and as a result of its historic operational
performance challenges.
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 specific other intangible assets subject to amortisation
and specific tangible assets subject to depreciation.
Accordingly, we focused on this area because the
consideration of whether indicators of impairment exist
is judgemental.
The tangible assets impairment charge of €12.1m relates
to €1.0m in the Commercial Waste Division in both the
Netherlands and Belgium and €0.7m in Monostreams
principally relating to part of the business that has been
closed and a right of use asset impairment of €10.4m in UK
Municipal related to the ELWA contract discussed below.
We focused on these impairments to verify whether the
assumptions used in determining the quantum of the
asset impairments were appropriate.
PFI onerous contracts
As disclosed in note 4.10 to the financial statements, the
Group has onerous contract provisions of €89.0m in the
Municipal Division. In 2020 the provision increased by
€15.5m in relation to the ELWA contract principally as a
result of a new Dutch import tax and increases in offtake
cost, in addition to the impairment noted above.
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 discount rate.
Our audit work on these provisions focused on:
` Considering significant PFI contracts entered into by the Group to determine whether
any other contracts, other than those identified by management, are onerous;
` Reading Board minutes to identify any relevant matters reported to the Board; and
` 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 impact of Covid-19 and 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.
134
Renewi plc Annual Report and Accounts 2020 KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
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 4.10 to the financial statements, the Group
has long-term landfill provisions for site restoration and
aftercare of €152.8m at 31 March 2020. Separately the Group
has other provisions of €47.6m principally comprising legal
and warranty claims.
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.
Deferred tax assets
The Group has recognised €33.9m of a total potential
deferred tax asset of €83.1m in respect of historic losses as at
31 March 2020. See note 3.4 to the financial statements.
The amount of deferred tax assets recognised is
judgemental and is determined by reference to future
forecasts of taxable profits.
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 3.3 to the
financial statements.
Our audit work on these provisions focused on:
` Understanding the processes and controls in place to ensure compliance and a
discussion of any instances of non-compliance in the year with management; and
` Reading Board minutes to identify any relevant matters reported to the Board.
In addition to the procedures above, for the Group’s long-term landfill provisions
we specifically:
` Considered the estimation accuracy of the forecast spend on which the provision
is based on historical accuracy, our knowledge of the industry, the sites and
contracts involved;
` 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; and
` Discussions with management to understand the basis of the calculation
of the provision.
In addition to the procedures above, for ongoing legal cases we specifically:
` Held discussions with internal and external legal counsel to determine the status of
known claims against the Group and assess the appropriateness of the associated
provisions held; and
` Discussions with management to understand the basis of the calculation
of the provision.
Having performed the procedures above we found that the key assumptions applied to
each provision, which differed depending on the nature of and duration of the provision,
were appropriately supported.
As part of our work on deferred tax, we have considered the appropriateness of
management’s assumptions and estimates in relation to the likelihood of generating
sufficient future taxable profits to support the recognition of deferred tax assets.
Specifically we have considered:
` Board approved budgets and forecasts against historic performance by legal entity
where appropriate;
` Correspondence with relevant local tax authorities; and
` 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 2020 are reasonable.
We considered the appropriateness of the amounts classified as non-trading and
exceptional. In order to do this we considered:
` The Group’s accounting policy on exceptional and non-trading items; and
` Pronouncements by the Financial Reporting Council on this matter.
We challenged management on the appropriateness of the classification of such items
being mindful that classification should be even-handed between gains and losses, the
basis for the classification clearly disclosed and a clear reconciliation to statutory
measures provided, 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 2020 is appropriate.
135
1234Renewi plc Annual Report and Accounts 2020 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF RENEWI PLC continued
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Impact of Covid-19 – Group and parent company
Covid-19 was declared a global pandemic by the World
Health Organisation on 11 March 2020 and the ongoing
response is having an unprecedented impact on the
economy, which was considered as part of the audit.
Management and the Board considered the potential impact
of Covid-19 on the current and future operations of the
business. In doing so, management focused on the Group’s
ability to continue as a going concern by performing a
detailed bottom-up analysis of the impact of Covid-19 on
revenue, EBIT and cash flows. Management made estimates
and judgements that are critical to the outcome of these
considerations. Two Covid-19 scenarios were modelled –
a new base case scenario and a further downside scenario.
This analysis has been used in conjunction with an
assessment of the Group’s liquidity and consideration of
the renegotiated loan covenants.
Because of its significance to the financial statements and to
our audit, we determined that management’s consideration
of the potential impact of Covid-19 on going concern to be
a key audit matter.
In assessing management’s consideration of the potential impact of Covid-19, we
undertook the following procedures:
` We obtained management’s going concern assessment and detailed models that
details the Group’s assessment and conclusions with respect to their ability to
continue as a going concern;
` We assessed the Board approved initial 2021 (pre-Covid-19) budget as well as
the new base case forecast and the downside scenarios (each of which factor in
Covid-19 overlays);
` We evaluated the historical accuracy of the budgeting process to assess the reliability
of the data;
` In relation to the Covid-19 overlays, we held discussions with management to
understand and challenge the rationale behind the assumptions made, using our
knowledge of the business and industry;
` We reviewed the latest available post year end trading results for April 2020 and
latest available volumes for May 2020, for all significant divisions, and compared to
management’s original budget, 2020 actuals and revised forecasts, and considered
the impact of these actual results on the future forecast period;
` We reviewed management’s sensitivity scenarios, we challenged management
assumptions and performed our own sensitivities such as a further downside scenario
in order to assess the possible impact of headroom against their borrowing facilities
and covenant compliance.
We reviewed management’s disclosures in the financial statements in relation to
Covid-19 and are satisfied that they are consistent with the risks affecting the Group,
their impact assessment and our findings from the procedures that we performed.
136
Renewi plc Annual Report and Accounts 2020 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
calls 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.
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:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
GROUP FINANCIAL
STATEMENTS
€8.88m (2019: €8.90m).
PARENT COMPANY
FINANCIAL
STATEMENTS
£6.21m (2019: £6.13m)
restricted for the
purposes of Group
reporting.
0.5% of revenue.
1% of net assets.
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. This
has been restricted
for purposes of
Group reporting.
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.
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 €3.0m 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 €420k
(Group audit) (2019: €450k) and £311k (parent company audit)
(2019: £193k) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
137
1234Renewi plc Annual Report and Accounts 2020 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF RENEWI PLC 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 12 months
from the date of approval of the
financial statements.
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 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.
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).
138
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 2020 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 98 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 84 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.
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 98 and 129, 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 pages 102 to 105 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.
Renewi plc Annual Report and Accounts 2020 Other required
reporting
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
` we have not received all the information and explanations we
require for our audit; or
` adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
` certain disclosures of directors’ remuneration specified by law
are not made; or
` the parent company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
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
26 years, covering the years ended 31 March 1995 to 31 March 2020.
Matthew Mullins (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
4 June 2020
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 129, 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.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC’s website at:
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.
139
1234Renewi plc Annual Report and Accounts 2020 FINANCIAL STATEMENTS
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2020
2020
Non
trading &
exceptional
items
€m
Note
Underlying
€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
2019
Non
trading &
exceptional
items
€m
–
(51.3)
(51.3)
(90.8)
(142.1)
–
(9.4)
–
(151.5)
28.0
(123.5)
Total
€m
1,780.7
(1,521.7)
259.0
(315.6)
(56.6)
12.4
(45.2)
0.4
(89.0)
12.4
(76.6)
1,775.4
(1,467.5)
307.9
(220.3)
87.6
9.7
(44.1)
0.9
54.1
(13.3)
40.8
–
(72.2)
(72.2)
(43.5)
(115.7)
2.2
–
–
(113.5)
12.2
(101.3)
1,775.4
(1,539.7)
235.7
(263.8)
(28.1)
11.9
(44.1)
0.9
(59.4)
(1.1)
(60.5)
1,780.7
(1,470.4)
310.3
(224.8)
85.5
12.4
(35.8)
0.4
62.5
(15.6)
46.9
2,3.1
3.3
3.3
2,3.3
5.4
5.4
4.4
3.4
6.4
2.3
43.1
(18.9)
(120.2)
(16.6)
(77.1)
1.4
48.3
(22.5)
(146.0)
(21.1)
(97.7)
5.9
43.0
0.1
43.1
(120.9)
0.7
(120.2)
(77.9)
0.8
(77.1)
48.9
(0.6)
48.3
(141.7)
(4.3)
(146.0)
Basic earnings (loss) per share attributable to owners of the parent (cent per share)
Continuing operations
Discontinued operations
3.5
3.5
Diluted earnings (loss) per share attributable to owners of the parent (cent per share)
Continuing operations
Discontinued operations
3.5
3.5
5.1
0.3
5.4
5.1
0.3
5.4
(12.8)
(2.4)
(15.2)
(12.8)
(2.4)
(15.2)
(7.7)
(2.1)
(9.8)
(7.7)
(2.1)
(9.8)
5.9
0.2
6.1
5.9
0.2
6.1
(14.9)
(2.8)
(17.7)
(14.9)
(2.8)
(17.7)
The notes on pages 145 to 213 are an integral part of these consolidated financial statements.
140
140
(92.8)
(4.9)
(97.7)
(9.0)
(2.6)
(11.6)
(9.0)
(2.6)
(11.6)
Renewi plc Annual Report and Accounts 2020 Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2020
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 notes on pages 145 to 213 are an integral part of these consolidated financial statements.
Note
5.5
3.4
4.4
7.2
3.4
2020
€m
6.3
(12.2)
0.3
0.2
(5.4)
15.2
(2.8)
12.4
7.0
(77.1)
(70.1)
(69.7)
(0.4)
(70.1)
(53.1)
(16.6)
(69.7)
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)
141
141
1234Renewi plc Annual Report and Accounts 2020 Consolidated Balance Sheet
AS AT 31 MARCH 2020
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Financial assets relating to PPP contracts
Trade and other receivables
Derivative financial instruments
Defined benefit pension scheme surplus
Deferred tax assets
Current assets
Inventories
Investments
Loans to associates and joint ventures
Financial assets relating to 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 – 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 – 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
31 March
2020
€m
31 March
2019
€m
Note
4.1
4.2
4.3
4.4
4.5
4.8
5.5
7.2
3.4
4.7
4.4
4.4
4.5
4.8
5.5
5.2
6.3
5.3
5.3
5.5
4.9
3.4
4.10
7.2
5.3
5.3
5.5
4.9
4.10
6.3
5.9
5.9
5.9
610.1
584.0
206.9
15.6
141.8
3.1
2.1
16.0
37.2
1,616.8
20.7
8.1
0.9
6.0
272.4
–
0.7
194.5
503.3
–
503.3
2,120.1
(87.2)
(816.1)
(32.4)
(7.1)
(46.9)
(252.4)
(7.5)
(1,249.6)
(2.8)
(38.3)
(5.6)
(534.3)
(16.5)
(37.7)
(635.2)
–
(635.2)
(1,884.8)
235.3
99.5
473.6
(11.6)
(327.6)
233.9
1.4
235.3
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
The notes on pages 145 to 213 are an integral part of these consolidated financial statements.
The Financial Statements on pages 140 to 213 were approved by the Board of Directors and authorised for issue on 4 June 2020. They were
signed on its behalf by:
Ben Verwaayen
Chairman
Toby Woolrych
Chief Financial Officer
142
142
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 MARCH 2020
Share
capital
€m
99.5
–
99.5
–
Share
premium
€m
473.6
–
473.6
–
Exchange
reserve
€m
(17.9)
–
(17.9)
–
Balance at 31 March 2019
Change in accounting policy (note 9)
Restated total equity at 1 April 2019
(Loss) profit 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
Non-controlling interest capital injection
Dividends paid
Balance as at 31 March 2020
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 paid
Balance as at 31 March 2019
Note
5.5
7.2
3.4
4.4
7.3
5.10
5.5
7.2
3.4
4.4
7.3
3.4
5.9
5.10
–
–
–
–
–
–
–
–
–
99.5
99.5
–
–
–
–
–
–
–
–
–
–
–
99.5
–
–
–
–
–
–
–
–
–
473.6
473.6
–
–
–
–
–
–
–
–
–
–
–
473.6
Retained
earnings
€m
(236.7)
(7.5)
(244.2)
(77.9)
–
(11.5)
15.2
(2.0)
0.2
(76.0)
6.3
–
–
–
–
6.3
–
–
–
(11.6)
1.2
–
(8.6)
(327.6)
(18.2)
–
(124.7)
(92.8)
0.3
–
–
–
–
0.3
–
–
–
–
(17.9)
–
2.3
10.8
(1.9)
0.2
(81.4)
0.8
(0.6)
(3.4)
(27.4)
(236.7)
Non-
controlling
interests
€m
1.0
–
1.0
0.8
–
(0.7)
–
(0.5)
–
(0.4)
–
0.8
–
1.4
6.1
(4.9)
–
(0.2)
–
–
–
(5.1)
–
–
–
–
1.0
Total
equity
€m
319.5
(7.5)
312.0
(77.1)
6.3
(12.2)
15.2
(2.5)
0.2
(70.1)
1.2
0.8
(8.6)
235.3
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
The notes on pages 145 to 213 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.
The cumulative translation loss of €1.9m in relation to the Canadian operations has been recycled through the Income Statement in the year
ended March 2020 with further details in 6.4.
143
143
1234Renewi plc Annual Report and Accounts 2020 Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 MARCH 2020
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
Depreciation and impairment of right-of-use assets
Exceptional loss on disposal of subsidiaries/remeasurement of assets held for sale
Gain on disposal of property, plant and equipment
Exceptional loss allowance of loans to associates and joint ventures
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 gain on disposal of subsidiaries
Exceptional charge on reassessment of discount rates for long term provisions
Net decrease in provisions
Exceptional past service cost in relation to defined benefit pension schemes
Payment related to committed funding of the defined benefit pension scheme
Other non-cash items
Share-based compensation
Operating cash flows before movement in working capital
Decrease 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
Proceeds from disposals of property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Acquisition of business assets
Proceeds from disposal of subsidiaries, net of cash disposed of and disposal costs paid
Purchase of associates and joint ventures
Net receipt 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 PPP arrangements under the financial asset model
Capital received in respect of PPP financial assets
Finance income
Net cash inflow (outflow) from investing activities
Financing activities
Finance charges and loan fees paid
Investment in own shares by the Employee Share Trust
Capital injection from non-controlling interest
Dividends paid
Proceeds from retail bonds
Repayment of retail bonds
Proceeds from bank borrowings
Repayment of PPP net debt
Repayments of obligations under leases*
Net cash outflow from financing activities
Net increase (decrease) in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
4.1
4.2
4.3
6.2,6.4
4.4
7.2
7.3
6.1
6.1
6.2,6.4
5.9
5.10
5.1
5.1
5.1
5.2
2020
€m
(59.4)
(11.9)
44.1
(0.9)
(28.1)
(15.8)
12.8
74.8
42.8
56.2
(1.7)
–
(1.4)
(0.2)
0.1
–
17.9
(2.8)
(1.4)
(3.5)
(0.1)
1.2
150.8
5.0
(5.7)
17.7
167.8
(10.1)
157.7
(6.7)
(77.8)
11.1
(3.8)
(2.6)
88.2
(1.7)
0.3
(2.4)
–
0.6
–
(1.7)
4.7
10.9
19.1
(37.9)
–
0.8
(8.6)
75.0
(100.0)
78.3
(2.9)
(38.5)
(33.8)
143.0
1.1
50.4
194.5
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
* Repayments of obligations under leases of €38.5m includes €1.8m in relation to assets of disposal groups classified as held for sale during the year which have now been
disposed of, €0.5m in relation to discontinued operations which have now been disposed of and €36.2m as set out in note 5.1. Included in the €38.5m is €29.7m in relation to
additional leases arising upon the adoption of IFRS 16.
The notes on pages 145 to 213 are an integral part of these consolidated financial statements.
144
144
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 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 from 30 January 2020 with a secondary listing on Euronext
Amsterdam. Renewi plc is incorporated and domiciled in Scotland under the Companies Act 2006, registered number SC077438 and the address
of the registered office is given on page 231. 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, share-based
payments, other receivables relating to invoice financing, money market funds, unlisted investments and short-term investments 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 2019. The consolidated financial statements are
presented in Euros and all amounts are rounded to the nearest €0.1m unless otherwise stated.
Going concern
As detailed in the CEO and CFO reviews, in relation to the Covid-19 pandemic our business is an essential service, in the front line of maintaining
vital services to hospitals, businesses and communities and has been able to maintain all required services and protect our employees in recent
times. There has been an adverse impact to volumes coming into our commercial divisions in particular in the last weeks of March and during
April and May. We have undertaken revised modelling for the new financial year and beyond to reflect these changes and have taken cost and
cash actions to preserve liquidity even in an extended crisis. The Group has recently announced that amendments to our banking covenants
until September 2021 have been secured as a result of the impact of Covid-19. Having assessed the revised forecasts and 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 accounting policies
The Group adopted IFRS 16 Leases from 1 April 2019 and has applied the modified retrospective approach. The comparative information has
not been restated however the reclassifications and adjustments on the opening Balance Sheet on 1 April 2019 have been recognised and
disclosed. The accounting policies and judgements in relation to right-of-use assets and lease liabilities are included in notes 4.3 and 5.3
retrospectively. Details of the impact of adopting IFRS 16 and the practical expedients taken are shown in note 9.
The Group also adopted IFRIC 23 Uncertainty over income tax treatments, no changes were needed to the Group’s tax provisions as at the initial
application date of 1 April 2019.
The Group has elected to early adopt the Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform (IBOR) issued in September
2019 and EU endorsed on 15 January 2020. In accordance with the transition provisions, the amendments have been adopted retrospectively to
hedging relationships that existed at the start of the reporting period or were designated thereafter. The amendments provide temporary relief
from applying specific hedge accounting requirements to hedging relationships directly affected by IBOR reform and set out triggers for when
the relief will end which include the uncertainty arising from interest rate benchmark reform no longer being present. The reliefs mean that this
reform should not generally cause the termination of hedge accounting and the Group has no plans to discontinue hedge accounting during the
period solely due to this IBOR related uncertainty. However, any hedge ineffectiveness will continue to be recorded in the Income Statement as
a non-trading item. The Group has limited exposure to changes in the GBP LIBOR benchmark with a notional principal amount of €243.1m of
forward cross-currency interest rate swaps and €104.7m of interest rate swaps relating to PPP contracts with full details set out in note 5.5. The
Group’s transition programme anticipates that the areas of greatest change will be amendments of the contractual terms of LIBOR referenced
interest rate swaps and cross-currency interest rate swaps and their related cashflows. In assessing whether the hedge is expected to be highly
effective on a forward-looking basis, the Group has therefore assumed that these future cash payments are not altered by IBOR. The Group has
also determined that the hedged GBP LIBOR risk component is not separately identifiable at hedge designation.
(cid:1)
145
145
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 1. BASIS OF PREPARATION CONTINUED
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, there are no IFRSs or IFRS IC interpretations not yet effective that would
be expected to have a material impact on the Group and there were no other new IFRSs or IFRS IC interpretations which were early adopted by
the Group.
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.
Foreign currencies
The financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the
entity operates (the functional currency). The 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:
(cid:1)(cid:1)monetary assets and liabilities at each balance sheet date are translated into Euros at the closing year end exchange rate;
(cid:1)(cid:1)income and expenses in each Income Statement are translated into Euros at the average rate of exchange for the year; and
(cid:1)(cid:1)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 a non-Euro denominated subsidiary undertaking
is sold.
The most significant currency for the Group is Sterling with the closing rate on 31 March 2020 of €1:£0.884 (2019: €1:£0.862) and an average rate
for the year ended 31 March 2020 of €1:£0.872 (2019: €1:£0.895).
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.
(cid:1)
146
146
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 1. BASIS OF PREPARATION CONTINUED
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 underlying 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. In 2020 we are also disclosing numbers on an IAS 17 basis (i.e. pre IFRS 16) to enable meaningful comparison year on year due to
the application of IFRS 16. These measures 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 in note 8.3.
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. The current year includes within restructuring the initial costs for the Renewi 2.0 programme which will cost €30m over three
years to deliver improved customer service and cost benefits of €20m annually once completed. See note 3.3 for further details.
Service concession arrangements – The consideration from local authorities for the operations of waste management service concessions
is treated as financial assets relating to PPP contracts in accordance with IFRIC 12. At the balance sheet date, the Group has financial assets
relating to PPP contracts of €147.8m (2019: €155.8m). 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 4.5.
Right-of-use assets and lease liabilities – Significant judgements were made in calculating the discount rates used on the date of initial
application of IFRS 16 Leases. The discount rate for specific components of the total lease portfolio is determined using an incremental
borrowing rate the Group may agree with third parties.
Defined benefit pension scheme surplus – Management have concluded that the Group has an unconditional right to a refund of any
surplus in the UK defined benefit pension scheme once the liabilities have been discharged and that the trustees of the scheme do not have
the unilateral right to wind up the scheme, therefore the asset has not been restricted and no additional liability has been recognised. The
International Accounting Standards Board under IFRIC 14 are currently reviewing the recognition of a pension surplus in the financial
statements. Dependent upon the final published standard, there is potential that any future defined benefit surplus may not be recognised
in the financial statements of the Group and additionally, the valuation methodology may also change. See note 7.2 for further details of
the scheme.
Assets held for sale and discontinued operations – Management used judgement to determine that the criteria of IFRS 5 Non-current assets
held for sale and discontinued operations were met for the businesses held for disposal at 31 March 2019 and all such assets have been sold
during the year ended March 2020. Further details are given in note 6.3 and 6.4.
Impact of Covid-19 – Management used judgement to determine the expected impact on financial instruments as a result of the Covid-19
pandemic. In addition management have adjusted the future cash flows of cash generating units when undertaking impairment reviews and
have taken the expected impact of Covid-19 into account when assessing the recoverability of deferred tax assets.
(cid:1)
147
147
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 1. BASIS OF PREPARATION CONTINUED
Estimates and assumptions
Impairment of intangible assets – Impairment testing is carried out annually at 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 applying appropriate discount
and long-term growth rates. The future cash flows are derived from approved forecasts, which have been updated to reflect the impact of
Covid-19, specifically with regard to a reduction in input volumes, reassessment of costs and a deferral of non-urgent maintenance and capital
expenditure. Details of the key assumptions and sensitivity analysis are given in note 4.1.
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. The impact of Covid-19 has been considered but has not led to the impairment of any tangible assets or investments.
Landfill related provisions – The Group has landfill related provisions of €152.8m (2019: €138.9m). 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 4.10.
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 €89.7m (2019: €94.9m) which have been provided for at the lower of 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 PPP contracts which amount to €89.0m (2019: €88.9m). The provisions have 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 4.10.
Right-of-use assets and lease liabilities – Upon the application of IFRS 16 Leases determination of the lease term was based on facts and
circumstances that were established with extension options only included when reasonably certain that the lease would be extended and as the
discount rate implicit in the leases was not readily available an incremental borrowing rate was determined. Further details are given in note 5.3.
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 the 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 five-year projections as used for the value in use calculations for impairment reviews.
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.
(cid:1)
148
148
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
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 and are set out below:
Commercial Waste
Hazardous Waste
Monostreams
Municipal
Group central services
Collection and treatment of commercial waste in the Netherlands and Belgium.
Treatment of hazardous waste in the Netherlands and industrial cleaning until 31 October 2019.
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,
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 Commercial Waste and Belgium Commercial Waste 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 profit measure the Board of Directors uses to evaluate performance is underlying EBIT. 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
(cid:1)
2020
€m
786.0
439.1
(1.5)
1,223.6
2019
€m
764.7
430.8
(1.1)
1,194.4
173.0
211.3
213.6
213.3
197.2
195.2
(32.0)
1,775.4
(33.5)
1,780.7
149
149
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
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 3.3)
Total operating loss from continuing operations
Finance income (note 5.4)
Finance charges (note 5.4)
Finance income – non-trading and exceptional items (note 3.3)
Finance charges – non-trading and exceptional items (note 3.3)
Share of results from associates and joint ventures
Loss before taxation and discontinued operations
2020
€m
56.0
33.9
89.9
2019
€m
53.2
33.3
86.5
12.0
7.0
14.5
12.9
(2.8)
0.8
(26.0)
(21.7)
87.6
(115.7)
(28.1)
9.7
(44.1)
2.2
–
0.9
(59.4)
85.5
(142.1)
(56.6)
12.4
(35.8)
–
(9.4)
0.4
(89.0)
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
983.0
186.1
(372.8)
796.3
880.6
210.1
(353.4)
737.3
202.8
21.7
(77.6)
146.9
163.4
114.7
(102.6)
175.5
195.4
46.0
(169.0)
72.4
183.8
43.3
(166.6)
60.5
155.1
42.1
(161.5)
35.7
159.0
34.6
(166.0)
27.6
41.2
12.2
(58.1)
(4.7)
39.3
195.2
(1,045.8)
(811.3)
1,616.8
503.3
(1,884.8)
235.3
–
–
–
–
1,616.8
503.3
(1,884.8)
235.3
14.1
9.8
(55.4)
(31.5)
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
Net Assets
31 March 2020
Gross non-current assets
Gross current assets
Gross liabilities
Net assets (liabilities)
31 March 2019
Gross non-current assets
Gross current assets
Gross liabilities
Net assets (liabilities)
(cid:1)
150
150
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 2. SEGMENTAL INFORMATION CONTINUED
Other disclosures
2020
Capital additions:
Property, plant and equipment
Right-of-use assets
Intangible assets
Depreciation charge:
Property, plant and equipment
Right-of-use assets
Amortisation of intangibles
Impairment charge:
Property, plant and equipment
Right-of-use assets
Intangible assets
Non-trading and exceptional items before tax
2019
Capital additions:
Property, plant and equipment
Intangible assets
Commercial
Waste
€m
Hazardous
Waste*
€m
Monostreams
€m
Municipal
€m
Group
central
services
€m
Total
continuing
operations
€m
Discontinued
operations
€m
51.4
49.1
0.3
53.9
22.5
3.7
1.0
–
–
7.1
1.6
0.2
8.2
2.6
0.1
6.6
3.4
24.3
7.7
3.5
1.7
9.6
3.4
4.8
0.7
–
–
0.1
1.6
0.1
0.4
1.2
0.3
–
10.4
–
1.0
6.2
6.4
1.0
2.7
3.9
–
–
–
67.3
62.0
8.7
73.1
32.4
12.8
8.3
13.8
24.3
3.8
–
–
–
–
–
–
–
–
Total
€m
71.1
62.0
8.7
73.1
32.4
12.8
8.3
13.8
24.3
34.6
39.6
13.0
26.9
(0.6)
113.5
18.9
132.4
63.7
–
17.6
–
17.8
–
Depreciation charge
Property, plant and equipment
60.0
14.3
11.2
Amortisation of intangibles
3.9
0.5
4.4
Impairment charge:
Property, plant and equipment
Intangible assets
Loans to joint ventures
0.1
0.4
–
–
19.5
–
9.2
–
–
0.6
1.5
0.7
0.4
1.0
18.1
20.4
1.0
3.4
1.1
4.0
–
0.1
–
100.7
4.9
87.3
13.2
10.3
38.1
20.4
2.9
–
2.4
0.1
6.9
15.6
–
103.6
4.9
89.7
13.3
17.2
53.7
20.4
Non-trading and exceptional items before tax
27.6
26.7
25.8
73.6
(2.2)
151.5
22.5
174.0
* The Hazardous Waste 2020 values include the Reym disposal group which were €1.7m capital expenditure on property, plant and equipment, €0.2m capital expenditure on
right-of-use assets, €6.6m impairment of property, plant and equipment, €24.3m impairment of intangibles assets and €3.4m impairment of right-of-use assets.
Geographical information
The Group’s segment assets (non-current assets being intangible assets, property plant and equipment, right-of-use assets and investments)
by geographical location are detailed below:
Netherlands
Belgium
UK
France
Portugal
Germany
Hungary
Total segment assets of continuing operations
(cid:1)
2020
€m
979.5
390.3
10.8
29.3
6.0
0.1
0.6
1,416.6
2019
€m
848.0
357.2
9.4
28.4
6.0
1.0
0.6
1,250.6
151
151
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
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 applies IFRS 15 Revenue from Contracts with Customers which 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 the revenue is recognised at a point in time when the waste is collected and accepted but deferred until the waste is actually processed.
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 increases revenue with a corresponding increase in cost of sales for the value of the waste
collected with no impact on operating profit.
Accounting policy
Under IFRS 15 revenue is defined as income arising in the course of the Group’s 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 when 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:
(cid:1)(cid:1)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 a price per tonne basis for different types of waste. 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.
―(cid:1)Waste collection services: revenue is recognised at the point in time when the waste is delivered to transfer stations or to a third party
processing facility.
―(cid:1)Waste processing services: where the Group’s revenue contracts include an obligation to process waste, revenue is recognised over time
as processing occurs.
(cid:1)(cid:1)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.
―(cid:1)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.
―(cid:1)Income from power generation: for gas produced by processes at anaerobic digestion facilities and landfill sites revenue is recognised
at a point in time based on the volumes of energy produced and an estimation of the amount to be received.
(cid:1)(cid:1)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. With regard to Hazardous waste industrial cleaning, revenue was recognised over time by reference to the stage of completion
based on services performed to date. This type of revenue ceased on 31 October 2019 with the sale of the Reym business.
(cid:1)(cid:1)Other includes charges for sundry low value packing materials, waste advisory services to customers, services to support customers with waste
collection and treatment activities and in the prior year included delayed damages in the Municipal Division.
(cid:1)
152
152
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.1 REVENUE RECOGNITION CONTINUED
The timing of payments 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 4.9. 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 4.8.
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 (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 such that it is handed over to the local authority in
good working order is known as lifecycle and is deferred and only recognised as revenue when the service is provided, further details are given
in note 4.5.
The following tables show the Group’s continuing revenue by type of service delivered and by primary geographic markets:
Revenue by type of service
2020
Inbound
Outbound
On-Site
Other
Total revenue
2019
Inbound
Outbound
On-Site
Other
Total revenue
(cid:1)
Commercial
Waste
€m
Hazardous
Waste
€m
Monostreams
€m
Municipal
€m
Inter-segment
€m
Total
€m
1,037.2
116.8
39.2
30.4
1,223.6
969.2
151.5
44.2
29.5
1,194.4
94.6
5.4
72.9
0.1
173.0
91.5
4.1
115.7
–
211.3
79.0
131.8
–
2.8
213.6
71.7
138.9
–
2.7
213.3
185.9
4.8
–
6.5
197.2
167.3
5.9
–
22.0
195.2
(27.8)
(2.4)
(0.2)
(1.6)
(32.0)
(23.5)
(2.2)
(6.3)
(1.5)
(33.5)
1,368.9
256.4
111.9
38.2
1,775.4
1,276.2
298.2
153.6
52.7
1,780.7
153
153
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.1 REVENUE RECOGNITION CONTINUED
Revenue by geographic market
2020
Netherlands
Belgium
UK
France
Other
Total revenue
2019
Netherlands
Belgium
UK
France
Other
Total revenue
Commercial
Waste
€m
Hazardous
Waste
€m
Monostreams
€m
Municipal
€m
Inter-segment
€m
Total
€m
785.1
438.5
–
–
–
1,223.6
764.0
430.4
–
–
–
1,194.4
173.0
–
–
–
–
173.0
211.3
–
–
–
–
211.3
116.0
64.7
–
22.7
10.2
213.6
113.9
62.6
–
24.2
12.6
213.3
–
–
197.2
–
–
197.2
–
–
195.2
–
–
195.2
(30.2)
(1.8)
–
–
–
(32.0)
(31.2)
(2.3)
–
–
–
(33.5)
1,043.9
501.4
197.2
22.7
10.2
1,775.4
1,058.0
490.7
195.2
24.2
12.6
1,780.7
Revenue recognised at a point in time amounted to €1,611.8m (2019: €1,576.8m) 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 the operating loss for the year:
Continuing operations
Staff costs
Depreciation of property, plant and equipment
Impairment of property, plant and equipment (not included in non-trading and exceptional items)
Depreciation of right-of-use assets
Amortisation of intangible assets
Repairs and maintenance expenditure on property, plant and equipment
Net gain on disposal of property, plant and equipment
Expense relating to short term leases
Expense relating to low-value assets
Income from subleasing right of use assets
Non-trading and exceptional items
Net foreign exchange loss (gain)
Net impairment losses on trade receivables and accrued income
Note
7.1
4.2
4.2
4.3
4.1
3.3
4.8
2020
€m
424.0
73.1
1.0
32.4
12.8
98.9
(0.8)
17.6
5.2
(3.5)
113.5
0.1
6.8
2019
€m
430.7
89.7
–
–
13.3
101.1
(2.3)
–
–
–
151.5
(2.3)
14.7
The total remuneration of the Group’s auditors, PricewaterhouseCoopers LLP (PwC) 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 €96,000 (2019: €35,000) of non-audit services were provided by PwC for audit related assurance services.
(cid:1)
2020
€m
0.4
1.4
1.8
2019
€m
0.3
1.5
1.8
154
154
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.3 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:
Loss on disposal of subsidiaries/prior year remeasurement of assets held for sale
Acquisition of 100% of shares in a joint venture
Prior year disposals
2017 merger related
UK Municipal contract issues
Other changes in long-term provisions
Other items:
ATM soil issues
Restructuring charges
Income relating to fires
IAS 19 Employee benefits pensions net credit
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
(cid:1)
Note
6.2
6.1
4.1
6.4
2020
€m
13.3
0.7
2.3
–
16.3
37.3
(1.4)
(2.2)
(3.9)
29.8
25.9
33.0
3.1
2.7
(0.1)
(1.4)
4.3
–
(2.2)
–
6.4
113.5
(9.8)
(2.4)
101.3
18.9
120.2
2019
€m
32.1
12.1
12.5
0.1
56.8
19.5
–
(11.0)
0.2
8.7
64.3
–
6.5
–
(0.5)
(0.1)
5.9
5.0
4.3
0.1
6.4
151.5
(12.4)
(15.6)
123.5
22.5
146.0
155
155
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.3 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 of Shanks Group and Van Gansewinkel Groep (VGG) in 2017 and the associated synergy delivery projects,
these costs are considered to be exceptional. Synergy delivery costs of €14.0m (2019: €44.2m) and integration costs of €2.3m (2019: €12.6m) were
incurred as the Group executes merger plans for generating value. Synergy delivery costs include non-cash impairments of €0.7m relating to the
simplification of the range of products at Coolrec and the prior year cost of €12.1m principally related to the restructuring of the Monostreams
glass operations in the Netherlands. The total cost of €16.3m (2019: €56.8m) was split €4.0m (2019: €29.5m) in cost of sales and €12.3m (2019:
€27.3m) in administrative expenses.
Portfolio management activity
The Municipal Canada sale completed in September 2019 and is shown as a discontinued operation. The sale of the Hazardous Waste Reym
industrial cleaning business completed in October 2019 with a loss on disposal of €37.3m (2019: €19.5m loss on remeasurement) and further
details are set out in note 6.2.
In November 2019 the Group acquired the 50% holding in AP4 Terra B.V. from the joint venture partner and this resulted in a profit of €1.4m and
further details are set out in note 6.1.
The credit for prior year disposals of €2.2m relates to the release of a warranty provision for a UK disposal as it is now no longer required. The
prior year credit of €11.0m includes the profit on the sale of the Group’s share in the UK joint venture, Energen Biogas and the profit on sale of
transferring 50% of a Hazardous Waste ATM subsidiary to a joint venture net of initial fees relating to the disposal process for the Canada and
Reym businesses.
The 2017 merger related credit of €3.9m (2019: €0.2m charge) includes a final warranty settlement relating to the 2017 merger of VGG, a release
of provisions in relation to pre-merger legal matters net of further legal and other advisory transaction costs incurred. These are considered
exceptional as part of the overall total transaction costs.
The total cost of €29.8m (2019: €8.7m) was all recorded in administrative expenses.
UK Municipal contract issues
The UK Municipal contract issues of €25.9m (2019: €64.3m) relate to the ELWA contract which has become onerous from 1 January 2020 as a
result of a new Dutch tax on the import of burnable waste which has and will continue to increase off-take costs until new outlets can be found
together with an expected impact of Brexit which will increase haulage and tariff costs. This charge is split between an onerous contract
provision of €15.5m and impairment of €10.4m of right-of-use assets. In the prior year €59.3m was reflected in relation to the UK Municipal Derby
contract including a provision against the original subordinated debt investment of €20.4m along with impairment of goodwill and other
intangible assets of €14.9m, onerous contract provision of €7.6m to cover ongoing losses and termination costs, a loss allowance against €11.6m
of unpaid delay damages and acceleration of a prepayment of €4.8m. The contract was subsequently terminated in August 2019. In addition the
prior year charge included a €1.8m onerous contract provision increase and €4.1m of impairments of contract right intangibles and plant and
equipment relating to the ELWA contract net of a release of a provision of €0.9m for the Elstow contract. The charge of €25.9m (2019: €64.3m)
was split €25.9m (2019: €9.4m) in cost of sales and €nil (2019: €54.9m) in administrative expenses.
Other changes in long-term provisions
Other changes in long-term provisions includes an increase in provisions of €17.9m due to the reduction in discount rates, principally landfill
related and onerous contracts, as a result of the fall in Government bond yields. As announced in March 2020, on 6 February the European
Commission announced its decision to initiate a formal investigation in which it alleges that the Walloon Region of Belgium provided state aid to
the Group in relation to the Cetem Landfill. An adverse judgement would require the Walloon Region to seek repayment from the Group. While
we are vigorously defending the case, we have considered it appropriate at this stage to recognise a provision of €15.1m which has been based
on the most likely outcome from our legal advisers. The charge of €33.0m is all recorded in cost of sales.
Other items
The charge for ATM soil issues of €3.1m (2019: €6.5m) relates to the soil offset market issue and includes additional costs of logistics, off-site
storage, testing and legal advice. These issues are now resolved and no further exceptional charges are expected.
Other restructuring of €2.7m (2019: €nil) includes advisor fees relating to Renewi 2.0, a project to enhance margins and efficiencies through
digitisation and optimising internal processes.
(cid:1)
156
156
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.3 NON-TRADING AND EXCEPTIONAL ITEMS CONTINUED
The net credit in income relating to fires of €0.1m (2019: €0.5m) was the result of final insurance settlements relating to significant fires in the
Commercial division in prior years.
The IAS 19 Employee benefits net credit of €1.4m (2019: €0.1m) relates to a past service credit for the UK defined benefit pension scheme which
was closed to future benefit accrual during the year together with a reduction in liabilities as a result of pension increase exchange exercises. The
prior year credit included 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 total charge of €4.3m (2019: €5.9m) was split €2.9m (2019: €6.0m) in cost of sales and €1.4m (2019: €0.1 credit) in administrative expenses.
Items recorded in finance charges and finance income
The exceptional finance charges in the prior year include a €5.0m loss allowance against the interest receivable on the subordinated debt in relation
to the Derby UK Municipal contract as described above. The €2.2m credit (2019: €4.3m charge) for ineffectiveness on cash flow hedges is principally
in relation to the Cumbria PPP project interest rate swaps as a result of a revised repayment programme for the PPP non-recourse debt.
(cid:1)
Amortisation of acquisition intangibles
Amortisation of intangible assets acquired in business combinations of €6.4m (2019: €6.4m) is all recorded in cost of sales.
Exceptional tax credit
The exceptional tax credit of €2.4m (2019: €15.6m) relates to a release of provisions in relation to pre-merger tax issues in Belgium and the
Netherlands and changes in tax rates in the UK and the Netherlands. The prior year credit related to the change in tax rates in Belgium and the
Netherlands and the recognition of tax losses in the Netherlands and further details are given in note 3.4.
Discontinued operations
The sale of the Canadian disposal group was completed on 30 September 2019 which resulted in a loss on disposal of €18.9m (2019: €22.5m loss
on remeasurement) and further details are set out in note 6.4. As a result of uncertainty of receipt, the contingent proceeds from this disposal
will only be recognised once more certain.
3.4 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 result 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 primarily in the Netherlands, Belgium, the UK, France and Canada (up until the disposal in September 2019), 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.
(cid:1)
157
157
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.4 TAXATION CONTINUED
Income Statement
The tax charge (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
– Adjustment in respect of the prior year
– Exceptional tax credit
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 charge (credit) for the year
2020
€m
2019
€m
1.5
11.4
(1.0)
(2.5)
9.4
(8.3)
–
(8.3)
1.1
1.5
10.1
(0.4)
–
11.2
(23.8)
0.2
(23.6)
(12.4)
The tax on the Group’s loss for the year from continuing operations differs from the UK standard rate of tax of 19% (2019: 19%), as explained below:
Total loss before taxation
Tax credit based on UK tax rate of 19% (2019: 19%)
Effects of:
Adjustment to tax charge in respect of prior years
Profits (losses) taxed at overseas tax rates
Non-deductible (non-taxable) other items
Non-deductible loss on portfolio management activity
Non-deductible goodwill impairment
Non-deductible impairment of subordinated debt
Unrecognised deferred tax assets
Net exceptional credit relating to recognition of tax losses
Exceptional charge (credit) relating to change in Netherlands tax rate
Exceptional credit relating to change in UK tax rate
Exceptional credit relating to pre-merger tax audits
Change in tax rate
Total tax charge (credit) for the year
2020
€m
(59.4)
2019
€m
(89.0)
(11.3)
(16.9)
(1.0)
(1.0)
(0.3)
5.7
–
–
11.4
–
1.6
(1.5)
(2.5)
–
1.1
(0.2)
2.3
0.9
–
4.9
4.8
6.0
(9.3)
(6.3)
–
–
1.4
(12.4)
Exceptional charge (credit) relating to changes in Netherlands tax rate
The standard Netherlands corporate income tax rate was 25% (2019: 25%). Under the corporate tax reform enacted by the Dutch government on
18 December 2018, it was stated that the rate would reduce to 22.55% for the period ending 31 March 2021 and 20.50% for the period ending 31
March 2022 and subsequent periods. However, in September 2019 the Dutch government announced amendments to the rates so that the rate
will remain at 25% for the period ending 31 March 2021 and 21.7% for the period ending 31 March 2022 and subsequent periods. These
amendments were enacted by the Dutch government on 17 December 2019. 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 resulted in an exceptional tax charge of
€1.6m in the current year and a credit of €6.3m in the prior year.
Exceptional credit relating to change in UK tax rate
The rate of UK corporation tax rate changed from 20% to 19% on 1 April 2017 and legislation was included in Finance Act 2016 to reduce the rate
to 17% on 1 April 2020. However, it was announced in the Chancellor’s Budget of 11 March 2020 that the rate will remain at 19% and this was
substantively enacted on 17 March 2020. As a result, the UK deferred tax for the year has been calculated based on the substantively enacted
rate of 19%. This has resulted in an exceptional tax credit of €1.5m in the current year.
Exceptional tax credit relating to pre-merger tax audits
The other exceptional tax credit of €2.5m relates to a release of provisions in relation to pre-merger tax issues in Belgium and the Netherlands.
158
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.4 TAXATION CONTINUED
Net exceptional credit in relation to tax losses in the prior year(cid:1)
In the prior year in view of the performance of the integrated Netherlands Commercial business and the Group’s forecasts for future profitability
of the Netherlands business, an exceptional tax credit of €10.5m was 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
was 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.
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
Retirement benefit schemes
Tax losses
Derivative financial instruments
Capital allowances
Other timing differences
At 31 March
The movement in the deferred tax balance during the year is:
Net deferred tax liability at 1 April
Change in accounting policy – impact of IFRS 16 (note 9)
Restated net deferred tax liability at 1 April 2019
Acquisitions
Credited to Income Statement
Charged to equity
Transferred to disposal groups classified as held for sale (note 6.3)
Disposals
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
2020
€m
(1.4)
33.9
4.7
(43.7)
(3.2)
(9.7)
2019
€m
2.7
33.5
4.8
(49.7)
(8.8)
(17.5)
2020
€m
(1.3)
0.4
(0.4)
5.0
4.6
8.3
2020
€m
(17.5)
1.7
(15.8)
(0.2)
8.3
(2.5)
–
1.0
(0.5)
(9.7)
37.2
(46.9)
(9.7)
2019
€m
(0.7)
11.8
0.8
5.8
5.9
23.6
2019
€m
(42.7)
–
(42.7)
–
23.6
(2.5)
4.2
–
(0.1)
(17.5)
38.6
(56.1)
(17.5)
The majority of the €37.2m (2019: €38.6m) deferred tax asset and the majority of the €46.9m (2019: €56.1m) deferred tax liability are expected to
be recovered after more than one year.
As at 31 March 2020, the Group had unused trading losses (tax effect) of €83.1m (2019: €76.2m) available for offset against future profits.
A deferred tax asset has been recognised in respect of €33.9m (2019: €34.1m) 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 did not make material
profits in 2020 and this is principally due to exceptional costs incurred in 2020 that are not expected to occur going forward. No deferred tax
asset has been recognised in respect of the remaining €49.2m (2019: €42.1m) 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, €15.6m (2019: €15.0m) recognised
and €13.6m (2019: €13.2m) unrecognised, expire after 6 to 9 years.
(cid:1)
159
159
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 3. OPERATING PROFIT AND TAX CONTINUED
3.4 TAXATION CONTINUED
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 2020 amounted to €284.4m
(2019: €262.8m) and unrecognised deferred tax estimated to arise on the unremitted earnings is €nil (2019: €0.1m) which would relate 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.
3.5 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 during the year 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 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.
Continuing operations
Basic
2020
Dilutions
Diluted
Basic
2019
Dilutions
Diluted
Weighted average number of shares (million)
794.9
0.9
795.8
796.7
0.1
796.8
Loss after tax (€m)
Non-controlling interests (€m)
Loss after tax attributable to ordinary shareholders (€m)
Basic loss per share (cents)
(60.5)
(0.8)
(61.3)
(7.7)
–
–
–
–
(60.5)
(0.8)
(61.3)
(7.7)
(76.6)
4.9
(71.7)
(9.0)
–
–
–
–
(76.6)
4.9
(71.7)
(9.0)
The reconciliation between underlying earnings per share and basic loss per share is as follows:
Underlying earnings per share/Underlying profit after tax attributable to ordinary shareholders
Adjustments:
Non-trading and exceptional items
Tax on non-trading and exceptional items
Exceptional tax
Basic loss per share/Loss after tax attributable to ordinary shareholders
Diluted underlying earnings per share/Underlying profit after tax attributable to
ordinary shareholders
Diluted basic loss per share/Loss after tax attributable to ordinary shareholders
Discontinued operations
Underlying earnings per share/Underlying profit after tax attributable to ordinary shareholders
Basic loss per share /Loss after tax attributable to ordinary shareholders
2020
Cents
5.1
€m
40.7
(14.3)
1.2
0.3
(7.7)
(114.2)
9.8
2.4
(61.3)
2019
Cents
5.9
(18.5)
1.6
2.0
(9.0)
€m
47.5
(147.2)
12.4
15.6
(71.7)
5.1
(7.7)
40.7
(61.3)
5.9
(9.0)
47.5
(71.7)
2020
Cents
0.3
(2.1)
€m
2.3
(16.6)
2019
Cents
0.2
(2.6)
€m
1.4
(21.1)
(cid:1)
160
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 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 value of landfill capacity to deposit waste in two landfill sites in the Netherlands. The initial landfill void was
capitalised at fair value on the acquisition of a Netherlands operation in 2006 and further void has been acquired in relation to the Maasvlakte
landfill site and capitalised at cost. The 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 ranges from 3 to 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 PPP contracts in Municipal
Computer software
Acquisition related intangibles:
Waste permits and licences
Customer relationships
Term of the lease
Term of the contract
Up to 5 years
5 to 20 years
Up to 14 years
(cid:1)
161
161
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.1 INTANGIBLE ASSETS CONTINUED
Intangible assets are analysed as follows:
Cost
At 1 April 2018
Additions
Acquisition through business combinations
Disposals
Transferred to disposal groups classified as held for sale (note 6.3)
Exchange
At 31 March 2019
Additions
Acquisition through business combinations
Disposals
Exchange
At 31 March 2020
Accumulated amortisation and impairment
At 1 April 2018
Amortisation charge
Impairment charge
Disposals
Transfer to disposal group classified as held for sale (note 6.3)
Exchange
At 31 March 2019
Amortisation charge
Disposals
Exchange
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
Goodwill
€m
Landfill void
€m
Computer
software and
others
€m
Acquisition
related
intangibles
€m
683.0
–
–
(5.1)
(57.3)
0.1
620.7
–
8.4
(4.1)
(0.2)
624.8
63.7
–
4.3
–
–
–
68.0
–
(4.1)
(0.2)
63.7
561.1
552.7
619.3
25.6
–
–
–
–
–
25.6
1.7
–
–
–
27.3
18.2
1.0
–
–
–
–
19.2
1.4
–
–
20.6
6.7
6.4
7.4
59.9
4.9
–
(2.0)
(8.5)
0.6
54.9
6.8
–
(2.0)
(0.6)
59.1
24.8
5.9
14.3
(1.9)
(3.6)
–
39.5
5.0
(2.0)
(0.3)
42.2
16.9
15.4
35.1
74.3
–
0.1
(0.1)
(1.3)
–
73.0
–
0.7
–
–
73.7
36.8
6.4
–
–
(1.3)
–
41.9
6.4
–
–
48.3
25.4
31.1
37.5
Total
€m
842.8
4.9
0.1
(7.2)
(67.1)
0.7
774.2
8.5
9.1
(6.1)
(0.8)
784.9
143.5
13.3
18.6
(1.9)
(4.9)
–
168.6
12.8
(6.1)
(0.5)
174.8
610.1
605.6
699.3
The computer software and other additions of €6.8m (2019: €4.9m) were software of €6.8m (2019: €3.4m) and the prior year also included
€1.5m for contract rights in relation to Municipal contracts. The goodwill acquired through business combinations of €8.4m relates to the
Hazardous Waste acquisition and the acquisition related intangibles of €0.7m relate to the Monostreams acquisition with full details provided
in note 6.1.
Of the total amortisation charge of €12.8m (2019: €13.3m), €6.4m (2019: €6.4m) related to acquisition related intangible assets. Of the remaining
amortisation expense of €6.4m (2019: €6.9m), €1.5m (2019: €1.6m) has been charged in cost of sales and €4.9m (2019: €5.3m) has been charged
in administrative expenses.
The net book value of acquisition related intangibles of €25.4m (2019: €31.1m) included customer relationships of €19.0m (2019: €20.8m),
permits of €5.9m (2019: €6.3m) and licences €nil (2019: €3.4m).
The goodwill impairment charge in the prior year of €4.3m related to the Derby contract in UK Municipal. The other intangibles impairment
charge in the prior year of €14.3m related to €13.8m of contract right intangibles in UK Municipal in relation to the Derby and ELWA contracts as
it was determined that they were no longer recoverable and €0.5m of software in the Commercial Division and Group Central Services as part of
the integration programme.
(cid:1)
162
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 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 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 of the closing net book values is set out below:
Netherlands Commercial Waste
Belgium Commercial Waste
Commercial Waste
Hazardous Waste
Monostreams
Total goodwill
2020
€m
231.5
136.3
367.8
110.8
82.5
561.1
2019
€m
231.5
136.3
367.8
102.4
82.5
552.7
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. They also reflect the planned changes in the CGUs as a result of restructuring programmes and actions instigated in the current
year together with expected general market and economic conditions. In addition, the forecast modelling has been revised recently to take
account of the Covid-19 pandemic. The Commercial CGUs are the most impacted by the pandemic and since the outbreak certain inbound
volumes have reduced and this drop in volumes and other economic conditions have been reflected in the updated modelling principally for the
first two years of the five year period. Costs directly linked to volumes are assumed to drop in line with revenue however other costs have been
analysed on a line by line basis with actions taken to reduce costs where possible. In addition all ongoing maintenance and capital expenditure
was reviewed and where not urgent this will be deferred to later years.
For each of the CGUs, the key assumptions used in the value in use calculations are shown below. The pre-tax discount rate reflects the Group’s
assessment of the risks related to the CGUs and the countries in which they operate.
2020
Revenue (% annual growth rate from year 1 to year 5)
Underlying EBIT margin (average % of revenue)
Long-term growth rate
Pre-tax discount rate
2019
Revenue (% annual growth rate from year 1 to year 5)
Underlying EBIT margin (average % of revenue)
Long-term growth rate
Pre-tax discount rate
Netherlands
Commercial
Waste
5.9%
5.8%
2.0%
8.3%
Netherlands
Commercial
Waste
3.7%
6.4%
2.0%
8.8%
Belgium
Commercial
Waste
7.4%
4.9%
2.0%
8.4%
Belgium
Commercial
Waste
3.7%
5.9%
2.0%
9.1%
Hazardous
Waste
8.6%
9.3%
2.0%
8.3%
Hazardous
Waste
7.0%
9.5%
2.0%
8.6%
Monostreams
3.9%
6.4%
2.0%
8.5%
Monostreams
(1.9)%
5.1%
2.0%
8.8%
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 historic performance which has resulted in restructuring initiatives being
implemented. At 31 March 2020 the recoverable amount for this CGU exceeds the carrying value by €41m. On a sensitised profit basis applying
an 10% profit reduction in the terminal value would reduce headroom to €21m.
(cid:1)
163
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1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
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
Up to 30 years
Up to 30 years (over the operational life of the site)
Up to 20 years
Up to 12 years
Up to 15 years
Up to 5 years
Up to 10 years
(cid:1)
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.2 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Property, plant and equipment are analysed as follows:
Cost
At 1 April 2018
Additions
Disposals
Transfer to disposal groups classified as held for sale (note 6.3)
Reclassifications
Exchange
At 31 March 2019
Adjustment for change in accounting policy (note 9)
At 1 April 2019 – restated
Additions
Acquisition through business combinations
Disposals
Reclassifications
Exchange
At 31 March 2020
Accumulated depreciation and impairment
At 1 April 2018
Depreciation charge
Impairment charge
Reversal of prior year impairment charge
Disposals
Transfer to disposal groups classified as held for sale (note 6.3)
Reclassifications
Exchange
At 31 March 2019
Adjustment for change in accounting policy (note 9)
At 1 April 2019 – restated
Depreciation charge
Impairment charge
Disposals
Reclassifications
Exchange
At 31 March 2020
Net book value
At 31 March 2020
At 1 April 2019 – restated
At 31 March 2019
At 31 March 2018
Land and
buildings
€m
Landfill
sites
€m
Plant and
machinery
€m
532.3
19.9
(15.0)
(72.7)
(1.0)
2.1
465.6
(4.4)
461.2
7.5
5.0
(10.8)
2.0
(0.2)
464.7
153.5
18.5
–
(0.5)
(5.9)
(28.8)
–
0.9
137.7
(0.5)
137.2
15.2
0.7
(5.6)
2.5
(0.2)
149.8
314.9
324.0
327.9
378.8
54.6
11.8
–
–
1.4
–
67.8
–
67.8
2.3
–
–
(1.6)
–
68.5
48.2
0.9
–
–
–
–
–
–
49.1
–
49.1
1.4
–
–
(0.1)
–
50.4
18.1
18.7
18.7
6.4
828.6
71.9
(29.8)
(75.8)
0.3
0.6
795.8
(46.6)
749.2
55.8
3.9
(35.7)
(0.4)
(0.1)
772.7
503.0
70.3
10.3
–
(25.4)
(45.8)
0.7
0.2
513.3
(15.0)
498.3
56.5
1.0
(31.6)
(2.4)
(0.1)
521.7
251.0
250.9
282.5
325.6
Total
€m
1,415.5
103.6
(44.8)
(148.5)
0.7
2.7
1,329.2
(51.0)
1,278.2
65.6
8.9
(46.5)
–
(0.3)
1,305.9
704.7
89.7
10.3
(0.5)
(31.3)
(74.6)
0.7
1.1
700.1
(15.5)
684.6
73.1
1.7
(37.2)
–
(0.3)
721.9
584.0
593.6
629.1
710.8
The accounting policy change relates to the adoption of IFRS 16 Leases from 1 April 2019 resulting in finance lease assets with a net book
value of €35.5m previously classified as property, plant and equipment being transferred to right-of-use assets, with further details in note 9.
Depreciation expense of €70.8m (2019: €85.1m) has been charged in cost of sales, €2.3m (2019: €2.2m) in administrative expenses and in the
prior year €2.4m related to discontinued operations.
The impairment charge of €1.7m (2019: €10.3m) relates to €1.0m in the Commercial division in both the Netherlands and Belgium and €0.7m in
Monostreams principally relating to part of the business that has been closed down. The prior year impairment charge included €9.3m relating
to the Monostreams division due to the underperformance of the glass operations and the simplification of the range of products at Coolrec. In
addition €0.9m related to the underperforming ELWA contract and €0.1m of merger related items in Belgium Commercial. The impairment
charge was split €1.7m (2019: €9.3m) in cost of sales and in the prior year €1.0m in administrative expenses.
Included within the net book value of property, plant and equipment of €584.0m (2019: €629.1m) are assets under construction of which €7.5m
(2019: €11.6m) is plant and machinery, €2.0m (2019: €3.0m) is land and buildings and in the prior year landfill sites also included assets under
construction of €10.7m. The net book value of plant and machinery of €251.0m includes €108.7m of plant and installations, €70.4m of machinery
and €66.2m of containers.(cid:1)
165
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1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.3 RIGHT-OF-USE ASSETS
Accounting policy
The Group has applied IFRS 16 Leases from the transition date of 1 April 2019 using the modified retrospective approach and therefore the
comparative information has not been restated. The standard has resulted in most leases being recognised on the Balance Sheet together with
the rights to control the use of an identified asset which are recognised as right-of-use assets. Adjustments arising from applying the new
standard have been recognised in the Balance Sheet on 1 April 2019 and full impact details are set out in note 9.
Right-of-use assets are recognised at the lease commencement date and are initially measured at cost which comprises the initial amount of the
lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. For the majority
of leases the Group has measured the right-of-use asset on transition date to be equal to the lease liability. For a limited number of real estate
contracts the Group has recalculated the right-of-use asset, as if IFRS 16 was applied from the beginning of the lease. The cumulative effect of
that recalculation has been recognised in equity as an adjustment to the opening balance of retained earnings for the current year.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. If
the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that
the Group will exercise a purchase option, then the right-of-use asset is depreciated over the useful life of the underlying asset, which is
determined on the same basis as those in property, plant and equipment. The lease liability is remeasured when there is a change in the Group’s
estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise
a purchase extension or termination option or if there is a revision to fixed lease payments. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the right-of-use asset.
Right-of-use assets are reviewed for impairment whenever events or circumstances indicate that the carrying value may not be recoverable
following the same approach as property, plant and equipment as stated in note 4.2.
Right-of-use assets are analysed as follows:
Cost
Reclassifications from property, plant and equipment
Right-of-use assets on transition
At 1 April 2019 – restated
Additions/modifications
Acquisition through business combinations
Disposals
Exchange
At 31 March 2020
Accumulated depreciation and impairment
Impairment of right-of-use assets on transition
At 1 April 2019 – restated
Depreciation charge*
Impairment charge
Disposals
Exchange
At 31 March 2020
Net book value
At 31 March 2020
At 1 April 2019 – restated
At 31 March 2019
Land and
buildings
€m
Plant and
machinery
€m
3.9
101.1
105.0
3.7
13.5
–
(0.5)
121.7
6.1
6.1
9.5
9.7
–
(0.5)
24.8
96.9
98.9
–
31.6
45.9
77.5
58.1
–
(1.3)
–
134.3
1.1
1.1
22.9
0.7
(0.4)
–
24.3
110.0
76.4
–
Total
€m
35.5
147.0
182.5
61.8
13.5
(1.3)
(0.5)
256.0
7.2
7.2
32.4
10.4
(0.4)
(0.5)
49.1
206.9
175.3
–
* The depreciation charge of €32.4m includes €26.6m of new IFRS 16 leases and €5.8m in relation to leases which were previously finance leases under IAS 17.
(cid:1)
166
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.3 RIGHT-OF-USE ASSETS CONTINUED
As a result of the adoption of IFRS 16 Leases on 1 April 2019 the transitional value of right-of-use assets was €147.0m which included the
reclassification of €6.0m from onerous contract provisions that had been provided at 31 March 2019 in relation to onerous lease provisions. In
addition on 1 April 2019 an assessment was made in relation to right-of-use assets where onerous leases had been identified prior to transition
and this resulted in impairments of €7.2m in the UK Municipal division. IAS 17 finance lease related assets with a net book value of €35.5m
previously classified as property, plant and equipment were transferred to right-of-use assets. Further details are included in note 9.
Depreciation expense of €26.4m has been charged in cost of sales and €6.0m in administrative expenses.
The impairment charge of €10.4m relates to the UK Municipal ELWA contract which became onerous on 1 January 2020, further details are
included in note 3.3.
The net book value of plant and machinery right-of-use assets at 31 March 2020 includes €4.5m plant and installations, €93.3m machinery and
€11.7m company cars.
4.4 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 judgement
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.
(cid:1)
167
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1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.4 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 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
Acquired
Additions
Share of retained (losses) profits
Dividend income
Fair value adjustment on cash flow hedges
Fair value movement on short term investments
Disposal
At 31 March 2020
Loans
Loans to
associates and
joint ventures
€m
22.5
–
–
–
–
–
(20.4)
(1.6)
–
0.4
0.9
–
–
–
–
–
–
–
0.9
Investments
Other unlisted
investments
€m
4.7
–
–
–
–
–
–
–
–
–
4.7
–
–
–
–
–
–
–
4.7
Associates
€m
6.8
–
–
0.6
(0.6)
0.2
–
–
–
–
7.0
1.7
–
1.0
(0.5)
0.2
–
–
9.4
Short term
investments
€m
–
–
5.9
–
–
–
–
–
–
–
5.9
–
2.4
–
–
–
(0.2)
–
8.1
Total
investments
€m
19.1
3.8
5.9
0.4
(0.8)
0.2
–
–
(6.8)
–
21.8
1.8
2.4
0.9
(0.6)
0.2
(0.2)
(2.6)
23.7
Joint ventures
€m
7.6
3.8
–
(0.2)
(0.2)
–
–
–
(6.8)
–
4.2
0.1
–
(0.1)
(0.1)
–
–
(2.6)
1.5
The loans to associates and joint ventures of €0.9m (2019: €0.9m) are current. Total investments are split €8.1m current (2019: €5.9m) and
€15.6m non-current (2019: €15.9m).
The associates acquisition in May 2019 related to a 32% stake in RetourMatras BV, a mattress recycler by the Netherlands Commercial division.
The prior year loss allowance of €20.4m in loans to associates and joint ventures related to the UK Municipal Derby contract as explained in note
3.3 and was recorded in administrative expenses.
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 €2.4m (2019: €54.7m loss, of which €53.6m related to the investment in Derby investment). Cumulatively losses of €3.8m (2019: €67.0m,
of which €65.6m related to the Derby investment which the Group no longer has a share of) are unrecognised.
Where the associate or joint venture holds non-recourse 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.
(cid:1)
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.5 FINANCIAL ASSETS RELATING TO PPP CONTRACTS
Financial assets result from the application of IFRIC 12 on accounting for concession arrangements relating to the UK PPP Municipal
contracts.
Accounting policies and key judgements
Financial assets relating to 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.
The IFRS 9 general approach is applied in relation to expected credit loss which requires an allowance to be recorded on initial recognition if
appropriate and then at each reporting date an assessment is made to determine the changes in the risk of default occurring over the expected
life of the financial asset. The UK Municipal division has entered into PPP long-term waste management contracts with local authorities to
secure project finance to cover the infrastructure capital costs. UK local authorities have historically enjoyed a strong credit profile with the
capacity to meet financial commitments and none have ever defaulted. These financial assets are assessed to have low credit risk based on low
risk of default, the vital nature of the service being provided, strong financial capacity to meet contractual cash flow obligations in the near term
and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the local authority’s ability to
fulfil its obligations.
UK 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 PPP arrangements relate to the construction and operation of waste management facilities for local authorities. The building of
the facilities is governed by the engineer, procure and construct contract entered into by the Group. The construction work was undertaken by
third party contractors with drawdowns of financing from the UK PPP funders used to pay the subcontractor for the construction works. The
Group considered all relevant factors in the contractual arrangements between the parties to determine whether the Group acted as agent or
principal during the construction phase of the contracts. 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 acted 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 PPP non-recourse debt cash flows 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.
Other information for PPP contracts
The table below sets out the Group’s interest in service concession arrangements as at 31 March 2020.
Contract
Argyll & Bute
Cumbria
Wakefield
Financial close
September 2001
Full Service Commencement
April 2003
June 2009
April 2013
January 2013
December 2015
Contract Expiry
September 2026
June 2034
February 2038
March 2012
July 2015
June 2040
December 2002
August 2007
December 2027
Barnsley, Doncaster
and Rotherham
East London
Waste Authority
(cid:1)
Interests in Special Purpose Vehicle
Renewi: 100%
Renewi: 100%
Renewi: 50.001%
Equitix Infrastructure 4
Limited: 49.999%
Renewi: 75%
SSE Generation Limited: 25%
Renewi: 20%
John Laing Environmental Assets
Group (UK) Limited: 80%
169
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1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.5 FINANCIAL ASSETS RELATING TO PPP CONTRACTS CONTINUED
The Derby City and Derbyshire contract was terminated in August 2019 and the City of Surrey contract was part of the Canada business which
was disposed of on 30 September 2019. There have been no changes to the other arrangements during the year ended 31 March 2020. Further
disclosures in respect of service concession arrangements as required by paragraph 6 SIC 29 are provided on pages 59 to 61 of the Municipal
operating review.
The movements in financial assets during the year are as follows:
At 1 April 2018
Income recognised in the Income Statement: Interest Income (note 5.4)
Income recognised in the Income Statement: Discontinued operations (note 6.4)
Advances
Repayments
Transfer to disposal groups classified as held for sale (note 6.3)
Exchange
At 31 March 2019
Income recognised in the Income Statement: Interest Income (note 5.4)
Advances
Repayments
Exchange
At 31 March 2020
Current
Non-current
At 31 March 2020
Current
Non-current
At 31 March 2019
€m
205.3
9.5
1.3
2.9
(24.4)
(44.0)
5.2
155.8
9.5
1.6
(15.1)
(4.0)
147.8
6.0
141.8
147.8
6.0
149.8
155.8
At 31 March 2020 and 2019 there was no expected credit loss allowance recorded in relation to the financial assets relating to PPP contracts.
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 PPP financial assets included in cash flows from investing activities*
Interest in relation to PPP financial assets included in finance income in cash flows from investing activities
2020
€m
–
4.7
10.4
15.1
2019
€m
8.6
4.4
11.4
24.4
* Capital received in respect of PPP financial assets is an investing cash flow in relation to the UK contracts where the Group acted as agent and as an operating cash flow in
relation to the Canadian contract now disposed of where the Group acted as principal. In addition to the above the operating cash flow includes €0.1m capital received in
respect of PPP financial assets in 2020, this movement is not included in the above table as the financial asset was included in assets of disposal groups classified as held
for sale.
4.6 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
Contracts placed for future right-of-use assets
2020
€m
0.1
12.0
3.5
12.3
2019
€m
0.1
15.7
0.1
–
(cid:1)
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.7 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
2020
€m
14.2
6.5
20.7
2019
€m
14.3
11.7
26.0
In the prior year there was a write down of €2.3m of inventories to net realisable value in the Monostreams division and this was recognised as
an exceptional cost of sale.
4.8 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 assessed by division and grouped based on ageing.
Accrued income relates to unbilled services provided and has substantially the same risk characteristics as the trade receivables for the same
types of contracts. In addition as a result of Covid-19, in the current year outstanding trade receivables have been reviewed on a detailed
customer by customer basis taking into account the sector in which they operate, the available government support and the likelihood of
default, which has resulted in an increase in the ECL. 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. For receivables other than trade receivables and accrued income the general approach
under IFRS 9 is applied which requires an ECL allowance to be recorded on initial recognition if appropriate and then at each reporting date
an assessment is made to determine the changes in the risk of default occurring over the expected life of the receivable.
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 are 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.
(cid:1)
171
171
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.8 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
The carrying amounts of trade and other receivables are denominated in the following currencies:
Euro
Sterling
2020
€m
0.1
3.0
3.1
190.4
68.0
(22.4)
236.0
0.5
20.5
15.4
272.4
2020
€m
238.3
37.2
275.5
2019
€m
0.5
–
0.5
178.5
73.8
(18.1)
234.2
0.2
26.5
17.9
278.8
2019
€m
251.8
27.5
279.3
As at 31 March 2020 the total value of trade receivables subject to the invoice finance facilities was €107.5m (2019: €85.1m), the Group recognises
the continuing involvement carrying amount in trade receivables of €0.4m (2019: €2.4m) and therefore the net amount of transferred assets was
€107.1m (2019: €82.7m). The carrying amount of the associated liability is €0.4m (€2019: €0.3m). The Group considers that the carrying amount
of the continuing involvement asset and related liability equals the fair value.
Included within other receivables is €10.8m (2019: €11.7m) being the amount owed to the Group from the financial institutions providing the
facilities and represents the portion of the receivable that has been sold that is not advanced but is covered by credit insurance.
No financial assets within other receivables were impaired in the current year (2019: €5.0m of other receivables were impaired).
The expected credit loss allowance for trade receivables and accrued income is equivalent to 9% (2019: 7%) of gross trade receivables and
accrued income and the movement in the loss allowance is shown below:
At 1 April
Charged to Income Statement
Utilised
Transfer to disposal groups classified as held for sale (note 6.3)
Exchange
At 31 March
2020
€m
18.1
6.8
(2.4)
–
(0.1)
22.4
2019
€m
8.3
14.7
(4.8)
(0.1)
–
18.1
(cid:1)
172
172
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.8 TRADE AND OTHER RECEIVABLES CONTINUED
The lifetime expected loss provision for trade receivables and accrued income is as follows:
31 March 2020
Expected loss rate %
Gross carrying amount (€m)
Expected credit loss allowance (€m)
31 March 2019
Expected loss rate %
Gross carrying amount (€m)
Expected credit loss allowance (€m)
Current
1%
216.8
1.9
0%
223.2
0.9
More than 30
days past due
7%
8.6
0.6
More than 90
days past due
19%
6.5
1.2
More than 180
days past due
71%
26.5
18.7
40%
10.7
4.3
61%
8.8
5.3
79%
9.6
7.6
Total
9%
258.4
22.4
7%
252.3
18.1
The expected credit loss includes €14.7m (2019: €11.6m) in relation to 100% of the gross receivable balance for the Derby contract in the UK
Municipal division as explained in note 3.3. As at 31 March 2019 the associated receivables were classified as past due by more than 30 days and
90 days which resulted in the higher level of expected credit losses in these categories last year, whereas at 31 March 2020 the receivables are all
more than 180 days past due.
4.9 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:
Non-current liabilities
Other payables
Deferred revenue
Government grants
Current liabilities
Trade payables
Other tax and social security payable
Accruals and other payables
Deferred revenue
2020
€m
3.1
4.0
–
7.1
183.5
54.3
245.4
51.1
534.3
2019
€m
3.3
3.0
0.2
6.5
198.9
40.2
228.1
51.4
518.6
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
PPP contracts known as lifecycle as explained in note 3.1. Of the deferred revenue recognised at 31 March 2019 of €54.4m (2018: €50.9m),
€42.2m (2019: €44.7m) has been recognised in revenue during the year ended 31 March 2020.
The carrying amounts of trade and other payables and other non-current liabilities are denominated in the following currencies:
Euro
Sterling
(cid:1)
2020
€m
469.4
72.0
541.4
2019
€m
451.4
73.7
525.1
173
173
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.10 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 relevant market rates and whether they are an appropriate proxy
for a risk free rate. The unwinding of the discount to present value is included within finance costs.
The Group’s policies on provisions for specific areas are:
(cid:1)(cid:1)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.
(cid:1)(cid:1)Onerous contract provisions are recognised when the unavoidable costs of meeting the obligation under the contract exceed the economic
benefits expected to be received.
(cid:1)(cid:1)Legal and warranty provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably measured. The value of the
provision is management’s best estimate of the expenditure required to settle the present obligation.
(cid:1)(cid:1)Provisions for restructuring costs are 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 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 6.3)
Reclassifications
Exchange
At 31 March 2019
Adjustment for change in accounting policy (note 9)
At 1 April 2019 – restated
Provided in the year
Released in the year
Adjustment as a result of the change in discount rate
(note 3.3)
Finance charges – unwinding of discount (note 5.4)
Utilised in the year
Reclassifications*
Exchange
At 31 March 2020
Current
Non-current
At 31 March 2020
Current
Non-current
At 31 March 2019
Site
restoration
and
aftercare
€m
133.6
2.1
–
4.5
(4.3)
–
2.8
0.2
138.9
–
138.9
0.3
–
11.6
4.4
(2.4)
–
–
152.8
5.1
147.7
152.8
8.2
130.7
138.9
Onerous
contracts
€m
109.5
11.3
(0.9)
3.7
(27.0)
Legal and
warranty
€m
–
–
–
–
–
Restructuring
€m
9.0
6.0
(0.1)
–
(7.3)
–
(2.8)
1.1
94.9
(6.0)
88.9
16.1
(0.1)
5.1
3.2
(20.6)
–
(2.9)
89.7
16.5
73.2
89.7
26.1
68.8
94.9
–
–
–
–
–
–
19.8
(4.3)
–
–
(0.6)
10.4
(0.1)
25.2
8.0
17.2
25.2
–
–
–
–
–
–
7.6
–
7.6
3.4
(0.7)
–
–
(6.0)
–
–
4.3
4.3
–
4.3
7.6
–
7.6
Other
€m
24.9
10.0
(0.5)
0.2
(4.0)
(0.8)
–
0.1
29.9
–
29.9
3.3
(2.9)
1.2
0.1
(3.0)
(10.4)
(0.1)
18.1
3.8
14.3
18.1
13.5
16.4
29.9
Total
€m
277.0
29.4
(1.5)
8.4
(42.6)
(0.8)
–
1.4
271.3
(6.0)
265.3
42.9
(8.0)
17.9
7.7
(32.6)
–
(3.1)
290.1
37.7
252.4
290.1
55.4
215.9
271.3
* Due to the increase in legal and warranty related provisions during the year ended March 2020 a new provision classification has been created and the value of legal and
warranty related provisions at 31 March 2019 has been transferred from other provisions.
174
174
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
SECTION 4. OPERATING ASSETS AND LIABILITIES CONTINUED
4.10 PROVISIONS CONTINUED
Site restoration and aftercare
The site restoration provision at 31 March 2020 relates 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.
Onerous contracts
Onerous contracts are provided for at the lower of 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. Additions in
the year principally relate to the ELWA contract in UK Municipal and details are in note 3.3.
Legal and warranty
Legal and warranty provisions relate to 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. The Group has a
liability until the end of the contractual terms in the agreements.
On 6 February 2020 the European Commission announced its decision to initiate a formal investigation in which it alleges that the Walloon
Region of Belgium provided state aid to the Group in relation to the Cetem Landfill. An adverse judgement would require the Walloon Region
to seek repayment from the Group and while we are vigorously defending the case a non-current provision of €15.1m has been recognised with
details given in notes 3.3 and 8.4.
Restructuring
The restructuring provision primarily relates to redundancy and related costs incurred as a result of restructuring initiatives. As at 31 March 2020
the provision is expected to be spent in the following year as affected employees leave the business.
Other
Other provisions principally cover dilapidations and long-service employee awards. The provisions will be utilised over the period up to 2065.
Sensitivity to changes in discount rates
Landfill related provisions in the Netherlands and Belgium have been discounted at a real discount rate of 0.49% (2019: either 0.98%, 1.47% or
2.45%). The impact of a 0.5% reduction in the discount rate would result in an increase in the provisions of approximately €9m (2019: €10m).
Onerous contract and landfill provisions relating to the Municipal UK Division have been discounted at a real rate of 0.98% (2019: 1.96%). A 0.5%
reduction in the discount rate would result in an increase in the provisions of approximately €3m (2019: €4m).
(cid:1)
175
175
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
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 and borrowings including IFRS 16 lease liabilities and PPP non-
recourse net debt. Net debt for covenant reporting includes cash and cash equivalents, and finance leases previously reported
under IAS 17 but excludes additional lease liabilities reported under IFRS 16 and the non-recourse net debt relating to the UK
PPP contracts.
5.1 MOVEMENT IN TOTAL NET DEBT
2020
Cash and cash equivalents
Bank loans and overdrafts
European private placements
Retail bonds
Lease liabilities
PPP non-recourse net debt
Total net debt
2019
Cash and cash equivalents
Bank loans and overdrafts
European private placements
Retail bonds
Finance leases
PPP non-recourse net debt
Total net debt
At
1 April 2019
€m
50.4
(355.0)
(24.5)
(199.6)
(23.3)
(552.0)
(95.4)
(647.4)
Adjustment for
change in
accounting policy
€m
–
–
–
–
(155.4)
(155.4)
–
(155.4)
At
1 April 2018
€m
73.0
(335.4)
–
(199.3)
(38.9)
(500.6)
(94.6)
(595.2)
Cash flows
€m
156.0
(78.3)
–
25.0
36.2
138.9
2.9
141.8
Cash flows
€m
(23.0)
(15.3)
(25.0)
–
11.8
(51.5)
0.6
(50.9)
Other
non-cash
changes
€m
–
0.7
(0.1)
0.3
(61.8)
(60.9)
–
(60.9)
Acquired/
Disposed of
€m
(13.0)
–
–
–
(13.7)
(26.7)
–
(26.7)
Exchange
movements
€m
1.1
(5.3)
–
–
0.4
(3.8)
2.5
(1.3)
At
31 March 2020
€m
194.5
(437.9)
(24.6)
(174.3)
(217.6)
(659.9)
(90.0)
(749.9)
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
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)
Net increase (decrease) in cash and cash equivalents excluding cash relating to acquisitions and disposals
Cash sold as part of business disposals, net of cash acquired as part of acquisitions
Net increase (decrease) in cash and cash equivalents
Net increase in borrowings and leases
Lease liabilities acquired as part of acquisitions
Capitalisation of loan fees
Total cash flows in net debt
Adjustment for change in accounting policy (note 9)
Leases entered into during the year
Amortisation of loan fees
Transferred to disposal groups classified as held for sale
Exchange loss
Movement in net debt
Total net debt at beginning of year
Total net debt at end of year
(cid:1)
2020
€m
156.0
(13.0)
143.0
(14.2)
(13.7)
2.2
117.3
(155.4)
(61.8)
(1.3)
–
(1.3)
(102.5)
(647.4)
(749.9)
2019
€m
(23.0)
–
(23.0)
(27.9)
–
3.0
(47.9)
–
(0.4)
(0.8)
4.2
(7.3)
(52.2)
(595.2)
(647.4)
176
176
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.2 CASH AND CASH EQUIVALENTS
Accounting policy
Cash and cash equivalents comprise cash balances, money market funds 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.
Money market funds are constant net asset value funds with same day access for subscription and redemption. The funds fail the ‘solely payments
of principal and interest’ criteria under IFRS 9. They are therefore classified at fair value through profit and loss, although the fair value is materially
the same as amortised cost. Gains and losses arising from changes in fair value are included in the Income Statement in net finance charges.
Cash and cash equivalents are analysed as follows:
Cash at bank and in hand
Money market funds
Short-term deposits
The carrying amounts of cash and cash equivalents are denominated in the following currencies:
Euro
Sterling
Canadian Dollar
2020
€m
94.5
100.0
–
194.5
2020
€m
183.2
11.1
0.2
194.5
2019
€m
50.3
–
0.1
50.4
2019
€m
29.7
18.6
2.1
50.4
5.3 BORROWINGS
Accounting policy
Retail bonds and bank borrowings
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 one debt instrument for another one with an existing lender and 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 calculated 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.
Leases – from 1 April 2019
The Group has applied IFRS 16 Leases from the transition date of 1 April 2019 using the modified retrospective approach and therefore the
comparative information has not been restated and continues to be reported under IAS 17. Adjustments arising from applying the new standard
have been recognised in the Balance Sheet on 1 April 2019 and details of the impact are set out in note 9.
From 1 April 2019, leases are recognised as a right-of use asset and a corresponding liability at the date at which the leased asset is available for
use by the Group. On transition the Group recognised additional lease liabilities in relation to leases which had previously been classified as
operating leases under IAS 17. These lease liabilities were measured at the present value of the remaining lease payments, discounted using the
Group’s specific incremental borrowing rates for groups of leases in the portfolio with reasonably similar characteristics. The weighted average
incremental borrowing rate applied by the Group to the lease liabilities on 1 April 2019 was 3.3%.
(cid:1)
177
177
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.3 BORROWINGS CONTINUED
For new contracts entered into on or after 1 April 2019 as a lessee, the Group considers whether a contract is, or contains a lease. A lease is
defined as ‘a contract that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply
this definition the Group assesses whether the contract meets three key evaluations which are:
(cid:1)(cid:1)The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time
the asset is made available to the Group;
(cid:1)(cid:1)The Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract; and
(cid:1)(cid:1)The Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct
‘how and for what purpose’ the asset is used throughout the period of use.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the
Group uses its incremental borrowing rate as the discount rate, which is determined based on interest rates from various external financing
sources and adjusted to reflect the terms of the lease and type of leased asset, this rate is reassessed on a regular basis.
The lease liability is subsequently measured at amortised cost and remeasured when there is a change in future lease payments arising from a
change in an index or rate or if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee,
if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a rise in-substance fixed
lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-
use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the Income Statement over the lease period to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases – before 1 April 2019
Where the Group had substantially all the risks and rewards of ownership of a leased asset, the lease was treated as a finance lease. Leased
assets were included in property, plant and equipment at the total of the capital elements of the payments during the lease term and the
corresponding obligation was included in borrowings.
(cid:1)
178
178
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.3 BORROWINGS CONTINUED
Estimates and assumptions
On adopting IFRS 16 Leases the Group has made the following estimates and assumptions:
(cid:1)(cid:1)For a limited number of specific real estate contracts the calculation of the right-of-use asset and the lease liability on transition date was
determined as if IFRS 16 was applied from the beginning of the lease with the cumulative effect of that recalculation being recognised in equity as
an adjustment to the opening balance of retained earnings.
(cid:1)(cid:1)Extension and termination options are included in a number of real estate and plant and machinery leases across the Group. In determining the
lease term, management has considered all facts and circumstances that create an economic incentive to exercise such options. Extension
options are only included in the lease term if the lease is reasonably certain to be extended or not terminated.
(cid:1)(cid:1)The Group estimated the incremental borrowing rate by type of related right-of-use asset, lease term and country based on the Group’s third party
incremental borrowing rate.
(cid:1)(cid:1)At IFRS 16 transition date the Group has identified right-of-use assets for which onerous lease provisions of €6.0m were provided for at 31 March
2019, as referenced in note 9. The onerous lease provisions were reclassified to right-of-use assets on 1 April 2019.
Borrowings are analysed as follows:
Non-current borrowings
Retail bonds
European private placements
Term loans
Revolving credit facility
Lease liabilities*
Other loans
Borrowings – Other
Borrowings – PPP non-recourse net debt
Current borrowings
Retail bonds
Bank overdrafts
Lease liabilities*
Other loans
Borrowings – Other
Borrowings – PPP non-recourse net debt
2020
€m
174.3
24.6
81.5
352.0
181.2
2.5
816.1
87.2
903.3
–
0.7
36.4
1.2
38.3
2.8
41.1
* The Group adopted IFRS 16 Leases from 1 April 2019 which resulted in an increase in lease liabilities with details set out in note 9. The impact on the 31 March 2020
borrowings is an addition of €202.7m.
The carrying amounts of borrowings are denominated in the following currencies:
Euro
Sterling
Canadian Dollar
2020
€m
593.3
351.1
–
944.4
2019
€m
99.6
24.5
132.4
212.2
15.0
–
483.7
92.6
576.3
100.0
5.4
8.3
5.0
118.7
2.8
121.5
2019
€m
394.6
234.7
68.5
697.8
Included within bank and retail bond borrowings are capitalised loan fees of €4.8m (2019: €3.9m). The Group’s core bank loans and retail bonds
are unsecured and have cross guarantees from members of the Group.
(cid:1)
179
179
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.3 BORROWINGS CONTINUED
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
2020
Borrowings
PPP non-
recourse
net debt
€m
3.9
15.5
67.8
87.2
Borrowings
Other
€m
34.3
696.0
85.8
816.1
Total
€m
38.2
711.5
153.6
903.3
Borrowings
Other
€m
5.1
467.1
11.5
483.7
2019
Borrowings
PPP non-
recourse
net debt
€m
5.2
20.3
67.1
92.6
Total
€m
10.3
487.4
78.6
576.3
Revolving credit facility, term loans and European private placements
At 31 March 2020, the Group had a Euro denominated multicurrency green finance facility of €520m (2019: €575m) including a €82.5m
(2019: €137.5m) term loan, €25.0m (2019: €25.0m) European Private Placement (EUPP) and a €412.5m (2019: €412.5m) revolving credit facility
(RCF). Of the term loan and RCF 50% (€247.5m) matures on 18 May 2023 subject to a further two-year extension option and 50% (€247.5m)
matures on 18 May 2024 subject to a further one-year extension option in both cases to 18 May 2025. The EUPP has a maturity of December 2023
for €15m and December 2025 for €10m. At 31 March 2020 the term loan was fully drawn and €355.7m (2019: €212.2m) of the RCF was drawn for
borrowings in Euros and Sterling. The remaining €56.8m (2019: €202.4m) was available for drawing under the RCF of which €51.7m (2019:
€52.6m) was allocated for ancillary overdraft and guarantee facilities.
Retail bonds
At 31 March 2020, the Group had two issues of green retail bonds. The green retail bonds maturing June 2022 of €100m (2019: €100m) have an
annual gross coupon of 3.65% and the green retail bonds of €75m issued on 19 July 2019 maturing July 2024 have an annual gross coupon of
3.00%. The retail bonds of €100m with a coupon of 4.23% and a maturity date of July 2019 were fully repaid during the year.
Lease liabilities
The Group’s lease liabilities are payable as follows:
Within one year
Between one and five years
More than five years
2020
2019
Minimum
lease
payments
€m
42.5
123.1
132.7
298.3
Interest
€m
(6.1)
(17.6)
(57.0)
(80.7)
Principal
€m
36.4
105.5
75.7
217.6
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
The Group adopted IFRS 16 Leases from 1 April 2019 which resulted in an increase in lease liabilities with details set out in note 9. The impact on the 31 March 2020 is an
increase of €202.7m.
For most plant and machinery leases the Group has an option to purchase the leased assets at the end of the lease term. There are no
restrictions imposed by lessors to take out further debt or leases.
PPP non-recourse net debt
The PPP non-recourse debt is held in three 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 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 PPP company and the carrying amount of
financial assets pledged was €143.2m (2019: £149.0m).
In the majority of cases subsidiaries holding non-recourse 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.
(cid:1)
180
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.3 BORROWINGS CONTINUED
PPP cash and cash equivalents are offset against the non-recourse gross debt as they are subject to offsetting arrangements under the debt facilities.
PPP non-recourse gross debt
PPP cash and cash equivalents
PPP non-recourse net debt
2020
PPP
non-recourse
net debt
€m
105.3
(15.3)
90.0
2019
PPP
non-recourse
net debt
€m
111.6
(16.2)
95.4
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. Furthermore, the
Group utilises its cash resources which are either held in bank accounts or highly liquid money market funds to manage its short term liquidity.
The Group has unutilised committed borrowing facilities expiring in more than 2 years of €35.2m (2019: €149.8m) in relation to the Bank
Facilities and €2.1m (2019: €2.2m) of PPP non-recourse net debt:
In addition, the Group has access to €16.8m (2019: €14.1m) of undrawn uncommitted working capital facilities.
The following table analyses the Group’s financial liabilities including derivative financial instruments into relevant maturity groupings. The
maturities of the undiscounted cash flows, including interest and principal, at the balance sheet date are based on the earliest date on which the
Group is obliged to pay.
Within
one year
€m
Between one
and five years
€m
Over
five years
€m
At 31 March 2020
Retail bonds
Bank loans – Term loans, revolving credit facility and European private placements
Bank loans – PPP non-recourse net debt
Lease liabilities
PPP Interest rate swaps
Cross-currency interest rate swaps – pay
Cross-currency interest rate swaps – receive
Fuel derivatives
Forward contacts – sell
Forward contracts – buy
Trade and other payables
At 31 March 2019
Retail bonds
Bank loans – Term loans, revolving credit facility and European private placements
Bank loans – PPP non-recourse net debt
Lease liabilities
PPP Interest rate swaps*
Cross-currency interest rate swaps – pay*
Cross-currency interest rate swaps – receive*
Fuel derivatives*
Forward contacts – sell*
Forward contracts – buy*
Trade and other payables
5.9
12.7
7.9
42.5
3.6
3.3
(6.1)
5.5
3.2
(3.2)
428.9
504.2
107.9
22.5
8.4
8.7
3.5
176.7
(179.5)
0.6
13.2
(12.9)
427.5
576.6
191.3
482.4
36.1
123.1
12.5
246.5
(250.9)
0.7
–
–
0.3
842.0
111.0
400.5
41.9
14.4
12.1
–
–
–
–
–
0.2
580.1
* The numbers in the table should be recorded gross as the cash flows are settled gross and therefore the prior year comparatives have been restated.(cid:1)
–
10.2
94.2
132.7
12.8
–
–
–
–
–
2.8
252.7
–
10.5
98.5
1.4
12.5
–
–
–
–
–
2.6
125.5
181
181
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
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 PPP contracts is added to the financial asset based on the rate implied at the start of
the PPP 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:
(cid:1)(cid:1)The change in fair value where a derivative financial instrument does not qualify for hedge accounting
(cid:1)(cid:1)Ineffectiveness incurred by a derivative financial instrument that does qualify for hedge accounting
(cid:1)(cid:1)A significant impairment of an interest receivable balance
Net finance charges are analysed as follows:
Finance charges
Interest payable on borrowings
Interest payable on PPP non-recourse net debt
Lease interest*
Unwinding of discount on provisions (note 4.10)
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 PPP contracts (note 4.5)
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 3.3)
Non-trading and exceptional items
2020
€m
18.5
7.8
6.4
7.7
0.2
1.3
2.2
44.1
(9.5)
(0.2)
–
(9.7)
–
(2.2)
–
(2.2)
2019
€m
16.3
7.8
0.8
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
Net finance charges
32.2
32.8
* The lease interest comparatives have been restated to reclassify the prior year charge for IAS 17 finance leases from interest payable on borrowings. Lease interest for the year
ended March 2020 includes €5.8m interest in relation to the increase in lease liabilities as a result of IFRS 16 with further details set out in note 9.
5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Accounting policy
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.
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:
(cid:1)(cid:1)Interest risk and foreign exchange risk on the Group’s variable rate borrowings;
(cid:1)(cid:1)Commodity risk in relation to diesel consumption; and
(cid:1)(cid:1)Foreign exchange risk on the Group’s off-take contracts in the UK Municipal business.
The Group manages these risks through a range of derivative financial instruments, including interest rate swaps, cross-currency interest rate
swaps, forward foreign exchange contracts and fuel derivatives.(cid:1)
182
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES CONTINUED
Hedge accounting
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:
(cid:1)(cid:1)An economic relationship exists between the hedged item and the hedging instrument
(cid:1)(cid:1)The effect of credit risk does not dominate the value changes resulting from the economic relationship
(cid:1)(cid:1)The hedge ratio is the same as that resulting from actual amounts of hedged items and hedging instruments for risk management
The hedge ratio for each designation is established by comparing the quantity of the hedging instrument and the quantity of the hedged item
to determine their relative weighting for all the Group’s existing hedge relationships the hedge ratio has been determined at 1:1. Where there is
a cumulative loss on the hedging instrument and it is no longer expected that the loss will be recovered it is immediately recognised in the
Income Statement.
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. Certain derivative financial instruments do not qualify for hedge accounting and are held at fair value through profit or loss.
Changes in the fair value of such instruments are recognised 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.
Ineffectiveness
Sources of hedge ineffectiveness in the Group may arise when there is a change in circumstances that affect the terms of the hedged item such
that the critical terms no longer match exactly the critical terms of the hedging instrument such as if there is a change in the credit risk of both
counterparties, if there is a change in the underlying debt profile of a variable rate loan in relation to interest rate swaps, a change in the foreign
exchange rate or a change in timing of the cash flows being hedged in relation to the cross-currency interest rate swaps. Additional sources of
hedge ineffectiveness include, if there is a reduced requirement for diesel volumes in relation to the fuel derivatives or for Euros under the
forward foreign exchange contracts. Any ineffectiveness is recognised in the Income Statement as a non-trading income or charge.
Derivative financial instruments are analysed as follows:
Cross-currency interest rate swaps – cash flow hedges
Fuel derivatives – cash flow hedges
Forward foreign exchange contracts – cash flow hedges
Relating to PPP contracts:
Interest rate swaps – cash flow hedges
Interest rate swaps – at fair value through profit or loss
Total
Current
Non-current
Total
(cid:1)
2020
Assets
€m
2.1
–
–
Liabilities
€m
0.1
6.2
0.1
–
–
2.1
–
2.1
2.1
31.5
0.1
38.0
5.6
32.4
38.0
2019
Assets
€m
2.0
1.0
–
–
–
3.0
2.9
0.1
3.0
Liabilities
€m
3.4
0.5
0.6
28.2
0.1
32.8
4.4
28.4
32.8
183
183
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES CONTINUED
Cross-currency interest rate swaps
The notional principal amount of the outstanding forward cross currency interest rate swaps at 31 March 2020 was €243.1m (2019: €172.6m).
The Group holds five floating rate contracts in relation to Sterling borrowings: £65m swapped to €73.0m at a fixed interest rate of 1.41% expiring
July 2022, £37.5m swapped to €41.6m at a fixed interest rate of 1.27% expiring October 2022, £37.5m swapped to €41.6m at a fixed interest rate
of 1.29% expiring October 2022, £50m swapped to €56.8m at a fixed interest rate of 1.35% expiring December 2022 and £25m swapped to €28.4m
at a fixed interest rate of 1.40% expiring December 2022.
Fuel derivatives
The notional value of wholesale fuel covered by fuel derivatives at 31 March 2020 amounted to €15.3m (2019: €16.8m). The Group has annual
usage across the Netherlands and Belgium of approximately 49m litres of diesel per annum of which approximately 30m litres have been fixed
at an average of €0.43 per litre for the year to 31 March 2021 (nominal value €13.0m) and a further 6m litres has been fixed at an average of
€0.40 per litre for the year to 31 March 2022 (nominal value €2.3m).
Forward foreign exchange contracts
The notional principal amount of the outstanding forward foreign exchange contracts at 31 March 2020 was €3.2m (2019: €13.2m). 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:£0.90 expiring March 2021.
Interest rate swaps relating to PPP contracts
The notional principal amount of the outstanding interest rate swap contracts at 31 March 2020 was €104.7m (2019: €110.4m). Under these
contracts the Libor rate of PPP non-recourse borrowings 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 PPP project borrowing has
led to ineffectiveness of a credit of €2.2m (2019: €4.2m charge) being recognised for the related interest rate swap which has been taken to the
Income Statement as a non-trading and exceptional finance credit or charge.
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 PPP contracts
At 31 March
2020
€m
(25.9)
–
(6.7)
0.5
(6.0)
(38.1)
2019
€m
(28.0)
0.3
(1.2)
(0.5)
3.5
(25.9)
Net investment hedge
Renewi plc, a Sterling functional currency company, has Euro borrowings of €200.0m, fair value of €199.7m (2019: €200.0m, fair value of
€203.6m), 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 2020 (2019: 100%) and as a result the related exchange gain of €5.7m (2019: €3.4m loss) has been
recognised in the exchange reserve in the consolidated financial statements.
(cid:1)
184
184
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
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:
Hedging instrument
Hedged item
Cumulative
cash flow
hedge
movement in
Other
Comprehensive
Income
€m
Hedge
ineffectiveness
included in the
Income
Statement
in the year
€m
Change in the
fair value used
to determine
hedge
effectiveness
€m
Nominal
amount at
31 March 2020
€m
Cumulative
movement
in exchange
reserve
€m
Change in the
fair value used
to determine
hedge
effectiveness
€m
Weighted
average
hedged
rate
243.1
2.3
(0.4)
(0.1)
15.3
(6.7)
(6.2)
3.2
0.5
(0.1)
–
–
104.7
(5.8)
(31.4)
(2.1)
–
–
–
–
(2.6)
6.7
1.35%
€0.42
per litre
(0.5) €1:£0.902
7.9
4.07%
Hedge
ratio
1:1
1:1
1:1
1:1
200.0
5.3
–
–
(25.2)
(5.3)
–
1:1
Hedging instrument
Hedged item
Cumulative
cash flow
hedge
movement in
Other
Comprehensive
Income
€m
Hedge
ineffectiveness
included in the
Income
Statement
in the year
€m
Change in the
fair value used
to determine
hedge
effectiveness
€m
Nominal
amount at
31 March 2019
€m
Cumulative
movement
in exchange
reserve
€m
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
110.4
2.0
–
1.2
0.5
1.9
(0.3)
(0.2)
–
0.6
(0.6)
–
–
–
(25.4)
(4.1)
–
–
–
–
–
(2.3)
2.0%
1:1
–
(1.2)
–
€0.44
per litre
(0.5)
€1:£0.91
2.4
4.07%
1:1
1:1
1:1
200.0
(3.5)
–
–
(20.4)
3.5
–
1:1
March 2020
Cross-currency interest rate
swaps/variable rate borrowings
Fuel derivatives/purchase
of diesel
Forward foreign exchange contracts/
off-take contracts
Interest rate swaps/variable rate
borrowings relating to PPP contracts
Net investment hedge:
Euro borrowings/investment in Euro
denominated subsidiaries
March 2019
Cross-currency interest rate
swaps/variable rate borrowings
Interest rate cap/variable rate
borrowings
Fuel derivatives/purchase
of diesel
Forward foreign exchange contracts/
off-take contracts
Interest rate swaps/variable rate
borrowings relating to PPP contracts
Net investment hedge:
Euro borrowings/investment in Euro
denominated subsidiaries
(cid:1)
185
185
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.6 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Accounting policy
The Group 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. Derivatives which are not hedging instruments are measured at fair value through profit or loss upon initial recognition
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.
Cash and cash equivalents includes money market funds which are constant net asset value funds with same day access for subscription and
redemption. The funds fail the ‘solely payments of principal and interest’ criteria under IFRS 9. They are therefore classified as fair value through
profit and loss, although the fair value is materially the same as amortised cost. Gains and losses arising from changes in fair value are included
in the Income Statement in net finance charges.
Financial liabilities are classified and measured at fair value through profit or loss or at amortised cost.
Fair value hierarchy
The Group uses the following hierarchy of valuation techniques to determine the fair value of financial instruments:
(cid:1)(cid:1)Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
(cid:1)(cid:1)Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
(cid:1)(cid:1)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 2020, there were no transfers between level 1 and level 2 fair value measurements and no transfers into or out
of level 3.
(cid:1)
186
186
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.6 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES CONTINUED
Valuation techniques used to derive level 2 fair values
(cid:1)(cid:1)Short term investment valuations are provided by the fund manager
(cid:1)(cid:1)Unlisted non-current investments comprise unconsolidated companies where the fair value approximates the book value
(cid:1)(cid:1)Derivative financial instruments are determined by discounting the future cash flows using the applicable period-end yield curve
(cid:1)(cid:1)Retail bonds, the fair value is based on indicative market pricing
The table below presents the Group’s assets and liabilities measured at fair values:
Assets
Money market funds (note 5.2)
Unlisted non-current investments (note 4.4)
Short term investments (note 4.4)
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 (excluding Money market funds)
Financial assets relating to PPP contracts
Derivatives used for hedging
Fuel derivatives
Cross-currency interest rate swaps
Financial assets at fair value through profit or loss (mandatorily)
Short term investments
Cash and cash equivalents – Money market funds
Other receivables relating to invoice finance
Financial assets at fair value through OCI
Unlisted non-current investments
2020
Level 1
€m
100.0
–
–
–
100.0
–
–
–
Level 2
€m
–
4.7
8.1
2.1
14.9
38.0
174.7
212.7
Note
4.4
4.8
5.2
4.5
5.5
5.5
4.4
5.2
4.8
4.4
2019
Level 1
€m
–
–
–
–
–
–
–
–
–
2020
€m
0.9
241.2
94.5
147.8
–
2.1
8.1
100.0
10.8
4.7
610.1
Level 2
€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
* Trade and other receivables at amortised cost comprise trade receivables and accrued income net of allowance of (cid:1)236.0m (2019: (cid:1)234.2m) and other receivables held at
amortised cost of (cid:1)5.2m (2019: (cid:1)9.7m).
The Group considers that the fair value of financial assets is not materially different to their carrying value.
(cid:1)
187
187
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.6 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES CONTINUED
Financial liabilities
Financial liabilities at amortised cost
Bank overdrafts
Term loan, revolving credit facility, EUPP and other loans
Retail bonds
Lease liabilities
Trade and other payables excluding non-financial liabilities*
PPP non-recourse net debt
Financial liabilities at fair value through profit or loss
Interest rate swaps relating to PPP contracts
Derivatives used for hedging
Cross-currency interest rate swaps
Fuel derivatives
Forward foreign exchange contracts
Interest rate swaps relating to PPP contracts
Note
5.3
5.3
5.3
5.3
4.9
5.3
5.5
5.5
5.5
5.5
5.5
2020
€m
0.7
461.8
174.3
217.6
432.0
90.0
2019
€m
5.4
374.1
203.6
23.3
430.3
95.4
0.1
0.1
0.1
6.2
0.1
31.5
1,414.4
3.4
0.5
0.6
28.2
1,164.9
*Trade and other payables excluding non-financial liabilities comprises trade payables, other payables and accruals of (cid:1)432.0m (2019: (cid:1)430.3m).
The Group considers that the fair value of bank loans, trade and other payables and lease liabilities 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, European private placements, fixed rate
finance leases and cross currency interest rate swaps. The proportion of the Group’s total borrowings excluding PPP non-recourse floating rate
borrowings that were fixed or hedged at 31 March 2020 was €660.7m (2019: €550.0m) or 77% (2019: 90%). Additionally, the 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 being recognised in Other
Comprehensive Income, 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.
(cid:1)
188
188
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.7 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Interest rate sensitivity for bank 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 (2019: €1.1m) based on the average bank borrowings during the year.
The fair values of cross currency interest rate swaps for hedging the core banking facilities 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 €6.4m (2019: €1.3m). 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 €6.6m (2019: €1.3m).
Interest rate sensitivity for PPP non-recourse borrowings
The PPP non-recourse borrowings are fully hedged with interest rate swaps. The fair values of interest rate swaps used for hedging of PPP non-
recourse borrowings 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 swap liabilities and resulted in a pre-tax gain in Other Comprehensive Income of €10.0m (2019: €10.5m). 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 €11.2m (2019: €11.8m).
Foreign exchange risk
The Group operates in the UK and up to 30 September 2019 also in Canada and is exposed to translation risk on the value of assets
denominated in Sterling and previously Canadian Dollars into Euros. This exposure is reduced by borrowings in Sterling and previously
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
foreign 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 €6.5m (2019: €6.6m) and the
impact on continuing underlying profit before tax would have been €1.7m (2019: €0.6m).
The fair values of cross currency interest rate swaps for hedging the core bank borrowing are determined with reference to spot foreign
exchange rates. A 10% increase in the Euro foreign exchange rate against Sterling (2019: Sterling and Canadian Dollars) 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 €23.2m
(2019: €16.0m). A 10% decrease in the Euro foreign exchange rate against Sterling (2019: Sterling and Canadian Dollars) 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 €28.3m (2019: €19.5m).
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 continuing profit before tax would have been €1.1m (2019: €1.1m).
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 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 unprecedented worldwide spread of Covid-19 has had a significant impact on various sectors and industries and the
impact of the pandemic has been considered when assessing the credit risk of the Group, also taking into account the government measures
being introduced to provide support and financial aid packages.
The Group recognises lifetime expected credit losses at the point of initial recognition for trade receivables and accrued income as set out in
note 4.8. 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 2020 taking into account the impact of Covid-19 there has not been a significant increase in
credit risk in relation to receivables where the IFRS 9 general approach is followed to determine expected credit loss.
(cid:1)
189
189
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.7 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
At 31 March 2020 the amount of credit risk on cash and cash equivalents totalled €194.5m (2019: €50.4m). The banks and financial institutions
used by the Group are restricted to those with the appropriate geographical presence and suitable credit rating. Money market investments are
made in accordance with the internal treasury policies and the fund invested in has AAA rating by both Fitch and S&P. 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. As a result of Covid-19 a
more detailed review has been undertaken at a customer level in some cases, in order to assess the likely potential of default considering
the nature of the customers business and the potential government support available and as a result of this assessment the ECL allowance has
increased. At 31 March 2020 the amount of credit risk on trade and other receivables amounted to €241.2m (2019: €243.9m). The Group does
not hold any collateral as security.
The financial assets relating to 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. This is reviewed on a regular basis and there has
been no change in the capacity of the counterparties to meet the contractual cash flow obligations. The UK Government’s Infrastructure and
Projects Authority has issued guidance in relation to Covid-19 and the provision of services under PPP contract in which it stated that the
contractors are part of the public sector response to Covid-19 and that the contracting authorities should work closely with PPP contractors
to maintain service and to ensure the unitary charge payments are maintained. At 31 March 2020 the amount of credit risk on financial assets
amounted to €147.8m (2019: €155.8m).
In the prior year the subordinated loan of €20.4m to Resource Recovery Solutions (Derbyshire) Ltd, the UK Municipal Derby contract, included
within loans to joint ventures and associates experienced a significant increase in credit risk and as a result a 100% expected credit loss was
recognised as set out in note 3.3. Subsequently on 4 September 2019 Resource Recovery Solutions (Derbyshire) Ltd entered administration.
There has been no repayment during the year therefore the expected credit loss remains unchanged. No other loans to associates or joint
ventures are credit impaired.
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 borrowings
Less: PPP non-recourse borrowings
Less: Lease liabilities as a result of the adoption of IFRS 16
Less: cash and cash equivalents
Net debt as per banking covenant definition
Total equity
Total capital
Note
5.3
5.3
5.2
2020
€m
944.4
(90.0)
(202.7)
(194.5)
457.2
235.3
692.5
2019
€m
697.8
(95.4)
–
(50.4)
552.0
319.5
871.5
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 adjusted 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.
(cid:1)
190
190
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
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 2018
Issued under share option schemes
At 31 March 2019 and 31 March 2020
Share capital – Ordinary shares
of 10p each
Number
€m
Share premium
€m
800,133,252
8,284
800,141,536
99.5
–
99.5
473.6
–
473.6
There were no shares allotted in the current year and in the prior year 8,284 ordinary shares were allotted following the exercise of share options
under the Savings Related Share Option Schemes for an aggregate consideration of €6,086. Further disclosures relating to share-based options
are set out in note 7.3.
The Renewi plc Employee Share Trust owns 4,834,692 (0.6%) (2019: 5,529,850 (0.7%)) 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.
2020
3SE
(Barnsley,
Doncaster &
Rotherham)
€m
19.9
(1.5)
(5.1)
(6.6)
(1.6)
74.1
3.9
(69.7)
(26.6)
(18.3)
(4.6)
Maltha
Groep
€m
58.0
3.5
–
3.5
1.2
24.1
18.5
(6.6)
(22.3)
13.7
4.6
Others
€m
21.0
(0.3)
–
(0.3)
–
6.0
8.9
(1.2)
(6.0)
7.7
1.4
Total
€m
98.9
1.7
(5.1)
(3.4)
(0.4)
104.2
31.3
(77.5)
(54.9)
3.1
1.4
2019
3SE
(Barnsley,
Doncaster &
Rotherham)
€m
19.2
(0.8)
(0.6)
(1.4)
(0.4)
78.6
3.4
(78.2)
(15.8)
(12.0)
(2.9)
Maltha
Groep
€m
55.2
(14.5)
–
(14.5)
(4.8)
23.5
15.6
(11.0)
(20.8)
7.3
2.4
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
0.1
–
–
0.1
(0.4)
–
(0.1)
(0.5)
Revenue
Profit (loss) after tax
Other comprehensive loss
Total comprehensive income (loss)
Total comprehensive profit (loss) allocated
to the non-controlling interests
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets (liabilities)
Accumulated non-controlling interests
Net increase (decrease) in cash and cash
equivalents
(cid:1)
191
191
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 5. CAPITAL STRUCTURE AND FINANCING CONTINUED
5.10 DIVIDENDS
Accounting policy
Final 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 2019 of 0.5 pence per share (2018: 2.1 pence)
Interim dividend paid for the year ended 31 March 2020 of 0.45 pence per share (2019: 0.95 pence)
Total dividend per share (pence)
2020
€m
4.4
4.2
8.6
0.45p
2019
€m
18.9
8.5
27.4
1.45p
The Directors have not recommended a final dividend for the year ended March 2020 (2019: 0.5p per share) therefore the aggregate amount of
the proposed dividend is €nil (2019: expected to be €4.6m). The actual amount paid for the year ended March 2019 final dividend was €4.4m due
to exchange translation as the dividends were paid in Sterling.
SECTION 6. ACQUISITIONS AND DISPOSALS
This section provides details of acquisitions and disposals.
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.
Acquisitions
In May 2019 the Monostreams division acquired the net assets and operations of Rotie Organics, a business that collects, sources, de-packages
and pre-treats out of date food waste. The acquisition enhanced the Group’s leading position in the Dutch organics market, strengthening the
existing capability to convert out of date food into valuable products and energy. The consideration paid was €2.6m with the provisional fair
value of the net assets acquired of €1.9m of plant and equipment and €0.7m acquisition intangible in relation to the customer relationships
acquired. The acquired business contributed €5.6m of revenue and €0.1m of operating profit since acquisition. If the acquisition had taken
place on 1 April 2019 the full year revenue would have been €6.1m and the full year operating profit would have been €0.1m.
In November 2019 ATM B.V. in the Hazardous Waste division acquired 100% of the share capital of AP4 Terra B.V. Prior to this date 50% of the
entity was owned as a Joint Venture with an equity value of €2.6m and a fair value of €4.0m. A gain of €1.4m was recognised in non-trading and
exceptional administrative expenses as a result of remeasuring the equity interest to fair value at the acquisition date. The business comprises
a waterside quay and warehousing under a long-term lease from the Dutch authorities. The consideration paid in cash was €4.0m net of €0.2m
cash held in the entity acquired resulting in a net cash outflow of €3.8m. The provisional fair value of the total identifiable net liabilities acquired
was €3.4m being €8.0m of property plant and equipment, €13.5m of right-of use assets, €0.3m trade and other receivables, €0.6m tax receivable,
€0.2m cash net of €12.3m trade and other payables and €13.7m of lease liabilities. The resulting goodwill of €8.4m represents the strategic
expansion that is already in progress. The acquired business contributed €0.6m of revenue and €0.7m of operating loss since acquisition. If
the acquisition had taken place on 1 April 2019 the full year revenue would have been €1.2m and the full year operating loss would have
been €2.0m.
(cid:1)
192
192
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 6. ACQUISITIONS AND DISPOSALS CONTINUED
6.2 DISPOSALS
Accounting policy
The results of operations disposed of during the year are included in the consolidated Income Statement within continuing operations up to the
date of disposal, unless they meet the criteria of a discontinued operation.
Canada disposal
On 30 September 2019 the Group completed the sale of Municipal Canada which was disclosed as held for sale at 31 March 2019 with an
impairment charge of €22.5m reflected at that time. The loss on disposal of Canada (net of disposal costs) recorded in the year ended March
2020 totalled €18.9m. Under the Sale and Purchase agreement there is a potential receipt of contingent consideration however there is
insufficient certainty to recognise a receivable at this time. Upon disposal the cumulative currency translation reserve of €1.9m has been
recycled through the Income Statement in accordance with IAS 21 The effects of changes in foreign exchanges rates. See note 6.4 for full details.
Reym disposal
On 31 October 2019 the Group completed the sale of the Hazardous Waste Reym industrial cleaning business which was disclosed as held for
sale at 31 March 2019 with an impairment charge of €19.5m reflected at that time. The final current year loss on disposal of Reym (net of disposal
costs) totalled €37.3m, which includes the €34.3m remeasurement recorded at 30 September 2019.
Loss on disposal
Net cash consideration
Net assets disposed of
Disposal costs and others
Loss on disposal
Remeasurement at 30 September 2019
Non-trading loss (note 3.3)
Cash flow
Cash consideration
Cash and cash equivalents disposed of
Net cash consideration
Disposal costs paid
Cash inflow per cash flow statement
(cid:1)
2020
€m
37.0
(34.0)
(6.0)
(3.0)
(34.3)
(37.3)
50.1
(13.1)
37.0
(3.0)
34.0
193
193
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 6. ACQUISITIONS AND DISPOSALS CONTINUED
6.3 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. Following the classification as held for
sale, non-current assets are not depreciated
Canada and Reym disposals
On 8 November 2018 the Group announced its intention to exit Municipal Canada and the Hazardous Waste Reym industrial cleaning business
therefore the assets and liabilities were 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 had been met. Both disposals completed during the year therefore the carrying value is €nil at 31 March 2020.
Details of the disposals are set out in note 6.2 and 6.4.
The carrying value of assets classified as held for sale and the related liabilities under IFRS 5 were as follows:
Goodwill
Other Intangible assets
Property, plant and equipment
Financial assets relating to 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
2020
€m
–
–
–
–
–
–
–
–
–
–
–
–
–
2019
€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)
121.9
6.4 DISCONTINUED OPERATIONS
Accounting policy
A discontinued operation is a component of the Group’s business that represents a separate major business line or geographical area of
operations that meets the criteria to be classified as held for sale. Discontinued operations are presented in the consolidated Income Statement
as a single line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the
re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations.
Canada disposal
The Municipal Canada disposal met 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.
Income Statement in relation to the discontinued operations:
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit before non-trading and exceptional items
Non-trading and exceptional items
Operating loss
Finance income
Finance charges
Loss before tax on discontinued operations
Taxation
Loss after tax on discontinued operations
194
194
2020
€m
10.8
(6.8)
4.0
(0.9)
3.1
(18.9)
(15.8)
0.6
(0.5)
(15.7)
(0.9)
(16.6)
2019
€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)
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 6. ACQUISITIONS AND DISPOSALS CONTINUED
6.4 DISCONTINUED OPERATIONS CONTINUED
The assets and liabilities disposed were:
Financial asset relating to a PPP contract
Property, plant and equipment
Right-of-use assets
Trade and other receivables
Inventories
Trade and other payables
Tax
Lease liabilities
Net assets disposed of (excluding cash)
Loss on disposal
Net cash consideration
Net assets disposed of
Loss on disposal before disposal costs
Cumulative currency translation loss
Disposal costs and others
Discontinued non-trading loss (note 3.3)
Cash flow
Cash consideration
Cash and cash equivalents disposed of
Net cash consideration
Disposal costs paid
Cash inflow per cash flow statement
Cash flow information in relation to the discontinued operations:
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net movement in cash
(cid:1)
Carrying value
under IFRS 5
recorded in asset
held
for sale at
31 March
2019
€m
44.0
21.7
–
1.7
0.1
(3.8)
(1.0)
–
62.7
Change in value
to date of
disposal on
30 September
2019
€m
1.2
4.5
4.7
1.7
0.2
(0.4)
(1.0)
(4.5)
6.4
Carrying value
of assets
and liabilities
disposed of at
30 September
2019
€m
45.2
26.2
4.7
3.4
0.3
(4.2)
(2.0)
(4.5)
69.1
2020
€m
38.6
(5.5)
(36.3)
(3.2)
56.8
(69.1)
(12.3)
(1.9)
(4.7)
(18.9)
56.9
(0.1)
56.8
(2.6)
54.2
2019
€m
10.5
(1.5)
(8.1)
0.9
195
195
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
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 from continuing operations
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
Note
7.3
7.2
2020
€m
325.3
64.0
1.2
33.5
424.0
2019
€m
333.6
61.2
0.8
35.1
430.7
2020
2019
4,658
661
490
598
233
6,640
29
6,669
4,685
941
490
649
279
7,044
49
7,093
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.
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.
Retirement benefit schemes costs
UK defined benefit scheme
UK defined contribution scheme
Overseas defined benefit schemes
Overseas defined contribution schemes
2020
€m
0.2
1.5
1.0
30.8
33.5
2019
€m
0.3
1.4
2.0
31.4
35.1
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 Aon Hewitt Ltd on behalf of the Trustees. There are four trustees currently, two appointed by the Company
196
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
SECTION 7. EMPLOYEE BENEFITS CONTINUED
7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
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.
From 1 December 2019 the Scheme was closed to future benefit accrual following a formal consultation. A bulk pension increase exchange
exercise was carried out on 10 October 2019 to members currently in receipt of a pension payment of which 37% accepted the offer and an at-
retirement pension increase exchange was also introduced at 31 March 2020. The impact of these changes has led to a reduction in the pension
scheme liability and has been reflected as a past service credit.
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. The Group has agreed that it will aim to eliminate the pension plan deficit with an annual deficit contribution of €3.5m
(£3.1m) until February 2022. The total estimated contributions expected to be paid to the scheme in the year ending 31 March 2021 are €3.5m.
The significant actuarial assumptions adopted at the balance sheet date were as follows:
Discount rate
Rate of price inflation
Consumer price inflation
2020
% p.a.
2.4
2.6
1.9
2019
% p.a.
2.5
3.3
2.2
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 2040 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 average salaries and in some cases on final 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 plans are subject to Netherlands and Belgium law for
pension insurance companies offering pension arrangements and are overseen by Autoriteit Financiele Markten in the Netherlands and Autoriteit voor
Financiele Diensten en Markten in Belgium. The Group has no responsibilities for governance of the plans other than correct calculation and timely
payment of the contributions. The total estimated contributions expected to be paid to the schemes in the year ending 31 March 2021 are €1.6m.
The significant actuarial assumptions adopted at the balance sheet date were as follows:
Discount rate
Rate of price inflation
Rate of salary inflation
2020
% p.a.
1.1
2.0
2.5
2019
% p.a.
2.1
2.0
2.5
The discount rate assumption is based on interest rates applying to high quality corporate bonds with a term approximately equal to the term of
the related pension liability. The mortality assumptions are based on standard mortality tables which allow for future mortality improvements.
The assumptions are that a member currently aged 65 will live on average for a further 22 years if they are male and for a further 24 years if they
are female. For a member who retires in 2040 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 26 years after retirement if they are female. The maturity of the schemes ranges from 15 to 25 years.
The amounts recognised in the financial statements for all defined benefit schemes are as follows:
Income Statement
Current service cost
Past service (credit) cost
Curtailment
Interest expense on scheme net liabilities
Net retirement benefit charge before tax
UK
€m
0.2
(1.4)
–
0.1
(1.1)
2020
Overseas
€m
1.0
–
–
0.1
1.1
Total
€m
1.2
(1.4)
–
0.2
–
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
197
197
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 7. EMPLOYEE BENEFITS CONTINUED
7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
The current year past service credit relates to the Shanks Group Pension Scheme which was closed to future benefit accrual following a formal
consultation and bulk and an at-retirement pension increase exchange as previously described. The prior year past service cost of €2.0m in the
UK scheme was a result of the impact of the 2018 Court ruling for guaranteed minimum pension equalisation. The prior year curtailment in the
overseas scheme arose as the principal legacy Van Gansewinkel defined benefit scheme was closed. These past service and curtailment items
were included in non-trading and exceptional items in both years.
Statement of Comprehensive Income
Actuarial gain (loss) on scheme liabilities
Actuarial gain on scheme assets
Actuarial gain (loss)
UK
€m
5.1
9.8
14.9
2020
Overseas
€m
(13.0)
13.3
0.3
Total
€m
(7.9)
23.1
15.2
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
Cumulative actuarial gains and losses recognised in the Statement of Comprehensive Income since 1 April 2004 are losses of €17.6m (2019: €32.8m).
Balance Sheet
Present value of funded obligations
Fair value of plan assets
Pension scheme asset (deficit)
Related deferred tax asset (note 3.4)
Net pension asset (liability)
Classified as:
Defined benefit scheme surplus – included in non-
current assets
Defined benefit pension schemes deficit – included
in non-current liabilities
Pension scheme asset (deficit)
UK
€m
(186.7)
202.7
16.0
(3.0)
13.0
16.0
–
16.0
2020
Overseas
€m
(79.6)
72.1
(7.5)
1.6
(5.9)
Total
€m
(266.3)
274.8
8.5
(1.4)
7.1
–
16.0
(7.5)
(7.5)
(7.5)
8.5
UK
€m
(202.1)
198.4
(3.7)
0.6
(3.1)
–
(3.7)
(3.7)
2019
Overseas
€m
(65.0)
56.8
(8.2)
2.1
(6.1)
–
(8.2)
(8.2)
The UK scheme’s assets of €202.7m (2019: €198.4m) are invested via Aon’s Delegated Consulting Service which is a fiduciary investment
management platform managed by Aon Hewitt Limited. A breakdown of the underlying investment classes is given below:
Equities
Absolute return
Fixed income
Property
Liability driven investment
Cash and others
2020
€m
27.9
48.1
25.6
4.8
87.2
9.1
202.7
Total
€m
(267.1)
255.2
(11.9)
2.7
(9.2)
–
(11.9)
(11.9)
2019
€m
46.9
46.5
19.8
5.1
73.7
6.4
198.4
The overseas schemes assets of €72.1m (2019: €56.8m) are insurance contracts managed by insurers in the Netherlands and Belgium.
(cid:1)
198
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 7. EMPLOYEE BENEFITS CONTINUED
7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
The movement in the pension scheme asset (deficit):
At 1 April 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
Current service cost
Past service credit
Interest expense
Net actuarial gains recognised in the year
Contributions from employer
Exchange
At 31 March 2020
Reconciliation of the defined benefit obligation:
At 1 April 2018
Current service cost
Past service cost
Curtailment
Interest expense
Remeasurements:
Actuarial loss 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
Current service cost
Past service credit
Interest expense
Remeasurements:
Actuarial gain (loss) on scheme liabilities arising from changes in financial assumptions
Actuarial loss on scheme liabilities arising from change in demographic assumptions
Actuarial gain on scheme liabilities arising from changes in experience
Contributions from plan participants
Benefit payments
Exchange
At 31 March 2020
(cid:1)
UK
€m
(16.4)
(0.3)
(2.0)
–
(0.4)
11.6
3.7
0.1
(3.7)
(0.2)
1.4
(0.1)
14.9
3.6
0.1
16.0
UK
€m
(208.4)
(0.3)
(2.0)
–
(5.6)
(8.1)
9.4
5.6
–
10.4
–
(3.1)
(202.1)
(0.2)
1.4
(4.5)
5.1
(0.3)
0.3
–
8.4
5.2
(186.7)
Overseas
€m
(9.0)
(2.0)
–
2.1
(0.2)
(0.8)
1.7
–
(8.2)
(1.0)
–
(0.1)
0.3
1.5
–
(7.5)
Overseas
€m
(63.5)
(2.0)
–
6.8
(1.4)
(1.4)
–
(0.3)
(0.7)
1.1
(3.6)
–
(65.0)
(1.0)
–
(1.3)
(14.5)
–
1.5
(0.4)
1.1
–
(79.6)
Total
€m
(25.4)
(2.3)
(2.0)
2.1
(0.6)
10.8
5.4
0.1
(11.9)
(1.2)
1.4
(0.2)
15.2
5.1
0.1
8.5
Total
€m
(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)
(1.2)
1.4
(5.8)
(9.4)
(0.3)
1.8
(0.4)
9.5
5.2
(266.3)
199
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1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 7. EMPLOYEE BENEFITS CONTINUED
7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
Reconciliation of plan assets:
At 1 April 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
Interest income
Remeasurements: Return on plan assets excluding interest expense
Contributions from employer
Contributions from plan participants
Benefit payments
Exchange
At 31 March 2020
UK
€m
192.0
–
5.2
4.7
3.7
–
(10.4)
–
3.2
198.4
4.4
9.8
3.6
–
(8.4)
(5.1)
202.7
Overseas
€m
54.5
(4.7)
1.2
0.9
1.7
0.7
(1.1)
3.6
–
56.8
1.2
13.3
1.5
0.4
(1.1)
–
72.1
Total
€m
246.5
(4.7)
6.4
5.6
5.4
0.7
(11.5)
3.6
3.2
255.2
5.6
23.1
5.1
0.4
(9.5)
(5.1)
274.8
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 Group 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.
Life expectancy – The majority of the 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 investments.
(cid:1)
200
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 7. EMPLOYEE BENEFITS CONTINUED
7.2 RETIREMENT BENEFIT SCHEMES CONTINUED
Sensitivities for defined pension benefit 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 asset/obligation
Change in
assumption
%
0.25
0.25
0.25
UK
Increase in
assumption
€m
20.9
9.4
9.4
Decrease in
assumption
€m
7.0
18.0
18.0
Change in
assumption
%
0.25
0.25
–
Overseas
Increase in
assumption
€m
4.0
(0.1)
–
Decrease in
assumption
€m
(4.3)
0.1
–
UK
Increase
by 1 year in
assumption
€m
7.8
Decrease
by 1 year in
assumption
€m
20.5
Overseas
Increase
by 1 year in
assumption
€m
0.5
Decrease
by 1 year in
assumption
€m
0.7
Other overseas schemes
The total cost in the year for other overseas pensions was €30.8m (2019: €31.4m). 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.
(cid:1)
201
201
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 7. EMPLOYEE BENEFITS CONTINUED
7.3 SHARE-BASED PAYMENTS
As described in the Directors’ 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 108 to 125.
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
Outstanding at 1 April 2018
Granted
Forfeited
Expired
Exercised/vested
Outstanding at 31 March 2019
Granted
Forfeited
Expired
Exercised/vested
Outstanding at 31 March 2020
Exercisable at 31 March 2020
Exercisable at 31 March 2019
At 31 March 2020:
Range of price per share at exercise
Weighted average remaining contractual life
SRSOS
LTIP
DAB
Number of
options
12,774,835
4,274,657
(3,340,420)
(2,574,653)
(765,407)
10,369,012
4,313,116
(1,884,584)
(1,767,473)
(527,943)
10,502,128
Number of
options
737,562
490,640
(680,609)
–
(91,075)
456,518
–
–
–
(90,110)
366,408
Number of
options
1,846,657
1,975,433
(941,924)
(99,530)
(8,284)
2,772,352
4,526,928
(1,737,080)
(440,871)
–
5,121,329
103,986
438,029
Weighted
Average exercise
price
73p
52p
69p
70p
65p
59p
25p
54p
65p
–
30p
71p
65p
25p to 76p
2 to 3 years
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
2020
Black-Scholes
8p
32p
25p
36%
3 years
0.5%
4.3%
2019
Black-Scholes
12p
63p
52p
29%
3 years
0.9%
5.2%
2020
Share price
32p
32p
–
–
3 years
–
–
2019
Share price
78p
78p
–
–
3 years
–
–
2020
Monte Carlo
16p
32p
–
36%
3 years
0.5%
–
2019
Monte Carlo
40p
78p
–
29%
3 years
0.7%
–
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. The awards granted 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 one and two years.
Charge for the year
The Group recognised a total charge of €1.2m (2019: €0.8m) relating to equity-settled share-based payments. The DAB awards for the year ended
31 March 2020 have not yet been granted and therefore the charge is based on an estimate.(cid:1)
202
202
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
SECTION 8. OTHER NOTES
8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2020
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 2020 is disclosed below by country of incorporation
which is the principal country of business. 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
AP4 Terra B.V.
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 C.V.
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.
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.
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.) C.V.
(cid:1)
Address of the registered office
Vlasweg 12, 4782 PW Moerdijk, Netherlands
Vlasweg 12, 4782 PW, Moerdijk, Netherlands
Van Hilstraat 7, 5145 RK Waalwijk, 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
Van Hilstraat 7, 5145 RK Waalwijk
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 63 1044 AN Amsterdam, Netherlands
Hornweg 63, 1044 AN Amsterdam, Netherlands
Hornweg 63, 1044 AN Amsterdam, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Vlasweg 12, 4782 Moerdijk, 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
Rijksweg-Zuid 91, 4715 TA Rucphen, Netherlands
Lindeboomseweg 15, 3825 AL, Amersfoort, Netherlands
Flight Forum 240, 5657 DH Eindhoven, 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
203
203
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 8. OTHER NOTES CONTINUED
Address of the registered office
8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2020 CONTINUED
Subsidiary
Incorporated in Belgium
Belgo-Luxembourgeoise de Services Publics SA
Coolrec Belgium NV
EcoSmart NV
Enviro+ NV
Maltha Glasrecyclage Belgie BV
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
Rue de Rolleghem 381, 7700 Mouscron, Belgium
Baeckelmansstraat 125, 2830 Tisselt, Belgium
Nijverheidsstraat 2, 2870 Puurs, Belgium
John F Kennedylaan 4410, 9042 Gent, Belgium
Fabrieksstraat 114, 3920 Lommel, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Terlindenhofstraat 36, 2170 Meerksem, Antwerpen, Belgium
Rue Wérihet 72, 4020 Liège, Belgium
Gerard Mercatorstraat 8, 3920, Lommel, Belgium
John F Kennedylaan 4410, 9042 Gent, Belgium
Berkebossenlaan 7, 2400 Mol, Belgium
Gerard Mercatorstraat 8, 3920, Lommel, Belgium
John F Kennedylaan 4410, 9042 Gent, Belgium
Incorporated in Germany
ATM Entsorgung Deutschland GmbH (Year end 31 December)
Coolrec Deutschland GmbH (Year end 31 December)
Kaldenkirchener Strasse 25, D-41063, Mönchengladbach, Germany
HRB 16119, Stadtweide 17, 46446 Emmerich am Rhein, Germany
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
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 Lda (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
(cid:1)
204
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 8. OTHER NOTES CONTINUED
8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2020 CONTINUED
Subsidiary
Subsidiary undertakings holding UK PPP contracts
Renewi Argyll & Bute Limited
Renewi Argyll & Bute Holdings Limited*
Renewi Cumbria Limited
Address of the registered office
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
Joint ventures, associates and joint operations
At 31 March 2020 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
PQA B.V.
50%
31 December 2019
Group
Holding %
Most recent
year end
Address of the registered office
Recycling Maatschappij Bovenveld B.V. 50%
50%
SQAPE B.V.
31 December 2019
31 December 2019
Bennebroekerdijk 244, 2142 LE, Cruquius,
Netherlands
Coevorderweg 48, 7737 PG Stegeren, Netherlands
Bennebroekerdijk 244, 2142 LE Cruquius,
Netherlands
31 December 2019
31 December 2019
31 March 2020
L. Coiseaukaai 43, 8380 Dudzele, Belgium
Reinaertlaan 82, 9190 Stekene, Belgium
Regenbeekstraat 7C, 8800 Roeselare, Belgium
Incorporated in Belgium
Marpos NV
Recypel BV
Silvamo NV
Incorporated in the UK
Caird Evered Holdings Limited
Caird Evered Limited
45%
50%
50%
50%
50%
31 December 2019
31 December 2019
Wakefield Waste Holdings Limited
50.001%
31 March 2020
Wakefield Waste PFI Holdings Limited 50.001%
31 March 2020
Wakefield Waste PFI Limited
50.001%
31 March 2020
(cid:1)
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
205
205
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 8. OTHER NOTES CONTINUED
8.1 SUBSIDIARY UNDERTAKINGS AND INVESTMENTS AT 31 MARCH 2020 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.
RetourMatras 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
Group
Holding %
Most recent
year end
Address of the registered office
22%
22%
22%
22%
22%
22%
33%
50%
32.35%
40%
33%
33%
23%
30%
33%
20%
20%
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
Trasmolenlaan 5, 3447 GZ Woerden, Netherlands
Trasmolenlaan 5, 3447 GZ Woerden, Netherlands
Trasmolenlaan 5, 3447 GZ Woerden, Netherlands
Trasmolenlaan 5, 3447 GZ Woerden, Netherlands
Trasmolenlaan 5, 3447 GZ Woerden, Netherlands
Trasmolenlaan 5, 3447 GZ Woerden, Netherlands
Victoriberg 18, 2211 DH Noordwijkerhout, Netherlands
Wateringveldseweg 1, 2291 HE Wateringen, Netherlands
Bruggenmeestersstraat 10, 2415 AA Nieuwerbrug
aan den Rijn, Netherlands
Oostkade 5, 4541 HH Sluiskil
Baanhoekweg 46, 3313 LA Dordrecht, Netherlands
Baanhoekweg 46, 3313 LA Dordrecht, Netherlands
31 December 2019
31 December 2019
Westvaartdijk 97, 1850 Grimbergen, Belgium
Rue des trois Burettes 65 1435 Mon-Saint-Guibert,
Belgium
31 December 2019
Johannesgasse 15,1010 Wien, Austria
31 March 2020
31 March 2020
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
Joint operations
Incorporated in the Netherlands
Baggerspecieverwerking Noord-
Nederland V.O.F.
Hydrovac V.O.F.
Induserve V.O.F.
Octopus V.O.F.
Smink Boskalis Dolman V.O.F.
TOP Leeuwarden V.O.F.
Group
Holding %
Most recent
year end
Address of the registered office
50%
50%
33%
50%
50%
50%
31 December 2019
Newtonweg 1, 8912 BD Leeuwarden, Netherlands
31 December 2019
31 December 2019
31 December 2019
31 December 2019
31 December 2019
Graafsebaan 67, 5248 JT Rosmalen, Netherlands
Flight Forum 240, 5657 DH Eindhoven, Netherlands
Forellenweg 24, 4941 SJ Raamsdonksveer, Netherlands
Lindeboomseweg 15, 3825 AL Amersfoort, Netherlands
Newtonweg 1, 8912 BD Leeuwarden, Netherlands
(cid:1)
206
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued
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
2020
€m
47.3
4.8
0.7
–
3.7
0.6
0.7
–
2019
€m
52.0
2.6
0.9
–
5.3
0.6
0.7
–
Joint ventures
2020
€m
25.4
0.2
0.4
–
1.8
0.1
0.2
0.6
2019
€m
57.1
0.4
1.1
0.1
1.9
–
0.2
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. In the prior year
an expected credit loss expense of €36.9m was 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 3.3.
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 108 to 125, and form part of these consolidated financial statements. The emoluments paid or payable to key management
personnel were:
Short-term employee benefits
Termination benefit
Post-employment benefits
Share-based payments
(cid:1)
2020
€m
6.1
1.1
0.2
0.3
7.7
2019
€m
4.1
–
0.2
0.1
4.4
207
207
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 8. OTHER NOTES CONTINUED
8.3 EXPLANATION OF NON-IFRS MEASURES AND RECONCILIATIONS
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
Underlying EBITDA
Underlying profit before tax
IAS 17 basis
Underlying EPS
Underlying effective tax rate
Return on operating assets on an
IFRS 16 basis
Return on operating assets on an
IAS 17 basis
Post-tax return on capital
employed
Underlying free cash flow
How we define it
Operating profit from either continuing operations or
ongoing businesses (which excludes all businesses
disposed of) excluding non-trading and exceptional items,
amortisation of intangible assets arising on acquisition
and fair value remeasurements
Underlying EBIT as a percentage of revenue
Underlying EBIT before depreciation, amortisation,
impairment and profit or loss on disposal of plant, property
and equipment
Profit before tax from either continuing operations or
ongoing businesses (which excludes businesses disposed
of) excluding non-trading and exceptional items,
amortisation of intangible assets arising on acquisition
and fair value remeasurements
Calculated using previous lease accounting standard
IAS 17
Earnings per share from either continuing operations or
ongoing businesses (which excludes businesses disposed
of) excluding non-trading and exceptional items,
amortisation of intangible assets arising on acquisition
and fair value remeasurements
The effective tax rate on underlying profit before tax
Last 12 months underlying EBIT divided by a 13 month
average of net assets excluding core net debt, IFRS 16 lease
liabilities, derivatives, tax balances, goodwill and
acquisition intangibles
Last 12 months underlying EBIT adjusted for the impact of
IFRS 16 divided by a 13 month average of net assets
excluding right-of-use assets under IFRS 16, core net debt,
IFRS 16 lease liabilities, 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 net assets excluding core net debt, lease liabilities
and derivatives
Net cash generated from operating activities principally
excluding non-trading and exceptional items and including
interest, tax and replacement capital spend
Free cash flow conversion
The ratio of underlying free cash flow to underlying EBIT
Net core cash flow
Non-trading and exceptional cash
flow items
Cash flow from core net debt excluding loan fee
amortisation and capitalisation, exchange movements,
movement in PPP non-recourse net debt, movements in
IFRS 16 lease liabilities and acquired/disposed of cash
Synergy delivery, integration and restructuring cash flows
are presented in cash flows from operating activities and
are included in the categories in note 3.3, net of opening
and closing Balance Sheet positions
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
Enables like for like comparison with prior year
Facilitates underlying performance evaluation
Provides a more comparable basis to analyse
our tax rate
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 return on assets
across the Divisions and the Group excluding
goodwill and acquisition intangible balances
and to enable a like to like comparison with
those previously reported
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
Provides useful information on non-trading
and exceptional cash flow spend
(cid:1)
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Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 8. OTHER NOTES CONTINUED
8.3 EXPLANATION OF NON-IFRS MEASURES AND RECONCILIATIONS CONTINUED
Financial Measure
Core net debt or core funding
How we define it
Core net debt includes cash and cash equivalents
but excludes the net debt relating to the UK PPP
contracts, lease liabilities as a result of IFRS 16 and
cash and borrowings in assets and liabilities of
disposal groups classified as held for sale
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. This includes the
cash and leases which were finance leases under
IAS 17 as included in assets and liabilities of disposal
groups classified as held for sale
Why we use it
The borrowings relating to the UK PPP contracts are
non-recourse to the Group and excluding these
gives a suitable measure of indebtedness for the
Group and excluding IFRS 16 leases which enables a
more meaningful comparison to the prior year
Commonly used measure of financial leverage and
consistent with covenant definition
Net debt to EBITDA
Reconciliations of certain non-IFRS measures are set out below:
Reconciliation of underlying EBIT to EBITDA
Operating loss
Non-trading and exceptional items
Underlying EBIT from continuing operations
Depreciation and impairment of property, plant and equipment and right-of-use assets
Amortisation of intangible assets (excluding acquisition intangibles)
Non-exceptional gain on disposal of property, plant and equipment
EBITDA from continuing operations
EBITDA from discontinued operations
Total EBITDA
Reconciliation of underlying free cash flow as presented in the CFO’s Review
Net cash generated from operating activities
Exclude IFRS 16 adjustment to operating expenses
Exclude non-trading and exceptional provisions, working capital and restructuring spend
Exclude exceptional proceeds from disposal of property, plant and equipment
Exclude payments to fund UK defined benefit pension scheme
Exclude increase (decrease) in Municipal Canada PPP financial asset
Exclude IFRS 16 adjustments relating to discontinued operations
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
2020
€m
(28.1)
115.7
87.6
106.5
6.4
(0.8)
199.7
3.1
202.8
2020
IFRS 16 basis
€m
157.7
–
49.0
0.8
3.5
0.1
–
(37.9)
10.9
(6.7)
(67.7)
10.2
119.9
2020
IAS 17 basis
€m
157.7
(32.2)
49.0
0.8
3.5
0.1
(0.5)
(32.1)
10.9
(6.7)
(67.7)
10.2
93.0
2019
€m
(56.6)
142.1
85.5
87.3
6.9
(2.3)
177.4
3.9
181.3
2019
IAS 17 basis
€m
73.6
–
66.0
–
3.4
(6.9)
–
(29.4)
11.7
(3.8)
(92.4)
8.1
30.3
The Group splits purchases of property, plant and equipment between replacement and growth as shown in the cash flow in the CFO’s review.
The 2020 replacement spend shown above totalling €74.4m (2019: €96.2m) (being €6.7m (2019: €3.8m) intangible assets and €67.7m (2019:
€92.4m) property, plant and equipment) plus the growth capital expenditure of €10.1m (2019:€11.7m) as shown in the CFO’s review less
additions to IAS 17 finance leases of €nil (2019: €0.4m) (as shown in note 5.1) reconciles to the purchases of property, plant and equipment and
intangible assets cash outflow of €84.5m (2019: €107.5m) within investing activities in the consolidated Statement of Cash Flows.
(cid:1)
209
209
1234Renewi plc Annual Report and Accounts 2020
Notes to the financial statements continued
SECTION 8. OTHER NOTES CONTINUED
8.3 EXPLANATION OF NON-IFRS MEASURES AND RECONCILIATIONS CONTINUED
Reconciliation of net core cash flow as presented in the CFO’s Review
Net core cash flow
Cash sold as part of business disposals, net of cash acquired as part of acquisitions
Lease liabilities acquired as part of acquisitions
Movement in PPP non-recourse net debt
Capitalisation of loan fees net of amortisation
Exchange movements
Exchange movements – discontinued
IFRS 16 Right-of-use asset additions
IFRS 16 transition additions – excluding assets held for sale
IFRS 16 transition additions – assets held for sale
IFRS 16 decrease in operating expenses – continuing
IFRS 16 increase in finance changes – continuing
IFRS 16 discontinued operations
IFRS 16 cash flows included in utilisation of onerous contract provisions
IFRS 16 leases sold as part of business disposal – assets held for sale
IFRS 16 finance leases – previously IAS 17 finance leases sold as part of business disposal
Finance leases transferred to disposal groups classified as held for sale
Movement in total net debt (note 5.1)
Reconciliation of total net debt to net debt under covenant definition
Total net debt
Less PPP non-recourse net debt
Less IFRS 16 lease liabilities
Add debt transferred to disposal group
Net debt under covenant definition
(cid:1)
2020
IFRS 16 basis
€m
140.6
(13.0)
(13.7)
5.4
0.9
(3.8)
(0.1)
(61.8)
(155.4)
(21.9)
–
–
–
–
20.1
0.2
–
(102.5)
2020
IAS 17 basis
€m
110.9
(13.0)
(13.7)
5.4
0.9
(3.8)
(0.1)
(61.8)
(155.4)
(21.9)
32.2
(5.8)
0.5
2.8
20.1
0.2
–
(102.5)
2020
€m
(749.9)
90.0
202.7
–
(457.2)
2019
IAS 17 basis
€m
(51.9)
–
–
(0.8)
2.2
(5.9)
–
–
–
–
–
–
–
–
–
–
4.2
(52.2)
2019
€m
(647.4)
95.4
–
(4.2)
(556.2)
210
210
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 8. OTHER NOTES CONTINUED
8.4 CONTINGENT LIABILITIES
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 and the charge is expected to be lower than €1m we do not consider it appropriate at
this stage to provide for this.
There is an ongoing appeal process with the authorised Minister of the Flanders government in respect of an environmental tax levy imposed by
the regulator OVAM in respect of the export of combustible waste from two sites in Commercial Waste Belgium. We have submitted our
objections to this decision in the administrative appeal process to the Minister. As part of that procedure, there has been an advice issued by the
advisory committee to the Minister. This advice supports the decision by OVAM to impose the levy. We expect the Minister to take a decision in
June 2020 and that decision is open for appeal at the applicable Belgian courts. We do not believe there are valid grounds to impose the
environmental tax levy and accordingly no provision has been made.
There is an ongoing investigation by the European Commission in which it alleges the Walloon region of Belgium provided state aid to the Group
in relation to the Cetem landfill. An adverse judgement would require the Walloon region to seek repayment from the Group. Both the Walloon
Region and Renewi believe that no state aid was offered and will defend their conduct vigorously. Renewi has provided €15m based on legal
advice which management considers to be their best estimate of the potential exposure, noting that the potential maximum claim is €57m, and
therefore there is a potential further liability should the Group be wholly unsuccessful in its defence.
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 €222.3m (2019: €238.6m).
8.5 EVENTS AFTER THE BALANCE SHEET DATE
On 28 May 2020 the Group agreed amendments to the leverage and interest covenants in its Euro denominated multicurrency green
finance facility.
(cid:1)
211
211
1234Renewi plc Annual Report and Accounts 2020 Notes to the financial statements continued
SECTION 9. IMPACT OF NEW STANDARDS ADOPTED IN THE YEAR
The Group adopted IFRS 16 Leases on 1 April 2019 and this note explains the impact on the financial statements.
IFRS 16 has a material impact on the financial statements as it leads to most leases being recognised on the Balance Sheet as a right-of-use
asset and a lease liability. Operating lease costs under the principle of IAS 17 Leases are now recognised as a depreciation charge in relation to
the right-of-use asset and as an interest expense on the lease liability.
The Group leases various real estate properties and items of plant and machinery for normal business operations in all divisions. Lease terms
are negotiated on an individual basis and contain a wide range of different terms and conditions.
The Group has applied the modified retrospective approach and has not restated the comparative amounts for the prior year. The reclassifications
and the adjustments arising from the new standard are therefore recognised in the opening Balance Sheet on 1 April 2019. For the majority of
the leases the Group has measured the right-of-use asset on transition date to be equal to the lease liability. For a limited number of real estate
lease contracts the Group has recalculated the right-of-use asset, as if IFRS 16 was applied from the beginning of the lease. The cumulative effect
of that recalculation has been recognised in equity as an adjustment to the opening balance of retained earnings for the current year.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has elected to apply the following practical expedients as permitted by the standard:
(cid:1)(cid:1)No reassessment as to whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the
adoption date the Group relied on its assessment made applying IAS 17 and IFRIC 4 (Determining whether an arrangement contains a lease).
(cid:1)(cid:1)The use of a single specific discount rate to categories of leases in the portfolio with reasonably similar characteristics.
(cid:1)(cid:1)Instead of performing an impairment review on the right
of
use assets at the date of transition, for some leases the Group has relied on its historic
assessment as to whether leases were onerous immediately before the date of initial application of IFRS 16.
(cid:1)
(cid:1)
(cid:1)(cid:1)For leases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of low value assets the
Group has applied the optional exemption to not recognise the lease liability and the right
in the Income Statement on a straight line basis over the remaining term.
(cid:1)(cid:1)Where the contract contains options to extend, the lease term has been determined with the benefit of hindsight
(cid:1)(cid:1)No inclusion of direct lease costs in the measurement of the right-of-use asset.
(cid:1)
(cid:1)
of
use asset but to account for the lease as an expense
Lease liabilities
The Group recognised additional lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the
principles of IAS 17 Leases. The Group’s accounting policies are included in note 5.3. These liabilities were measured at the present value of the
remaining lease payments, discounted using the Group’s specific incremental borrowing rates for groups of leases in the portfolio with
reasonably similar characteristics as of 1 April 2019. The weighted average incremental borrowing rate applied by the Group to the lease
liabilities on 1 April 2019 was 3.3%. The following is a reconciliation of total operating lease commitments for continuing operations at 31 March
2019 to the lease liabilities recognised at 1 April 2019:
Operating lease commitments disclosed as at 31 March 2019
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Finance lease liabilities as at 31 March 2019
Adjustments as a result of a different treatment of extension and termination options
Adjustments relating to changes in the index or rate affecting future lease payments
Short-term leases recognised on a straight-line basis as expenses
Other
Lease liability recognised as at 1 April 2019
Classified as:
Current lease liabilities
Non-current lease liabilities
Lease liabilities of disposal groups classified as held for sale
Lease liability recognised as at 1 April 2019
2019
€m
264.1
(85.9)
27.5
0.6
(6.0)
(1.7)
0.5
199.1
30.2
147.3
21.6
199.1
(cid:1)
212
212
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued SECTION 9. IMPACT OF NEW STANDARDS ADOPTED IN THE YEAR CONTINUED
Right-of-use assets
Right-of-use assets have generally been measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued
lease payments and any onerous contract provision relating to that lease recognised in the Balance Sheet as at 31 March 2019. For certain
specific property leases the associated right-of-use assets in land and buildings were measured on the date of initial application on a
retrospective basis as if the new rules had always been applied. The right-of-use assets are depreciated over the remaining term of the lease.
For assets previously financed from leases classified as finance leases under IAS 17, the Group recognised the carrying amount of these assets
immediately before transition as right-of-use assets under IFRS 16 at the date of initial application and the amounts were reclassed to right-of-
use assets in the Balance Sheet.
The right-of-use assets accounting policy and value on initial application are shown in note 4.3.
Impact on Financial Statements
The impact of the change in accounting policy to the Balance Sheet on adoption of IFRS 16 on 1 April 2019 can be summarised as follows:
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Assets of disposal groups classified as held for sale
Accruals
Lease liabilities
Deferred tax liability
Liabilities of disposal groups classified as held for sale
Onerous contract provisions
Impact on net assets
As reported 31
March 2019
€m
629.1
–
38.6
162.4
(160.4)
(23.3)
(56.1)
(40.5)
(94.9)
IFRS 16
adoption
effect
€m
(35.5)
175.3
0.7
21.9
0.4
(155.4)
1.0
(21.9)
6.0
(7.5)
1 April 2019
opening balance
€m
593.6
175.3
39.3
184.3
(160.0)
(178.7)
(55.1)
(62.4)
(88.9)
The impact of the changes in the Consolidated Income Statement for the year ended March 2020 due to the adoption of IFRS 16 can be
summarised as follows:
Continuing operations
Decrease in operating expense
Increase in depreciation charge
Operating profit
Increase in finance charges
Impact on profit before tax from continuing operations
The impact of the changes to the Consolidated Cash Flow Statement for the year ended March 2020 due to the adoption of IFRS 16 can be
summarised as follows:
Decrease in operating expense – continuing operations
Decrease in operating expense – discontinued operations
Increase in provisions
Impact on cash flows from operating activities
Increase in finance charges – continuing operations
Increase in finance charges – discontinued operations
Repayment of leases – continuing operations
Repayment of leases – discontinued operations
Impact on cash flows from financing activities
Impact on cash and cash equivalents at the end of the year
€m
32.2
(26.6)
5.6
(5.8)
(0.2)
€m
32.2
0.6
2.8
35.6
(5.8)
(0.1)
(29.2)
(0.5)
(35.6)
–
213
213
1234Renewi plc Annual Report and Accounts 2020
Consolidated five year financial summary
Consolidated Income Statement
Revenue from continuing operations1
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 attributable to:
Owners of the parent
Non-controlling interests
Consolidated Balance Sheet
Non-current assets
Other assets less liabilities
Total 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
2020
€m
2019
€m
2018
€m
2017
€m
1,775.4
87.6
(23.4)
(11.0)
0.9
54.1
(113.5)
(59.4)
(13.3)
12.2
(60.5)
(16.6)
(77.1)
(77.9)
0.8
(77.1)
1,616.8
(631.6)
(749.9)
235.3
573.1
(339.2)
233.9
1.4
235.3
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
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
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)
5.1c
(7.7)c
0.45p
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
1. Revenue and underlying EBIT from continuing operations is stated before non-trading and exceptional items as set out in note 3.3.
2. Underlying earnings and basic loss per share for continuing operations have been restated for year ended 2016 to reflect the bonus factor within the 2016 equity raise.
214
214
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued Parent company Balance Sheet
FOR THE YEAR ENDED 31 MARCH 2020
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Trade and other receivables
Defined benefit pension scheme surplus
Deferred tax assets
Current assets
Current tax receivable
Trade and other receivables
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
2020
£m
31 March
2019
£m
Note
6
7
8
9
16
10
9
11
12
16
12
13
14
15
17
17
0.4
0.2
524.5
263.5
14.2
2.8
805.6
0.6
1.7
2.8
5.1
810.7
(175.3)
–
(175.3)
–
(0.1)
(9.8)
(1.0)
(4.0)
(14.9)
(190.2)
620.5
80.0
401.4
139.1
620.5
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
* 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 2020 of £3.9m (2019: £109.6m).
The notes on pages 217 to 227 are an integral part of these financial statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 4 June 2020. They were signed on its behalf by:
Ben Verwaayen
Chairman
Toby Woolrych
Chief Financial Officer
215
215
1234Renewi plc Annual Report and Accounts 2020 Parent company Statement of Changes in Equity
FOR THE YEAR ENDED 31 MARCH 2020
Share
premium
£m
401.4
–
Retained
earnings
£m
131.2
3.9
Balance at 1 April 2019
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
Dividends
Balance at 31 March 2020
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 as at 31 March 2019
Note
16
3
5
16
3
17
5
Share
capital
£m
80.0
–
–
–
–
–
–
80.0
80.0
–
–
–
–
–
–
–
–
80.0
–
–
–
–
–
401.4
401.4
–
–
–
–
–
–
–
–
401.4
Parent company Statement of Cash Flows
FOR THE YEAR ENDED 31 MARCH 2020
Cash flows from operating activities
Income tax paid
Net cash (outflow) inflow from operating activities
Investing activities
Investment in subsidiary
Dividend received
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 retail bonds
Repayment of retail bonds
Proceeds from bank borrowings
Investment in own shares by the Employee Share Trust
Dividends paid
Net cash outflow from financing activities
Net (decrease) increase 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
216
216
Note
19
17
5
11
Total
equity
£m
612.6
3.9
13.1
(2.4)
14.6
0.9
(7.6)
620.5
521.7
109.6
10.1
(1.7)
118.0
0.8
(0.6)
(3.0)
(24.3)
612.6
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
13.1
(2.4)
14.6
0.9
(7.6)
139.1
40.3
109.6
10.1
(1.7)
118.0
0.8
(0.6)
(3.0)
(24.3)
131.2
2020
£m
(13.6)
–
(13.6)
(1.2)
1.7
–
–
(0.2)
20.3
20.6
(10.4)
67.6
(90.2)
20.9
–
(7.6)
(19.7)
(12.7)
15.5
2.8
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 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 from 30 January 2020 with a secondary listing on Euronext
Amsterdam. Renewi plc is incorporated and domiciled in Scotland under the Companies Act 2006, registered number SC077438. The address of
the registered office is given on page 231. 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 2019.
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.
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.
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.
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.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Investments in subsidiary undertakings are stated at cost less any provision for impairment in value.
(cid:1)
217
217
1234Renewi plc Annual Report and Accounts 2020 Notes to the parent company financial statements continued
1. ACCOUNTING POLICIES – COMPANY CONTINUED
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.
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.
(cid:1)
218
218
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 1. ACCOUNTING POLICIES – COMPANY CONTINUED
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.
(cid:1)
219
219
1234Renewi plc Annual Report and Accounts 2020 Notes to the parent company financial statements continued
2. KEY ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenditure. The areas involving a higher degree
of judgement or complexity are set out below and in more detail in the related 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. Management have
concluded that the Group has an unconditional right to a refund of any surplus in the UK defined benefit pension scheme once the liabilities
have been discharged and that the trustees of the scheme do not have the unilateral right to wind up the scheme, therefore the asset has not
been restricted and no additional liability has been recognised. The International Accounting Standards Board under IFRIC 14 are currently
reviewing the recognition of a pension surplus in the financial statements. Dependent upon the final published standard, there is potential that
any future defined benefit surplus may not be recognised in the financial statements of the Company and additionally, the deficit valuation
methodology may also change. The principal assumptions in connection with the retirement benefit scheme 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
2020
£m
3.1
0.3
0.9
–
4.3
2019
£m
3.3
0.5
0.8
0.1
4.7
The average number of people (including executive directors) employed by the Company was 16 employees (2019: 17).
See pages 108 to 125 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 (2019: £0.1m) and the fees paid to PricewaterhouseCoopers LLP and its
associates for non-audit services for audit related assurance services for the Company were £63,023 (2019: £nil).
5. DIVIDENDS
Dividends recognised and proposed:
Amounts recognised as distributions to equity holders in the year:
Final dividend paid for the year ended 31 March 2019 of 0.5 pence per share (2018: 2.1 pence)
Interim dividend paid for the year ended 31 March 2020 of 0.45 pence per share (2019: 0.95 pence)
Total dividend per share (pence)
2020
£m
4.0
3.6
7.6
2019
£m
16.8
7.5
24.3
0.45p
1.45p
The Directors have not recommended a final dividend for the year ended March 2020 (2019: 0.5p per share) therefore the aggregate amount of
the proposed dividend is £nil (2019: expected to be £4.0m).
(cid:1)
220
220
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 6. INTANGIBLE ASSETS
Cost
At 1 April 2018
Additions
At 31 March 2019
Additions
Disposals
At 31 March 2020
Accumulated amortisation and impairment
At 1 April 2018 and at 1 April 2019
Amortisation charge
Disposals
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
7. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 April 2018, 31 March 2019 and 31 March 2020
Accumulated depreciation and impairment
At 1 April 2018 and 31 March 2019
Depreciation charge
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
(cid:1)
Land
£m
0.1
–
–
–
0.1
0.1
0.1
Fixtures and
fittings
£m
0.2
–
0.1
0.1
0.1
0.2
0.2
Computer
Software
£m
1.0
0.3
1.3
0.2
(1.0)
0.5
1.0
0.1
(1.0)
0.1
0.4
0.3
–
Total
£m
0.3
–
0.1
0.1
0.2
0.3
0.3
221
221
1234Renewi plc Annual Report and Accounts 2020
Notes to the parent company financial statements continued
8. INVESTMENTS
At 1 April 2018
Additions
Impairment charge
Disposals
At 31 March 2019
Additions
Disposals
At 31 March 2020
Investments
in joint
ventures
£m
–
3.7
–
(3.7)
–
–
–
–
Investments
in subsidiary
undertakings
£m
376.2
65.2
(91.4)
–
350.0
237.1
(62.6)
524.5
A restructuring took place during the year which included the Company disposing of its 50% holding of Renewi Europe BV of £62.6m in exchange
for a £62.6m investment in Renewi Holdings Limited. In addition the Company released £173.3m of debt with Renewi Holdings Limited in
exchange for additional shares in the entity. In addition there was a further investment of £1.2m in an existing subsidiary.
In the prior year the Group undertook a restructuring of subsidiaries 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 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 £524.5m (2019:
£350.0m). 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
2020
£m
2019
£m
263.5
258.1
1.5
0.1
0.1
1.7
186.3
0.3
1.2
187.8
During the year an expected credit loss allowance of £2.2m (2019: £45.7m) was charged to the Income Statement in relation to loans owed
by subsidiary undertakings in the UK Municipal division. The prior year charge also included an allowance in relation to the Derby PFI contract
as explained in note 3.3 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% (2019: 0% and 14%), the balances are
unsecured and repayable either on demand or in accordance with the loan agreements with a final repayment date of 30 September 2039.
(cid:1)
222
222
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 9. TRADE AND OTHER RECEIVABLES CONTINUED
The carrying amounts of trade and other receivables are denominated in the following currencies:
Sterling
Euro
Canadian Dollar
10. DEFERRED TAX ASSET
2020
£m
14.9
250.3
–
265.2
2019
£m
157.7
258.0
30.2
445.9
Deferred tax is provided in full on temporary differences under the liability method using the applicable tax rate.
At 1 April 2018
(Charge) credit to Income Statement
Charge to equity
At 31 March 2019
Charge to Income Statement
Charge to equity
At 31 March 2020
Retirement
benefit
scheme
£m
2.4
(0.2)
(1.7)
0.5
(0.8)
(2.4)
(2.7)
Tax losses
£m
6.4
(0.9)
–
5.5
(0.3)
–
5.2
Derivative
financial
instruments
£m
(0.1)
0.2
–
0.1
(0.1)
–
–
Other
timing
differences
£m
0.7
0.1
(0.5)
0.3
–
–
0.3
Total
£m
9.4
(0.8)
(2.2)
6.4
(1.2)
(2.4)
2.8
The majority of the £2.8m (2019: £6.4m) deferred tax asset is expected to be recovered after more than one year.
As at 31 March 2020, the Company has unused tax losses (tax effect) of £5.2m (2019: £5.5m) available for offset against future profits. A deferred
tax asset has been recognised in respect of £5.2m (2019: £5.5m) 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 £2.8m (2019: £15.5m) was denominated in the following currencies:
Sterling
Euro
Canadian Dollar
(cid:1)
2020
£m
2.5
0.1
0.2
2.8
2019
£m
15.3
0.1
0.1
15.5
223
223
1234Renewi plc Annual Report and Accounts 2020 Notes to the parent company financial statements continued
12. BORROWINGS
Non-current borrowings
Retail bonds
Bank loans – revolving credit facility
Current borrowings
Retail bonds
2020
£m
154.1
21.2
175.3
–
2019
£m
85.8
–
85.8
86.1
At 31 March 2020 the Group had two issues of green retail bonds. The green retail bonds maturing June 2022 of £88.2m (€100m) (2019: £85.8m
(€100m)) have an annual gross coupon of 3.65% and the green retail bonds issued on 19 July 2019 maturing July 2024 of £65.9m (€75.0m) have
an annual gross coupon of 3.00%. The retail bonds of £85.8m (€100m) with a coupon of 4.23% and a maturity date of July 2019 were fully repaid
in the year.
The bank borrowings relate to the Group’s Euro denominated multicurrency green finance facility of €520m (2019: €575m), details are set out in
note 5.3 of the Group financial statements.
The non-current borrowings of £175.3m (2019: £85.8) are due to be repaid between two and five years.
The carrying amounts of borrowings are denominated in Euros.
13. DERIVATIVE FINANCIAL INSTRUMENTS
The Company held forward foreign exchange contracts with a current liability of £0.1m (2019: £0.5m) and a notional value of £2.9m (2019: £11.3m).
14. TRADE AND OTHER PAYABLES
Trade payables
Other tax and social security payable
Accruals and other payables
Amounts owed to Group undertakings
2020
£m
0.5
0.3
7.5
1.5
9.8
2019
£m
0.3
0.2
8.8
18.1
27.4
Interest on amounts owed to Group undertakings is 0% (2019: 0% to 2.64%) 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 2019
Additions
Utilised in the year
At 31 March 2020
2020
£m
5.3
4.5
9.8
2019
£m
21.7
5.7
27.4
£m
2.4
1.8
(0.2)
4.0
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. The Company has the liability until the end of the contractual terms in
the agreements.
(cid:1)
224
224
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 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 2021 are £3.0m. See note 7.2 of the Group financial statements for further details.
From 1 December 2019 the scheme was closed for future benefit accrual following a formal consultation. A bulk pension increase exchange
exercise was carried out on 10 October 2019 to members currently in receipt of a pension payment of which 37% accepted the offer and an at-
retirement pension increase exchange was also introduced at 31 March 2020. The impact of these changes has led to a reduction in the pension
scheme liability and has been reflected as a past service credit of £1.2m. 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.
17. SHARE CAPITAL AND SHARE PREMIUM
Share capital allotted, called up and fully paid
At 1 April 2018
Issued under share option schemes
At 31 March 2019 and at 31 March 2020
Ordinary shares
of 10p each
£m
Number
Share
premium
£m
800,133,252
8,284
800,141,536
80.0
–
80.0
401.4
–
401.4
During the prior year 8,284 ordinary shares were allotted following the exercise of share options under the Savings Related Share Option
Schemes for an aggregate consideration of £5,400.
Renewi plc Employee Share Trust
The Renewi plc Employee Share Trust owns 4,834,692 (0.6%) (2019: 5,529,850 (0.7%)) 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 695,158 (2019: 865,878) shares were transferred to individuals under the
LTIP and DAB schemes and during the prior year 5,087,076 shares were purchased by the Trust at a cost of £3.0m.
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
Financial liabilities
Retail bonds
Bank loans – revolving credit facility
Trade and other payables excluding non-financial liabilities
Forward foreign exchange contracts
Note
9
11
12
12
14
13
2020
£m
265.1
2.8
267.9
154.1
21.2
9.5
0.1
184.9
2019
£m
444.7
15.5
460.2
171.9
–
27.2
0.5
199.6
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 £154.5m (2019: £175.4m).
(cid:1)
225
225
1234Renewi plc Annual Report and Accounts 2020
Notes to the parent company financial statements continued
18. FINANCIAL INSTRUMENTS CONTINUED
The following table analyses the Company’s financial liabilities including 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
Company is obliged to pay.
Within
one year
£m
Between one
and five years
£m
Over
five years
£m
At 31 March 2020
Retail bonds
Bank loans
Forward contacts – sell
Forward contracts – buy
Trade and other payables
At 31 March 2019
Retail bonds
Forward contacts – sell
Forward contracts – buy
Trade and other payables
19. NOTES TO THE STATEMENT OF CASH FLOWS
Profit before tax
Fair value (gain) loss on financial instruments
Finance income
Finance charges
Operating (loss) profit
Amortisation of intangible assets
Depreciation of property, plant and equipment
Dividend in specie
Dividend income
Exceptional provision against investments in subsidiaries
Exceptional gain on sale of joint venture
Exceptional past service (credit) cost in relation to the defined benefit pension scheme
Exceptional write-off of intercompany receivable
Exceptional provision against intercompany receivables
Exceptional intercompany debt waiver
Non-cash investment in subsidiary as settled via intercompany
Net increase (decrease) in provisions
Payment related to committed funding of the defined benefit pension scheme
Share-based compensation
Exchange (loss) gain
Operating cash flows before movement in working capital
Decrease in receivables
Decrease in payables
Cash flows from operating activities
5.2
0.5
2.9
(2.8)
9.5
15.3
93.0
11.3
(10.7)
27.2
120.8
169.2
23.5
–
–
–
192.7
95.6
–
–
–
95.6
2020
£m
5.1
(0.4)
(20.3)
8.7
(6.9)
0.1
0.1
(11.2)
(1.7)
–
–
(1.2)
15.3
2.2
173.3
(173.3)
1.6
(3.1)
0.9
(4.5)
(8.4)
0.5
(5.7)
(13.6)
–
–
–
–
–
–
–
–
–
–
–
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
(cid:1)
226
226
Renewi plc Annual Report and Accounts 2020FINANCIAL STATEMENTS continued 20. CONTINGENT LIABILITIES
In addition to the contingent liabilities as referred to in note 8.4 of the Group financial statements, the Company has given guarantees in respect
of the Group’s subsidiary undertakings’ borrowing facilities totalling £432.3m (2019: £366.4m). The Company also has contingent liabilities in
respect of both VAT and HM Revenue & Customs group payment arrangements of £0.7m (2019: £1.8m).
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 £20.3m (2019: £20.8m), management charges were £4.7m
(2019: £5.2m) and dividends received were £12.9m (2019: £231.5m). Total outstanding balances are listed in notes 9 and 14.
22. EVENTS AFTER THE BALANCE SHEET DATE
On 28 May 2020 the Company agreed amendments to the leverage and interest covenants in its Euro denominated multicurrency green
finance facility.
227
227
1234Renewi plc Annual Report and Accounts 2020 We support renewable energy to
turn the tide on climate change.
One of the six UN Sustainable Development Goals we’re
aligned with advocates clean energy, and so do we: we’re
investing in wind turbines; our on-site solar panels result
in 450 tonnes of carbon emissions avoidance every year;
and our Organics business generates green energy from
biogas to power 15,000 households in Amsterdam.
228
Renewi plc Annual Report and Accounts 2020 4/ MORE INFORMATION
229
1234Renewi plc Annual Report and Accounts 2020 Shareholder information
SHAREGIFT
If shareholders have only a small number of shares, the value of
which makes it uneconomical to sell, they may wish to consider
donating them to the charity ShareGift (UK registered charity
no. 1052686).
Further information may be obtained from its website at
sharegift.org or by calling +44 (0)20 7930 3737.
ELECTRONIC SHAREHOLDER COMMUNICATION
Shareholders may elect to receive future shareholder
documents and information by email or via the Company’s
website. This is intended to help the environment by reducing
paper and transport as well as enabling the Company to save
on administration, printing and postage costs. Please contact
the Company Registrar for details.
SHARE FRAUD WARNING
Fraudsters use persuasive and high-pressure tactics to lure
investors into scams. They may offer to sell shares that turn out
to be worthless or non-existent, or to buy shares at an inflated
price in return for an upfront payment. While high profits are
promised, if you buy or sell shares in this way you will probably
lose your money.
HOW TO AVOID FRAUD
Firms authorised by the Financial Conduct Authority (FCA) in
the UK 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 fca.org.uk to see if
the person and firm is authorised by the FCA. If the firm does not
have contact details on the register or they are out of date, call
the FCA on 0800 111 6768 (from the UK) or +44 20 7066 1000
(from abroad). You can search the list of unauthorised firms
to avoid at 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 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 +44 (0)300 123 2040.
Private shareholders
Corporate shareholders
Holders
1,674
588
%
74.0
26.0
Shares held
9,107,903
%
1.1
791,033,633
98.9
Total
2,262
100.0
800,141,536
100.0
Size of shareholding
Holders
1 - 5,000
5,001 - 25,000
25,001 - 50,000
50,001 - 100,000
100,001 - 250,000
250,001 - 500,000
500,000+
Total
%
62.9
21.5
3.7
2.1
2.2
1.9
5.7
Shares held
2,526,841
5,375,849
2,838,427
3,484,614
8,036,399
14,705,534
%
0.3
0.7
0.4
0.5
1.0
1.8
763,173,872
95.3
1,422
486
83
48
50
43
130
2,262
100.0
800,141,536
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
+44 (0)370 707 1290. Shareholders can also manage their
holding online by registering at investorcentre.co.uk.
WEBSITE
Shareholders are encouraged to visit our website, which has
a wealth of information about Renewi.
There is a section on our website designed specifically for
investors. It includes detailed coverage of the Renewi share
price, annual results, performance charts, financial news
and investor relations videos. This Annual Report can also be
viewed on our website, together with may other reports, by
going to renewiplc.com.
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.
FINANCIAL CALENDAR
16 July 2020
Annual General Meeting
November 2020
Announcement of interim results and dividend
31 March 2021
2021 financial year end
May 2021
Announcement of 2021 results and dividend
recommendation
For updates to the calendar during the year, please visit the
Company website: renewiplc.com.
230
Renewi plc Annual Report and Accounts 2020 Company information
CORPORATE ADVISERS
Independent Auditors
PricewaterhouseCoopers LLP for FY20
BDO LLP from FY21
Principal Bankers
ING Bank N.V.
Coöperatieve Rabobank U.A.
ABN Amro Bank N.V.
KBC Bank N.V.
BNP Paribas Fortis S.A./N.V.
HSBC Bank plc
Financial Advisers
Greenhill & Co International LLP
Corporate Brokers
Investec
Peel Hunt
Solicitors
Ashurst LLP
Dickson Minto W.S.
Remuneration Committee Advisers
FIT Remuneration Consultants LLP
PR Advisers
FTI Consulting
PRINCIPAL OFFICES
Renewi Commercial Waste Netherlands
Flight Forum 240
5657 DH Eindhoven
The Netherlands
Renewi Commercial Waste Belgium
Gerard Mercatorstraat 8
B-3920
Lommel
Belgium
Renewi Mineralz & Water
Vlasweg 12
4782 PW
Moerdijk
The Netherlands
Renewi Specialities
Dunedin House
Auckland Park, Mount Farm
Milton Keynes
Buckinghamshire
MK1 1BU
UK
Registered Office
Renewi plc
16 Charlotte Square
Edinburgh
EH2 4DF
Registered in Scotland
No. SC077438
Corporate Head Office
Renewi plc
Dunedin House
Auckland Park, Mount Farm
Milton Keynes
Buckinghamshire
MK1 1BU
UK
Tel: +44 (0)1908 650580
Company Secretary
Philip Griffin-Smith, FCIS
Email: company.secretary@renewi.com
Websites
For investors:
renewiplc.com
For customers:
renewi.com
231
1234Renewi plc Annual Report and Accounts 2020 NOx
PFAS
PFI
PMC
PPP
RDF
ROA
ROCE
SDG
SHEQ
SPV
SRF
SSC
TAG
TGG
TSR
VGG
ZEV
Gases (nitric oxide and nitrogen dioxide) produced
when fuel is burned
Poly- and perfluoroalkyl substances
Private finance initiative
Purified Metal Company
Public private partnership*
Refuse-derived fuel
Return on operating assets
Return on capital employed
The UN Sustainable Development Goals
Safety, health, environment and quality
Special purpose vehicle
Solid recovered fuel
Shared service centre
Tar and asphalt granulate
Thermally treated soil
Total shareholder return
Van Gansewinkel Groep B.V.
Zero-emission vehicle
Glossary
AD
AEB
AP4Terra
ATM
BDR
BENELUX
Anaerobic digestion
One of the largest incinerators in the Netherlands
ATM’s waste treatment plant that transitions thermally
treated soil (TGG) into gravel, sand and filler
Afvalstoffen Terminal Moerdijk, a brand in our Mineralz
& Water Division
Barnsley, Doncaster and Rotherham
The economic union of Belgium, the Netherlands
and Luxembourg
Bio-LNG
Bio-liquefied natural gas
C&D
CER
CFS
CHP
CI
CLA
Construction and demolition
Constant exchange rate
A brand in our Hazardous Waste Division
Combined heat and power
Continuous improvement
Collective labour agreement
CORE NET DEBT Borrowings less cash from core facilities excluding
PPP non-recourse debt and lease liabilities as a
result of IFRS 16
DAB
DAF
DCMR
EBIT
EBITDA
ELWA
EPS
ESG
FCA
FORZ®
FTE
HIPS
HWRCs
I&C
ICT
IFRS
IL&T
KPI
LLP
LTIP
M&A
MBT
Deferred annual bonus
Truck manufacturer
Shared environmental service of the province of Zuid-
Holland and 14 municipalities in the Netherlands
Earnings before interest and tax
Earnings before interest, tax, depreciation
and amortisation
East London Waste Authority
Earnings per share
Environmental, social and governance
Financial Conduct Authority
Brand name for a breakthrough product line
at Mineralz
Full-time equivalent
High-impact polystyrene
Household waste recycling centres
Industrial and commercial
Information and communications technology
International Financial Reporting Standards
Human Environment and Transport Inspectorate
Key performance indicator
Limited liability partnerships
Long-term incentive plan
Mergers and acquisitions
Mechanical biological treatment
*PPP refers to a public private partnership project in the UK between (1) one or more local authorities
and (2) a special purpose vehicle owned either solely by Renewi or together with joint venture partners
and financed with project finance debt, under which Renewi, as operator, performs some of the waste
management functions of the relevant local authorities. These include, where appropriate, those projects
that also benefit from central government private finance initiative (PFI) credits.
232
Renewi plc Annual Report and Accounts 2020 Notes
233
1234Renewi plc Annual Report and Accounts 2020 Notes
234
Renewi plc Annual Report and Accounts 2020 Designed and produced by Wardour wardour.co.uk.
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Renewi plc Dunedin House, Auckland Park, Mount Farm, Milton Keynes, Buckinghamshire MK1 1BU