Slide 1: Financial Results Half year ended 31 December 2022
Financial Results Half year ended 31 December 2022 Creating Value by Providing a Pathway to Decarbonisation for our Customers 14 February 2023
Slide 2: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 14 February 2023. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic r
Slide 3: Agenda
Agenda Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Strategic Progress & Outlook Alistair Field, Group CEO 3
Slide 4: Results Overview
Results Overview Alistair Field, Group CEO 4
Slide 5: A resilient performance against a challenging trading and operating environment
A resilient performance against a challenging trading and operating environment Sales volume growth in Metal EBIT was impacted by challenging macro and operating conditions, although above guidance Lower trading margin reflected challenging market conditions across all metal segments Operating cash
Slide 6: HY23 Themes
HY23 Themes Lower prices, tight scrap availability, and inflationary pressures • Statutory EBIT of $163.4 million, down 52.1% • Underlying EBIT1 of $93.3 million, down 74.2% • Underlying EPS of 26.8 cents, down 79.7% • Metal trading margin percentage down 1.0 percentage points on prior corresponding
Slide 7: Summary of Financial Outcomes
Summary of Financial Outcomes Improved operating cash flow, further strengthening robust balance sheet Sales Revenue Sales Volumes $3,831.2 million 4.0 million tonnes HY22 HY22 1.4% -10.2% 3.9 million tonnes $4,265.0 million Underlying1 EBITDA Operating Cash Flow $200.1 million $322.0 million HY22 H
Slide 8: Employee Health & Safety
Employee Health & Safety Excellent safety performance continued in HY23 53 Total Injuries 29% reduction in • Strategic focus on improvement of control Recordable and Lost Time 43 Injuries measures continued to drive excellent safety 38 HY23 vs HY22 performance 34 24 • Maintained investment in traffi
Slide 9: Sustainability
Sustainability Strengthened ESG credentials and advanced execution of the strategy OPERATE RESPONSIBLY PARTNER FOR CHANGE 14th most sustainable • Lowest ever Total Recordable Injury Rate company • Member of Australian • Committed to HESTA 40:40 vision Climate Leaders Coalition • Achieved target of 2
Slide 10: Markets
Markets Weak ferrous prices following sharp correction in 2H22, lower non-ferrous prices and freight costs 1. Ferrous1 – Steep decline in average price in HY23 vs HY22 2. Freight2 – HY23 average price significantly below HY22 Baltic Exchange Handysize Index 700 2,250 HY22 average Turkey HMS 80:20 Pr
Slide 11: Financial Results
Financial Results Stephen Mikkelsen, Group CFO 11
Slide 12: Group Financial Performance
Group Financial Performance As expected, EBIT result was impacted by lower margins and increased operating costs A$m HY23 HY22 Change Sales revenue 3,831.2 4,265.0 (10.2)% • Proprietary intake volumes down 3.2% Statutory EBITDA 270.2 442.0 (38.9)% • Revenue down 10.2% driven by 12.3% decline in Stat
Slide 13: Business Segment Financial Performance
Business Segment Financial Performance Underlying EBIT1 (A$m) HY23 HY22 Change Sales volumes HY23 HY22 Change (‘000 tonnes) Metal Business2 87.3 266.5 (67.2)% Metal Business2 3,995 3,941 1.4% Sims Lifecycle Services 7.0 9.9 (29.3)% Global Trading 562 675 (16.8)% SA Recycling 49.1 128.7 (61.8)% Other
Slide 14: North America Metal
North America Metal Higher sales volume, inflationary pressures and growth-related costs A$m HY23 HY22 Change • Proprietary intake volumes down 2.8% Proprietary Sales Volumes 2,451 2,395 2.3% • Sales volumes up 2.3% due to inventory reduction as (‘000 tonnes) freight and supply chain conditions impr
Slide 15: Australia & New Zealand Metal
Australia & New Zealand Metal EBIT decline driven by lower trading margins and increased operating costs • Proprietary intake volumes down 4.0%, partially due to A$m HY23 HY22 Change impacts of flooding Proprietary Sales Volumes 800 799 0.1% (‘000 tonnes) • 10.2% decrease in sales revenue driven by
Slide 16: UK Metal
UK Metal EBIT result driven by lower ferrous trading margin and increased operating costs • Proprietary intake volumes down 3.6% A$m HY23 HY22 Change Proprietary Sales Volumes • Sales revenue down 5.9%, driven by 7.6% decline in 744 747 (0.4)% (‘000 tonnes) average ferrous sale price Sales revenue 7
Slide 17: Sims Lifecycle Services
Sims Lifecycle Services Repurposed unit growth and market share gains despite supply chain constraints • Repurposed units up 38.5%, despite supply chain A$m HY23 HY22 Change constraints limiting the release of cloud material Repurposed units (million) 1.8 1.3 38.5% • Revenue up 0.8% in HY23 with rep
Slide 18: SA Recycling
SA Recycling Achieved trading margin percentage increase. EBIT decline due to margin compression and increased operating costs A$m HY23 HY22 Change • Intake volumes down 2.1% partially benefitting by six Proprietary Sales Volumes months of PSC volumes 2,196 2,203 (0.3%) (‘000 tonnes) • Revenue down
Slide 19: Global Trading, Corporate & Other
Global Trading, Corporate & Other Global Trading Global Trading (A$m) HY23 HY22 Change • Underlying EBIT represents external and SA Recycling Underlying EBIT1 (11.8) (11.1) 6.3% brokerage less the costs of running the global trading Corporate (A$m) HY23 HY22 Change operations Underlying EBIT1 (47.3)
Slide 20: Cash generation
Cash generation Lower inventory and prices released working capital Million $AUD • Working capital of $186.8 million release, driven by lower inventory and metal prices • Provisions of $85.6 million includes incentive payments related to FY22 322.0 • Tax payments of $31.7 million Total Inventory 100
Slide 21: Net cash movement
Net cash movement Operating cashflow up by 10.7% Million $AUD • Cash inflow from operating activities of $322.0 million increase • Cash received for asset sales included Doremus land for $36.5 million • Capex spend of $127.2 million, includes $23 million in delayed growth projects from prior year •
Slide 22: Capital Expenditure
Capital Expenditure Focused deployment of capital. Quickly adapted to market changes while continued supporting growth Capital Expenditure • Total capex of $127.2 million in HY23 was comprised of 300 $92.4 million in Sustaining Capex 250 • $34.8 million spend in Growth Capex • Sustaining and environ
Slide 23: Strategic Progress & Outlook
Strategic Progress & Outlook Alistair Field, Group CEO 23
Slide 24: Green Steel Momentum
Business Strategy Green Steel Momentum Governments, NGOs and industry associations are pursuing Green Steel US & EU announced commitment to negotiate the world’s first carbon-based sectoral arrangement on steel trade by 2024 The US Federal Government launched Buy Clean Initiative and Task Force The
Slide 25: Customers and end users will require more scrap to meet decarbonisation targets
Business Strategy Green Steel Momentum Customers and end users will require more scrap to meet decarbonisation targets and circular strategies CUSTOMERS END USERS Increase steel Increase the use of Car Manufacturers Recycled-content targets production from EAFs recycled metal by steel 40 to 80% by 2
Slide 26: Well placed to capitalise on the steel structural growth
Business Strategy Green Steel Momentum Well placed to capitalise on the steel structural growth Our products reduce Continuous upgrade of Unrivalled competitive significantly the carbon Increasing our volumes to our products to access strengths developed over emissions of steel meet structural growt
Slide 27: HY23 - Growth strategy
HY23 - Growth strategy Continued to execute on strategy despite challenging market conditions in our core business ✓ Record safety result in HY23 ✓ SA Recycling has integrated PSC, added new bolt-on acquisitions and maintained a strong balance sheet ✓ Further advanced the capital strategy, with the
Slide 28: Outlook
Outlook Remain confident in the medium and long-term fundamentals of the business. Short-term outlook uncertain due to macro and geopolitical challenges Short-term • Outlook remains uncertain, although there has been a recent strengthening in ferrous and non-ferrous markets: • Inflation and labour s
Slide 29: Questions & Answers
Questions & Answers 72 RY 7
Slide 30: Appendix
Appendix O) 30
Slide 31: Product Segment Volumes
Product Segment Volumes Sales volumes (‘000 tonnes) HY23 HY22 Change Intake volumes (‘000 tonnes) HY23 HY22 Change North America Metal 2,451 2,395 2.3% North America Metal 2,323 2,389 (2.8)% ANZ Metal 800 799 0.1% ANZ Metal 776 808 (4.0)% UK Metal 744 747 (0.4)% UK Metal 677 702 (3.6)% Total Proprie
Slide 32: Product Segment Volumes
Product Segment Volumes Sales revenue ($m) HY23 HY22 Change Ferrous Trading 2,105 2,377 (11.4)% Non-Ferrous Trading 867 887 (2.2)% Non Ferrous Shred Recovery 281 250 12.6% Sales revenue 3,253 3,514 (7.4)% Sales volumes (‘000 tonnes) HY23 HY22 Change Ferrous Trading 3,657 3,620 1.0% Non-Ferrous Tradi
Slide 33: Group Profit & Loss
Group Profit & Loss A$m HY23 HY22 Chg % FY22 FY21 FY20 FY19 FY18 Sales revenue 3,831.2 4,265.0 (10.2)% 9,264.4 5,916.3 4,908.5 6,640.0 6,448.0 Statutory EBITDA 270.2 442.0 (38.9)% 976.4 507.3 35.7 358.1 395.8 Underlying EBITDA 200.1 462.3 (56.7)% 958.9 579.9 144.9 363.4 392.3 Statutory EBIT 163.4 34
Slide 34: North America Metal
North America Metal A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Sales Revenue 1,849.0 1,997.2 (7.4)% 4,453.4 2,669.9 2,061.7 2,725.6 2,607.1 Trading Margin ($) 385.4 421.6 (8.6)% 881.4 568.6 456.8 576.4 571.7 Trading Margin (%) 20.8% 21.1% (0.3)ppts 19.8% 21.3% 22.2% 21.1% 21.9% Statutory EBITDA 1
Slide 35: Investment in SA Recycling
Investment in SA Recycling A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Statutory EBIT 1 65.9 128.7 (48.8)% 302.5 157.8 12.1 41.0 67.9 Underlying EBIT 1 49.1 128.7 (61.8)% 298.5 157.8 12.1 35.9 68.5 Assets 506.2 403.3 25.5% 512.4 345.8 277.5 211.1 180.7 Intake Volumes (000's) 2 2,235 2,285 (2.1)% 4
Slide 36: Australia & New Zealand Metal
Australia & New Zealand Metal A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Sales Revenue 732.4 815.6 (10.2)% 1,694.4 1,098.9 924.8 1,203.7 1,071.0 Trading Margin ($) 189.6 225.0 (15.7)% 423.1 313.6 260.3 312.8 298.3 Trading Margin (%) 25.9% 27.6% (1.7)ppts 25.0% 28.5% 28.1% 26.0% 27.9% Statutory EB
Slide 37: UK Metal
UK Metal A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Sales Revenue 700.6 744.4 (5.9)% 1,594.9 993.3 869.8 1,186.9 1,203.0 Trading Margin ($) 96.0 115.7 (17.0)ppts 234.6 189.3 124.2 188.2 176.7 Trading Margin (%) 13.7% 15.5% (1.8)ppts 0.1 0.2 0.1 0.2 0.1 Statutory EBITDA (1.4) 38.7 (103.6)% 77.9 54
Slide 38: Global Trading
Global Trading A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Sales Revenue 381.8 484.3 (21.2)% 1,128.5 745.8 550.8 690.9 733.5 1 Statutory EBITDA (8.7) 8.1 (207.4)% 55.8 21.9 8.2 23.3 19.0 Underlying EBITDA (11.2) (10.5) 6.7% (19.2) (16.4) (13.9) (14.9) (12.3) Depreciation 0.6 0.6 0.0% 1.1 1.0 1.3 0
Slide 39: Sims Lifecycle Services
Sims Lifecycle Services A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Sales Revenue 167.4 166.0 0.8% 327.0 318.9 408.0 746.5 758.4 Statutory EBITDA 1.1 12.1 (90.9)% 15.3 21.2 9.9 26.4 34.5 Underlying EBITDA 12.2 14.7 (17.0)% 25.9 31.1 28.2 34.5 39.7 Depreciation 4.8 4.8 0.0% 9.6 9.3 11.3 8.5 8.4 Amo
Slide 40: Corporate & Other
Corporate & Other A$m HY23 HY22 Change FY22 FY21 FY20 FY19 FY18 Sales Revenue - 57.5 (100.0)% 66.2 89.5 93.4 86.4 75.0 Statutory EBITDA 30.7 (36.3) (184.6)% (35.6) (89.6) (11.2) (2.7) (10.1) Underlying EBITDA (37.0) (24.0) 54.2% (77.6) (46.9) (35.9) (32.1) (39.8) Depreciation 1.6 8.3 (80.7)% 10.9 15
Slide 41: Constant Currency Summary
Constant Currency Summary A$m HY23 HY23 HY22 Change Actual Constant Currency Actual NAM Sales revenue 1,849.0 1,694.3 1,997.2 (15.2)% Trading Margin 385.4 353.1 421.6 (16.2)% Net Operating Costs (287.6) (263.5) (231.9) 13.6% Underlying EBIT 37.8 34.6 142.2 (75.6)% UK Sales revenue 700.6 744.5 744.4
Slide 42: Financial Summary – Group
Financial Summary – Group A$m HY23 HY22 FY22 FY21 FY20 FY19 FY18 Group Results Sales Revenue 3,831.2 4,265.0 9,264.4 5,916.3 4,908.5 6,640.0 6,448.0 Underlying EBITDA 200.1 462.3 958.8 579.9 144.9 363.4 392.3 Underlying EBIT 93.3 361.7 756.1 386.6 (57.9) 230.3 275.1 Underlying NPAT 53.0 269.3 578.9
Slide 43: Financial Summary – Segment
Financial Summary – Segment A$m HY23 HY22 FY22 FY21 FY20 FY19 FY18 Sales Revenue North America Metals 1,849.0 1,997.2 4,453.4 2,669.9 2,061.7 2,725.6 2,607.1 ANZ Metals 732.4 815.6 1,694.4 1,098.9 924.8 1,203.7 1,071.0 UK Metals 700.6 744.4 1,594.9 993.3 869.8 1,186.9 1,203.0 Sims Lifecycle Services
Slide 44: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) A$m HY23 HY22 FY22 FY21 FY20 FY19 FY18 Proprietary sales tonnes (‘000)1 North America Metals 2,451 2,395 5,081 4,318 4,042 4,887 4,865 800 799 1,532 1,537 1,428 1,763 1,585 ANZ Metals 744 747 1,493 1,370 1,221 1,602 1,691 UK Metals 3,995 3,942 8,106 7,225 6,691 8,
Slide 45: Financial Summary – Product
Financial Summary – Product A$m HY23 HY22 FY22 FY21 FY20 FY19 FY18 Sales tonnes (‘000) Ferrous Trading 3,784 3,724 7,664 6,870 6,301 7,817 7,709 Non Ferrous 211 217 442 355 390 435 432 Brokerage 578 744 1,601 1,368 1,463 1,551 1,715 Total 4,573 4,685 9,707 8,593 8,154 9,803 9,856 Sales Revenue Ferro
Slide 46: Income Tax Expense – FY23
Income Tax Expense – FY23 A$m Profit Before Tax Income Tax Expense Effective Tax rate Statutory Result 150.8 49.8 33.0% Significant Items (70.1) (22.1) 31.5% Normalised Results 80.7 27.7 34.3% 46
Slide 47: Significant Items
Significant Items HY23 HY23 HY22 HY22 A$m Pre-Tax Total After-Tax Total Pre-Tax Total After-Tax Total ERP software implementation costs 5.5 3.8 23.7 17.9 Gain on sale of investment (49.2) (36.9) - - Non-recurring gain on asset dispositions (36.5) (27.4) (6.2) (4.6) Restructuring and redundancies 6.8
Slide 48: Net Cash Position
Net Cash Position A$m HY23 HY22 8.3 Opening Net Cash (102.7) Underlying net profit 269.3 53.0 Depreciation & amortisation 106.8 100.6 Joint venture non-cash income, net of dividends 2.5 (52.4) Change in working capital 101.2 (38.4) Movement in tax balance (31.7) 7.6 ERP current year spend (5.5) (23.