Seche Environnement SA

PAR:SCHP

Earnings Call Transcript 2017-Q4

[Joël Séché, Chairman, CEO & President]

Ladies and gentlemen, good morning. I would like to thank you for attending this meeting, this morning, as we present our consolidated results for 2017.I would like to say special words of greetings to all those people who have logged in online to listen in this morning on the webcast. I've got Baptiste Janiaud, who is our Administrative and Financial Director. Baptiste joined the Group at the end of 2017, in fact. And he shall be presenting the figures for 2017 as well as the outlook for 2018. We have Manuel Andersen, who is the Director of Investor Relations and also he will be here to answer any questions that you may have at the end of the presentation.I wanted to present to you an overview of the achievements of 2017. The year that has gone past was full of developments that have consolidated the group -- growth and have -- we've seen a lot of activity on the external growth front. I will also be pinpointing some of the trends that we see for 2018 and the main lines of our strategy that we're going to be rolling out. The objectives are, basically, to continue with our development and to improve our results. 2017 was a year in which we were able to confirm our dynamic of external growth and to increase our business in recovery and waste treatment in France and elsewhere.First, let's look at the external growth. In the first half of 2017, we made significant investments and acquisitions, EUR 70 million, in fact, both in France and internationally. I'll detail all of that later on. But during the first year of consolidation, I can see that these acquisitions have already made a significant contribution to the profitability of the Group. Internationally, when it comes to hazardous waste, we have seen a twofold increase in our revenues, which now represents 10% of our consolidated turnover. And in France, through all of the different companies that are part of the Western France regions, we now have a strong position there. And because of the recovery and treatment facilities we now have, we can offer a broader range of services to our local customers with greater capacity. With external growth, the Group has confirmed its leadership in the non-hazardous waste markets in the western quarter of France. In our historical scope, our business did well in 2017. Séché Environnement benefited from the very strong business environment in France, especially vis-a-vis our industrial clients. We've also ramped up our new capacity for production and this has made it possible for us to match growing demand of our customers, both in volume terms and in profitably terms. And in most of these industrial markets, the Group has benefited from greater volumes and in some cases, we have seen some favorable price conditions. Looking forward, we will continue to work to extend our authorizations such as the ones that we got in [indiscernible] and in Changé, for example, in order to make sure that our growth has long-term prospects and sustainability based on to this enhanced capacity. Our results have gone up markedly and, in particular, our current operating income, which has gone up and now stands at 7.7% of contributed revenue compared to 5.5% last year. This is a result of the improvements in profitability in our historical scope and also it contributes -- it's also due to the contributions from our acquisitions. Our financial situation is very positive, and we have good mastery over our expenses and this is a trend that should continue throughout 2018. Let's look at Hazardous Waste Markets. 2017 was a year in which we saw a lot of good external growth and also positive trends in internal growth. Let's look at internal growth first. As I've already said, the industrial markets were driven by economic performance and good industrial conditions. Investments in capacity that we've made in previous years have made it possible for us to respond to this increase in demand from our industrial clients. This is the case of recovery facilities in France and in Spain. I'm thinking about solvent regeneration as well as recovery of bromine. It's a very innovative process that we've developed and that has been very successful, not just in France, but internationally. This is a case of our platform businesses as well. And in particular, our Salaise 4 platform, which has been ramped up and this has made it possible for us to reach out to new industrial clients and to deal with dispersed waste situations. This is also the case of our Class 1 businesses. In 2017, they all were being benchmarks against 2016, which is a strong year. But we had extended permits in 2017 and that has consolidated this business, which is one of our core businesses well into the next decade. We have also seen this in the services businesses as well. For example, medical waste markets, we've seen fast business growth in this niche. And this is a business that's developing very rapidly. And this actually is in sync with the plan that we shared with you earlier. Also, there were acquisitions in 2017 in the international hazardous wastes markets. We have about 30 million in turnover coming from that in Latin America and, in particular, in Chile and Peru. We have acquired hazardous waste treatment facilities in mining regions in these countries. And as you know, our mining clientele is one of our target customers. In Peru, we acquired Taris, which is a strategic acquisition. This is a company that specialized in storing hazardous waste for industrial clients in Peru. The large sectors of raw materials, energy, mining all of these industries are clients. So this ties in with our historical core business, our Class 1 businesses and our target clientele. Then this is something that also helps enhance what we've already got on the ground in this country. Kanay synergies, this is a proving company, and we are a shareholder with a local shareholder and businessmen. It has activities in the incineration of hazardous waste, mostly what -- medical waste. But it's also moving into new hazardous waste markets, and in particular, decontamination. The final storage activities of Taris are very complementary with Kanay synergies and they will be able to work well together. So these 2 companies are actually a very coherent ensemble and we are currently developing industrial plans together with them.Let's look at what's going on in Chile. This is a final waste storage facility with huge potential. We're going to be increasing the storage capacity to enhance the level of expertise in order to tap into rising sales prospects. We want to make this company the benchmark in Chile for this market. Internationally, we also continue with other acquisitions. We have the acquisition of Solarca. This is a company that provides services in industrial maintenance. And in particular, chemical cleanup facilities. Solarca works with clients in the chemical industry and in the energy sector. It's active mainly in Spain, the Middle East and in Southeast Asia. Thanks to Solarca, we now have a complementary range of services that we can offer to our industrial clients in those regions where we don't have such a strong presence yet, but we have top tier services to offer.Let's look at the Non-Hazardous Waste market. In 2017, we saw that this market remains very solid. 2017 saw the acquisition of 3 companies in the Western part of France. And these are companies that are active in recovery of waste, energy production and treatment. There facilities are totally complementary in terms of our business lines and also in terms of our geographical footprint. Our integration has been seamless and the synergies of different markets and our clients are really very palpable. 2017 was a year also in which we saw the completion of some large products, for example, the Changé incinerating facility. As you know, this is a project that we've been involved in for more than 2 years now. It's used to produce energy from solid waste. We turn this into solid refuse fuel (sic) [ solid recovered fuel ] actually, SFR. And in the fourth quarter of 2017, we saw the successful startup of a 20-year contract thus providing energy coming from solid refuse in the terms of hot water for the urban heating system of the city of Laval. And this is something that can also be fed with all of the waste we get from our different sorting facilities and this means that we can enhance its catchment area considerably. In 2018, we'll be able to tap into full potential of this ramp-up. And we have seen the results of this. For the first time in the history of Séché Environnement, we've gone beyond EUR 0.5 billion in revenue. Our COI is sound, both in terms of our historical scope and also with the new acquisitions. The net income has gone up markedly. Last year, our net income suffered from one-off events, namely tax-related issues. And here, I would like to announce that the -- a tax dispute that we had on our real estate taxes in our storage facilities was something that was ruled in our favor. And so it's something that will no longer be reflected in the accounts going forward. Our financial structure is very sound. We have made considerable financial and capital expenses in the first half of the year. In the first year, we started seeing initial returns on these investments and that Group is also in the process of bringing down its level of debt. Our bank ratios are under control. And are now very favorable when it comes to the expected requirements that we'll have to comply with in 2018. In 2018, all of these positive trends will continue. The beginning of the year has confirmed already what we had anticipated coming from 2017. First, the industrial markets for hazardous and non-hazardous waste stand or amount of about 2/3 of our overall revenue and support growth. We had delay in the startup of 2017 in some of our facilities, but they are already starting to post some very significant commercial successes starting this year. And the activities that we engage in with our industrial clients such as incineration have also been performing very well. Internationally, we will see growth that is higher than what we will find within our French businesses. Working with local authorities will be based on the recurring nature of the business. We'll benefit from the increase in recovery activities. For example, with the LEN contract -- that's the hot water system for heating in the city of Laval that I already mentioned, we'll also benefit from the commercial synergies with Séché Environnement West. In 2018, Séché Environnement shall pursue its strategy of profitable growth. This is a strategy that's based on an increase in our capacity and a selective policy of investments and developments. The Group shall strive to optimize all of its operational and financial parameters in order to further break down its debt and to finance its development. These objectives are part of the strategy that we've already set forth and shared with you. There is one new development, we will provide further details on this during the year at an Investors Day event that we will have, most likely, on the 26th of June, that's yet to be confirmed.Baptiste will share more details with you on that because I'm going to give the floor now. And he will now walk you through the figures of 2017 and will speak about the outlook for 2018 as well. You have the floor, my friend.

[Baptiste Janiaud]

Thank you, Joël, and good morning, everyone. Let's take a look at the key figures for 2017. You have here on Slide 9 a recap of all the key figures. We have highlighted the fact that the numbers were up. We have arrows going up just to indicate that there is an improvement, at least in terms of revenue and indeed profitability. We have contributed revenue. It's 1.6% on a like-for-like basis on the -- and it is at EUR 44 million on the new scope. I will look more closely at the EUR 44 million. We were looking at the EUR 40 million or so and we have done better than that. That's the first message as Joël pointed out. We have a new scope, which is up to expectations in terms of contributing to revenue. In terms of a profit EBITDA, stands at EUR 98.1 million, up 10%, thanks to the new scope. Again, EBITDA from a recent acquisition EUR 9.4 million. You can -- is again in line with our expectations. Current operating income stands at EUR 39.7 million, up 16% overall. 5% on the original scope and so it means that there is a clear improvement in operating profitability on the historical scope, but also, a positive contribution of the new scope in terms of operating income and profitability therefore.Financial income was EUR 10.7 million. Now it's EUR 13.6 million in financial expenses. So there is no -- it's not a matter of interest rate, but it just turns out that, of course, our net financial debt has increased and, so therefore, this is why we have a higher financial expenditure. Net income stands at EUR 15.4 million. This is up significantly, as Joël pointed out. We are now looking at numbers closer to the normative levels, because we don't have one-offs just like we -- that we had last year. We also included, on this table, a number of items on industrial CapEx. We are -- in terms of cash out, we're looking at EUR 57.1 million, in IFRS standards. So this is up. This is because, of course, we completed this number of specific projects, as Joël mentioned, the completion of the boiler and furnace in Laval. And that is why, there is an additional CapEx compared to last year.Gross cash flow before dividend and before development CapEx, this is up again significantly. Now this is to do with higher EBITDA. But this is also because we have an improvement in our working capital requirements where all these things come together to bring out higher cash flow, especially on H2. And that enabled us to deleverage the company. You can see that the net banking debt at 31 December stood at EUR 325.8 million, down compared to 30 June 2017.Now then, let us take a closer look at revenue. Regarding revenue, it's up almost -- up 12%, there's a significant scope effect, EUR 44 million due, which I mentioned earlier on. If you look at Non-Hazardous Waste, it's mostly SEO, Séché Environnement West, which used to be Group Charier. Now that of course accounts for most of that EUR 44 million to the tune of EUR 34 million. Looking at hazardous waste, we have a 22 -- EUR 29.2 million. So you have Solarca accounting for EUR 20 million, Taris in Peru EUR 6 million and SAN in Chile EUR 4 million, all adding up to EUR 29.2 million. Then, we have a contribution of organic growth. Now the historical scope provide EUR 54 million. The hazardous waste is almost stable. Q4 in 2016 was, of course, was very favorable in storage activities. This didn't occur again in 2017, but we have a dynamic buoyant business in materials recovery, purification and treatment of waste. Regarding Non-Hazardous Waste on 2017, again, this line of business was very active, both in terms of storage and incineration. Non-contributed revenue, no comments there. Having said that, it is up EUR 4.5 million. This is because there is lower CapEx under IFRIC 12 standards, so we went from EUR 4.2 million to EUR 4.1 million. And there's an increase in indemnities for bypasses in Sénerval that started in December 2016. So there's a full year in 2017. And that accounts for most of the increase in bypass indemnities in 2017, full year rather than only part of the year.If you now compare the revenue, internationally compared with France. Of course, we have become more international. The international part was 4.6% in 2016, now it's 11% in 2017. So much more business overseas than we used to have. This is about just under EUR 56 million, mostly because of Peru and Chile, but also Spain. I won't go into the breakdown again that you have EUR 20 million for Solarca, EUR 6 million for Peru and EUR 4 million for Chile. That's revenue, but we also have a -- the international scope was -- grew 17% in 2017, up EUR 25 million. You had solvent regeneration in Spain. That made a big difference. But you should also mention this -- the spot PCBs market in Argentina. So that was a very active indeed. So in fact, we find that there is more growth internationally than domestically.Regarding the -- on Slide 12, hazardous versus Non-Hazardous Waste, the 2 businesses developed along different lines in 2017 from one quarter to the next. Hazardous waste throughout the year had enjoyed a good business environment for the -- amongst industrial clients, but at year ends compared with 2016, where business was very high in Q4, of course, we didn't do quite as good, but there were spot contracts for polluted land. That's because of one specific contract. But nonetheless, Non-Hazardous Waste confirmed its robustness. It was very dynamic at the beginning of the year, and growth in 2017 stands at 4.4%. And that -- so 4.4% between 2016 and 2017.Now just to shed some light on the various businesses. Let's zoom in, therefore, on revenue along the different lines of businesses. It's not as straightforward as all that to split up the various businesses, because many businesses do overlap, or at least they are into wovens. So it's not always easy to split them up at all the same. We can have a fair idea of how business went in 2017. So from left to right, looking at the different lines of business, there's the one big block that is treatment and that is incineration and storage for hazardous and non-hazardous waste. Now on the treatment part, there is one business, which is up EUR 6 million and that is mostly incinerations and hazardous waste platforms, storage. It was penalized in 2017 compared to 2016 because there were fewer remediation contracts for asbestos laced land. We were hoping to make up for this in H2, but no specific contracts came in H2. Conversely, a business was more buoyant at the beginning of 2018, but for 2017, therefore, we find a negative comparison for storage for non-hazardous waste storage there. There was an improvement. This was because we had various businesses in solid waste and grinded waste that made up -- that made a difference.For the negative number here, we deliberately decided on [ Celestoi ] to have less non-hazardous waste and more hazardous waste. And that's why, we have this negative EUR 0.7 million block here. In other treatments, in recovery rather, we have remarkable business in purification, plus EUR 4 million, most on custom services, but also on the sales on the PCB business and the maintenance of sites and incinerators. That again, was very -- that's eco services -- I beg your pardon, that was very significant and as Joël said, recovery of bromine brought EUR 1.6 million in 2017 alone.In eco services then, we have less revenue. This is because of the completion of remediation contracts to this asbestos laced land. So business was down in 2017 compared to 2016. This is the decontamination and dehydration contracts that came to an end. So in 2017, the comparison basis with 2016 was unfavorable, but in other eco services, there were other services and that is radiation protection, that's up EUR 1.6 million alone and that made a positive contribution to revenue.Now if you look at EBITDA, the -- if you look at the numbers in operating profit, we see that gross operating profit is up EUR 3 million. This is because of a price effect and a volume effect positive to the tune of 2.7 -- EUR 4.7 million. But that, of course, was partly compensated by variable operational expenses, which were up EUR 1.7 million. So more expenses. Still, if you look at the volume effect, we have a volume effect that was positive on the incineration of hazardous waste and on the recovery business, but that was penalized by the storage of hazardous waste and this is in line with what we said. There is a positive price effect and that was also carried by purification and regeneration businesses. And some treatment for asbestos waste, the volume effect is down, but the price effect is up. In the price effect, there is one negative factor and that is the electricity-generation contract at the regulated rate that we had on [ Salaise ]. That contract came to an end in 2017. And so today, in terms of power generation, we are in the free market and that cost us EUR 2 million, the price effect being unfavorable there.EBITDA was also penalized by maintenance, repairs and employee expenses. That's EUR 2.2 million. You find it on the chart again. Now this was mostly to do with thermal treatment in 2017. Heat treatment, I beg your pardon, in 2017, but also employee expenses and that is because of our platform businesses and the reorganization of some of our sites that cost us an additional EUR 2.2 million compared with 2016. As Joël said, we had a -- we took in additional EUR 0.8 million because the tax administration decided to abandon its claim against us. So to the tune of EUR 0.8 million, this was a dispute about property taxes and on structural expenses, these were additional EUR 1.9 million. This is a number of businesses there. You have for our sales force and what you call when we develop our businesses, we have hired new sales people, sales representatives to boost our business. And that is always a significant item, because we're going international, because we are developing new businesses. Well, there is more travel. There's more bigger sales force and that, of course, has a price. We also have [ IS ] issues, [ IS ] -- IT developments have to be, while there are some expenses there, we want to make sure that our sites are safe. We have -- of course we want to have such issues reporting, cybersecurity, that applies to all of our sites. And again in IT, there is more subcontracting and because we are becoming a more digital company that again comes at a price. This scope effect provides a positive development, 9.4 -- EUR 3.4 million in France domestically and EUR 6 million overseas. We have that 25% in France. 25% in South America, 17% in Solarca. Solarca is a bit less than the others, but these are service businesses, chemical cleaning. And so our new acquisitions provide high profit margins, higher than for our historical scope. And there, the key message again is that on new acquisitions, the margins have overall, have improved the overall profit margin of the Group, because these new businesses are more profitable. Regarding current operating profit and -- well, we have 2 key messages again, the same as before. We -- our profitability with 7.5% of revenue. The revenue was EUR 34 million, now we have 7.8% of revenue. So there is a clear improvement in operating profitability. The scope effect stands -- represents EUR 3.7 million, so the -- so we have the operating profitability 7.8% the overseas profits are 8.7%, 7.2% in Spain, 13% in South America. And there again, you can see that our operating profits are boosted by our international business. This is with highlighting by going overseas, by -- rather by reaching out to new markets. We took advantage of sales, but also operating synergies. We were able to generate more profitability and that has improved our overall position.I'll now move quickly to how we get from COI to Group net income. And if you so desire, afterwards, we could take a look at the analysis for current operating income to current operating profit. You can see that we've got EUR 7.7 million in corporate tax in 2017. It shouldn't be interpreted as a decrease at our overall tax rate. We had EUR 5 million in 2016, a tax debt, which was a cost that was associated to a deferred tax asset, which was posted as an expense, that was EUR 5 million. So we have an increase of EUR 5.5 million to EUR 7.7 million, which reflects the increase of profitability of our operations. We also have an improvement in our minority interests. This has to do with all of our minority interests at [indiscernible], Katay, et cetera. We have also disposed of [Ungarotech ] in Hungary. There was some residual costs that are reflected in 2017, and we can point those out to you if you're interested. But we've got a net income of Group share of EUR 15.4 million for 2017, which is a marked improvement over 2016. We have also seen strong gross cash flow generation. The table sums up how we go from EBITDA down to gross cash flow. This is, again, the free cash flow before distribution of -- and this is due to new regulations we've had to develop some new landfill sales, which cost more than had -- than it would have if we had just added sales to existing landfills. And so the overall cost of landfill sales increased in 2017. We also have a change in working [ capital ] requirement, which moved into the positive in 2017, generating cash. This is due to several factors. Some of them you are familiar with. These are things you have already seen, for example, EUR 4 million in improvements of Sénerval and its EMS local authorities contract; EUR 6.7 million on [ Muco and Viviez ] which we saw in the first quarter of 2017; EUR 1.5 million associated with the improvements in payments from our customers in Guadeloupe. And the balance reflects a loan buyback. So there will be [Technical Difficulty] gone down [ EUR 1.0 million ]. That gap also reflects[Technical Difficulty]the [ EDS ] charge and, in fact, we received funds in excess in 2017, and so there's about a EUR 2 million effect of that. That is a lower amount of taxes dispersed than -- it's more that than it is a change in the overall cash picture that we would have expected in 2017. And then the financial fees reflect the average change in our net financial debt.So we have seen our gross cash flow go from EUR 11.1 million to EUR 64.4 million. This has improved our overall net banking debt picture. On the 31st of December 2017 -- 2016, it was at EUR 279 million. We have the gross cash flow -- we've looked at that, development CapEx at 17.4% for 2017. New scope CapEx EUR 3.9 million, dividends that were paid out. Then we've got the financial investments, these are mainly the acquisitions that were carried out in 2017 to the tune of EUR 71 million. Amortization of non-recourse debt at EUR 1.8 million and then the scope effect reflects the debt that was associated with the companies that we purchased in 2017. So the net banking debt is EUR 325.8 million on the 31st of December 2017.Let's look at Slide 19 now. Here we have a very important takeaway for those who have been watching our credit position. We now have a very healthy liquidity situation and a solid financial structure. On the left, you'll see the change in our cash position, which has gotten better. On the 31st of December 2017, it was EUR 52 million. And our current debt is EUR 45 million for 2017. So we've already started to draw down our debt by EUR 7 million. So there's no real liquidity issue for the Séché Group in 2017 -- 2018, rather.Second point, our financial ratios have also improved since the 30th of June -- between the 30th of June and 31st of December. If we look at our financial covenants on the 6th of -- 30th of June, we see that we are at -- our debt-to-EBITDA ratio was 3.5x. Debt equity ratio was 1.5x, and we've brought them both down. And you can see that our financial leverage is now in keeping with the terms of the covenants that we signed on the 30th of June. Gearing is the same picture. Our gearing is now 1.3x on the 31st of December. It had risen by June to 1.5x. But again, we have brought it down, and we are now in keeping with the terms of covenants for the 30th of June.Some concluding remarks. The first conclusion that I'd like to share with you this morning is that 2018 is going to be a year in which we're going to be focusing on generating free cash flow. We'll be doing this via several channels. First, we're going to be extremely selective when it comes to the investments that we're planning on making. I can detail that more for you, if you're interested. What we really want to focus on is the profitability of our investments in our core businesses. We have a strict set of criteria that we'll be implying and our investment committee will be adhering to those principles. So that's selectivity -- agility now. Agility reflects the fact that we are currently reviewing all of our industrial processes in order to make them more efficient and this is something that also points at enhancing our profitability and our generation of cash flow. We're also going to be flexible when it comes to CapEx. More details on that later. Basically, what we want to do is to adjust our CapEx on the basis of EBITDA. So that we can make[Technical Difficulty]So that we can [indiscernible] [ variable ] sheet. We have already entered into covenants and upheld the terms therein, but we want to strengthen our balancing structure in 2018. And thereby, increase our leverage or improve our leverage.Now let's look at CapEx. As we have already stated, we'll be reaching the end of development in CapEx cycle, reflecting the SRF installation and also our energy production capabilities in Guadeloupe. But in any event, these different levels of CapEx will be focusing on our existing production capacity. The takeaway here is that we're not going to stop with our investments. We've acquired some new platforms for growth, but development CapEx will be targeted on these growth platforms. Let me just mention a couple of examples to illustrate what I'm talking about. In Chile, in order -- but what we've acquired is a company in order to develop it and in order to do this, we have to build landfills sales in order to increase our storage facility. And that's going to require some CapEx. But this is a core business activity and it's also profitable. This will make a positive contribution to the overall profitability of the Group. Same thing in Peru. It's a platform for growth. We've bought this company. We're going to invest in that company and grow that business based on our core business. So these are very profitable investments. The outlook for 2018. Joël has already mentioned selective growth profitability, core business investments and deleveraging. We can do better than we've done in the past on the basis of our acquisitions. We can continue to develop our existing scope, our commercial performance. We are introducing a series of local action plans with the management at local level. This will make it possible for us to enhance the efficiency and capability of our existing scope. We're also going to be very selective when it comes to development CapEx. The idea is to reduce our level of debt. We want to, get our -- we want to bring it down to 3.0, we were at 3.5 on the 6th -- 30th of June last year. We brought it down to 3.3. And we want to bring it down to 3 by the end of '18. And this will go a long way to helping improve our competitive position, because we will be in a better position than most of our competitors. So what does this mean in terms of targets, concrete targets for 2018? First, we'll see a modest growth in the contributed revenue on a constant-scope basis. EBITDA will be above EUR 100 million. We'll see cash generation targeting a financial leverage ratio of about 3x. And the dividend for 2017 will be kept at EUR 0.95 per share. These are the objectives and the targets we have set for 2018. As Joël has already said, this summer we'll be staging an Investors Day. This will take place in June. We're in the process of putting together a strategic plan, so that we can give you some midterm guidance and outlook for the Group. We would also like to have the opportunity to present to you all of the different business lines within the Group. In light of the recent acquisitions, the overall composition of our different business lines have changed. There is an overall consistent picture and we would like to share that with you as well.So that covers the presentation of -- from 2017 as well as 2018.I'll turn the floor back to Joël.

[Joël Séché, Chairman, CEO & President]

Thank you, Baptiste. You did an excellent job. Now we can throw the open the floor for questions, if there are any questions.

[Philippe Ourpatian, Analyst]

I'm from Natixis. I have several questions. First, you have shared us -- shared with us some interesting figures when it comes to EBITDA. Can you give us the same breakdown when it comes to your turnover figures between hazardous waste, Non-Hazardous Waste [indiscernible] breakdown? And also, we saw an [ offset in ] organic growth. What are your benchmarks? If the business environment is same, is that going to hold true? What if things don't get better? And you also talked about the decrease in your tax bill in 2018, can you tell us whether you anticipate any one-off developments throughout 2018 in that -- on that front? Another question, you talked about this massive uptick in your working capital requirement. Are you going to be able to bring that back down to, let's say, a more standardized level? Can you give us an idea at least of where that will stabilize? I also have a question on some investments. You will be making, we should say, EUR 15 million to EUR 20 million that will have to go into deleveraging. So a question about this consensus where we're talking about the different figures that are represented by the consensus. Are you in agreement with those figures?

[Joël Séché, Chairman, CEO & President]

Baptiste?

[Baptiste Janiaud]

Yes, there is a framework for it here. When it comes to recurring investments, maintenance, general operations and then hazardous and Non-Hazardous Waste at a constant -- in constant scope or not, what we're looking at about EUR 40 million and about EUR 10 million for maintenance. Now as I've already told you, at least for that EUR 10 million, there's a lot of flexibility because of EBITDA. And so this EUR 10 million is not an investment commitment to date. It's simply an amount that we can play around with. We have a certain amount of leeway with that. And it just depends on the other financial factors in the equation.

[Philippe Ourpatian, Analyst]

The upswing in working capital requirement?

[Baptiste Janiaud]

I indicated that there was a change in our WCR. The important development here is, of course, we're going to continue to pursue an active policy to improve our WCR. And we think that this will be more of a resource in 2018. That's the first point. Secondly, I refer to that credit buyback that I mentioned. It's something that's new for us. It's a way of diversifying our sources of finance, because right now, we have some credits that enable us to get to cheaper access to credit. And this is the type of thing that might be recurring. This is a kind of thing that we can tap into rather quickly, easily. And so we see this as another potential resource in 2018. So overall, out of the EUR 15 million that you have mentioned in order to get leverage down to 3x, some of this is going to come out of the fact that we've got this active policy to manage our WCR. We also have to bear in mind EBITDA. We've already mentioned this. We've seen that there was increase in EBITDA in 20 -- or anticipated that it would be bigger in 2018 -- above EUR 100 million. I have no more specifics to share with you at that point right now, especially regarding your question on the consensus. I don't really have any comment to make on that. What I can say is this. Today, our guidance has been clear with an EBITDA forecast of something that's above EUR 100 million. When it comes to reductions in our tax bill, we don't anticipate any one-off tax reductions in 2018 at all. Basically, the tax burden has been established at EUR 7.7 million. There's a cash component and a noncash component, basically 50-50. And in 2018, we will be looking on the cash side and we should be able to cover that out of -- in 2018. On the volume effects and price effects, you want this for non-hazardous waste on a business line by business line breakdown? Well, let me take a stab at this first generally and then maybe I can give you more specific answers. First, let's take look at the volume effect. This is for hazardous waste and nonhazardous waste, firstly. Those are the businesses that have made a difference. And again, 50-50 in terms of volume. And in terms of price, lots of hazardous waste coming from regeneration activities has been processed. And also, places have been contaminated by asbestos. And so that will represent, basically, everything coming from hazardous waste.

[Jean-Francois Granjon]

First question, I am surprised that despite the business environment, which is actually pretty rosy in France and in Europe and internationally, your organic growth seems somewhat limited. And of course, there is a very tough benchmark that you're referring yourself to when it comes to hazardous waste. But why don't you see more organic growth and also when it comes to 2018, you're anticipating limited organic growth even though the business environment is strong. So can you explain that? Second question. Will prices continue to be evolving in your favor in 2018 following on from 2017? Third question, in the downside, you've talked about the structural costs that were rather large in 2017. Do you think, this will recur in 2018 as part of your growth development strategy? Now what about your order books compared to last year on your existing scope? And also when it comes to WCR, can you give us an order of magnitude? Is it going to be between -- you say it's going to be positive. Is it going to be between 0 and EUR 30 million, somewhere in there? Can you give us an idea of that for 2018, please?

[Manuel Andersen, Head of Investor Relations]

All right, then. Regarding growth [Audio Gap] levels indeed in 2017, there was a comparison based on Q4, especially on the hazardous waste whereas in H1, it was a mix in terms of volumes where we had a higher volume of non-hazardous waste and that meant that revenue was limited, but if you leave out these one-off items, there is significant growth. Look at Class 1 waste, well, that provided less of a contribution at year's end. But still revenue was sustained in looking at all our -- that business. We in Q1 2018, we already have pretty hefty contracts and if we look at the end of 2017, we can see that the base effect was minus 0.2 -- EUR 2.5 million, but that conceals the fact that there was some catching up. It's simply that some contracts -- the de-pollution contracts started later or the Viviez contract came to an end. And so there is a timing effect in 2017, but if you look at the markets, especially for hazardous waste, these are looking up. Regarding Non-Hazardous Waste, now that business is more stable in terms of volumes at least, because a significant portion of our revenue is generated with local authorities. And there -- while, most of the growth driver is demographics. But there are volume increase in economic waste, industrial waste. And this business with our industrial clients is -- has brought about some positive volume effects, and we don't expect a turnaround in 2018. That the trend is expected to continue. Now you can consider that our guidance for 2018 is a bit conservative. This is only the beginning of the year. So far, so good. We do not see any change in the trend compared to the end of last year regarding our recurring business. But these are the still pretty early days and so our guidance including on profits remains cautious.

[Aude Nomblot-Gourhand]

Well, when I was hired, this is the CFO. I was told we say what we do and we do what we say we're doing. And so that's how we provide our guidance, really much want to be as good as our word. And if you look at Europe, the markets are very much linked to industrial output. The end of 2017 was pretty dynamic in terms of manufacturing output. And in many European countries, we find that there is a saturation of capacity. So is there potential for significant growth in Europe. Well, if you look at the guidance for the consensus for manufacturing output, it's not clear that there will be significant increase in 2018. And there is room for volatility in fact. Right now, the beginning of the year of course, is looking very good. This is very promising. But we have to remain cautious. We are also our building sort of financial equilibrium on the basis of, say, cautious macroeconomic assumptions, because we want to be able to keep to stay the course, looking at what looks like a credible market assumption. So you may call it cautious, we call it credible. Regarding our structural costs, now there are costs and they give you a breakdown so that you could see exactly where we stand. Part of the cost is related to the fact that we are growing and there are associated costs with that. That will continue. This is -- this will continue. Likewise our investment in sales force is again a recurring expense. But it is an expense, but that also brings about revenue. So we expect a portion of these structural costs to be, of course, absorbed by improved revenue and improved income. WCR, you want a number between 0 and EUR 30 million. Well, that is always tricky. We have a proactive policy to looking at receivables and well, and payables. That payable receivable management really that's not much of a contribution at the lower end of the -- look at the amount of receivables that we'll be using for cash, by transferring them, we have significant room for maneuver there. We can go all the way up to the top of the range, if need be -- if need be. Now that provides us with the financial flexibility. That will be the case in 2017 -- in 2018 as well. I believe there was another point? Oh, yes. The price effect for 2018. Now, we're looking at a crystal ball here. What we have seen so far, at least since the beginning of the year, is that the prices are looking good. The market prices are on the positive trend regarding hazardous waste. Now this is true both domestically and internationally, but I wouldn't be in a position to give you a guidance on prices in 2018. That would be too risky. There was a question about acquisitions. Now, there is the domestic part of our business and that has been growing in line with our scope. We have a steady but slow growth in France, we don't expect any sudden development unless the macro effect makes a big difference and, certainly, we have a huge increase in consumption and GDP. Barring that, we're looking at business -- domestic business growing at a rather modest rate, because it's a non-hazardous waste in France. Internationally, well, Solarca's business revenue was up to the tune of about 5%, up 5%, but that very much depends on contracts, because these are specific sites. You have chemical cleaning. We have industrial contracts [indiscernible] contracts [indiscernible] for 2017 was pretty buoyant. 2018 also should be dynamic because they are commercial links. With Solarca, we come up with a portfolio of customers, and so Solarca should have a wider business. But conversely, Solarca has its own portfolio of customers, they are present in the Middle East, Asia and Spain. So because of the -- well, the potential clientele, we should be able to broaden business. If you look at the order book, that is -- it is growing steadily, and we're looking almost at 10% growth in 2018. That is an estimate because, of course, it depends on how things pan out in 2018. Looking at the Latin American portfolio, we're looking at 10% growth rates, and we certainly intend to make the most of these new acquisitions and indeed stick to that rate of growth to get some return on this investment on this CapEx. But again, it depends on our ability to develop local customers. We have huge potential, both in Chile and in Peru. We will be investing in our growth. We will hope to generate growth. We're looking -- we're banking on 10%. We hope to do still better than that.

[Unknown Analyst]

My name is [ Eric Bluff ] from Raymond James. One clarification, you said something about transferring receivables and so this has a deep consolidating effect. You didn't give the amount, but I believe, you had a significant receivable on Strasbourg, upwards of EUR 30 million. Is that part of that, that you were transferring? Or is still in your books? I imagine, you mentioned EUR 4 million so you've been cashing in on it, or have you?

[Aude Nomblot-Gourhand]

Yes, and it's true. I was not very precise. We -- when these transfer receivables cannot be repealed in other words, these are receivables on big industrial clients. It's not the Sénerval situation. So we're looking at EUR 25 million in the transfer of receivables in 2017. The Strasbourg receivable, this is -- has come down on asbestos. It was EUR 43 million at end of 2016 and now it stands at EUR 39 million. So of course, we -- some of this was cashed in to the tune of EUR 4 million.

[Unknown Analyst]

But could we take it out of the balance sheet, surely...

[Aude Nomblot-Gourhand]

Well, if there are bankers in the room, maybe we could work it out. You have to see that this is long-term assets -- I mean, receivable. I mean, we haven't thought about it. But this is, indeed, one way we could generate more cash or at least, to have better -- well, it may be something of a challenge. We might do it.

[Unknown Analyst]

Another question about Laval, the EBITDA we're looking at about EUR 2 million for full year in EBITDA, but in 2018 is just the year. Is the first year?

[Aude Nomblot-Gourhand]

Yes, the furnace and boiler -- sorry, the boiler was commissioned, entered in 2017. So 2018, it has reached full capacity -- it will reach full capacity.

[Unknown Analyst]

So we're looking at about [ EUR 22 million ] in the full year in terms of EBITDA for that boiler.

[Manuel Andersen, Head of Investor Relations]

No, no. EUR 2 million is not EBITDA, it's revenue. It's a EUR 40 million contract over 20 years.

[Unknown Analyst]

But do you expect to have a significant portion of EBITDA on that?

[Manuel Andersen, Head of Investor Relations]

No, no. They are, they are expenses. Well, we never give guidance on EBITDA.

[Unknown Analyst]

But do you mean that revenue will grow gradually?

[Manuel Andersen, Head of Investor Relations]

We are exactly 1/20 of the full contract on an annual basis. Sorry. Well, we will find our cruising speed gradually -- very quickly. The boiler was commissioned in October. There are some adjustments. We have to get it up to full capacity. We can't do this overnight. And of course, we certainly expect to reach full capacity in -- during the year. So full efficiency, full capacity, very, very quickly.

[Philippe Ourpatian, Analyst]

Philippe Ourpatian. I have 2 questions. Looking at the receivables, I mean how much do you generate on the private or industrial? I don't know, I mean if you can -- I mean, you can transfer these receivables through tune of EUR 23 million. Part of it generates positive free cash flow -- for positive WCR. So how much are we talking about? A question for Mr. Séché, the environment is a changing environment. If you could make a completely new acquisition game changer changing your business with possibly 2 major players coming together. Would you resort to the capital markets to find funds for a big operation like that?

[Baptiste Janiaud]

Well, not all our receivables can be transferred. At least, we cannot always transfer them in advantageous conditions. Here, we're looking at about EUR 50 million, that's the overall volume of potential transfers of receivables that could bring in some cash at a very low discount. This is because we are looking -- well, these are receivables on fully solvent customers, fully credit worthy and so banks are happy to buyback these receivables. At a very low discount.

[Joël Séché, Chairman, CEO & President]

On the second question, well, you're talking -- I mean, there's always talk about a big place coming together. It's the recurring story. We look at opportunities constantly. There's no big thing going on now, but we are still on the lookout for that.

[Philippe Ourpatian, Analyst]

Follow-up question on non-hazardous waste. You see that the revenue was up 16% in Q4. Whereas the other quarters were more stable? How do you account for this sudden surge in Q4?

[Manuel Andersen, Head of Investor Relations]

These are spot effects related to the remediation market. We had the specific contracts and that to follow up on your earlier question. In our numbers, you have what are known as spot effects. So sometimes, you have windfalls and then suddenly you have a big boost in our numbers. And then, of course, that creates a comparison basis that may be unfavorable. But to be more specific, if you look at last year, last year in the Hazardous Waste Business, we're looking at decontamination and remediation on Class 1 waste. And that caused this comparison basis. If you look at, there is 1 decontamination contract that we had in 2016. And that was worth EUR 12 million for that contract alone. If you look at the consolidation of Viviez, you're looking at EUR 6 million right there. So you have a significant organic growth, which sort of absorbs these one-off items over the year that we are looking at significant amounts of one-offs effects that change the comparison basis.

[Joël Séché, Chairman, CEO & President]

If there are no further questions, well thank you so very much.