Derichebourg : Présentation aux analystes financiers du 5 décembre 2019

FY18 - FY19

RESULTS

DECEMBER 5TH 2019

www.derichebourg.com

DISCLAIMER

The material contained in this document presents Derichebourg's current business activities as of December 5th, 2019. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group's periodic reporting, registration document, and other announcements lodged with the Autorité des Marchés Financiers. Additional information about factors which may impact Group's results are contained in the registration document, which is available on www.derichebourg.com and which can also be requested from the company.

To the extent that this document may contain forward-looking statements, such statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause actual results to differ materially from those expressed in the statements contained in this release.

This document is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation, or needs of any particular investor.

2

Table of contents

• Executive summary
• 2018-2019results
• Outlook
• Our strategy
• Lyrsa acquisition
• Derichebourg at a glance

3

1

EXECUTIVE SUMMARY

4

1 RESILIENT PERFORMANCE IN CHALLENGING MARKET CONDITIONS

• Resilient performance in an increasingly complex environment in worldtrade
• Few non-recurring items compared to prior year, which enables improving EBT compared to last year.
• Significant negative tax impact on net income due to switch from CICE (tax credit which impacted bottom line) to lower social charges (pre-income tax).
• High amount of CAPEX this year in order to prepare for future.
• Signing of Group Lyrsa Acquistion.
• Middle- Long term opportunities even if short term is more challenging in recycling.

5

2

2018-2019 RESULTS

6

• IMPROVED EBT, BUT LOWER NET INCOME DUE TO INCREASED TAX RATE

in millions of euros	2019	2018	Var.	Var.
%
Turnover	2 705,0	2 919,7 (214,7)	(7,4%)
Current EBITDA	191,2	202,1	(10,9)	(5,4%)
Current EBIT	103,1	118,3	(15,2)	(12,8%)
EBIT	97,5	96,3	1,2	1,3%
EBT	87,0	83,4	3,6	4,3%
Net income attributable to shareholders	55,6	71,1	(15,5)	(21,8%)
Proposed dividend per share	0,11	0,14
Net debt	124,9	95,1	29,8	31,3%
Ratios :
Current EBITDA (as a % of turnover)	7,1%	6,9%
Current EBIT as a % of turnover	3,8%	4,1%
Leverage Ratio	0,65	0,47

Source: Derichebourg

KPIs
2 705 m€		191 m€		103 m€		97 m€
Revenue		Current EBITDA		Current EBIT		EBIT
Breakdown revenue by activity
1 847 m€							858 m€
Environmental Services				Multiservices

• Recycling activities faced troubled environment, due to :
• • China ban of solid waste,
  • tariffs war between USA and China, and USA and Turkey, which led to lower demand in ferrous scrap, decrease in prices and volumes.
• The group benefited from several amortizers in order to reduce the impact of lower ferrous scrap volumes:

• • Its resilient business model in recycling
  • Improved performance of its services activities (Household Waste Collection and Multiservices pro forma)
• The group performed risk management and portfolio management activity due to its favourable financial position (disposal of San

Germano, Morocco activities, nuclear enginnering).	7

2.1 FEW NON-RECURRING ITEMS IN 2019

in millions of euros	2019	2018	Var.	Var.
%
Turnover	2 705,0	2 919,7 (214,7)	(7,4%)
Current EBITDA	191,2	202,1	(10,9)	(5,4%)
Current EBIT	103,1	118,3	(15,2)	(12,8%)
EBIT	97,5	96,3	1,2	1,3%
EBT	87,0	83,4	3,6	4,3%
Net income attributable to shareholders	55,6	71,1	(15,5)	(21,8%)
Proposed dividend per share	0,11	0,14
Net debt	124,9	95,1	29,8	31,3%
Ratios :
Current EBITDA (as a % of turnover)	7,1%	6,9%
Current EBIT as a % of turnover	3,8%	4,1%
Leverage Ratio	0,65	0,47

Source: Derichebourg

in millions of euros	2019	2018	Var.	Var.%
Current EBITDA	191,2	202,1	(10,9)	(5,4%)
Current EBITDA (as a % of turnover)	7,1%	6,9%
Current EBIT	103,1	118,3	(15,2)	(12,8%)
Current EBIT (as a % of turnover)	3,8%	4,1%
Italy - end of litigation with Rotamfer		(9,5)
Italy - end of CRS-Csrap litigation		(0,6)
Italy- consequences of disposal of household waste		(7,0)
collection and treatment
Houshold waste collection - 1st instance judgement in		(3,7)
favour of Veolia
Nuclear engineering contracts	(5,0)
Results on disposal subsidiaries		(1,2)
Others	(0,6)
EBIT	97,5	96,3	1,2	1,3%
Net finance costs	(9,7)	(11,7)
Exchange gain & loss, and others	(0,8)	(1,1)
EBT	87,0	83,4	3,6	4,3%

Source: Derichebourg

2.1	2019 FINANCIAL HIGHLIGHTS ENVIRONMENTAL SERVICES : A VOLUME DECREASE BALANCED BY RESISTANCE
OF UNIT MARGINS

in millions of euros	2019	2018	Var.	Var.%
Turnover	1 846,7	2 116,4	(269,7)	(12,7%)
Current EBITDA	162,1	173,1	(11,0)	(6,3%)
Current EBIT	88,2	102,9	(14,7)	(14,3%)
Italy - end of CRS-Csrap litigation		(0,6)
Houshold waste collection - 1st instance judgement in		(3,7)
favour of Veolia
Others	(0,7)
EBIT	87,5	98,6	(11,1)	(11,3%)
Ratios :
Current EBITDA (as a % of turnover)	8,8%	8,2%
Current EBIT as a % of turnover	4,8%	4,9%

Source: Derichebourg

Recycling

• 2018 US launched trade war moved dramatically long established trade flows. As a consequence, in 2019
• • Increased sales to Europe from Turkish and Asian steel, which was previously sold to the US, leading to a decrease in scrap prices and needs from customers
  • Economic crisis in Turkey : downwards pressure on ferrous scrap prices
  • Specific crisis for stainless steel (nickel), due to Indonesian exports
• Increase in US exports from Non-ferrous Metals to Europe (due to China ban), over local needs, which led to price decreases
• However, unit margins were nearly maintained, which helped to limit decrease in results

Services

• Disposal of business in Italy and Morocco in order to reduce future CAPEX
• Significant success in new contracts in France

9

2.1 INCREASE BY 5% OF STEEL PRODUCED BY EAF PROCESS IN 2018

World steel production by process (in Mt)

2 000

• 800
• 600
• 400

1 237

1 200

301

1 000

800 360

														1 730	1 808
		1 649	1 669
		1 619	1 625
	1 537	1 559
													413
1 432													403
	372		380		360	364
	383	384
355
														457		467
		456		466		455	454
	451	445
438																	108
														81
				57			54
									47		51
	71		65

600

400

56

66
631	666	765	768	756	757	789	821

200

0

521

572

2 009	2 010	2 011	2 012		2 013	2 014	2 015	2 016	2 017	2 018
			China - other than EAF			China- EAF			Rest of World - other than EAF			Rest of World - EAF

Source : World Steel Association, Derichebourg

10

2.1 TREND IN ELECTRIC ARC FURNACE SHARE IS FAVOURABLE FOR THE RECYCLING INDUSTRY

Share of Electric Arc Furnace Process in total crude steel production

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

47% 47%

44%

9%

6%

1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
										Share of EAF China		Share of EAF rest of word

Source : World Steel Association, Derichebourg

• Electric Arc Furnace steel share has been increasing on a regular basis worlwide except in China.
• 2016 is the turning point in China for the steel industry, which began deploying Electric Arc Furnace Technology. For the time

being, it is still a separate market (import ban on ferrous scrap)

11

2.1 CHANGE IN CONTEXT IN NEEDS FROM CUSTOMERS

STEEL PRODUCTION CHANGE IN CLIENTS COUNTRIES FY19 vs. FY18

+5,7%

1. 000

1. 000

1. 000

1. 000

100 000	-2,4%
80 000			-4,8%
-0,3%
60 000

-4,0%

40 000	-1,4%
-0,7%
20 000				-0,3%
					0,5%
0

sept.-18		sept.-19	(12 months)

Source: World Steel Association

All steel manufacturing processes included

• Negative trend in steel production in countries where the group delivers most of its scrap.
• In Turkey, which is the trendsetter for ferrous scrap prices, steel production volumes have reduced by 10% over jan-sep 19 vs. LY. Steel demand in Turkey has reduced by 30%, which means that Turkish steel is exported in Europe and in Middle-East;
• Numbers are good for the USA, but reversing trend in recent months.
• Group's volumes decrease more, due to its margin policy.

12

400 $4

900 $4

400 $5

900 $5

400 $6

900 $6

400 $7

900 $7

oct-15

nov-15

déc-15

janv-16

févr-16

2016

mars-16

avr-16

mai-16

juin-16

Cuivre

juil-16

août-16

sept-16

Lme

oct-16

2017

nov-16

Settlement

déc-16

janv-17

févr-17

mars-17

avr-17

mai-17

juin-17

juil-17

août-17

sept-17

oct-17

nov-17

déc-17

janv-18

févr-18

2018

mars-18

avr-18

mai-18

juin-18

juil-18

août-18

sept-18

oct-18

nov-18

déc-18

janv-19

févr-19

2019

mars-19

avr-19

mai-19

juin-19

juil-19

août-19

sept-19

thanproportionsametheinincreasedhavediscounts materials

pricesfrombenefitnotdidgroupthesteel,stainless regards As

20172016

000 $8

000 $9

000 $10

000 $11

000 $12

000 $13

000 $14

000 $15

000 $16

SettlementLmeNickel

oct-15

nov-15

déc-15

janv-16

févr-16

mars-16

avr-16

mai-16

juin-16

juil-16

août-16

sept-16

oct-16

nov-16

déc-16

janv-17

févr-17

mars-17

avr-17

mai-17

juin-17

juil-17

août-17

sept-17

oct-17

nov-17

increasesnickel

nickel,inincreases

2018

déc-17

janv-18

févr-18

mars-18

avr-18

mai-18

juin-18

juil-18

août-18

as

sept-18

oct-18

rawsecondary

2019

nov-18

déc-18

janv-19

févr-19

mars-19

avr-19

mai-19

juin-19

juil-19

août-19

sept-19

€ 130

€ 180

€ 230

€ 280

€ 330

oct-15

nov-15

déc-15

janv-16

févr-16

2016

mars-16

avr-16

mai-16

juin-16

juil-16

août-16

sept-16

oct-16

nov-16

déc-16

janv-17

févr-17

2017

mars-17

exE40

mai-17

avr-17

juin-17

33

juil-17

(Shredding

août-17

sept-17

oct-17

nov-17

2018

déc-17

product)

janv-18

févr-18

mars-18

avr-18

mai-18

juin-18

juil-18

août-18

sept-18

oct-18

nov-18

déc-18

janv-19

févr-19

2019

mars-19

avr-19

mai-19

juin-19

juil-19

août-19

sept-19

400 $1

500 $1

600 $1

700 $1

800 $1

900 $1

000 $2

100 $2

200 $2

300 $2

400 $2

oct-15

nov-15

déc-15

janv-16

févr-16

2016

mars-16

avr-16

mai-16

juin-16

juil-16

août-16

Aluminium

sept-16

oct-16

nov-16

déc-16

Lme

janv-17

2017

févr-17

Settlement

mars-17

avr-17

mai-17

juin-17

juil-17

août-17

sept-17

oct-17

nov-17

2018

déc-17

moyenAluminium

janv-18

févr-18

mars-18

avr-18

mai-18

juin-18

juil-18

août-18

Metal

sept-18

oct-18

Bulletin

nov-18

déc-18

janv-19

€

févr-19

2019

mars-19

avr-19

mai-19

juin-19

juil-19

août-19

sept-19

€ 200 1

€ 300 1

€ 400 1

€ 500 1

€ 600 1

€ 700 1

€ 800 1

€ 900 1

€ 000 2

€ 100 2

€ 200 2

NICKEL FOR TREND SPECIFIC A FOR EXCEPT 2019, IN PRICES COMMODITY DECLINING 1.2

13

2.1 WE HAVE BEEN ABLE TO LIMIT THE EFFECTS OF THIS CONTEXT ON OUR RESULTS

The group benefited from several built-in amortizers:

• Low inventories policy:

We have been able to limit the impact of these prices decreases and to protect our margins:

• • Ferrous Scrap unit margins are just below LY's margins, which is a good performance in a price declining market
  • Non Ferrous Metals unit margins decreased only by 3% compared to prior year
• Niche business:
• • 2 New Non Ferrous Metals sorting lines were implemented over the year in order to sort products which were prior sold to China : additional added value kept in Europe
  • Improved aluminium refining facility in Premery in order to produce ingots with other aluminium references than in Lille.

14

2.1 DECREASE IN VOLUMES IN FERROUS SCRAP, NEARLY STABLE VOLUMES IN NON FERROUS METALS

									Environnemental Services activity in volume
in thousands of tons			FY19				FY18					(8,0)%
	Yards	Trading	Total		Yards	Trading	Total
			(6,4)%		3 746
Ferrous scrap	3 065,6	380,2	3 445,8	3 274,2	471,7	3 745,9
3 274		3 446
Non ferrous	535,1	0,0	535,1	536,5	4,1	540,6
3 066
Total volumes		3 600,7	380,2	3 980,9		3 810,7	475,8	4 286,5
in M€			FY19				FY18				(19,4)%				(0,3)%		(1,0)%
	Yards	Trading	Total		Yards	Trading	Total
									537 535	n.a	541 535
Ferrous scrap	766,9	92,0	858,9	892,9	123,5	1 016,4			472 380
							4 -
Non ferrous	674,7	0,0	674,7	756,3	4,3	760,6
Services		313,1	0,0	313,1		339,3	0,0	339,3		Yards	Trading	Total		Yards	Trading	Total
Total revenue		1 754,7	92,0	1 846,7		1 988,5	127,8	2 116,3
				Ferrous scrap						Non ferrous
Source: Derichebourg													FY18		FY19
										Source: Derichebourg

• France (excluding trading) : - 6,0%
• Others European subsidiary (Excluding trading) : - 8,1%
• Trading Europe (low margins) : -19%
• Americas area : - 6%

• The average price of scrap sold was 8% lower than in the previous year, with a sharp drop in selling prices at the end of the 2019 financial year.

15

2.1 RESIDUES AND LANDFILL CAPACITY

• Since last year, ongoing difficulties in France (and also in Germany) in order to evacuate shredding residues to landfills due to progress implementation of change in regulation (in 2025, landfills will intake only 50% of 2010 volumes).

Several actions taken by the group :

• Let politicians better know our business in order our residues (after sorting) have a prioritary acceptance in landfills compared to other products which are not sorted in context of law discussion on circular economy.
• Purchase products with lower residues % (impact on volumes).
• « Re-work » some products, sometimes abroad, in order to find additional valuable materials.
• R&D action (long term) in order to use our residues as solid recovery fuel.

16

2.1 DEVELOPMENTS IN SERVICES ACTIVITY

• Paris Household waste collection contract :
• • Renewal of existing contract in june 2019 (3 years + 3 years option) ;
  • Extension of services in new districts : 10ème and 18ème arrondissements.
  • • Additional yearly revenue : 16 m€
• Award of Paris Trilib tender, which will progressively deliver new revenue.
• Post year-end, award of a new contract in order to modernize and run a sorting facility close to Angers (30,000 t/year)
• Disposal of activities : Italy (sold in january 19) and Morocco (sold in september 19) in order to refocus future growth of activities.

17

2.1 ECONOMIC VIEW OF P&L ENVIRONMENTAL SERVICES BY SUB ACTIVITY

	In M€		2019				2018				Var
		Rec.	STM	Total Env.		Rec.	STM	Total Env.		Rec.	STM	Total Env.
	Gross margin ferrous &	337,6		337,6	363,3		363,3	(25,7)		(25,7)
	NFM
	Gross margin others	(1,0)		(1,0)	(4,6)		(4,6)	3,6
	Services	109,5	203,6	313,0	104,3	235,1	339,4	5,1	(31,5)	(26,4)
1	Gross income	446,1	203,6	649,7		463,1	235,1	698,2		(17,0)	(31,5)	(48,5)
2	Expenses	(309,2)	(178,3)	(487,6)	(313,3)	(211,8)	(525,1)	4,0	33,5	37,5
3	Current EBITDA	136,9	25,2	162,1		149,8	23,3	173,1		(12,9)	1,9	(11,0)
	Amortization	(58,2)	(15,8)	(74,0)	(50,1)	(20,1)	(70,2)	(8,1)	4,3	(3,8)
	Current EBIT	78,7	9,5	88,2		99,7	3,2	102,9		(21,0)	6,3	(14,7)
	Source: Derichebourg

REC : RECYCLING

STM : SERVICES TO MUNICIPALITIES

Comments :

1 Decrease by 3,7% of Recyling Gross income.

2 Decrease by 1,3% of Recyling expenses.

3 Decrease by 8,6% of recycling EBITDA.

18

2.1 ENVIRONMENTAL SERVICES EBITDA BRIDGE

173,1
	15,6								4,9	3,0	162,1
							1,6	0,7
						2,9
		5,2
				3,8
M€			3,4
		2,3
En	GM « Ferrous » = -20,8 M€
		GM « Recycling » = -22,1 M€
				Recycling EBITDA = -12,9M€			HWC EBITDA = 1,9 M€
EBITDA FY18	Volume effect	Unit margin	Unit margin	GM others	Staff costs	Energy	Taxes	Other recycling	France HWC	Sold HWC	EBITDA FY19
	"Ferrous"	effect	effect "NFM"	effects					impact
		"Ferrous"

Source: Derichebourg

GM: Gross Margin - NFM: Non Ferrous Metal - HWC: Household Waste Collection

19

2.2 2019 FINANCIAL HIGHLIGHTS MULTISERVICES

in millions of euros	2019	2018	Var.	Var.%
Turnover	857,6	802,5	55,1	6,9%

KPIs
858 m€		33 m€		21 m€		16 m€
Revenue		Current EBITDA		Current EBIT		EBIT

Current EBITDA	33,0	33,2	(0,2)	(0,6%)
Current EBIT	21,3	22,1	(0,8)	(3,5%)
EBIT	16,4	22,1	(5,7)	(25,7%)
Ratios :
Current EBITDA (as a % of turnover)	3,8%	4,1%	(0,3%)
Current EBIT (as a % of turnover)	2,5%	2,8%	(0,3%)

Source: Derichebourg

Breakdown revenue by activity 59% of total revenue

Tertiary

18% of total revenue

Sourcing HR

EBITDA by activity 59% of total revenue

Tertiary

17% of total revenue

Sourcing HR

17% of total revenue Industry 6% of total revenue

Urban

23% of total revenue Industry 0% of total revenue

Urban

20

2.2 IMPROVING MULTISERVICES PRO-FORMA CURRENT EBITDA

		Impact of	December 2018	End of loss-making	Underlying
		impact for companies
in M€	FY 19	nuclear	performance of
with payroll date at	contract in july 19
		activity	Multiservices in FY 19
			10th
Reported Revenue	857,6	(1,0)		(7,5)	849,1
Reported Current EBITDA	33,0	3,7	1,7	1,0	39,4
Ratio:
Current EBITDA (as a % of turnover)	3,8%				4,6%

Source: Derichebourg

• Taking into account the impact of one-off items and end of loss-making contracts, EBITDA ratio would stand at 4,6%.
• Underlyding performance is improving in Multiservices business.

21

2.2 MULTISERVICES: RECURRING IMPROVEMENT IN REVENUE (10TH YEAR IN A ROW OF GROWTH)

in millions of euros	2019	2018	Var.	Var.%			Multiservices : Change in revenue
											858
Turnover	857,6	802,5	55,1	6,9%					781	803	52
			741	44
								38	153
								39
							667		144
Current EBITDA	33,0	33,2	(0,2)	(0,6%)		618	151
	33
585	159
					2
					2	152	160			147	143
					136		149
Current EBIT	21,3	22,1	(0,8)	(3,5%)
		143
					111	109	130

EBIT	16,4	22,1	(5,7)	(25,7%)
Ratios :
Current EBITDA (as a % of turnover)	3,8%	4,1%	(0,3%)
Current EBIT (as a % of turnover)	2,5%	2,8%	(0,3%)

Source: Derichebourg

									443	468	510
	356						400
336			344
2013	2014			2015	2016	2017	2018	2019
			Tertiary			Industry		Sourcing HR		Urban space

• Tertiary Solutions increase by 9 % : internal growth in cleaning and energy + external growth
• Industry Solutions: limited decrease in Revenue (-2%) due to end of nuclear engineering activity . Significant Growth in Aeronautics (+6,6%) with developments in China and Canada
• Sourcing RH : 6% Growth (8% in Aeronautic Temp Staff, 4% in general temp staff)
• Urban Maintenance : 18% Growth (Lightning, new customers outsourcing in the field of advertising display)

• Revenue : + 6.9%.

22

2.2 MULTISERVICES: STABLE EBITDA, IMPACTED BY ONE-OFFS

in millions of euros	2019	2018	Var.	Var.%
Turnover	857,6	802,5	55,1	6,9%
Current EBITDA	33,0	33,2	(0,2)	(0,6%)
Current EBIT	21,3	22,1	(0,8)	(3,5%)
EBIT	16,4	22,1	(5,7)	(25,7%)
Ratios :
Current EBITDA (as a % of turnover)	3,8%	4,1%	(0,3%)
Current EBIT (as a % of turnover)	2,5%	2,8%	(0,3%)

Source: Derichebourg

Multiservices : Evolution de l'EBITDA courant

				33,3	33,0
				29,1	5,7
		27,1	26,7	5,8
		2,3
21,6	22,2	4	3,9	5,7	7,7
			10,5
4	5		7,4
9

• 8

									16,2	21,3	19,6
						15,5
11		13
10
2013	2014	2015			2016	2017	2018	2019
			Tertiary		Industry			Sourcing HR		Urban space

• Tertiary solutions : one-off impacted of change in social law : - 1 m€
• Industry : strong improvement in aeronautics results +3,9 m€, offset by a 1,7 M€ decrease in nuclear engineering activity
• Sourcing RH : Stable EBITDA
• Urban Maintenance : 0 EBITDA due to productivity on outsourcing advertising display contract

23

2.3	2019 FINANCIAL HIGHLIGHTS HOLDING
	in millions of euros	2019	2018	Var.	Var.%
	Turnover	0,8	0,8
	Current EBITDA	(3,9)	(4,2)	0,3	(7,1%)
		na	na
	Current EBIT	(6,4)	(6,7)	0,3	(4,5%)
		na	na
	Results on disposal of susidiaries		(1,2)
	Italy - end of litigation with Rotamfer		(9,5)
	Italy- consequences of disposal of household waste collection and treatment		(7,0)
	EBIT	(6,4)	(24,4)	18,0	(73,8%)
	Source: Derichebourg

24

2.4	A STRONG BALANCE SHEET

in M€	2019.09	2018.09	Var
Non current assets	822	746	76
Net deferred tax assets	9	4	5
Working capital requirement	(99)	(92)	(7)
Financ. Instr, assets held for sale, and others	6	41	(36)
Total assets	739	700	38
Equity	526	512	14
Provisions for risks and charges	76	73	3
Net financial indebtedness	125	95	30
Financ. Instr, liabheld for sale, and others	8	29	(21)
Net tax position	4	(8)	12
Total liabilities	739	700	38
Goodwill	228	218	10
Intangible assets	8	6	2
Tangible assets	539	481	58
Financial assets	47	41	6
Total non-current assets	822	746	76

Source: Derichebourg

					Equity, Net debt and Gearing
1000																						5,0
900																						4,5
800																						4,0
700																						3,5
600																						3,0
														511				526
500																						2,5
400																						2,0
300																						1,5
200																						1,0
																		125
100															95			0,5
																			0,2
0															0,2	0,0
2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018		2019
					Equity (book value)			Net financial debt		Gearing (D/E)

Source: Derichebourg

25

2.4 DEBT FLOWS - CHANGE IN NET DEBT FROM SEPT18 TO SEPT19

En M€

150												22,4	124,9
	95,1	(191,2)					17	(8)	(2,2)	16,9
100					85,6
					144,3	1,1
50
-
				20,7	(0,9)
(50)
(100)					9,7
(150)

Source: Derichebourg	Sept 2018			Sept 2019
	Leverage ratio :	0.47		Leverage ratio :	0.65
	Gearing debt to equity :	0.19		Gearing debt to equity :	0.24

26

2.4 A SIGNIFICANT YEAR OF CAPEX

• Costs related to properties and equipment represent 45% of our total costs.

Depreciation

Maintenance costs

Energy costs

Properties costs

45%

Capex often enables to reduce these costs

CAPEX and EBITDA relation

160

140

120

100

80

60

40

20

0

									74%	80%
							59%	16	70%
			57%
			52%	11		21	60%
51%
		11		18			50%
					30					40%
13	11					105	30%
14			91		20%
21
		64
			44					10%
28
										0%
2015	2016	2017		2018	2019
		Recycling		Services to municipalities		Multiservices		Holding	CAPEX/EBITDA

This year, the group exceeded its practice to spend 50-60% of its EBITDA in CAPEX, due to :

• progress building of 2 significant yards - Bassens (finished) and Avrillé : 24 m€ ;
• wider Renewal of cranes and trucks, 28 m€, due to financial headroom, low interest rates, energy savings ;
• New contracts in household waste collection

27

2.4 DRIVERS OF CAPEX IN RECYCLING

• Maintenance of our assets. Breakdown of recycling CAPEX :
• • ~ 25% Development (including acquisition of lands)
  • 75% maintenance
• Standardization of assets :
• • 3,000 HP shredders.
  • 1,000 T shears.
  • 2 to 3 suppliers for trucks, hydraulic cranes: new equipment reduce significantly gazole consumption (up to 30%).

1

2

Capex

drivers

3

4

• Ongoing internal transportation initiative in order to improve daily rotations of our trucks:
• • IT in order to control gazole consumption
  • New trucks, with up to 30% in consumption saving
• R&D state of the art sorting solutions to separate :
• • every single metal : finder, combisens, X-tract, which allow to sell these materials worldwide and not limited to China
  • Shredder residues in different families, in order to improve recovery or energy valorization

Increased production, improved production cost, mutualisation of spare parts and knowledge

28

2.4 NEARLY TWO DIGIT ROCE IN 2019 FOR THE GROUP

16,0%

14,0%

12,0%

10,0%

8,0% 7,4%

6,0% 6,6%

4,0%

2,0%

0,0%

2015

Return on capital employed - Group

14,6%

11,8%

8,7%

5,2%

5,8% 4,3%

2016

2017

2018

9,4%

9,2%

2019

18,0%			ROCE by activity
			16,6%
16,0%			15,5%
				13,4%
14,0%			14,6%
		11,8%
12,0%
			9,9%	9,2%
10,0%	8,3%
	7,5%
8,0%	8,0%	6,4%		6,5%
6,0%	7,4%		5,4%
4,0%			5,2%
2,0%
0,0%
2015	2016	2017	2018	2019

(EBIT Env Sces - Income tax)/(Fixed assets Env Sces + Working capital requirement Env Sces)

(EBIT Multiservices - Income tax)/(Fixed assets Multiservices + Working capital requirement Multiservices)

(EBIT-Income tax)/(Equity Book value + Net Debt + Provisions) (EBIT-Income tax)/(Market Cap at year-end+ Net Debt + Provisions)

(EBIT Group - Income Tax)/(Fixed assets Group book value + Working Capital Requirement Group)

Source : Derichebourg

Source : Derichebourg

• Due to non allocated assets and holding EBIT, Environmental Services and EBITDA ROCE do not reconcile exactly with Group ROCE
• In 2019, ROCE was impacted by expenses in nuclear activity (Multiservices) for 8,7 M€ and by a recurring increase in tax rate due to end of Tax Credit on low wages (CICE)

29

2.4	SOURCES OF FINANCING - CREDIT LINES AS OF SEPTEMBER 30TH 2019 - ADEQUATE LIQUIDITY

900

700

500

300

100

-100

-300

906

109

112

341

121	102
		497
300	121	125
		102	387
	232
	121
130
	16
100	130	130	10
		100
32	31,8	31,8
	-278	-278

Outsanding as of Sept 2019		Used as of Sept 2019		Debt as of Sept 2019		Liquidity headroom as of Sept 2019
		Syndicated loan - term loan		Syndicated loan - RCF		BEI loan		Factoring
		Financial leases		Term loans		Overdraft (mostly uncommitted)		Others

30

2.4 SOURCES OF FINANCING - IMPROVED MATURITY OF CREDIT LINES THANKS TO BEI LOAN

Credit lines amortization as of Sept 2019

1000

900

800

700

600

500

400

300

200

100

0

Syndicated loan - term loan		Syndicated loan - RCF		BEI loan		Factoring
Financial leases		Term loans		Overdraft (mostly uncommitted)		Others

31

2.4 RETURN ON EQUITY AND EBITDA MULTIPLE VALUATION

	Return on Equity
18,0%
16,0%
14,0%	11,5%
12,0%
10,0%	11,2%
8,0%
6,0%
4,0%
2,0%
0,0%

2015	2016	2017	2018	2019
	Net income/Equity (book value)	Net income/Equity (market cap at year-end)

		Enterprise Value and EBITDA multiple
1 800								9,00
1 600								8,00
1 400								7,00
1 200								6,00
1 000								5,00
800								4,00
600								3,00
400								2,00
200								1,00
0									0,00
2014	2015	2016	2017	2018	2019
				Enterprise Value		Ebitda	Multiple

• Based on shareprice as of Sept 30, 2019 (i.e. 3,20€) and 2019 results, ROE is around 11,5%.
• Market Capitalization is close to equity book value.
• Based on 2019 disclosed numbers, Enterprise Value is 3,32x EBITDA.
• Proposed dividend (0,11€/share) yield is 3,4%.

32

3

OUTLOOK

33

3 LONG RANGE OUTLOOK

• The group is confident with the "raison d'être" of its two sectors :

SERVICES A L'ENVIRONNEMENT

• Recycling is a non relocatable activity : takes care of local waste.
• Society asks for more recycling in general and regulation is favourable for recycling, but also adds constraints for recyclers
• Electric Arc Furnace steel process reduces significantly CO2 emissions compared to Blast Furnace Process and is increasing its share in steel production
• Electricity conversion will require more copper and aluminium.

MULTISERVICES

• Outsourcing, as well as Digitalization trends create new opportunities and upgrade services to tenants.
• Building rehabilitation inducements boosts electricity, relamping, and air conditioning markets.
• Aeronautics increasing market in Asia.

34

3 SHORT RANGE OUTLOOK

Recycling

• Soft start of the 19-20 financial year, with low volumes and price decreases.
• Bottom prices may have been reached in October.
• Latest PMI figures show at least stabilization, and some of them improvement.
• Expansionist currency and budget policies may help in sustaining industrial goods, housing, insfrastructure sectors, which would be favourable for our activity.
• A trade agreement between China and USA would certainly lead to a technical increase in commodities prices, and volumes.

Multiservices

• Another year of growth in Revenue and reported EBITDA is expected.

35

4

OUR STRATEGY

36

4 OUR AMBITION FOR THE GROUP

RECYCLING

• Be a strong, leading, long-term European player in metallic waste recycling, evidenced by rising at least one spot in the ranking of European players before end of 2023

SERVICES (including household waste collection)

• Reach €1 Billion revenue in Multiservices before end of 2023 and achieve EBITDA ratio close to peer average
• Improve financial performance by focusing on and developing businesses in which we have achieved critical mass in selected geographies

FINANCE

• Maintain our leverage ratio (Debt/EBITDA) below 3
• Pay a yearly dividend amounting to around 30% of net income

37

• OUR BUSINESS MODEL DRIVERS, WHAT MAKES US DIFFERENT

Model	Dense Network	1
Business	Vertical	Long-term
management
Our	integration	style	2

► To be close to where waste is produced, to reduce
transportation costs
► Optimize use rate of our industrial equipment
► Thanks to the density of the network, we collect enough
tons of each material to economically justify the
development of specialized processing lines:
	Zorba floating
	Aluminium refineries
 Inox waste blend preparation

3 14,0%

Inventories/ Revenue

 Aluminium profile shredding

12,0%
10,0%
8,0%
6,0%						3
4,0%
2,0%
0,0%
2013	2014	2015	2016	2017	2018
	Derichebourg	SIMS Metal		Schnitzer Steel	ChiHo Environmental Group

► Long-term management style evidenced by low

inventories, which reduce cycle exposure and put us in a

good position to consolidate the market

► We do not benefit as much as our competitors from

price increases but generally weather downturns

better than they do, as evidenced in 2015 and 2016.

► Patrimonial approach to asset ownership, with

double-digit ROCE ambitions

38

4 OUR STRATEGY IN RECYCLING 1/2

Consolidate our position of major supplier to steel and metal industry

• Maintain a consistent level of quality for our products (above average quality).
• Develop our export customer base, in particular for ferrous scrap.

Implement state of the art technologies

• Implement environmentally friendly technologies and means of transportation.
• Standardize our assets.
• Implement new optic sorting lines.

Develop the skills and expertise of our employees

• Build a focused and dedicated management team with considerable experience in the industry.
• Prepare for the future by recruiting young engineers.

39

4 OUR STRATEGY IN RECYCLING 2/2

Enhance our IT

• Update our IT without changing its best in class key characteristics :
• • Real time inventory (in tons and in €) ;
  • Actual margins available daily.

Specialized activities

• 20-25%of recycling revenue through specialized activities that our competitors cannot perform under the same economic conditions because they have smaller networks.

Densify our network through new site openings or external growth

• In each country where we operate, be a leading player or at least a regional leader.
• Open feeder yards to increase the use of our industrial equipment.
• Look at external growth opportunities in countries where we already have activity based on a long-term approach (not only top of the cycle). Most of our external growth deals have been made during downturns.

40

4 OUR STRATEGY (MULTISERVICES)

Long term trends which are taken into account in our strategy :

• Digitalization of services and upgrading of services to tenants ;
• Environmental regulation which creates new markets for our energy activities ;
• Outsourcing of services by customers in order to concentrate on core business ;
• From "delivering services to customers" to "end user experience", which creates excellence requirement, and new opportunities.

Impact on our strategy :

• More IT in our services ;
• Independent facility management offer ;
• Enhance HR strategy ;
• Improve our network.

41

4	SRI AT THE HEART OF OUR MARKETS
			Energy requirement			Carbon Footprint
				(MJ/kg steel)			(tCO2/T steel)
		14,5						1,8
										Steelmaking accounts
		14	-16%				1,6	2,4 x less
		13,5				1,4	for at least 5%
	Steel
	13						1,2	Or - 58%	of		greenhouse	gaz
		12,5						1				emissions
							0,8
		12									in	the world.	EAF
							0,6
											enables
	EAF: Electric Arc Furnace	11,5						0,4
	11						0,2				to reduce this impact.
	BoF: Blast Furnace	10,5						0
						EAF route	BF/BOF route
		EAF route	BF/BOF route
	8 - 11		Energy requirement			Carbon footprint
		(MJ/kg aluminium)			(tCO2/T aluminium)

Aluminium

50			4,5
		4
40	20 x less		3,5
30		3	13 x less
Or - 95%	2,5
	Or - 92%
20			2
10			1,5
		1
0			0,5
Secondary	Primary
	0
	production	production		Secondary	Primary
				production	production

Source : Report on the Environmental Benefits of Recycling - 2016 Edition, Bureau International du Recyclage

42

• SRI AT THE HEART OF OUR PROCESSES

Equipment selection

• Electric fixed cranes : 90% of our shredders and shears are fed by electric fixed cranes :
• • Competitive maintenance costs
  • Less noise
  • 25-yearlife span
  • No CO2 emissions
• New trucks CAPEX program
• • Latest engines (E6)
  • Gas efficient (30% savings)

Choice of means of transportation

• 23% of our sales are shipped by vessel or barge. Choose boats whenever possible for shipping.
• Internal transport initiative designed to improve consumption, implementation of eco-driving soon.

R&D to reduce waste residue sent to landfill

• R&D team is working to find alternatives (recovery & energy) within 4 years for 20% of our residues currently sent to landfill.

Improve our health and safety ratios

• Within 4 years, targeting:
• • Accident frequency: 20% below our peers
  • Criticality below our peers.

43

4	SRI AT THE HEART OF OUR ACTION
		Embody our role as a committed		Reduce our environmental
		employer			footprint
		 Deploy a risk prevention policy to
		guarantee employee safety and health	2,1 - 2,5	 Optimize our most energy-intensive
	21 - 25		1 000
			-
		 Define key skills and develop them for		industrial tools to save natural
		our present and future needs		resources	1 500
		 Integrate diversity, promote local		 Improve local impact of our
		employment, and fight against job		premises

insecurity

 Identify,8 -anticipate,11	and manage	 Improve enhancement of waste
environmental, labour, and ethics	treated on our sites
risks	0,4 - 0,7	 Improve environmental performance
 Ensure excellence in service	of our customers
			200
			-
			300
Consolidate trust-based relationships with		Be a leading player in the circular
our stakeholders		economy

44

5

GROUP LYRSA ACQUISITION

45

5 GROUP LYRSA ACQUISITION

 Lyrsa is the leading independent metal recycling company in Spain. It runs mostly industrial yards.

 It is a family owned business, created in 1939.

 Lyrsa and Derichebourg have a joint-venture created in 1992 (Reyfra), with one shredder in Madrid.

 Sigining took place on September 19th, 2019.

 Closing is expected to take place late in december

2019. Will be funded with existing credit lines.

46

5 LYRSA HISTORY

47

5 GEOGRAPHICAL FOODPRINT

	Usine	Location	Propriété
1	Lyrsa Pontevedra	Porrino	Lyrsa
2	Lyrsa Reciclagens	Valença (Portugal)	Lyrsa
3	Lyrsa Valladolid	Valladolid	Lyrsa
4	Reyfra ( 2 usines)	Mejorada et San Martin	Lyrsa
	(Madrid)
5	Lyrsa Madrid	Mejorada	Reyfra
6	Lyrsa Sevilla	Alcalà de Guadaira	Lyrsa
7	Lyrsa Sevilla (AZ)	Aznalcollar	Lyrsa
8	Lyrsa Cadiz	Cadiz	Acerinox
9	Lyrsa Alava	Alava	Lyrsa
10	Redisa	La Rioja	Redisa
11	Mefragsa	Albalate del Arzobispo	Mefragsa
12	Lyrsa Barcelona	Barcelone	Lyrsa
13	Archamesa la Muela	Zaragosse	Archamesa
14	Recobar - Pina	Pina del Ebro - Zaragosse	Recobat
15	Recobat - Albalate	Albalate del Arzobispo	Recobat
16	Lyrsa Valence	Valence	Lyrsa
17	Lyrsa Alicante	Alicante	Lyrsa
18	Colomer	Ciudad Real	Colomer

Headoffice (Madrid - Mejorada Del Campo)

48

5 LYRSA GROUP ACQUISITION PROJECT

Rationale for the transaction

Mostly an Add-on acquisition

• The company deals with around 1.000.000 T/year, among which 160.000 T non-ferrous metals (% NFM even higher than Derichebourg)
• Active in a country which produces nearly as mucsh steel than France (around 15 Mt), with a higher EAG % (70% vs 40%) -> large customer base
• New business for the Derichebourg group : lead recycling and lead battery manufacturing
• Possibility to capture additional margin with small feeder yards acquisition

Synergies

• Benchmark of economics between different customers and suppliers

49

6

DERICHEBOURG AT A GLANCE

50

• MAIN INDICATORS BY ACTIVITY

Business Line	Activity	Revenue	EBITDA	HEADCOUNT		97,5 M€	55,6 M€
					103,1 M€	EBIT	Net income
						attributable
					Current EBIT
					87,0 M€	to
						EBT	shareholders

	2,7 billion €	191,2 M€	36 800		3,20 €
							510 M€	3,32x
							Market Cap	Share price
							EBITDA
								0,11€
							125 M€	Entreprise
							Dividend
							Net Financial	Value
							/share
							Debt
RECYCLING	61%
	137	2 600
								13,4 %
								ROCE (Equity)
SERVICE TO		25
MUNICIPALITIES	8%		2 000
	32%	33
ALL ACTIVITIES							6,5 %
MULTISERVICES								ROCE (Equity)
		32 200

24 %	9,4 %
Gearing
ROCE
145 M€	(Market Cap
at year-end)
Capex
3,4%	11,5 %
ROE (market
Dividend
Cap at year-
yield
end)

136

CAPEX

16

CAPEX

51

6 AN OFFER ORGANIZED INTO TWO COMPLEMENTARY BUSINESS LINES

1,8						4 600	0,9				32 200
Bn Revenue	EMPLOYEES	Bn Revenue	EMPLOYEES
9						223		9				162
	COUNTRIES	SITES		COUNTRIES		SITES
				Our solutions											Our solutions

INDUSTRIES

ÉCO-ORGANISMES

COLLECTIVITIES

TERTIARY

URBAN

INDUSTRIES

SOURCING HR

52

• SUMMARY ORGANIZATION CHART OF THE GROUP AND ITS SHAREHOLDERS

Derichebourg Family

100%

100%

TBD Finances

DBG Finances

		100%	0,20%
		Financière DBG
		99,71%
	0,04%	CFER
Real estate	assets	41, 2%	57,65%
of the Environment
business	are	Derichebourg SA
carried	by		1,06%
Derichebourg
Immobilier
	100%	100%	100%

Public

Employees

Derichebourg Derichebourg Derichebourg

Immobilier Environnement Multiservices

• The above chart is presented in % interest. CFER holds 57,8 % of the voting rights.

53

FY18 - FY19

RESULTS

DECEMBER 5TH 2019

www.derichebourg.com