annual general meeting - recylex · presentation of the resolutions 8. questions & answers...

2018 05 06

Tuesday, June 5th, 2018 – Paris

ANNUAL GENERAL MEETING

2018 05 06

Overview

1. Opening of the General Meeting

2. Formalities and agenda

3. 2017 performance indicators

4. Consolidated financial statements and 2017 key figures

5. Review of 2017 and outlook

6. Statutory Auditors’ reports

7. Presentation of the resolutions

8. Questions & Answers session

9. Voting on the resolutions

2

2018 05 06

1. Opening of the General Meeting

Sebastian RUDOW, Chairman and Chief Executive Officer

3

2018 05 06

Appointment of Sebastian Rudow as Chairman and CEO on November 30, 2017

Born in Germany in 1980

Graduated in law from the University of Mannheim and Master’s Degree from the University of Heidelberg (Germany)

Professional experience:

More than ten years’ in specialized consulting, recently as a partner of Wellensiek, a German firm specialized in advising managers, business owners and boards of directors on turnaround solutions for distressed companies, reorganization and post recovery situations

Alongside his specialized consulting activities, several appointments as Manager and Executive over the past decade in various industries

Sebastian Rudow brings along his expertise in managing post-recovery companies to continue the Group’s organic industrial development

Based at the Group’s managing headquarters at Suresnes in France and splitting his time between France and Germany

4

2018 05 06

2. Formalities and agenda

Régine YU, General Secretary

5

2018 05 06

3. 2017 performance indicators Sebastian RUDOW, Chairman and Chief Executive Officer

6

2018 05 06

Review of 2017

Further profitability improvement in the Lead and Zinc segments, stable breakeven performance in the Plastics segment, smaller loss in the Special Metals segment

Supportive conditions with rise in metals prices

Very solid production and collection levels

– These offset the impact of maintenance shutdowns

Strong improvement in the Group’s performance (IFRS financial indicators)

Sales: € 450.3 M (+ 18% vs. 2016)

EBITDA*: € 23,0 M (x 2.5 vs. 2016)

EBIT: € 14.5 M ( vs. breakeven in 2016)

Positive net income: € 18.0 M (vs. € -10.1 M in 2016)

Strong increase in debt

Strong increase of investments in production facilities

– Chiefly for the Lead segment’s reduction furnace

With the conversion of provisions into debt

– European Commission fine (€ 26.7 M)

* Operating income before depreciation, amortization, impairment.

7

2018 05 06


3.1 Lead segment

8

2018 05 06

1,6081,694

2,052

2015 2016 2017

1200

1400

1600

1800

2000

2200

2400

2600

2800

3000

01/01/2017 01/04/2017 01/07/2017 01/10/2017

In $ In €

Lead segment 2017 dashboard

+21%

9

Source: LME

278.3

324.1

2016 2017

122,600

137,100

117,010

105,100

Lead production (BSF furnace)

Scrap batteries processed

Group industrial performance (metric tons)

Group sales (€ million)

+5%

2016 2017

Lead price in 2017 (per metric ton)

Average annual lead price (€ per metric ton) Source: LME

+30%

+16%

2018 05 06

Lead segment key 2017 financials

10

IFRS financial indicators Restated financial indicators*

* After revaluation of inventories on a LIFO basis: When assessing the performance of its Lead operating segment, the Group uses in its internal reporting the LIFO (Last In First Out) method to

measure inventories at its smelter in Germany (Nordenham), a method not permitted under IFRS. See Note 19 to the 2017 consolidated financial statements.

(€ million) 2017 2016

Sales 324.1 278.3

Operating income

before non-recurring

items

7.3 3.7

as a % of sales 2.2% 1.3%

Operating income

before depreciation,

amortization,

impairment (EBITDA)

12.2 8.6


(€ million) 2017 2016

Sales 324.1 278.3

Operating income


items

7.3 3.2


Operating income


amortization,

impairment (EBITDA)

12.3 8.1


2018 05 06

Lead segment review of 2017

Supportive conditions

Significant increase in average lead prices

Good availability of scrap batteries

Good production levels and efforts to protect margins

Despite maintenance shutdowns

Encouraging and improving financial results

For the second year in a row

Pursuit of the construction works of the new reduction furnace

With the aim of becoming the cornerstone of the lead segment’s sustainable profitability

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2018 05 06


3.2 Zinc segment

12

2018 05 06

23,800

73,270

23,778

72,580

Zinc oxideproduction

Waelz oxideproduction*

1,7371,896

2,561

2015 2016 2017

1200

1700

2200

2700

3200

3700

01/01/2017 01/04/2017 01/07/2017 01/10/2017

In $ In €

Zinc segment 2017 dashboard

Group industrial performance* (metric tons)

Zinc price in 2017 (per metric ton)

Average annual zinc price (€ per metric ton)

Source: LME

Source: LME

2016 2017 * Including 100% of Recytech S.A.

+35%

=

+1%

+35%

13

Group restated sales** (€ million) ** Including 50% of Recytech S.A.

92.1

124.6

2016 2017

2018 05 06

Zinc segment key 2017 financials

IFRS financial indicators Restated financial indicators*

* To assess the performance of the Zinc segment, the Group also releases restated financial data including the contribution from 50%-owned Recytech S.A. consolidated proportionately, even

though this method is not permitted under IFRS. See Note 19 to the 2017 consolidated financial statements.

14

(€ million) 2017 2016

Sales 98.4 73.2

Operating income


items

16.4 6.9

as a % of sales 16.7% 9.6%

Operating income


amortization,

impairment (EBITDA)

19.3 9.4

as a % of sales 19.6% 12.8%

(€ million) 2017 2016

Sales 124.6 92.1

Operating income


items

32.2 16.6

as a % of sales 25.6% 18.0%

Operating income


amortization,

impairment (EBITDA)

35.9 19.9

as a % of sales 23.6% 21.6%

2018 05 06

Zinc segment review of 2017

Very solid production levels in both activities

These made up for the major maintenance shutdown at Harz-Metall GmbH

Strong sales growth

Strong increase in zinc prices

Significant improvement in financial performance compared with 2016 and between the first and second half in 2017

Strong increase in zinc prices

Scheduled maintenance shutdown at Harz-Metall GmbH in the first half (no shutdowns in 2016)

15

2018 05 06


3.3 Plastics segment

16

2018 05 06

Plastics segment 2017 dashboard

13,260

14,830Polypropylene

produced

-11%

15.513.6

2016 2017

-12%

Group industrial performance (metric tonnes)

Group Sales (€ million)

2016 2017

17

2017 2016 Change

Production 10,600 tonnes 11,300 tonnes -6%

Sales €11.0 M € 12.1 M -9%

EBIT € 0.6 M € 0.8 M -25%

2017 2016 Change

Production 2,700 tonnes 3,600 tonnes -25%

Sales € 2.6 M € 3.4 M -24%

EBIT € -0.6 M € -0.5 M -20%

C2P S.A.S. (France)

C2P Germany GmbH (Germany)

2018 05 06

Plastics segment key 2017 financials

18

(€ million) 2017 2016

Sales 13.6 15.5

Operating income before non-

recurring items 0.1 0.3


Operating income before

depreciation, amortization,

impairment (EBITDA)

0.5 0.6


IFRS financial indicators

2018 05 06

Plastics segment review of 2017

Challenging market conditions

Low oil price: fierce competition between virgin materials vs. recycled materials

Decline in production and sales

Especially in Germany

Breakeven result

19

2018 05 06


3.4 Special Metals segment

20

2018 05 06

Special Metals segment 2017 dashboard

2017 sales breakdown (€ million)

Production (per tonnes)

4.4 9.1

37.3

91.0

4.4 5.9

36.1

138.6

Gallium Germanium Arsenic Others

2016 2017

€ 5.3 M

€ 4.8 M

€ 0.6 M

€ 3.2 M

Arsenic Germanium Gallium Others

21

2018 05 06

Special Metals segment key 2017 financials


22

(€ million) 2017 2016

Sales 14.2 15.0

Operating income before non-

recurring items (1.9) (3.3)

as a % of sales nm nm

Operating income before depreciation,

amortization, impairment (EBITDA) (2.0) (1.4)

as a % of sales nm nm

2018 05 06

Special Metals segment review of 2017

Slight decline in sales

Solid performance in the fourth quarter of 2017

Reduction in the segment’s financial loss

Solid arsenic sales volumes

Sales and marketing initiatives to boost germanium margins

Efforts to diversify the metals portfolio

Cost-cutting measures

23

2018 05 06

4. Consolidated financial statements and 2017 key figures

Pierre-Yves CHARRA, Chief Financial Officer

24

2018 05 06

Key income statement figures

25

(€ million) 2017 2016 Change

Sales 450.3 382.1 +68.2

EBITDA* 23.0 9.3 +13.7

EBIT 14.5 (0.1) +14.6

Non-recurring income 1.6 (20.2) +21.8

Share in income from equity affiliates 10.6 6.0 +4.6

Net financial income/(expense) (10.0) (0.9) -9.1

Net income 18.0 (10.1) +28.1


* Operating income before depreciation, amortization, impairment

** To assess the performance of its Lead segment, the Group uses the LIFO (“Last in first out”, not permitted under IFRS) method in its internal reporting to measure inventories for its main lead

smelter in Nordenham. To assess the performance of the Zinc segment, the Group also releases restated financial data including the contribution from 50%-owned Recytech S.A. consolidated

proportionately, even though this method is not permitted under IFRS. See Note 19 to the 2017 consolidated financial statements. See also the press release of Recylex S.A. of June 4, 2018.

(€ million) 2017 2016 Change

Restated EBITDA* 39.6 19.3 +20.3

Restated operating income before

non-recurring items 30.4 9.0 +21.4

Restated financial indicators**

2018 05 06

Key balance sheet figures (IFRS)

(€ million) 31/12/2017 31/12/2016 Change

Gross cash 5.5 6.2 -0.7

Operating Working Capital 45.9 22.9 +23.0

Equity (4.2) (31.0) +26.8

Provisions 29.1 64.2 -35.1

Gross debt 98.7 33.3 +65.4

26

2018 05 06

Group financial debt evolution

Consolidated gross debt* (€ million)

8.5 16.0

25.9

32.2

13.2

15.0

2.9

1.0

5.1

5.1

3.6

3.6

Total: 33.3

Total: 98.7

2016 2017

Loan Glencore (2024) European Commission fine

Bank loan Capex Germany (2023) Credit lines Germany (used)

Old bank loans Germany (2018) Glencore continuation plan debt (2026)

Claw back clause

* In legend debt maturity in brackets.

27

2018 05 06

39.6

23.0

18.0

-

- 1.2

-

-

10.6

1.6

16.6

8.4

3.8

6.2

Restated** EBITDA*

IFRS 10 & 11 restatement

IFRS EBITDA*

Depreciation and

amortization

FMM land sale

Other financial

expenses

Cost of financial debt

Result in associated companies

Other (Deferred

tax)

Net income

From EBITDA to 2017 net income

Bridge from 2017 EBITDA to net income (€ million)

28


** To assess the performance of its Lead segment, the Group uses the LIFO (“Last in first out”, not permitted under IFRS) method in its internal reporting to measure inventories for its main lead

smelter in Nordenham. To assess the performance of the Zinc segment, the Group also releases restated financial data including the contribution from 50%-owned Recytech S.A. consolidated

proportionately, even though this method is not permitted under IFRS. See Note 19 to the 2017 consolidated financial statements. See also the press release of Recylex S.A. of June 4, 2018.

2018 05 06

2017 cash flow

2017 cash flow (€ million)

29

6.2 5.5

23.0

6.0

-

1.2

34.2

7.5

7.8

- -

-

- - -

23.0

37.2

1.5 6.1

9.0

2.2 1.4

Cash a

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Bank loan

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Eq

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Envir

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Cash a

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017


2018 05 06

2017 capital expenditures

3.4

32.9

2.4

4.7

0.2

0.2

0.4

0.4

2016 2017

Lead Zinc Plastics Special Metals

Investing to build the future

Capital expenditures and depreciation (€ million)

Capital expenditures by segment (€ million)

30

13.7

6.3 6.0 6.4

38.2

10.6 8.9 9.3 9.4 8.4

2013 2014 2015 2016 2017

Capital expenditures Depreciation

2018 05 06


31

2018 05 06


5.1 Review of 2017

32


2018 05 06

Update on L’Estaque site rehabilitation

Resumption of rehabilitation work at the L’Estaque facility

€1.2 M expenses during the second half of 2017

Total cost of outstanding works: €9.9 M

Provisions set aside at December 31, 2017

Objective for Recylex S.A. to finance on its own cash-flows

33

2018 05 06

2017 and 2018 legal update

Major source of uncertainty dispelled in May 2017 through the comprehensive agreement with the European Commission and Group’s main financial partners

Installment plan obtained for the payment of the €26.7 million fine imposed on February 8, 2017*

Appeal pending

Legal proceedings*

January 31, 2017: Recylex S.A. condemned by the Douai Appeal Court (€7.8 M damages for loss of a chance to keep their job to 187 former employees of Metaleurop Nord S.A.S.)

– May 24, 2018: favorable decision from the Cour de Cassation

• Recylex S.A. is not co-employer

• Case deferred to the Amiens Appeal Court regarding the payment of damages

March 2, 2017: favorable decision by the Douai Administrative Appeal Court

– Noyelles-Godault plant not included in the list of “asbestos” facilities

– Damages claims for anxiety prejudice still pending

April 11, 2018: favorable decision by the Arras Commercial Court

– Liability claim up to €22 million initiated by Metaleurop Nord S.A.S’ liquidators rejected at first instance

– Appeal lodged by liquidators is pending

May 7, 2018: claim for damages lodged by SNCF Réseau** jointly against Retia S.A.S.A.U. and Recylex S.A. regarding l’Estaque site

*The summary of the legal proceedings concerning Recylex S.A. is available from the Recylex Group’s website at www.recylex.fr - News - Legal proceedings schedule.

See Note 1 to the 2017 consolidated financial statements.

** See press release dated May 7, 2018.

34

2018 05 06

Q1 2018 Financial information

Q1 2018 consolidated sales at €95.3 million, down 22% compared to Q1 2017

Metal prices plateauing and volatile

Lead segment production affected as expected by a major maintenance shutdown

To prepare for the connection of the existing furnace to the new reduction furnace

Solid production in the Zinc segment despite maintenance shutdowns

Stable sales in the Plastics segment

Growth in Special Metals segment’s sales

35

2018 05 06

Share price performance

Equity line arranged with Kepler Cheuvreux

Amounts raised: € 8.6 M since it was launched in Dec. 2016

Dilution: 0.9409 % for a shareholder who held an 1% stake in Dec. 2016

Switch from Compartment C to Compartment B of Euronext Paris on 26/01/2018

Market cap.: approx . € 240 M as of 01/06/2018

Shareholdership at 19/04/2018 (%)

Share price performance (from 01/01/2017 to 01/06/2018)

30.1%

8,0%7.0%

54.8%0.1%

Glencore

French institutional investors

Non-French institutional investors

Individual shareholders

Treasury shares (0.1%)0 €

2 €

4 €

6 €

8 €

10 €

12 €

14 €

16 €

18 €

20 €

01/01/2017 01/06/2018

EC fine and suspension of trading

Payment plan of EC fine

FY 2016 results

H1 2017 results

Appointment of Sebastian Rudow

FY 2017 results

Q1 2018 Sales

SNCF claim

36

2018 05 06


5.2 Reduction furnace

37

Brad BARTER, Reduction furnace project manager

2018 05 06

Reduction furnace project rationale

38

Lead-rich by-product (55% Pb)

Reduction Furnace

Lead bullion

Slag (<2% Pb)

Added value of

Reduction Furnace

• Maximizing the value of metals contained in incoming materials

• Increased flexibility to treat different feed grades.

• Refinery operated close to capacity

Ausmelt Furnace

(BSF)

Lead concentrates

Lead secondaries

Lead bullion Refinery Lead metal

Technical limitations of

the past process

• Existing furnace allows the oxidation of lead but not reduction

• Part of the incoming lead is retained in a by-product sold outside the Group, at a heavy discount

• Refinery not operated at full capacity

2018 05 06

Reduction furnace project scope

Installation of a Reduction Furnace and associated systems necessary for its operation at our Nordenham site

Modification of existing Ausmelt bath smelting furnace (BSF) required for integration with the new reduction furnace flowsheet

39

2018 05 06

75%

10%

7% 4%

2% 2%

Reduction furnace project facts and figures

€ 42 M Capex Reduction furnace building,

granulation building, storage hall, filter plant…

1,000+ people involved in design, manufacture, erection, and commissioning Best in class safety during

construction works: low level of incidents (2 minor)

Reduction furnace dimensions Height = 8 m Length = 6.8 m

Steelwork (excluding equipment) ~ approx 2,200 t

Piping length ~ approx 6,500 m

Cabling length ~ approx 75,000 m

Major expenses breakdown (in %)

Buildings, mechanical and electrical equipment, piping, automation, erection, commissioning

Civil design and civil works

Reduction furnace design and supply

Bath smelting furnace modifications

Approvals, tests, checks

Refractory & others

40

2018 05 06

Reduction furnace project timeline

• Project approval and funding 2016 – Q4 2016

• Engineering and equipment supply Q2 2016 – Q2 2018

• Civil works Q1 2017 – Q4 2017

• Structural erection Q2 2017 – Q1 2018

• Mechanical and piping erection Q2 2017 – Q2 2018

• Electrical and instrumentation Q4 2017 – Q2 2018

• Cold commissioning Q1 2018 – Q2 2018 Ongoing

• Start of production Q2 2018 Planned

41

2018 05 06

Reduction furnace building - progression

June 2017

January 2017 May 2017

July 2017 November 2017

42

2018 05 06

Reduction furnace building - final

43

2018 05 06

Granulation building - progression

May 2017

November 2017

August 2017

July 2017

October 2017

44

2018 05 06

Granulation building - final

45

2018 05 06

Storage Hall - progression

January 2018

November 2017

October 2017

July 2017

46

2018 05 06

Storage Hall - final

47

2018 05 06

Filter plant building - progression

May 2017

May 2018

Mar 2017

October 2017

48

2018 05 06

Filter plant building - final

49

2018 05 06

Bath smelting furnace modifications

Completed during BSF major shutdown, March 2018

50

2018 05 06


51


5.3 Outlook

2018 05 06

Strategy focus: Transition process

2017 results: an important step in the group’s recovery

Sign of the strength of our roots in the European industry and of teams’ commitment

After a long distressed period, objective is to rebuild an integrated group with state of the art:

Organization structure and internal communication

Management culture and team-oriented cooperation

Industrial processes

Focus on enhancing the Group’s industrial and financial output

Top priority is to generate cash

Efficient operations and processes as key drivers

Reimbursement of debts and pursue necessary investments

Health and safety are key daily priorities

52

2018 05 06

Outlook and industrial priorities for 2018

Lead

• Increase of production and sales with new reduction furnace

• Commissioning of new reduction furnace and ramp-up during summer 2018

Zinc

• Zinc oxide: ongoing initiatives to diversify Norzinco’s sourcing

• Waelz oxides: except for Harz-Metall’s major maintenance shutdown (scheduled for Q3), objective is to operate at full capacity in 2018

Plastics

• Develop the future strategy to come back to a high level of sales and production

• Acquire new customers by matching their future needs

Special Metals

• Turn around margins and match production with market demands

53

2018 05 06

6. Statutory Auditors’ reports

Alexandra SAASTAMOINEN, KPMG Audit ID

Laurent ODOBEZ, Deloitte & Associés

54

2018 05 06

7. Presentation of the resolutions

Régine YU, Corporate Secretary

55

2018 05 06

Summary of the resolutions

Ordinary General Meeting

1. First resolution: Approval of the parent company financial statements for the year ended December 31, 2017

2. Second resolution: Approval of the consolidated financial statements for the year ended December 31, 2017

3. Third resolution: Approval of net income for the year ended December 31, 2017, as reflected in the parent company financial statements

4. Fourth resolution: Approval of the related party agreements referred to in Article L.225-38 et seq. of the Commercial Code

5. Fifth resolution: Reappointment of Jean-Pierre Thomas as a director

6. Sixth resolution: Ratification of the co-option of Sebastian Rudow as a director

56

2018 05 06


Ordinary General Meeting

7. Seventh resolution: Approval of remuneration paid or awarded in respect of FY 2017 to Yves Roche

8. Eighth resolution: Approval of remuneration paid or awarded in respect of FY 2017 to Sebastian Rudow

9. Ninth resolution: Approval of the principles and criteria for the determination, allocation and award of the fixed, variable and exceptional components of the total remuneration and benefits of any kind attributable in respect of FY 2018 to the Chairman and Chief Executive Officer

10.Tenth resolution: Appointment of KPMG S.A. as principal Statutory Auditor

11.Eleventh resolution: Reappointment of Deloitte & Associés as principal Statutory Auditor

12.Twelfth resolution: Authorization for the Board of Directors to buy or transfer Recylex S.A. shares

57

2018 05 06


Extraordinary General Meeting

13. Thirteenth resolution: Authorization for the Board of Directors to reduce the Company’s share capital by canceling shares

14. Fourteenth resolution: Authorization for the Board of Directors to allot the Company’s shares free of charge

Ordinary and Extraordinary General Meeting

15. Fifteenth resolution: Powers

58

2018 05 06

8. Questions & Answers

Written questions

Questions from the floor

59

2018 05 06

9. Voting on the resolutions

Combined General Meeting of the Shareholders

60

2018 05 06

First resolution – Ordinary General Meeting

Approval of the parent company financial statements for the year ended December 31, 2017

61

2018 05 06

Second resolution – Ordinary General Meeting

Approval of the consolidated financial statements for the year ended December 31, 2017

62

2018 05 06

Third resolution – Ordinary General Meeting

Appropriation of net income for the year ended December 31, 2017, as reflected in the parent company financial statements

63

2018 05 06

Fourth resolution – Ordinary General Meeting

Approval of the related party agreements referred to in Article L. 225-38 et seq. of the Commercial Code

64

2018 05 06

Fifth resolution – Ordinary General Meeting

Reappointment of Jean-Pierre Thomas as a director

65

2018 05 06

Sixth resolution – Ordinary General Meeting

Ratification of the co-option of Sebastian Rudow as a director

66

2018 05 06

Seventh resolution – Ordinary General Meeting

Approval of remuneration paid or awarded in respect of FY 2017 to Yves Roche

67

2018 05 06

Eighth resolution – Ordinary General Meeting

Approval of remuneration paid or awarded in respect of FY 2017 to Sebastian Rudow

68

2018 05 06

Ninth resolution – Ordinary General Meeting

Approval of the principles and criteria for the determination, allocation and award of the fixed, variable and exceptional components of the total remuneration and benefits of any kind attributable in respect of FY 2018 to the Chairman and Chief Executive Officer

69

2018 05 06

Tenth resolution – Ordinary General Meeting

Appointment of KPMG S.A. as principal Statutory Auditor

70

2018 05 06

Eleventh resolution – Ordinary General Meeting

Reappointment of Deloitte & Associés as principal Statutory Auditor

71

2018 05 06

Twelfth resolution – Ordinary General Meeting

Authorization for the Board of Directors to buy or transfer Recylex S.A. shares

72

2018 05 06

Thirteenth resolution – Extraordinary General Meeting

Authorization for the Board of Directors to reduce the Company’s share capital by canceling shares

73

2018 05 06

Fourteenth resolution – Extraordinary General Meeting

Authorization for the Board of Directors to allot the Company’s shares free of charge

74

2018 05 06

Fifteenth resolution – Ordinary and Extraordinary General Meeting

Powers

75

2018 05 06

End of the Annual General Meeting


76

annual general meeting - recylex · presentation of the resolutions 8. questions & answers...

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