SIMS LIMITED — Annual Report 2020

Aug 17, 2020

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Financial Results Full year ended 30 June 2020

18 August 2020

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Disclaimer

The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 18 August 2020. 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 and other announcements lodged with the Australian Securities Exchange (ASX).

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 the control of the Group, 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.

Authorised for Release by : the Company Secretary

ABN 69 114 838 630

Head Office : level 9, 189 O’Riordan Street, Mascot, NSW, Australia 2020

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2

Agenda

Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Summary & Outlook Alistair Field, Group CEO

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Port Hedland, Australia

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FY20 Themes

Tough market conditions prevailed throughout FY20

First half scrap market crash followed by COVID-19 global collapse

• Rapid fall in September 2019 ferrous scrap prices, combined with low zorba prices, compressed margins in the first half

• Historic world-wide response to slow the spread of COVID-19 materially reduced intake volumes and prices in the second half

Response to COVID-19

• Invoked the business continuity plan to limit the disruption of services and safeguard employees, customers, and the community

• Lowered “fixed” operating cost base through business restructuring with $70 million benefits to be realised in FY21 vs FY19

• Reduced FY20 capital expenditure by 35% compared to August 2019 forecast

All financial measures negatively impacted during FY20, but positive start to FY21

• Statutory EBIT loss of $239.1 million

• Underlying EBIT[1] loss of $57.9 million

• Net cash balance of $110.4 million

• The Sims Group, including all metal divisions, returned to positive EBIT for the month of July 2020

Progressing strategic growth plan

• Commenced community consultation for the first resource renewal facility planned in Campbellfield, Victoria, using InEnTec technology which has been in operation since 1997

• Secured a further three significant “recycling the cloud” customers for FY21

• China announced new regulations classifying high quality non-ferrous scrap as a “renewable metal”

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1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges.

Summary of Financial Outcomes Financial outcomes reflect the rapid global downturn

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Sales Revenue
$4,908.5 million
FY19 -26.1%
$6,640.0 million
Underlying [1] EBITDA
$144.9 million
1H $61 million | 2H $123 millionFY19
-60.1%
$363.4 million
Underlying [1] EBIT
$(57.9) million
1H ($5) million | 2H $63 millionFY19 -125.1%
$230.3 million
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Sales Volumes 8.154 million tonnes 1H 4.30 million | 2H 4.25 millionFY19 -16.8% 9.803 million tonnes

Net Cash Balance $110.4 million As at 30 Jne 201631 December 2019 -27.0% $151.2 million

Return on Productive Assets[2] -3.0% 1H (0.4)% | 2H 5.5%FY19 -124.6% 12.2%

Underlying[1] NPAT $(58.1) million 1H ($18) million | 2H $56 millionFY19 -135.9% $161.9 million

FY20 Dividend Interim 6.0 cents per share (100% franked) Final 0.0 cents per share

Interim 23.0 cents per share (100% franked) -85.7% Final 19.0 cents per share (100% franked)

1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges.

2) Underlying EBIT / average of opening non-current assets and ending non-current assets excluding assets relating to adoption of AASB 16 Leases.

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Employee Health & Safety Equal lowest TRIFR ever recorded

• Safety remains the most important priority for all stakeholders. TRIFR now includes temporary staff

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3.5
2.9
3.0
2.5
2.0 1.8
1.6
1.5
1.5 1.3 1.3
1.0
0.5
0.0
1
Total Recordable Injury Frequency Rate (TRIFR)
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• Focus and progress on Critical Risk awareness and management

• Critical Risk Management training launched in December 2019 has been completed by all employees and contractors

• Critical Control Verification Inspections follow the new inspections standard and have been undertaken monthly since January 2020

▪ Focus on Employee Health

• Additional leave days related to COVID-19 symptoms and isolation

• Reemphasised the Employee Assistance Program and significant investment in Personal Protective Equipment

• Fully paid medical insurance in the US while on furlough

• Redesigned processes to ensure social distancing, eliminated paper transfers and implemented safe return to work procedures

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1) Defined as total recordable injuries x 200,000 divided by number of hours worked for employees and temporary staff.

Sustainability

Rapid response to protect employees and the community while providing essential service

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Sims’ Sustainability Pillars

Operate Responsibly: Foundation of a sustainable company

We commit to operating as a best in class business continuously improving our safety performance, employee engagement, operating performance and upholding responsible and ethical business practices

Close the Loop: Raising the bar on sustainability

We commit to investing in innovative technologies to extract more value from materials, re-think waste and enable the circular economy to not only close our own materials loop but support others do the same

Partner for Change: Amplifying our impact

We commit to working with our partners to create new business models that ensure a safe, healthy and productive value chain to create shared value and keep resources in use at their highest value as long as possible

COVID-19 response

• Invoked business continuity plan

• Redesigned health and safety procedures

• Improved employee health benefits

• Providing essential services in a safe manner

• Prudent reduction in capital expenditure

• Increased computer refurbishment to support virtual education

• Donation of laptops to assist distance learning of children in orphanages

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Group Financial Performance

A$m	FY19	FY20	% Chg
Sales revenue	6,640.0	4,908.5	-26.1%
Statutory EBITDA	358.1	35.7	-90.0%
Underlying EBITDA1	363.4	144.9	-60.1%
Statutory EBIT	225.0	(239.1)	-206.3%
Underlying EBIT1	230.3	(57.9)	-125.1%
Statutory NPAT	152.6	(265.3)	-273.9%
Significant items 9.3 207.2 NMF
Underlying NPAT1	161.9	(58.1)	-135.9%
Statutory EPS (diluted) 74.2 (131.2) -276.8%
Underlying EPS (diluted) 1	78.8	(28.7)	-136.4%
Dividend per share (cents)	42.0	6.0	-85.7%
Average non-current assets	1,884.3	1,917.7	1.8%
Return on productive assets2	12.2%	-3.0%	-124.6%

• Historic world-wide response to slow the spread of COVID-19 materially reduced intake volumes and sales prices

• Weak or negative margins throughout FY20 due to:

• Reduced intake and sales volumes

• Intense competition for lower ferrous scrap inflow

▪ Low ferrous sales prices ~US$265 vs US$315 in FY19

• Low zorba prices ~US$800 vs US$1,000 in FY19

• 1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges.

2) Underlying EBIT / average of opening non-current assets and ending non-current assets excluding assets relating to adoption of AASB 16 Leases.

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Markets

Volatile market conditions but improved volumes and pricing since April 2020 lows

Ferrous – Improved pricing since April 2020 lows

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400
350
300
250
200
Jan-18 May-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20 Aug-20
Non-ferrous – Improved pricing since April 2020 lows
1700
1500
1300
1100
900
700
500
Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20
Zorba Twitch
(US$/tonne)
Turkey HMS 80:20 Price
(US$ /tonne)
Zorba and Twitch Price
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Intake volumes have improved since April 2020 lows

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800
700
600
500
400
300
200
100
0
FY19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20
Avg
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China Ferrous and Non-ferrous Reclassification

• China reclassified high grade non-ferrous metals as a “renewable metal” rather than “waste” and is expected to import under this category without quotas in 2020

• ~90% of Sims’ non-ferrous material meets this standard (noting that only 20-30% of Sims’ non-ferrous volumes are typically sent to China)

• China is looking to introduce a high grade ferrous import category in 2021 that enables the import of these materials without quotas

Source: Platts (top and bottom chart)

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Financial Results Stephen Mikkelsen, Group CFO

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Statutory EBIT Reconciliation

Business restructuring to reduce costs and rationalise sites

A$m	FY20
Statutory EBIT	(239.1)
Legacy Brand Write Off	27.3
Other Intangible Impairments	44.7
Asset Write Offs 50.2
Gain on Property Sale (20.4)
Loss on asset disposals 9.9
Environmental Provisions 25.0
Restructuring and Redundancy Provisions 35.2
Impact of Fires, Net of Insurance Recoveries (5.0)
Non-qualified Hedges 8.0
Other 6.3
Underlying EBIT1	(57.9)

▪ Annualised savings and cost efficiencies are estimated at $70 million in FY21 vs FY19

• Facilities reduced in FY20 compared to FY19

▪ Reduced UK Metals from 47 to 29

▪ Reduced NAM from 54 to 50

▪ Maintained ANZ Metal sites at 50 through the period

▪ Headcount significantly reduced

Employees	FY19	FY20	FY212	FY21 vs FY19 %
NAM	1,577	1,124	1,150	-27.1%
UK Metals	761	676	572	-24.8%
SLS3	990	919	919	-7.2%
Corporate4 & Global Trade	144	127	127	-11.8%

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• 1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges.

• 2) UK FY21 employee numbers are proposed.

• 3) SLS FY19 employee numbers were adjusted to exclude the 360 employees transferred in the sale of the European compliance scheme operations.

• 4) Corporate excludes employees from Sims Municipal Recycling, Sims Resource Renewal and Sims Energy.

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Operating Costs

Thorough review of Metals and Corporate operating costs

FY19 Operating Costs

• A clear focus on cash costs which have a high fixed component[1] and therefore:

• Burden the company when volumes are lower

• Open up EBIT margins when volumes are higher

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A$ million
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• In FY19, these predominately fixed costs totaled around $600 million

• There is also focus to ensure that variable costs do fall when volumes fall

• 1) Approximately 70% of these costs do not vary materially within reasonable volume changes.

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Operating Costs

Business restructuring to reduce “fixed” costs by $70 million in FY21 vs FY19

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A$ million
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Fixed Cost Savings[1]

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• Annualised savings and cost efficiencies are estimated at $70 million in FY21 vs FY19

• 50% of the $30 million annualised savings identified at the end of 1H FY20 were delivered in 2H FY20. The remainder will be delivered in FY21

• Further cost reductions were identified and implemented. For example:

• Lower headcount due to reduced management layers and increased span of control

• Consolidated facilities across the UK

• $20 million of these further cost reductions require implementation of the ERP system in order for them to be maintained

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1) Excludes Sims Lifecycle Services, Sims Municipal Recycling, Sims Resource Renewal and Sims Energy.

Business Segment Financial Performance All business areas and regions impacted by the tough market conditions

Underlying EBIT1 (A$m)	FY19	FY20	Chg %
North America Metals	99.7	(39.0)	-139.1%
ANZ Metals	106.5	50.7	-52.4%
UK Metals	20.3	(31.9)	-257.1%
Sims Lifecycle Services	26.0	16.9	-35.0%
SA Recycling	35.9	12.1	-66.3%
Global Trading	(15.1)	(15.2)	0.7%
Corporate & Other	(43.0)	(51.5)	-19.8%
Underlying EBIT	230.3	(57.9)	-125.1%

Sales volumes (‘000 tonnes)	FY19	FY20		Chg %
North America Metals2	4,887	4,042		-17.3%
ANZ Metals2	1,763	1,428		-19.0%
UK Metals2	1,602	1,221		-23.8%
Global Trading	1,374	1,301		-5.3%
Other Brokerage	177	162		-8.5%
Total sales volumes	9,803	8,154		-16.8%
Intake volumes (‘000 tonnes)	FY19	FY20		Chg %
North America Metals2	4,770	4,180		-12.4%
ANZ Metals2	1,717	1,513		-11.9%
UK Metals2	1,633	1,192		-27.0%
Global Trading	1,384	1,287		-7.0%
Other Brokerage	178	162		-9.0%
Intake volumes	9,682	8,334		-13.9%

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1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges. 2) Proprietary volumes exclude ferrous and non-ferrous brokerage volumes.

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North America Metals

Strategic restructure provides a lower operating cost base from FY21

A$m	FY19	FY20	% Chg
Underlying EBIT1	99.7	(39.0)	-139.1%
Proprietary Sales Volumes (‘000 tonnes)	4,887	4,042	-17.3%
Underlying EBIT / tonne	20.4	(9.6)	-147.1%
Underlying EBIT (constant currency)	99.7	(38.7)	-138.8%

• Sales volumes were down 17.3% over prior corresponding period driven by slower economic activity largely due to COVID-19 lockdowns

• Second half sales volumes were 22.3% lower than first half due to severe lockdowns across New York and New Jersey

North American Employees

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1,800
1,600
27% reduction
1,400
1,200
1,000
800
600
400
200
0
FY19 FY20 FY21 Expected
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• Negative earnings driven by:

• Lower volumes across both ferrous and non-ferrous

• Intense competition for lower ferrous scrap inflow following fall in ferrous prices

• Weak zorba prices

• Cost reduction initiatives will deliver improved outcomes and achieve their full run rate in FY21

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1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

Australia & New Zealand Metals

Positive earnings supported by internal initiatives and cost reductions

A$m	FY19	FY20	% Chg
Underlying EBIT1	106.5	50.7	-52.4%
Proprietary Sales Volumes (‘000 tonnes)	1,763	1,428	-19.0%
Underlying EBIT / tonne	60.4	35.5	-41.2%

• Underlying EBIT was $50.7 million, down 52.4% over prior corresponding period

• Lower full year profit driven by lower volumes

Crude Steel Production Australia

• Improved 2H FY20 EBIT and margins over 1H FY20, supported by internal initiatives and swift cost reduction response

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3,500
3,000
2,500
2,000
1,500
1,000
500
-
1H FY18 2H FY18 1H FY19 2H FY19 1H FY20 2H FY20
‘000 tonnes
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• Sales volume declined 19.0% over prior corresponding period due to:

• Lower prices across all commodities

• Impact of COVID-19 lockdowns across ANZ reducing economic activity in 2H FY20

• Offset by relatively stable demand for ferrous scrap metal from Australian steel mills

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Source: World Steel Association

16

1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

UK Metals

Lower operating cost base helped deliver a significant improvement to the 2H FY20 result

A$m	FY19	FY20	% Chg
Underlying EBIT1	20.3	(31.9)	-257.1%
Proprietary Sales Volumes (‘000 tonnes)	1,602	1,221	-23.8%
Underlying EBIT / tonne	12.7	(26.1)	-305.5%
Underlying EBIT (constant currency)	20.3	(30.7)	-251.2%

• Significant improvement in second half Underlying EBIT delivering a loss of $3.5 million, compared to a $28.4 million loss in first half

• Sales volume declined 23.8% compared to prior corresponding period

UK Metals Employees

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800
25% reduction
700
600
500
400
300
200
100
0
FY19 FY20 FY21 Proposed
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• Challenging environment driven by:

• Business shutdown in response to COVID-19

• Intense competition in UK market

▪ Business response:

• Restructure in first half closed 11 sites and reduced headcount by 85

• Proposed closure of a further 7 sites and headcount reduction of 150 in FY21

• FY19 processing capacity maintained

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1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

Sims Lifecycle Services

Secured a further three significant “recycling the cloud” customers for FY21

A$m	FY19	FY20	% Chg
Underlying EBIT1	26.0	16.9	-35.0%
Underlying EBIT (constant currency)	26.0	16.2	-37.7%

Sims Lifecycle Services Remaining Businesses[2]

• Sale of European compliance scheme operations completed resulting in ~$121 million net cash inflow

• Logistics disruptions and customer personnel availability, due to COVID-19, limited the ability to increase cloud material volumes in 2H FY20

A$m	FY19	FY20	% Chg
Underlying EBIT1	0.83	2.9	262.5%
Total Volumes (tonnes)	74,700	79,600	6.6%
US Cloud Volumes	15,200	16,000	5.3%
RoW Cloud Volumes	6,400	8,600	34.4%
Total Cloud Volumes (tonnes)	21,600	24,600	13.9%

• Targeting a 34% increase in FY21 cloud material to 33,000 tonnes. This assumes improvements to logistics and customer personnel availability

• 1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges. 2) Excludes the sale of European compliance scheme operations.

3) FY19 Underlying EBIT differs from the $3.7 million disclosed at 1H FY20 due to final reconciliation of remaining business EBIT allocation.

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SA Recycling Significant improvement in second half earnings from improved volumes and ferrous margins

A$m	FY19	FY20	% Chg
Underlying EBIT (50% share)	35.9	12.1	-66.3%
Sales Volumes(‘000 tonnes) (50% of SA tonnes)	1,766	1,624	-8.0%
Underlying EBIT / tonne	20.3	7.5	-63.1%
Underlying EBIT (constant currency)	35.9	11.4	-68.2%

• Significantly improved 2H FY20 Underlying EBIT due to higher volumes (locations not as significantly impacted by COVID-19 lockdowns) and improved ferrous margins

• Sales volume declined 8.0% over prior corresponding period due to slower economic activity and low pricing environment

• Underlying EBIT was $12.1 million, down 66.3% over prior corresponding period driven by:

• Margin squeeze associated with ferrous scrap market crash and low ferrous pricing

• Lower zorba pricing

• Reduced volumes

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Global Trading

Lower costs reflect lower employee expenses and operation of only one non-ferrous trading office

A$m	FY19	FY20	% Chg
Brokerage Gross Margin	12.0	9.6	-20.0%
Operating Costs	(27.1)	(24.8)	8.5%
Underlying EBIT1	(15.1)	(15.2)	-0.7%
Brokerage Volumes (‘000 tonnes)	1,374	1,301	-5.3%
Underlying EBIT (constant currency)	(15.1)	(13.5)	10.6%

• Underlying EBIT represents external and SA Recycling brokerage less the costs of running the global trading operations

• Brokerage export volumes decreased due to reduced volumes from SA Recycling

• Operating costs decreased due to lower employee expenses and a higher 1H FY19 cost from running two offices while moving non-ferrous trading from Hong Kong to Singapore in 1H FY19

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1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

Corporate & Other

Transparency of costs for growth businesses and lower Corporate costs on constant currency

Corporate (A$m)	FY19	FY20	% Chg
Underlying EBIT1	(59.4)	(57.6)	3.0%
Underlying EBIT (constant currency)	(59.4)	(54.3)	8.6%
Sims Municipal Recycling (A$m)	FY19	FY20	% Chg
Underlying EBIT1	7.4	1.5	-79.7%
Underlying EBIT (constant currency)	7.4	1.4	-81.1%
LMS Energy (A$m)	FY19	FY20	% Chg
Underlying EBIT (50% share)	9.6	7.2	-25.0%
Sims Energy (A$m)	FY19	FY20	% Chg
Underlying EBIT	(0.6)	(0.8)	-33.3%
Sims Resource Renewal (A$m)	FY19	FY20	% Chg
Underlying EBIT	-	(1.8)	NMF

Corporate

• Corporate costs declined 8.6% over prior corresponding period at constant currency due to reduced employee expenses

Sims Municipal Recycling

• Underlying EBIT of $1.5 million due to increased residue rates and disposal costs, and lower paper/plastic/metal pricing partially offset by recently commenced Florida contract

LMS Energy

• Underlying EBIT down 25.0% due to lower wholesale electricity and renewable prices

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1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

Net Cash Position

Net positive cash balance despite COVID-19 downturn

A$m	1H FY20	1H FY20	2H FY20	2H FY20	FY20	FY20
Opening Net Cash	347.5		151.2		347.5
Net profit	(91.1)		(174.2)		(265.3)
Depreciation & amortisation	98.1		104.7		202.8
Non-cash impairments	41.7		80.5		122.2
Change in working capital	(63.6)		(46.4)		(110.0)
Net interest and tax paid	(22.0)		(18.3)		(40.3)
Other non-cash items	(3.5)		20.7		17.2
Operating cash flow, net of operating recoveries	(40.4)		(33.0)		(73.4)
Capital expenditure, net of recoveries	(70.7)		(61.7)		(132.4)
Net proceeds from sale of European Compliance Scheme Operations	-		121.2		121.2
Proceeds from sale of PPE	1.2		47.1		48.3
Loan to Adams Steel of Nevada	-		(61.4)		(61.4)
Other cash flow from investing	(0.9)		4.7		3.8
Free cash flow	(110.8)		17.0		(93.8)
Dividends paid	(38.6)		(12.0)		(50.6)
Share buy-back	(22.4)		(11.6)		(34.0)
Lease payments	(31.1)		(37.1)		(68.2)
Proceeds from issue of ordinary shares	1.7		-		1.7
Other net cash flow from financing & FX	4.9		2.9		7.8
Change in net cash	(196.3)		(40.8)		(237.1)
Closing Net Cash	151.2		110.4		110.4

▪ Solid balance strength with net cash of $110.4 million despite severe COVID-19 downturn

▪ Higher receivables resulted in negative working capital

▪ July 2020 cash flow higher than prior two years’ July cash flows

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22

Capital Expenditure Reduced FY20 capital expenditure 35% compared to original forecast

Capital Expenditure

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250
200
Growth capex is
largely ERP and
Resource
150
Renewal Facility
100
50
0
FY16 FY17 FY18 FY19 FY20 1H
FY21F
Sustaining Capex Growth Capex
$ million
----- End of picture text -----

• FY20 capital expenditure reduced 35% compared to August 2019 forecast

• Forecast capex of $95 million in 1H FY21. 2H FY21 capex will be determined on market conditions

• Growth capex is focused on the ERP and first Resource Renewal Facility

• Reduced operating cost base and net cash balance of $110.4 million as at 30 June support strategic growth initiatives

• Depreciation from existing assets and new capital expenditure expected to be approximately $195 million for FY21, including $60 million of right of use (leased) assets

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23

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Strategic Progress & Outlook Alistair Field, Group CEO

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24

Business Transformation

Lowering risk and increasing opportunities through a global structure

• Sims Metals operating model will be aligned functionally across the globe

Alistair Field

Group CEO & Managing Director

• Global responsibility for operations will enable best practices to standardise across the regions

• Structurally combining buy and sell functions will improve gross margin per tonne and overall risk management

• Financial reporting for the metals business will continue by geographic location

John Glyde

Chief Operating Officer

Group CEO & Managing Director Responsible for Sims Metal processing Alistair Field facilities globally, transportation and logistics and engineering service.

Michael Movsas

Chief Commercial Officer

Responsible for all ferrous and nonferrous sales and purchases, and shipping for metals globally.

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25

Global ERP Implementation

Digitise to take advantage of the true benefits of a global company

Net positive ERP cash flow in early FY25

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FY20 FY21 FY22 FY23 FY24 FY25
Implementation
complete FY23
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Strategic initiative

• Implementation of SAP s/4HANA, ISB, BSM and HCM as an integrated global instance in the cloud

• The program will enable Sims to:

• Have globally integrated business processes

• Real-time management of key business information enabling better trading and risk management

• Improve customer and supplier experiences

Financial Benefits

• $30 million per annum EBIT benefit once complete: ▪ Retain $20 million pa cost reduction from FY21 run rate

• Additional $10 million pa cost reduction on completion in FY23 via shared services and Centres of Excellence

• $40 million avoided IT upgrade costs over four years

• Gross margin benefits not quantified in the financial analysis

ERP Capex Lower Costs

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26

Sims Lifecycle Services Growth in customer numbers creating strong foundation

FY20 Cloud Material by Customer

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----- Start of picture text -----

(24,600 tonnes)
[H][ IJ][K] [L]
F [G]
E
D A
C
B
Cloud volumes target 34% growth in FY21
40,000
30,000
20,000
10,000
0
FY19 FY20 FY21F
tonnes
----- End of picture text -----

Cloud volumes target 34% growth in FY21

• Cloud customers increased to 12 from eight in FY19

• A further three significant customer contracts secured for FY21

• Global volumes starting to expand

• Rigorous due diligence process required for selection with strong focus on security

• COVID-19 limited second half volumes due to logistics constraints and customer personnel availability

• Targeting a 34% increase in FY21 cloud material to 33,000 tonnes. This assumes improvements to logistics and customer personnel availability

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27

Sims Resource Renewal

Convert 1 million tonnes of ASR to quality products each year by 2030

Resource Renewal Facility

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----- Start of picture text -----

Synthesis
gas Recycled
processing Plastic
Leftover shredded Electrical
material
energy
(known as “ASR”)
Plasma Torch Plasma Torch
----- End of picture text -----

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----- Start of picture text -----

Vitrified Vitrified product
Vitrified
product for construction
residue
processing materials
----- End of picture text -----

• Plasma gasification converts 95% of ASR into useful products including aggregates for construction materials, high quality synthesis gas and the building blocks of recycled plastic

• The first facility is planned in Campbellfield, Victoria, using InEnTec technology which has been in operation since 1997 with a number of facilities across the USA and Asia

• Suitability of Sims ASR with InEnTec technology confirmed during feasibility study early 2020

Date Key Milestones Aug 2020 Commenced community consultation Sept 2020 Commercial demonstration of technology Late 2021 Begin construction (subject to regulatory approval) Late 2022 First plant operational (subject to regulatory approval)

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28

Strategic Targets

Targeting minimum 15% return on growth projects requiring capital and material ESG benefits

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----- Start of picture text -----

FY20 FY25 FY25
Key ESG Measure
Expand metal volumes Ferrous Volumes (‘000 tonnes)
in favourable
6,301 9,600 1.8 million tonne
geographies
Additional metals recycled
Non-Ferrous Retail Volumes (‘000 tonnes)
Grow non-ferrous
business 390 580 145k tonne
Additional metals recycled
Resource Renewal Status
Enter resource renewal Pre-feasibility Capacity Converts 95%
completed 120k ASR tonne / year of ASR into useful products
Tonnes of cloud material
Recycle cloud
infrastructure 24,600 200,000 3.9 million [1]
Units reused or redeployed
Expand proven landfill Renewable energy (MegaWatts)
CO2 energy business 67 [2] Under ~450k MWh [2]
overseas
review Of renewable energy generated
----- End of picture text -----

1. Represents renewable energy generated by LMS Energy.

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1. Estimated based on outcomes from 2019.

29

Conclusion & Outlook

Positioning Sims for sustained long term growth following a year of historic market disruption

FY20

• Low and volatile market conditions, combined with a significant COVID-19 induced volume reduction, produced an FY20 underlying EBIT loss of $57.9 million

• Management responded to the tough market conditions with an extensive restructuring and cost reduction programme that will achieve a full run rate of $70 million in FY21 vs FY19

• Good progress on implementation of strategic growth plans

• Commenced implementation of transformative global ERP program

Outlook

• More robustly structured to handle global market volatility:

• Cost reductions

• Structurally combining buy and sell functions

• Implementation of ERP to provide real time global trading and inventory positions and retain cost reductions

• Well positioned to take advantage of anticipated government infrastructure stimulus

• The Sims Group, including all metal divisions, returned to profit for the month of July 2020

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30

1. Adjusted for the sale of E-Recycling’s European compliance scheme operations.

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Questions & Answers

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31

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Appendix

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32

Product Segment Sales Volumes

Sales volumes(‘000 tonnes)	FY19	FY20	Chg %
North America Metals	4,887	4,042	-17.3%
ANZ Metals	1,763	1,428	-19.0%
UK Metals	1,602	1,221	-23.8%
Total Proprietary Volumes	8,252	6,691	-18.9%
Global Trading & Other Brokerage	1,551	1,463	-5.7%
Sales volumes	9,803	8,154	-16.8%

Sales volumes(‘000 tonnes)	FY19	FY20	Chg %
Ferrous Trading	7,817	6,301	-19.4%
Non-Ferrous Trading	435	390	-10.3%
Brokerage	1,551	1,463	-5.7%
Sales volumes	9,803	8,154	-16.8%

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33

Grou Profit & Loss p

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales revenue	4,651.7	5,079.4	6,448.0	6,640.0	4,908.5	-26.1%
Statutory EBITDA	83.0	313.5	395.8	358.1	35.7	-90.0%
Underlying EBITDA	190.4	292.4	392.3	363.4	144.9	-60.1%
Statutory EBIT	(215.5)	201.2	278.6	225.0	(239.1)	-206.3%
Underlying EBIT	64.0	180.1	275.1	230.3	(57.9)	-125.1%
Net interest (expense)/income	(9.7)	(10.2)	(8.9)	(6.7)	(13.8)	-106.0%
Statutory tax (expense)/benefit	8.7	12.6	(66.2)	(65.7)	(12.4)	81.1%
Underlying tax (expense)/benefit	(9.2)	(52.6)	(78.2)	(61.7)	13.6	122.0%
Statutory NPAT	(216.5)	203.6	203.5	152.6	(265.3)	-273.9%
Significant items	259.4	(85.3)	(14.9)	9.3	207.2	NMF
Underlying NPAT	42.9	118.3	188.6	161.9	(58.1)	-135.9%
Statutory EPS (diluted)	(106.8)	101.6	98.7	74.2	(131.2)	-276.8%
Underlying EPS (diluted)	21.2	59.0	91.5	78.8	(28.7)	-136.4%
Dividend per share (cents)	22.0	50.01	53.0	42.0	6.0	-85.7%

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34

1) Includes 10.0 cents per share 2017 Special Dividend.

North America Metals

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales Revenue	1,942.5	1,984.0	2,607.1	2,725.6	2,061.7	-24.4%
Statutory EBITDA	35.2	106.0	121.0	124.8	(16.2)	-113.0%
Underlying EBITDA	84.8	124.4	159.5	162.6	55.0	-66.2%
Depreciation	51.9	45.0	46.9	53.2	90.2	-69.5%
Amortisation	11.7	8.9	7.9	9.7	3.8	60.8%
Statutory EBIT	(35.1)	52.1	66.2	61.9	(145.8)	-335.5%
Underlying EBIT	21.2	70.5	104.7	99.7	(39.0)	-139.1%
Assets	910.7	904.4	1,070.4	1,065.4	1,116.7	4.8%
Intake Volumes (000's)	4,625	4,312	5,044	4,827	4,268	-11.6%
Proprietary Sales Volumes (000's)	4,517	4,344	4,865	4,887	4,042	-17.3%
Brokerage Sales Volumes (000's)	118	87	47	56	88	57.1%
Total Sales Volumes (000's)	4,635	4,431	4,912	4,943	4,130	-16.4%
Employees1	1,656	1,490	1,578	1,577	1,124	-28.7%

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1) FY18 employee count has been amended to exclude 156 contingent workers as these workers are non-permanent workers and are excluded from the FY19 employee count.

35

Investment in SA Rec clin y g

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Statutory EBIT	(120.6)	26.3	67.8	41.0	12.1	-70.5%
Underlying EBIT	(1.5)	26.3	68.5	35.9	12.1	-66.3%
Assets	126.8	131.9	180.7	211.1	277.5	31.5%
Intake Volumes (000's) 1	2,005	2,557	3,477	3,473	3,250	-6.4%
Sales Volumes (000's) 1	2,049	2,548	3,342	3,531	3,247	-8.0%

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36

1) Volumes represent total volumes recorded for SA Recycling, LLC and includes the portion sold through Sims Group Global Trade Corporation.

Australia & New Zealand Metals

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales Revenue	743.6	981.4	1,071.0	1,203.7	924.8	-23.2%
Statutory EBITDA	58.0	90.9	121.6	125.6	92.3	-26.5%
Underlying EBITDA	75.6	102.4	126.2	137.9	103.7	-24.8%
Depreciation	26.0	28.2	29.1	31.2	52.8	-69.2%
Amortisation	0.9	0.4	0.2	0.2	0.2	0.0%
Statutory EBIT	31.1	62.3	92.3	94.2	39.3	-58.3%
Underlying EBIT	48.7	73.8	96.9	106.5	50.7	-52.4%
Assets	481.7	542.5	625.2	614.1	694.9	13.2%
Intake Volumes (000's)	1,485	1,616	1,669	1,836	1,584	-13.7%
Proprietary Sales Volumes (000's)	1,377	1,530	1,585	1,763	1,428	-19.0%
Brokerage Sales Volumes (000's)	41	126	111	119	71	-40.3%
Total Sales Volumes (000's)	1,418	1,656	1,696	1,882	1,499	-20.4%
Employees1	712	709	715	921	924	0.3%

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37

1) FY18 employee count excludes Sims Pacific Metals employees.

UK Metals

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales Revenue	759.1	924.3	1,203.0	1,186.9	869.8	-26.7%
Statutory EBITDA	(15.7)	50.5	42.0	19.7	(59.4)	-401.5%
Underlying EBITDA	43.8	54.2	50.5	39.5	(4.3)	-110.9%
Depreciation	13.8	12.0	14.9	18.3	26.8	-46.4%
Amortisation	-	-	0.3	0.9	0.8	11.1%
Statutory EBIT	(29.7)	38.5	26.8	0.5	(110.0)	NMF
Underlying EBIT	30.0	42.2	35.3	20.3	(31.9)	-257.1%
Assets	245.2	329.2	431.4	389.9	322.5	-17.3%
Intake Volumes (000's)	1,420	1,570	1,696	1,635	1,195	-26.9%
Proprietary Sales Volumes (000's)	1,350	1,589	1,691	1,602	1,221	-23.8%
Brokerage Sales Volumes (000's)	11	1	3	2	3	50.0%
Total Sales Volumes (000's)	1,361	1,590	1,694	1,604	1,224	-23.7%
Employees1	612	660	690	761	676	-11.2%

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38

1) FY18 employee count excludes Morley and Barnsley employees.

Global Tradin g

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales Revenue	352.6	386.6	733.5	690.9	550.8	-20.3%
Statutory EBITDA	3.2	3.1	19.0	23.3	8.2	-64.8%
Underlying EBITDA	(10.5)	(15.3)	(12.3)	(14.9)	(13.9)	-6.7%
Depreciation	0.1	0.1	0.1	0.2	1.3	NMF
Amortisation	-	-	-	-	-	-
Statutory EBIT	3.1	3.0	18.8	23.1	6.9	-70.1%
Underlying EBIT	(10.6)	(15.4)	(12.4)	(15.1)	(15.2)	-0.7%
Assets	77.6	108.0	95.6	67.2	54.1	-19.5%
Intake Volumes (000's)	1,135	1,028	1,558	1,384	1,287	-7.0%
Sales Volumes (000's)	1,137	1,023	1,554	1,374	1,301	-5.3%
Employees	45	46	69	75	66	-12.0%

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39

Sims Lifec cle Services y

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales Revenue	792.7	726.9	758.4	746.5	408.0	-45.3%
Statutory EBITDA	(2.6)	30.6	34.5	26.4	9.9	-62.5%
Underlying EBITDA	23.3	36.3	39.7	34.5	28.2	-18.3%
Depreciation	11.2	8.2	8.4	8.5	11.3	-32.9%
Amortisation	0.4	-	-	-	-	-
Statutory EBIT	(60.2)	22.4	26.1	17.9	(14.8)	-182.7%
Underlying EBIT	11.7	28.1	31.3	26.0	16.9	-35.0%
Assets	447.9	382.1	397.3	340.6	139.4	-59.1%
Employees1	1,471	1,417	1,420	1,350	919	-31.9%

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40

1) FY20 employee count excludes sold European compliance scheme operations employees.

Cor orate & Other p

A$m	FY16	FY17	FY18	FY19	FY20	Chg %
Sales Revenue	61.2	76.2	75.0	86.4	93.4	8.1%
Statutory EBITDA	6.4	6.1	(10.1)	(2.7)	(11.2)	-314.8%
Underlying EBITDA	(25.1)	(35.9)	(39.8)	(32.1)	(35.9)	-11.8%
Depreciation	10.4	9.5	9.4	10.9	15.6	-43.1%
Amortisation	-	-	-	-	-	-
Statutory EBIT	(4.1)	(3.4)	(19.4)	(13.6)	(26.8)	-97.1%
Underlying EBIT	(35.5)	(45.4)	(49.2)	(43.0)	(51.5)	-19.8%
Assets	281.0	344.9	401.2	497.1	601.0	20.9%
Employees1	260	239	280	311	366	17.7%

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41

1) FY20 employee count includes employees from the new Sims Municipal Recycling contract in Florida.

Financial Summar – Grou y p

A$m	FY16	FY17	FY18	FY19	FY20
Group Results
Sales Revenue	4,651.7	5,079.4	6,448.0	6,640.0	4,908.5
Underlying EBITDA	190.4	292.4	392.3	363.4	144.9
Underlying EBIT	64.0	180.1	275.1	230.3	(57.9)
Underlying NPAT	42.9	118.3	188.6	161.9	(58.1)
Underlying EPS (cents per share)	21.2	59.0	91.5	78.8	(28.7)
Dividend (cents per share)	22.0	50.0 3	53.0	42.0	6.0
Balance Sheet
Total Assets	2,570.9	2,743.0	3,201.8	3,185.4	3,206.1
Total Liabilities	738.4	775.4	1,013.1	886.7	1,223.8
Total Equity	1,832.5	1,967.6	2,188.7	2,298.7	1,982.3
Net Cash	242.1	373.0	298.1	347.5	110.4
Cash Flows
Operating Cash Flow	131.3	266.4	252.1	360.1	(65.3)
Capital Expenditure	(108.9)	(126.5)	(176.1)	(197.1)	(140.5)
Free Cash Flow1	22.4	139.9	76.0	163.0	(205.8)
Average non-current assets	1,583.0	1,502.8	1,664.2	1,884.3	1,917.7
ROPA2 (%)	4.0%	12.0%	16.5%	12.2%	-3.0%

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1) Free cash flow = operating cash flow – capex.

42

2) Return on Productive Assets = Underlying EBIT / average of opening non-current assets and ending non-current assets excluding assets relating to adoption of AASB 16 Leases.

Financial Summar – ment y Seg

A$m	FY16	FY17	FY18	FY19	FY20
Sales Revenue
North America Metals	1,942.5	1,984.0	2,607.1	2,725.6	2,061.7
ANZ Metals	743.6	981.4	1,071.0	1,203.7	924.8
UK Metals	759.1	924.3	1,203.0	1,186.9	869.8
Sims Lifecycle Services	792.7	726.9	758.4	746.5	408.0
Global Trading	352.6	386.6	733.5	690.9	550.8
Corporate & Other	61.2	76.2	75.0	86.4	93.4
Total	4,651.7	5,079.4	6,448.0	6,640.0	4,908.5
Underlying EBIT
North America Metals	21.2	70.5	104.7	99.7	(39.0)
ANZ Metals	48.7	73.8	96.9	106.5	50.7
UK Metals	30.0	42.2	35.3	20.3	(31.9)
Sims Lifecycle Services	11.7	28.1	31.3	26.0	16.9
Investment in SA Recycling	(1.5)	26.3	68.5	35.9	12.1
Global Trading	(10.6)	(15.4)	(12.4)	(15.1)	(15.2)
Corporate & Other	(35.5)	(45.4)	(49.2)	(43.0)	(51.5)
Total	64.0	180.1	275.1	230.3	(57.9)
Underlying EBIT Margin (%)
North America Metals	1.1%	3.6%	4.0%	3.7%	-1.9%
ANZ Metals	6.5%	7.5%	9.0%	8.8%	5.5%
UK Metals	4.0%	4.6%	2.9%	1.7%	-3.7%
Sims Lifecycle Services	1.5%	3.9%	4.1%	3.5%	4.1%
Total	1.4%	3.5%	4.3%	3.5%	-55.1%

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43

1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

Financial Summar – Se ment y g (cont.)

A$m	FY16	FY17	FY18	FY19	FY20
Proprietary sales tonnes (‘000)1
North America Metals	4,517	4,344	4,865	4,887	4,042
ANZ Metals	1,377	1,530	1,585	1,763	1,428
UK Metals	1,350	1,589	1,691	1,602	1,221
Total	7,244	7,463	8,141	8,252	6,691
Underlying EBIT2
North America Metals	21.2	70.5	104.7	99.7	(39.0)
ANZ Metals	48.7	73.8	96.9	106.5	50.7
UK Metals	30.0	42.2	35.3	20.3	(31.9)
Total	99.9	186.5	236.9	226.5	(20.2)
EBIT / tonne ($/t)
North America Metals	4.69	16.23	21.52	20.40	(9.65)
ANZ Metals	35.37	48.24	61.14	60.41	35.50
UK Metals	22.22	26.56	20.88	12.67	(26.13)
Total	13.79	24.99	29.10	27.45	(3.02)

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1) Proprietary sales volumes exclude ferrous and non-ferrous brokerage sales volumes.

44

2) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges.

Financial Summar – Product y

A$m	FY16	FY17	FY18	FY19	FY20
Sales tonnes (‘000)
Ferrous Trading	6,768	7,009	7,709	7,817	6,301
Non Ferrous	476	454	432	435	390
Brokerage	1,307	1,237	1,715	1,551	1,463
Total	8,551	8,700	9,856	9,803	8,154
Sales Revenue
Ferrous Metals	2,703.0	3,136.1	4,381.6	4,505.4	3,286.2
Non Ferrous Metals	1,055.3	1,123.7	1,215.6	1,271.4	1,095.5
Sims Lifecycle Services	792.7	726.9	758.4	746.5	408.0
Secondary processing & other	100.7	92.7	92.4	116.7	118.8
Total	4,651.7	5,079.4	6,448.0	6,640.0	4,908.5

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45

Income Tax Ex ense – FY20 p

A$m	Loss Before Tax	Income Tax Benefit /(Expense)	Effective Tax %
Statutory Result	(252.9)	(12.4)	4.9
Significant Items	207.2	26.0
Normalised Results	(45.7)	13.6	-29.8

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46

Lease Standard Im act – FY20 p

A$m	EBIT	EBITDA
Underlying Result	(57.9)	144.9
Lease Depreciation	N/A	67.1
Lease Interest Expense	6.8	6.8
Underlying Result Excluding Lease Standard Impact	(64.7)	71.0

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47

Significant items

A$m	A$m	A$m	A$m	FY19 Pre-Tax Total	FY19 Pre-Tax Total	FY19 After-Tax Total	FY20 Pre-Tax Total	FY20 Pre-Tax Total	FY20 After-Tax Total	FY20 After-Tax Total	48
Legacy brand write offs					-	-	27.3		20.6
Other intangible asset impairments					-	-	44.7		34.7
Asset write offs					-	-	50.2		38.8
Restructuring and redundancies					11.5	8.9	35.2		27.8
Loss on asset disposals, net of associated professional fees					-	-	9.9		8.3
Environmental provisions					-	-	25.0		18.8
Gain on sale of property					(4.2)	(3.0)	(20.4)		(15.4)
Non-qualified hedges					2.2	1.9	8.0		6.2
Impact of fires, net of insurance recoveries					(1.8)	(1.2)	(5.0)		(3.7)
Non-recurring gain on asset disposition by joint venture					(5.1)	(3.8)	-		-
Other					2.7	2.0	6.3		5.0
Impact of tax remeasurements					-	4.5	-		66.1
Significant Items for FY					5.3	9.3	181.2		207.2
	A$m	FY20			A$m			FY20
	Statutory EBIT	(239.1)			Statutory NPAT			(265.3)
	Significant Items	173.2			Significant Items			201.0
	Non qualifying hedges	8.0			Non qualifying hedges			6.2
	Underlying EBIT	(57.9)			Underlying NPAT			(58.1)