Finance review
Renewi delivered a strong performance, with revenues and underlying EBIT up 10% and 83% respectively. We have retained some of the structural cost savings made in response to Covid-19 and these, combined with a strong prices benefit, have contributed to a significant increase in margins and profits. Underlying EBIT was €60.6m higher than the prior year, of which €44.6m resulted from the net impact of increased waste producer pricing, recyclate prices, less cost indexation and €9.2m from volume and mix changes, €8.7m from cost savings with balancing €1.9m from others.Underlying EBIT increased by 83% and underlying EBITDA increased by 34% as the level of non-cash items of depreciation, amortisation and impairment charges only increased by 6% year on year.
The level of exceptional and non-trading items in the current year was again significantly reduced to €9.6m, resulting in a statutory operating profit of €124.0m compared to €36.1m last year. This was adjusted for the prior year restatement for the change in cloud computing charges, as referred to below.
Following on from an IFRS clarification on the accounting treatment of costs associated with the configuration and customisation incurred in cloud computing or Software as a Service (SaaS) arrangements, the Group has reviewed its accounting policy. The revised policy, applied retrospectively, aligns with the clarification, whereby configuration and customisation costs are recognised as an expense as incurred, except in the limited instances where these costs result in a separately identifiable intangible asset. We have determined that €3.9m of costs incurred and capitalised during the current financial year and €7.3m of intangible assets held at 31 March 2021 no longer meet the criteria for recognition under IAS 38 Intangible Assets. The impact relating to the year ended March 2020 and prior was not material, and has therefore been included in the 31 March 2021 comparative adjustment. Accordingly, €3.9m (FY21: €7.3m) has been expensed and disclosed as a non-trading and exceptional administrative expenses item because it arises from the one-off introduction of interpretations to accounting policy guidance and is material in size. The prior year balance sheet has been adjusted with a reduction of €7.3m of intangibles with an increase in deferred tax assets of €1.8m and a reduction in retained earnings of €5.5m.
