Slide 1: Financial Results
Financial Results Full year ended 30 June 2020 18 August 2020
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, 18 August 2020. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic rep
Slide 3: Agenda
Agenda Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Summary & Outlook Port Hedland, Australia Alistair Field, Group CEO 3
Slide 4: FY20 Themes
FY20 Themes Tough market conditions prevailed throughout FY20 First half scrap market crash followed by COVID-19 global collapse ▪ Rapid fall in September 2019 ferrous scrap prices, combined with low zorba prices, compressed margins in the first half ▪ Historic world-wide response to slow the spread
Slide 5: Summary of Financial Outcomes
Summary of Financial Outcomes Financial outcomes reflect the rapid global downturn Sales Revenue Sales Volumes $4,908.5 million 8.154 million tonnes FY19 1H 4.30 million | 2H 4.25 million FY19 $6,640.0 million -26.1% 9.803 million tonnes -16.8% Underlying1 EBITDA Net Cash Balance $144.9 million $110
Slide 6: Employee Health & Safety
Employee Health & Safety Equal lowest TRIFR ever recorded ▪ Safety remains the most important priority for all stakeholders. TRIFR now includes temporary staff ▪ Focus and progress on Critical Risk awareness 3.5 and management Total Recordable Injury Frequency Rate (TRIFR)1 3.0 2.9 ▪ Critical Risk M
Slide 7: Sustainability
Sustainability Rapid response to protect employees and the community while providing essential service Sims’ Sustainability Pillars COVID-19 response Operate Responsibly: Foundation of a sustainable ▪ Invoked business continuity plan company ▪ Redesigned health and safety procedures We commit to ope
Slide 8: Group Financial Performance
Group Financial Performance A$m FY19 FY20 % Chg ▪ Historic world-wide response to slow the Sales revenue 6,640.0 4,908.5 -26.1% spread of COVID-19 materially reduced Statutory EBITDA 358.1 35.7 -90.0% intake volumes and sales prices 1 Underlying EBITDA 363.4 144.9 -60.1% ▪ Weak or negative margins t
Slide 9: Markets
Markets Volatile market conditions but improved volumes and pricing since April 2020 lows Ferrous – Improved pricing since April 2020 lows Intake volumes have improved since April 2020 lows Proprietary intake volumes (‘000 tonnes) 400 800 700 Turkey HMS 80:20 Price 350 600 (US$/tonne) 500 400 300 30
Slide 10: Financial Results
Financial Results Stephen Mikkelsen, Group CFO 10
Slide 11: Statutory EBIT Reconciliation
Statutory EBIT Reconciliation Business restructuring to reduce costs and rationalise sites A$m FY20 ▪ Annualised savings and cost efficiencies are Statutory EBIT (239.1) estimated at $70 million in FY21 vs FY19 Legacy Brand Write Off 27.3 ▪ Facilities reduced in FY20 compared to FY19 Other Intangibl
Slide 12: Operating Costs
Operating Costs Thorough review of Metals and Corporate operating costs FY19 Operating Costs ▪ A clear focus on cash costs which have a high fixed component1 and therefore: ▪ Burden the company when volumes are lower ▪ Open up EBIT margins when volumes are higher ▪ In FY19, these predominately fixed
Slide 13: Operating Costs
Operating Costs Business restructuring to reduce “fixed” costs by $70 million in FY21 vs FY19 Fixed Cost Savings1 ▪ Annualised savings and cost efficiencies are estimated at $70 million in FY21 vs FY19 ▪ 50% of the $30 million annualised savings identified at the end of 1H FY20 were delivered in 2H
Slide 14: Business Segment Financial Performance
Business Segment Financial Performance All business areas and regions impacted by the tough market conditions Sales volumes Underlying EBIT1 (A$m) FY19 FY20 Chg % FY19 FY20 Chg % (‘000 tonnes) North America Metals2 4,887 4,042 -17.3% North America Metals 99.7 (39.0) -139.1% 2 ANZ Metals 1,763 1,428
Slide 15: North America Metals
North America Metals Strategic restructure provides a lower operating cost base from FY21 A$m FY19 FY20 % Chg ▪ Sales volumes were down 17.3% over prior Underlying EBIT1 99.7 (39.0) -139.1% corresponding period driven by slower Proprietary Sales Volumes economic activity largely due to COVID-19 4,88
Slide 16: Australia & New Zealand Metals
Australia & New Zealand Metals Positive earnings supported by internal initiatives and cost reductions A$m FY19 FY20 % Chg ▪ Underlying EBIT was $50.7 million, down Underlying EBIT 1 106.5 50.7 -52.4% 52.4% over prior corresponding period Proprietary Sales Volumes (‘000 tonnes) 1,763 1,428 -19.0% ▪
Slide 17: UK Metals
UK Metals Lower operating cost base helped deliver a significant improvement to the 2H FY20 result A$m FY19 FY20 % Chg ▪ Significant improvement in second half Underlying EBIT 1 20.3 (31.9) -257.1% Underlying EBIT delivering a loss of $3.5 Proprietary Sales Volumes (‘000 tonnes) 1,602 1,221 -23.8% m
Slide 18: Sims Lifecycle Services
Sims Lifecycle Services Secured a further three significant “recycling the cloud” customers for FY21 A$m FY19 FY20 % Chg ▪ Sale of European compliance scheme operations completed resulting in ~$121 Underlying EBIT1 26.0 16.9 -35.0% Underlying EBIT million net cash inflow 26.0 16.2 -37.7% ▪ Logistics
Slide 19: SA Recycling
SA Recycling Significant improvement in second half earnings from improved volumes and ferrous margins A$m FY19 FY20 % Chg ▪ Significantly improved 2H FY20 Underlying Underlying EBIT (50% share) 35.9 12.1 -66.3% EBIT due to higher volumes (locations not Sales Volumes (‘000 tonnes) (50% of SA tonnes)
Slide 20: Global Trading
Global Trading Lower costs reflect lower employee expenses and operation of only one non-ferrous trading office A$m FY19 FY20 % Chg ▪ Underlying EBIT represents external and Brokerage Gross Margin 12.0 9.6 -20.0% SA Recycling brokerage less the costs of Operating Costs (27.1) (24.8) 8.5% running the
Slide 21: Corporate & Other
Corporate & Other Transparency of costs for growth businesses and lower Corporate costs on constant currency Corporate (A$m) FY19 FY20 % Chg Corporate 1 Underlying EBIT (59.4) (57.6) 3.0% ▪ Corporate costs declined 8.6% over prior Underlying EBIT (constant currency) (59.4) (54.3) 8.6% corresponding
Slide 22: Net Cash Position
Net Cash Position Net positive cash balance despite COVID-19 downturn A$m 1H FY20 2H FY20 FY20 ▪ Solid balance strength with Opening Net Cash 347.5 151.2 347.5 net cash of $110.4 million Net profit (91.1) (174.2) (265.3) despite severe COVID-19 Depreciation & amortisation 98.1 104.7 202.8 downturn N
Slide 23: Capital Expenditure
Capital Expenditure Reduced FY20 capital expenditure 35% compared to original forecast Capital Expenditure 250 ▪ FY20 capital expenditure reduced 35% compared to August 2019 forecast 200 ▪ Forecast capex of $95 million in 1H FY21. Growth capex is 2H FY21 capex will be determined on market largely ER
Slide 24: Strategic Progress & Outlook
Strategic Progress & Outlook Alistair Field, Group CEO 24
Slide 25: Business Transformation
Business Transformation Lowering risk and increasing opportunities through a global structure ▪ Sims Metals operating model will be Alistair Field aligned functionally across the globe Group CEO & Managing Director ▪ Global responsibility for operations will enable best practices to standardise acro
Slide 26: Global ERP Implementation
Global ERP Implementation Digitise to take advantage of the true benefits of a global company Net positive ERP cash flow in early FY25 Strategic initiative ▪ Implementation of SAP s/4HANA, ISB, BSM and FY20 FY21 FY22 FY23 FY24 FY25 HCM as an integrated global instance in the cloud ▪ The program will
Slide 27: Sims Lifecycle Services
Sims Lifecycle Services Growth in customer numbers creating strong foundation FY20 Cloud Material by Customer (24,600 tonnes) ▪ Cloud customers increased to 12 from G H IJ K L F eight in FY19 E ▪ A further three significant customer D A contracts secured for FY21 ▪ Global volumes starting to expand
Slide 28: Sims Resource Renewal
Sims Resource Renewal Convert 1 million tonnes of ASR to quality products each year by 2030 Resource Renewal Facility Synthesis ▪ Plasma gasification converts 95% of ASR into useful gas Recycled products including aggregates for construction processing Plastic materials, high quality synthesis gas a
Slide 29: Strategic Targets
Strategic Targets Targeting minimum 15% return on growth projects requiring capital and material ESG benefits FY20 FY25 FY25 Ferrous Volumes (‘000 tonnes) Key ESG Measure Expand metal volumes in favourable geographies 6,301 9,600 1.8 million tonne Additional metals recycled Non-Ferrous Retail Volume
Slide 30: Conclusion & Outlook
Conclusion & Outlook Positioning Sims for sustained long term growth following a year of historic market disruption FY20 ▪ Low and volatile market conditions, combined with a significant COVID-19 induced volume reduction, produced an FY20 underlying EBIT loss of $57.9 million ▪ Management responded
Slide 31: Questions & Answers
Questions & Answers 31
Slide 32: Appendix
Appendix 32
Slide 33: Product Segment Sales Volumes
Product Segment Sales Volumes Sales volumes (‘000 tonnes) FY19 FY20 Chg % North America Metals 4,887 4,042 -17.3% ANZ Metals 1,763 1,428 -19.0% UK Metals 1,602 1,221 -23.8% Total Proprietary Volumes 8,252 6,691 -18.9% Global Trading & Other Brokerage 1,551 1,463 -5.7% Sales volumes 9,803 8,154 -16.8
Slide 34: Group Profit & Loss
Group Profit & Loss A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales revenue 4,651.7 5,079.4 6,448.0 6,640.0 4,908.5 -26.1% Statutory EBITDA 83.0 313.5 395.8 358.1 35.7 -90.0% Underlying EBITDA 190.4 292.4 392.3 363.4 144.9 -60.1% Statutory EBIT (215.5) 201.2 278.6 225.0 (239.1) -206.3% Underlying EBIT 64.0
Slide 35: North America Metals
North America Metals A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales Revenue 1,942.5 1,984.0 2,607.1 2,725.6 2,061.7 -24.4% Statutory EBITDA 35.2 106.0 121.0 124.8 (16.2) -113.0% Underlying EBITDA 84.8 124.4 159.5 162.6 55.0 -66.2% Depreciation 51.9 45.0 46.9 53.2 90.2 -69.5% Amortisation 11.7 8.9 7.9 9.7
Slide 36: Investment in SA Recycling
Investment in SA Recycling A$m FY16 FY17 FY18 FY19 FY20 Chg % Statutory EBIT (120.6) 26.3 67.8 41.0 12.1 -70.5% Underlying EBIT (1.5) 26.3 68.5 35.9 12.1 -66.3% Assets 126.8 131.9 180.7 211.1 277.5 31.5% 1 Intake Volumes (000's) 2,005 2,557 3,477 3,473 3,250 -6.4% Sales Volumes (000's) 1 2,049 2,548
Slide 37: Australia & New Zealand Metals
Australia & New Zealand Metals A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales Revenue 743.6 981.4 1,071.0 1,203.7 924.8 -23.2% Statutory EBITDA 58.0 90.9 121.6 125.6 92.3 -26.5% Underlying EBITDA 75.6 102.4 126.2 137.9 103.7 -24.8% Depreciation 26.0 28.2 29.1 31.2 52.8 -69.2% Amortisation 0.9 0.4 0.2 0.2
Slide 38: UK Metals
UK Metals A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales Revenue 759.1 924.3 1,203.0 1,186.9 869.8 -26.7% Statutory EBITDA (15.7) 50.5 42.0 19.7 (59.4) -401.5% Underlying EBITDA 43.8 54.2 50.5 39.5 (4.3) -110.9% Depreciation 13.8 12.0 14.9 18.3 26.8 -46.4% Amortisation - - 0.3 0.9 0.8 11.1% Statutory EBIT
Slide 39: Global Trading
Global Trading A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales Revenue 352.6 386.6 733.5 690.9 550.8 -20.3% Statutory EBITDA 3.2 3.1 19.0 23.3 8.2 -64.8% Underlying EBITDA (10.5) (15.3) (12.3) (14.9) (13.9) -6.7% Depreciation 0.1 0.1 0.1 0.2 1.3 NMF Amortisation - - - - - - Statutory EBIT 3.1 3.0 18.8 23.1
Slide 40: Sims Lifecycle Services
Sims Lifecycle Services A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales Revenue 792.7 726.9 758.4 746.5 408.0 -45.3% Statutory EBITDA (2.6) 30.6 34.5 26.4 9.9 -62.5% Underlying EBITDA 23.3 36.3 39.7 34.5 28.2 -18.3% Depreciation 11.2 8.2 8.4 8.5 11.3 -32.9% Amortisation 0.4 - - - - - Statutory EBIT (60.2)
Slide 41: Corporate & Other
Corporate & Other A$m FY16 FY17 FY18 FY19 FY20 Chg % Sales Revenue 61.2 76.2 75.0 86.4 93.4 8.1% Statutory EBITDA 6.4 6.1 (10.1) (2.7) (11.2) -314.8% Underlying EBITDA (25.1) (35.9) (39.8) (32.1) (35.9) -11.8% Depreciation 10.4 9.5 9.4 10.9 15.6 -43.1% Amortisation - - - - - - Statutory EBIT (4.1) (
Slide 42: Financial Summary – Group
Financial Summary – Group A$m FY16 FY17 FY18 FY19 FY20 Group Results Sales Revenue 4,651.7 5,079.4 6,448.0 6,640.0 4,908.5 Underlying EBITDA 190.4 292.4 392.3 363.4 144.9 Underlying EBIT 64.0 180.1 275.1 230.3 (57.9) Underlying NPAT 42.9 118.3 188.6 161.9 (58.1) Underlying EPS (cents per share) 21.2
Slide 43: Financial Summary – Segment
Financial Summary – Segment A$m FY16 FY17 FY18 FY19 FY20 Sales Revenue North America Metals 1,942.5 1,984.0 2,607.1 2,725.6 2,061.7 ANZ Metals 743.6 981.4 1,071.0 1,203.7 924.8 UK Metals 759.1 924.3 1,203.0 1,186.9 869.8 Sims Lifecycle Services 792.7 726.9 758.4 746.5 408.0 Global Trading 352.6 386.
Slide 44: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) A$m FY16 FY17 FY18 FY19 FY20 Proprietary sales tonnes (‘000)1 North America Metals 4,517 4,344 4,865 4,887 4,042 ANZ Metals 1,377 1,530 1,585 1,763 1,428 UK Metals 1,350 1,589 1,691 1,602 1,221 Total 7,244 7,463 8,141 8,252 6,691 Underlying EBIT2 North America Met
Slide 45: Financial Summary – Product
Financial Summary – Product A$m FY16 FY17 FY18 FY19 FY20 Sales tonnes (‘000) Ferrous Trading 6,768 7,009 7,709 7,817 6,301 Non Ferrous 476 454 432 435 390 Brokerage 1,307 1,237 1,715 1,551 1,463 Total 8,551 8,700 9,856 9,803 8,154 Sales Revenue Ferrous Metals 2,703.0 3,136.1 4,381.6 4,505.4 3,286.2
Slide 46: Income Tax Expense – FY20
Income Tax Expense – FY20 Income Tax Benefit A$m Loss Before Tax Effective Tax % /(Expense) Statutory Result (252.9) (12.4) 4.9 Significant Items 207.2 26.0 Normalised Results (45.7) 13.6 -29.8 46
Slide 47: Lease Standard Impact – FY20
Lease Standard Impact – FY20 A$m EBIT EBITDA Underlying Result (57.9) 144.9 Lease Depreciation N/A 67.1 Lease Interest Expense 6.8 6.8 Underlying Result Excluding Lease Standard Impact (64.7) 71.0 47
Slide 48: Significant items
Significant items FY19 Pre-Tax FY19 After-Tax FY20 Pre-Tax FY20 After-Tax A$m Total Total Total Total Legacy brand write offs - - 27.3 20.6 Other intangible asset impairments - - 44.7 34.7 Asset write offs - - 50.2 38.8 Restructuring and redundancies 11.5 8.9 35.2 27.8 Loss on asset disposals, net o