Inter-segment revenue (30.6) (28.0) - -
Ongoing Businesses 1,693.6 1,697.0 0% 73.0 75.5 -3%
Reym - 78.4 - 12.1
Continuing Operations 1,693.6 1,775.4 -5% 73.0 87.6 -17%
The underlying figures above are reconciled to statutory measures in note 3 in the consolidated financial statements. Ongoing businesses as presented for the prior year exclude the financial results for the Canada Municipal business which was sold on 30 September 2019 and the Reym business which was sold on 31 October 2019.
Revenue from continuing operations was down 5% to EUR1,694m and underlying EBIT was down 17% to EUR73.0m. Excluding businesses sold in the prior year revenue was flat and underlying EBIT decreased by just 3%. Underlying profit before tax from ongoing businesses increased by 11% to EUR47.4m, reflecting primarily lower borrowing costs as a result of reduced debt and leverage ratios. Underlying earnings per share from ongoing businesses increased by 15% to 4.5c (FY20: 3.9c).
The Commercial Division saw revenues fall by 1% and underlying EBIT by 2%. This was a highly resilient performance, particularly in the Netherlands and in the second half, with volumes recovering well from the first lockdown and certain recyclate prices increasing sharply back to levels last seen in 2017.
The Mineralz & Water Division made underlying progress and saw revenues increase by 21%, due to the transfer in of a facility from Specialities. Underlying earnings fell to EUR0.3m with additional offsite soil storage costs of EUR4.1m, as previously announced, now included in ordinary trading, having previously been accounted for as exceptional. We also made a further accrual of EUR5m to allow ATM to ship legacy inventories of TGG and related materials at worse prices. Other activities in the division were slightly ahead of expectations.
The Specialities Division generated an underlying EBIT of EUR2.4m compared to a loss of EUR1.3m in the prior year. Coolrec recovered particularly well after a difficult first quarter, and Maltha and the UK Municipal contracts performed in line with expectations despite significant ongoing challenges arising from Covid.
The business delivered a positive operational cash performance of EUR117.5m in the year (193% free cash flow conversion), including a EUR54m impact in the year from tax deferrals in the Netherlands as a result of Covid-19. This strong performance also reflected a determined focus on working capital, reduction of cash outflows in Municipal, reduced exceptional cash outflows and a 14% reduction in replacement capital expenditure. Our core net debt at 31 March 2021 was EUR344m, a 25% reduction on the previous year and a 38% reduction from the peak two years ago. Leverage fell to 2.2x (FY20: 3.0x), well within our covenant. Liquidity headroom including cash and undrawn facilities was also strong at EUR364m (FY20: EUR252m).
The Board has decided not to pay a dividend this year while the full impacts of Covid-19 and the shape of the recovery remain uncertain. The Board will keep the future resumption of dividends under review during FY22.
Managing the impact of Covid-19
The last year has demonstrated the resilience of the Renewi business model. As market leader, our scale means that we serve most segments of the Dutch and Belgian economies. Therefore, as some segments contracted, such as hospitality, others increased, such as bulky waste. In addition, our dynamic pricing model protects us when recyclate prices fall, as they did in the first half before recovering strongly in the second half.
Our virus response team coordinated a decisive action plan from the outset to prepare for and then to manage Covid-19. We are an essential service and we were able to maintain all services to our customers throughout the year. Rapid changes were made to some collection processes, such as digitising collection notes, and to our operating facilities in order to protect our people. Total confirmed infections over the year were relatively low at 443 given that our drivers travel extensively within communities every day. We are deeply appreciative of the commitment and flexibility of all our colleagues who enabled this seamless maintenance of an essential service to the community. We recognised the exceptional effort of over 6,000 essential frontline and operational support team members with a one-off ex gratia cash bonus of EUR200 each.
We took prompt action to reduce costs and preserve cash and were able to exceed both targets. We reduced operational costs (beyond the variable costs) by EUR19m and secured cash savings of EUR77m against targets of EUR15m and EUR60m respectively. We deployed EUR3m of these savings to reward our frontline and operational support teams. We have additionally taken steps to rationalise our footprint in certain locations and activities, recognising that the economic impact of the pandemic will be longer lasting. Our Covid-19 cost action plan has resulted in the closure or planned closure of six processing lines or sites with a cash cost of EUR3m and an annual benefit of circa EUR2m from next year.
Well positioned in a market focused on increasing circularity
The Covid-19 pandemic has strengthened the resolve of Western European leaders to "build back better" and to focus on a "green recovery". This recognises the urgent need for action to address global warming and resource depletion, including water.
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 company that focuses on reuse: supplying high-quality secondary materials, which we believe is the best way to extract value from waste. We are a key player in the rapidly emerging circular economy and a pioneer among companies that collect our society's waste to find new uses for it.
Regulatory changes within the last year include the passing into law of Vlarema 8 in Flanders that effectively bans the incineration of any recyclable waste. This will require a further step change in source segregation by waste producers by 2023 and a significant investment by the recycling industry to offer a capability to sort waste streams that cannot be segregated at source. The Netherlands is pressing ahead with a progressive carbon tax that will ramp up over the next decade, while the UK Government has promised a significant strategy for waste in 2023. We believe that Renewi is well placed to meet the needs of these regulatory developments.
Looking forward, legislators are considering further action, including further carbon taxes, minimum recycled content levels and producer responsibility for the management of closed loops. All these measures will help to accelerate the transition to increased recycling rates and, critically, increased demand for secondary materials. While progress is being made, we believe that it will have to accelerate significantly if governments wish to meet their own recycling and circularity targets.
Last year we launched Renewi's upgraded sustainability strategy and our new sustainable development objectives for the next three and five years. Starting from the UN Sustainable Development Goals, we focus on three key themes: Enable the circular economy; Reduce carbon emissions and waste; and Care for people. In keeping with our purpose, our business and sustainability strategies are inextricably linked and mutually supportive. By delivering on one, we deliver on the other.
During the last year we have made good progress with our strategy, including the following highlights: ? Increased recycling rate from 64.7% to 65.8% (+1.1% points), mainly driven by a decrease in volumes to incineration
in Commercial Belgium, and an improved recycling performance in Mineralz & Water ? 3.1m tonnes of carbon avoidance, up 1.5% year on year per tonne of waste processed ? Additional 7 solar roofs installed, and permit for the largest Belgium on-land wind turbine in Ghent obtained ? Employee NPS (net promoter score) improved by 50%, as a result of active management follow-up on employee feedback
Progress against each of our specific targets is detailed in full in both our forthcoming Annual Report and our Sustainability Review.
Our strategy for long-term profitable growth
To expand our position as a secondary raw material producer, our strategy is based on three pillars: 1. Leader in recycling: increase our recycling rate. We will invest to start or expand production of secondary raw
materials out of waste streams currently going to incineration or landfill. Our ambitious goal, launched as
"Mission75", is to increase our recycling rate within five years to 75% from the current 65.8%, which we believe is
already the highest in the industry. 2. Leader in secondary material production: Enhance value 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. 3. Selectively gain market share. Our primary focus in the Benelux is on driving margin expansion from existing waste
flows through the first two pillars of our strategy. In addition, there are consolidation opportunities in our
sector, and we intend to participate both in smaller acquisitions in our core markets and potentially to enter into
new geographies with strong growth potential for our waste-to-product model.
This strategy is further underpinned by our modernisation of Renewi in the Renewi 2.0 programme.
Good progress with our innovation portfolio
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