Slide 1: Financial Results
Purpose Grow Preserve Invest Financial Results Full year ended 30 June 2019 Fortify 23 August 2019
Slide 2: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities (primarily: metal recycling, electronics recycling and municipal recycling) current at the date of the presentation, 23 August 2019. It is provided in summary form and does not purport to
Slide 3: Agenda
Agenda Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Summary & Outlook Alistair Field, Group CEO 3
Slide 4: FY19 Themes
FY19 Themes Solid result in the face of challenging market conditions Strong cash flow Underlying EBIT1 of $230.3 million, down 16.3% over prior year Underlying NPAT1 of $161.9 million, down 14.2% over prior year FY19 final dividend of 19.0 cents per share, fully franked Net cash of $347.5 m
Slide 5: Summary of Financial Outcomes
Summary of Financial Outcomes Strong cash flow despite a contraction in margins Sales Revenue Sales Volumes $6,640.0 million 9.803 million tonnes FY18 1H 4.30 million | 2H 4.25 million FY18 $6,448.0 million +3.0% 9.856 million tonnes -0.5% Underlying1 EBITDA Net Cash $363.4 million $347.5 million 1H
Slide 6: Employee Health & Safety
Employee Health & Safety Global commitment for zero harm today Safety performance Safety remains the most important priority for both our employees and the community 3.0 2.8 After nearly a decade without a fatality, Total Recordable Injury Frequency Rate (TRIFR)1 there were two fatalities in FY1
Slide 7: Sustainability
Sustainability Sims integral role in the circular economy HP closed-loop hardware recycling program Recycles ~10 million tonnes of metal (ferrous, aluminium, copper, etc) each year Helps OEMs close the loop in their manufacturing process. For example, operating HP closed loop hardware recycling
Slide 8: Group Financial Performance
Group Financial Performance Margin contraction partially offset by a lower Australian dollar A$m FY18 FY19 % Chg Sales revenue up 3.0% over prior year but Sales revenue 6,448.0 6,640.0 3.0% down 2.5% on a constant currency basis Statutory EBITDA 395.8 358.1 -9.5% 1 Meaningful sales volume growth
Slide 9: Markets
Markets Challenging market conditions Recycled Ferrous – Under pressure since July 2018 China Non-Ferrous Quotas 400 Chinese non-ferrous quotas applied from 1 July Turkey HMS 80:20 Price (US$) 350 2019 Confident that the parties we deal with are likely to 300 have sufficient quotas to meet their
Slide 10: Financial Results
Purpose Grow Financial Results Stephen Mikkelsen, Group CFO Preserve Invest 10
Slide 11: Business Segment Financial Performance
Business Segment Financial Performance Overall stable volumes and strong growth from ANZ Metals Sales volumes Underlying EBIT1 (A$m) FY18 FY19 Chg % FY18 FY19 Chg % (‘000 tonnes) North America Metals2 4,865 4,887 0.5% North America Metals 104.7 99.7 -4.8% 2 ANZ Metals 1,585 1,763 11.2% UK Metals2 1,
Slide 12: North American Metals
North American Metals Solid result in challenging market driven by product optionality from technology investment A$m FY18 FY19 % Chg Underlying EBIT was $99.7 million, down 4.8% Underlying EBIT 104.7 99.7 -4.8% over prior corresponding period Proprietary Sales Volumes (‘000 tonnes) 4,865 4,887 0.
Slide 13: Australia & New Zealand Metals
Australia & New Zealand Metals Good volume growth while maintaining EBIT / tonne margin A$m FY18 FY19 % Chg Underlying EBIT was $106.5 million, up 9.9% Underlying EBIT 1 96.9 106.5 9.9% over prior corresponding period Proprietary Sales Volumes (‘000 tonnes) 1,585 1,763 11.2% Sales volume growth
Slide 14: UK Metals
UK Metals Significant 2H FY19 improvement as quality initiatives deliver operational performance A$m FY18 FY19 % Chg Underlying EBIT of $20.3 million, down 42.5% Underlying EBIT 1 35.3 20.3 -42.5% over prior corresponding period Proprietary Sales Volumes (‘000 tonnes) 1,691 1,602 -5.3% Sales vol
Slide 15: Global Electronics Recycling
Global Electronics Recycling 2H FY19 improvement driven by contract wins and more selective procurement activities A$m FY18 FY19 % Chg Underlying EBIT of $26.0 million, down Underlying EBIT 1 31.3 26.0 -16.9% 16.9% over prior corresponding period Underlying EBIT (constant currency) 31.3 25.0 -20.1
Slide 16: SA Recycling
SA Recycling EBIT reduction primarily driven by falling zorba prices A$m FY18 FY19 % Chg Underlying EBIT of $35.9 million, down Underlying EBIT (50% share) 68.5 35.9 -47.6% 47.6% over prior corresponding period Sales Volumes (‘000 tonnes) (50% of SA tonnes) 1,671 1,766 5.7% Volume improvement pa
Slide 17: Global Trading
Global Trading Increased costs largely timing in nature A$m FY18 FY19 % Chg Underlying EBIT represents external and Brokerage Gross Margin 12.1 12.0 -0.8% SA Recycling brokerage less the costs of Operating Costs (24.5) (27.1) -10.6% running the global trading operations 1 Underlying EBIT (12.4) (1
Slide 18: Corporate & Other
Corporate & Other Municipal recycling contract amendment to adjust for the collapse in paper price Corporate (A$m) FY18 FY19 % Chg Corporate 1 Underlying EBIT (66.2) (59.4) 10.3% Underlying EBIT of -$59.4 million, Underlying EBIT (constant currency) (66.2) (55.5) 16.2% improved by 10.3% over prior
Slide 19: Product Segment Sales Volumes
Product Segment Sales Volumes Increased proprietary volumes despite the quality push in UK Metals Sales volumes (‘000 tonnes) FY18 FY19 Chg % Sales Volumes by Region North America Metals 4,865 4,887 0.5% Total proprietary sales volumes increased ANZ Metals 1,585 1,763 11.2% by 1.4% in FY19 UK Meta
Slide 20: Underlying EBIT by Quarter
Underlying EBIT by Quarter Improved second half FY19 result Strong Q4 FY19 result driven by: A deliberate shift of volumes from Q3 to Q4 Underlying EBIT by Quarter1 and It is common for Q4 to be the highest 120 3.0 volume quarter Municipal recycling contract amendment 100 2.5 Improved techno
Slide 21: Net Cash Position
Net Cash Position Strong cash conversion A$m FY18 FY19 Working Capital improvement of $89.6 million Net Cash at 1 July 373.0 298.1 - Reduced inventory position due to lower tonnage on Underlying EBITDA 392.3 363.4 hand and reduced average price per tonne Change in working capital (28.9) 89.6 - Red
Slide 22: Capital Expenditure
Capital Expenditure Continued discipline in the capital expenditure program Capital Expenditure Net cash balance of $348 million as at 30 June continues to support growth initiatives Forecast total capex of $205 million in FY20 250 excluding potential bolt-on acquisitions Growth Capex enables
Slide 23: Strategic Progress & Outlook
Purpose Strategic Progress & Outlook Grow Alistair Field, Group CEO Preserve Invest 23
Slide 24: UK Metals – Morley Acquisition
UK Metals – Morley Acquisition Performing in line with business plan FY19 FY19 Acquisition of nine sites in Northern England for £m Business % Chg Actual Plan £32m in March 2018 Underlying EBIT1 3.1 3.0 3.3% EBIT and volumes performance ahead of Underlying EBITDA1 5.4 6.5 -16.9% business plan Po
Slide 25: Quality initiatives
Quality initiatives Technology investments provided significant EBIT in FY19 $27 million FY19 EBIT from quality initiatives Operation of copper granulation and zorba separation plants providing geographic and customer optionality for differentiated product Furnace ready twitch/heavies product fr
Slide 26: Capital Management
Capital Management Staged and disciplined approach to capital investment Summary All investment goes through executive and board approval processes, including due diligence and feasibility Rigorous post implementation reviews and monitoring Further investment requires expected returns to be ac
Slide 27: Strategy Target Measures
Strategy Target Measures Good progress in FY19 and strong position to further advance strategy in FY20 FY18 FY19 FY20 FY25 NAM Ferrous Volumes (‘000 tonnes) Expand metal volumes in favourable geographies 4,725 4,731 5,000 6,500 NAM Non-Ferrous Retail Volumes (‘000 tonnes) Grow non-ferrous business 1
Slide 28: Conclusion & Outlook
Conclusion & Outlook Resilience shown despite challenging markets and an attractive long-term growth outlook remains FY19 Underlying NPAT of $161.9 million, 14.2% lower than $188.6 million in the prior corresponding period Proprietary volumes of 8.252 million tonnes, 1.4% higher than 8.141 milli
Slide 29: Questions & Answers
Purpose Grow Questions & Answers Preserve Invest 29
Slide 30: Appendix
Purpose Grow Appendix Preserve Invest 30
Slide 31: Group Profit & Loss
Group Profit & Loss A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales revenue 6,310.9 4,651.7 5,079.4 6,448.0 6,640.0 3.0% Statutory EBITDA 265.6 83.0 313.5 395.8 358.1 -9.5% Underlying EBITDA 260.0 190.4 292.4 392.3 363.4 -7.4% Statutory EBIT 144.8 (215.5) 201.2 278.6 225.0 -19.2% Underlying EBIT 139.2 64.0
Slide 32: North America Metals
North America Metals A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales Revenue 2,916.4 1,942.5 1,984.0 2,607.1 2,725.6 4.5% Statutory EBITDA 66.2 35.2 106.0 121.0 124.8 3.1% Underlying EBITDA 88.4 84.8 124.4 159.5 162.6 1.9% Depreciation 47.4 51.9 45.0 46.9 53.2 -13.4% Amortisation 13.0 11.7 8.9 7.9 9.7 -22.
Slide 33: Investment in SA Recycling
Investment in SA Recycling A$m FY15 FY16 FY17 FY18 FY19 Chg % Statutory EBIT 0.5 (120.6) 26.3 67.8 41.0 -39.5% Underlying EBIT 0.5 (1.5) 26.3 68.5 35.9 -47.6% Assets 243.1 126.8 131.9 180.7 211.1 16.8% Intake Volumes (000's) 1 2,156 2,005 2,557 3,477 3,473 -0.1% Sales Volumes (000's) 1 2,135 2,049 2
Slide 34: Australia & New Zealand Metals
Australia & New Zealand Metals A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales Revenue 1,053.3 743.6 981.4 1,071.0 1,203.7 12.4% Statutory EBITDA 85.0 58.0 90.9 121.6 125.6 3.3% Underlying EBITDA 98.5 75.6 102.4 126.2 137.9 9.3% Depreciation 26.6 26.0 28.2 29.1 31.2 -7.2% Amortisation 1.1 0.9 0.4 0.2 0.2 0
Slide 35: UK Metals
UK Metals A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales Revenue 1,036.6 759.1 924.3 1,203.0 1,186.9 -1.3% Statutory EBITDA 38.0 (15.7) 50.5 42.0 19.7 -53.1% Underlying EBITDA 44.3 43.8 54.2 50.5 39.5 -21.8% Depreciation 12.5 13.8 12.0 14.9 18.3 -22.8% Amortisation - - - 0.3 0.9 -200.0% Statutory EBIT 25.
Slide 36: Global Trading
Global Trading A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales Revenue 455.2 352.6 386.6 733.5 690.9 -5.8% Statutory EBITDA 14.1 3.2 3.1 19.0 23.3 22.6% Underlying EBITDA (8.2) (10.5) (15.3) (12.3) (14.9) -21.1% Depreciation 0.1 0.1 0.1 0.1 0.2 -100.0% Amortisation - - - - - NMF Statutory EBIT 14.1 3.1 3.0
Slide 37: Global E-Recycling
Global E-Recycling A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales Revenue 795.0 792.7 726.9 758.4 746.5 -1.6% Statutory EBITDA 53.0 (2.6) 30.6 34.5 26.4 -23.5% Underlying EBITDA 57.1 23.3 36.3 39.7 34.5 -13.1% Depreciation 10.6 11.2 8.2 8.4 8.5 -1.2% Amortisation 0.6 0.4 - - - NMF Statutory EBIT 41.8 (60.
Slide 38: Corporate & Other
Corporate & Other A$m FY15 FY16 FY17 FY18 FY19 Chg % Sales Revenue 54.4 61.2 76.2 75.0 86.4 15.2% Statutory EBITDA 8.8 6.4 6.1 (10.1) (2.7) 73.3% Underlying EBITDA (20.6) (25.1) (35.9) (39.8) (32.1) 19.3% Depreciation 8.9 10.4 9.5 9.4 10.9 -16.0% Amortisation - - - - - NMF Statutory EBIT (0.2) (4.1)
Slide 39: Financial Summary – Group
Financial Summary – Group A$m FY15 FY16 FY17 FY18 FY19 Group Results Sales Revenue 6,310.9 4,651.7 5,079.4 6,448.0 6,640.0 Underlying EBITDA 260.0 190.4 292.4 392.3 363.4 Underlying EBIT 139.2 64.0 180.1 275.1 230.3 Underlying NPAT 99.4 42.9 118.3 188.6 161.9 Underlying EPS (cents per share) 48.2 21
Slide 40: Financial Summary – Segment
Financial Summary – Segment A$m FY15 FY16 FY17 FY18 FY19 Sales Revenue North America Metals 2,916.4 1,942.5 1,984.0 2,607.1 2,725.6 ANZ Metals 1,053.3 743.6 981.4 1,071.0 1,203.7 UK Metals 1,036.6 759.1 924.3 1,203.0 1,186.9 Global E-Recycling 795.0 792.7 726.9 758.4 746.5 Global Trading 455.2 352.6
Slide 41: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) A$m FY15 FY16 FY17 FY18 FY19 Proprietary sales tonnes (‘000)1 North America Metals 5,499 4,517 4,344 4,865 4,887 ANZ Metals 1,782 1,377 1,530 1,585 1,763 UK Metals 1,583 1,350 1,589 1,691 1,602 Total 8,864 7,244 7,463 8,141 8,252 Underlying EBIT2 North America Met
Slide 42: Financial Summary – Product
Financial Summary – Product A$m FY15 FY16 FY17 FY18 FY19 Sales tonnes (‘000) Ferrous Trading 8,325 6,768 7,009 7,709 7,817 Non Ferrous 539 476 454 432 435 Brokerage 1,617 1,307 1,237 1,715 1,551 Total 10,481 8,551 8,700 9,856 9,803 Sales Revenue Ferrous Metals 4,067.7 2,703.0 3,136.1 4,381.6 4,505.4
Slide 43: Income Tax Expense - FY19
Income Tax Expense - FY19 A$m Profit Before Tax Income Tax Expense Effective Tax % Statutory Result 218.3 65.7 30.1 Remeasurement of UK deferred tax asset (4.5) 2.1 Normalised Results 61.2 28.0 43
Slide 44: Significant items
Significant items FY18 Pre-Tax FY18 After-Tax FY19 Pre-Tax FY19 After-Tax A$m Total Total Total Total Non-recurring gain on asset disposition by joint venture - - (5.1) (3.8) Gain on sale of property - - (4.2) (3.0) Impact of Victorian fire, net of insurance recoveries - - (1.8) (1.2) Redundancy exp
Slide 45: Location of Quality Initiatives
Location of Quality Initiatives MRP facilities Copper granulation plants Chicago, Illinois Barnsley, United Kingdom Jersey City, New Jersey Milperra, New South Wales (expanded) Chesapeake, Virginia Zorba separation plants Chicago, Illinois Long Marston, United Kingdom Fairless, Penns