Annual Report 2016
Making a sustainable future possible
CLEANAWAY WASTE MANAGEMENT LIMITED
ABN: 74 101 155 220
Contents
SECTION 1: OVERVIEW
Meet the new Cleanaway
2016 Snapshot
Chairman’s Report
Chief Executive Officer’s Report
2
4
6
8
SECTION 2: BUSINESS REVIEW
Liquids and Industrial Services Report 14
16
Our People
18
Safety
20
Environment
22
Part of the Community
SECTION 3:
CORPORATE INFORMATION
SECTION 4: FINANCIAL REPORT
Financial Statements
Directors' Report
39
40
SECTION 5: OTHER INFORMATION
Other Information
119
Solids – Collections Report
Solids – Post Collections Report
10
12
Board of Directors
Senior Executive Team
Corporate Governance
24
26
28
Whether it’s turning food waste into
a nutrient rich soil enhancer; finding
innovative and bespoke recycling
solutions to help businesses achieve
their sustainability goals; or the
delivery of tried and true kerbside
waste and recycling collection
services – if there’s anything that
we can do to help, we’ll be there.
... making a sustainable
future possible.
1
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW1 Meet the new Cleanaway
A new chapter for Australia’s leader
in waste and recycling.
On 1 February 2016, we launched our new, unifying brand. With this came a name change,
to Cleanaway Waste Management Limited, and a single minded mission to make a sustainable
future possible.
Our new brand signifies more than just a refreshed look. It represents a major evolution for
our business, our customers and our shareholders. It has allowed us to provide a greater and
more consistent range of total waste management, industrial and environmental services,
supported by our market leading innovation and service. Importantly, it also reflects our
strengthened commitment to make a sustainable future possible for all Australians.
We know Australians are increasingly focussed on living sustainably. As a result, we’re
constantly on the lookout for new ways to recycle and better manage our waste. With more
than 50 years’ experience and the largest operating footprint across Australia, we play a big
part in helping hundreds of communities to more sustainably manage their waste.
You can now see our fresh new brand worn proudly by our team and displayed across hundreds
of our physical assets, with more sites, vehicles and bins being rebranded each week. The full
rollout of our brand across our entire network is on track for completion by 30 June 2018.
2
Cleanaway launches
its first mobile app
Sustainability at your fingertips.
Making the decision to recycle should never be difficult.
In August 2016, we launched our first mobile app, making
it easier for residents to better manage their household
recycling and waste, including information on how to minimise
the waste they generate. The new app can be downloaded for
free from the App Store on iTunes or the Google Play Store,
and allows users to find information about their local waste
collection services, including when their bins need to be put
out, when their recycling and green waste is due for collection,
and what can and can’t be recycled.
The app’s key features include:
• A direct link to local council websites, providing information on
– General waste, recycling and green bin collections;
– Hard waste collection arrangements;
– Where to find local transfer and recycling stations; and
– Local council contact details.
• The ability for users to book a skip directly from the app 1.
• Educational programs and information on sustainable
waste management.
• Emergency spills information.
• A direct email link for users to provide feedback
on our products and services.
1 Where services are locally available.
3
OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW1 2016
snapshot
Cleanaway is Australia’s
leading total waste
management, industrial
and environmental services
company with operations
around the country.
Financial highlights
Revenue ($ millions)
Continuing Operations
EBITDA 1 ($ millions)
Continuing Operations
EPS 1 (cents)
Dividend (cents)
$1,455.1m
$281.3m
4.0¢
1.7¢
2013 2014 2015
2016
2013 2014 2015
2016
2013 2014 2015
2016
2013 2014 2015
2016
Statutory results
Underlying results
$1,455.1 million revenue u5%
$281.3 million EBITDA u22%
$256.9 million EBITDA u96%
$122.6 million EBIT u26%
$96.1 million EBIT u2564%
$63.3 million NPAT 2 u39%
$44.8 million NPAT 2 u290%
4.0 ¢/share eps u38%
1.7 ¢/share dividend u13%
2.8 ¢/share eps u287%
1 Underlying financial results.
2 Attributable to ordinary equity holders.
4
Operations at a glance
4,224
employees
2,959
vehicles
179
sites
Australia-wide
coverage
In the community
+66
community
organisations
supported
+$580,000
invested in Australian
communities
+1,480
education
programs
held
nationally
Waste to resource highlights
+145m kWh
+85,000t
+65,000t
~130,000ML
of renewable energy
generated
of organic liquid waste
re‑used as nutrient
of biosolid waste
re‑used as nutrient
of oil collected for
re‑processing
~230,000t
of paper and
cardboard recycled
~11,000t
of plastic packaging
recycled
~22,000t
of steel recycled
~120m m3
of landfill gas
captured
5
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW1 Chairman’s Report
It is with great pride that I present to you what
will be my final report on Cleanaway Waste
Management Limited as Chairman of your Company.
As shareholders may be aware, we announced in February 2016 that I will be retiring
as Chairman and as a Director of the Company before the 2016 Annual General Meeting.
During the past seven years as a Director and the last three as Chairman, I have seen the
Company make significant progress towards its mission of making a sustainable future possible.
I am very proud of the accomplishments we have achieved over recent years. In the late
2000s the Company had little or no growth strategy and our debt levels were too high.
It was imperative that the Board took action to not only establish a sound financial footing
for the Company but also put in place strategies to grow the Company.
Shortly after my appointment as Chairman in 2013, the Board instigated a detailed business
and operational review to achieve these objectives. The strategy formulated from this review
acted as the catalyst for the numerous actions we have implemented over the past three years.
It resulted in the sale or closure of a number of underperforming businesses and the sale of the
Commercial Vehicles and New Zealand businesses, which dramatically reduced our debt levels
and established the strong balance sheet that you see today.
We have also implemented a number of actions to secure the long term future of the Company
and its operations, including a renewed focus on our health and safety environment, the
acquisition of the Melbourne Regional Landfill, the overhaul of our fleet management system,
restructuring our sales teams to improve their effectiveness and the review of our landfill
remediation provisions. These initiatives have made your Company the market leader in the
Australian waste management industry and well positioned for continued and sustained growth.
In all my time at the Company, the appointment of Vik Bansal as the Chief Executive Officer last
year is a major highlight. His leadership skills are exemplary and the vision he has communicated
to the Board to take your Company forward is both realistic and achievable. I and the Board
have the utmost confidence in Vik’s ability to grow Cleanaway. Vik is ably supported by an
experienced management team that has the leadership credentials to execute the growth plan.
It is therefore pleasing that I report that our financial results for FY2016 are a considerable
improvement over those achieved last year.
Total revenues increased 5.1% to $1,455.1 million, driven by increased revenues from our Solids
Collections and Solids Post Collections businesses. However, our Liquids and Industrial Services
businesses continued to face difficult trading conditions and reported revenues 8.7% below
those achieved last year.
A statutory profit after tax attributable to ordinary shareholders of $44.8 million was achieved
compared to a statutory loss of $23.6 million last year. This statutory profit after tax was
impacted by a number of significant items totalling $18.5 million mainly attributable to
restructuring costs and the costs of the rebranding of the Company.
6
"During the past seven
years as a Director and
the last three as Chairman,
I have seen the Company
make significant progress
towards its mission
of making a sustainable
future possible."
MARTIN HUDSON
CHAIRMAN
Excluding these significant items, which in the Board’s view
should be excluded to more closely align the results with
the operational performance of the Company, underlying
net profit after tax attributable to ordinary equity holders
was $63.3 million, an increase of 38.5% on last year.
Our balance sheet remains strong with all debt ratios well
within banking covenant requirements, an average debt
maturity at 30 June 2016 of 3.5 years and $251.3 million
of headroom under our banking facilities.
Based upon the financial strength of the Company and our
confidence in its future growth, the Board have declared
a fully franked final dividend of 0.9 cents per share, payable
on 7 October 2016. Combined with the 0.8 cents per share
paid in April 2016, the total dividends declared in respect
of FY2016 was 1.7 cents per share, a 13.3% increase on the
dividends declared last year.
A key focus of the Board and management team over recent
years has been improving the health and safety of our
employees and contractors. Over the past three years our
total recordable injury frequency rate has reduced by 29%
and pleasingly, in the past year that momentum continued
with a reduction of almost 12%. I cannot overstate the
importance that we place across all the operations of the
Company on the creation of a zero harm environment.
After I have stepped down as Chairman, Mark Chellew
will take on the role. I am pleased to be able to pass the
Chairmanship onto someone of Mark’s experience and
calibre following his more than 30 years’ experience
in industrial markets both in Australia and overseas.
I am confident that he will work closely with the Board
and management team to implement the strategies and
plans we have in place to take Cleanaway from a good
company to a great company.
I am leaving the Company in good hands and would like
to sincerely thank all the Cleanaway employees, my fellow
Board members and you, our shareholders, for the support
you have given me over the past several years and I wish
everyone continued success into the future.
Martin Hudson
CHAIRMAN
7
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW1 Chief Executive Officer’s Report
I am pleased to report to shareholders that
we have made encouraging progress in our
good to great journey over the past year.
After commencing as Chief Executive Officer and Managing
Director of Cleanaway in August 2015, I had the privilege
of visiting many of our sites and meeting our people.
Their commitment and passion was inspiring, and it provided
comfort that my focus is going to be on creating a clear path
forward and ensuring the capability matches the strategy.
Cleanaway is the largest waste management company in
Australia. We have a Company with a strong brand, good
market share, extensive footprint of prized assets across
the country and an integrated waste management offering
supported by a team of very good people.
It was critical that we build a Company that was fit for purpose
and well positioned for future growth.
Let me start my update with what I consider to be one of our
most important responsibilities – the safety of all employees,
contractors, customers and the communities we serve.
I am pleased to report that in FY2016 we reduced our long
term injury frequency rate by almost 12%. Whilst this is
commendable, our primary responsibility of aspiring to
Goal Zero has not and will not ever diminish. We remain
committed to Zero by Choice versus Zero by Chance.
One of my first actions as CEO was to understand our value
chain, i.e. where and how we create value versus where
we add value. Out of that came our Value Operating Model.
We then re-evaluated and refreshed our three year strategic
plan to align with the value model and presented it to the
Board in October 2015 which was subsequently approved.
There are a clear set of actions now underway which flow
from our revised strategic plan.
We also needed to align our people and the organisation
on a common platform. The first and most publicly visible
change was to bring the business together under a new
name – Cleanaway Waste Management Limited, and a single
reinvigorated brand – Cleanaway.
We defined our Mission Statement, or the reason why
we exist: to make a sustainable future possible – for all
our stakeholders.
8
We also articulated a clear vision of who we are aspiring
to be, and reinforced the role of our values as something
which guides our behaviour every day.
We developed our five strategic pillars, or our Five C’s,
and commenced the process of building capabilities and
supporting actions behind each of them. Our Five C’s are:
1. Customer for Growth
2. Continuous Improvement for Cost
3. Capital for Cash
4. Clarity for Alignment
5. Competitive Advantage for Excellence
We knew our cost structure was unsustainable; it was
therefore important that we transitioned to a ‘fit for purpose’
organisational structure. It was important that our organisation
structure matched with our Value Operating Model.
This work has led to increased clarity and accountability
within the Company.
All of the above formed the foundation of our operating
way – “Our Cleanaway Way”, which links and aligns:
• Why we exist, reflecting our purpose and mission;
• How we can leverage our assets to drive value; and
• What we do to ensure discipline, consistency, efficiency
and repeatability.
Along with our single brand, this is the glue which binds the
Company together as one and is a critical component as we
develop a truly sustainable business.
During this past year we have undertaken a number of initiatives
that support and drive our journey from good to great:
• CUSTOMER: The acceleration of growth initiatives,
including refined sales structures, and the addition of the
Save Desk and Telesales functions. Additional investment
in the marketing and pricing teams was needed to support
the seven business units.
• COST: The establishment of a fit for purpose structure
which saw our organisational structure aligned to support
our strategy and ‘go to market’ model. This fit for purpose
structure also contributed directly to a major cost out
program. An ambitious target of $30 million annualised
cost reduction was established and we are confident it will
be in place by 30 June 2017.
• CAPITAL: Increased capital discipline as we control capital
spending in line with depreciation and amortisation.
In FY2015, capital expenditure was 130% of depreciation
and amortisation, which is well above industry
benchmarks. In FY2016 we saw a significant reduction
to 95%. In addition, our rectification and remediation cash
flows are carefully monitored and managed.
• CLARITY: The establishment of clear measures, operating
rhythms and consistent standards have reinforced stability
and accountability. This approach enables all leaders and
their teams to perform optimally, and ensures they are
held accountable for their respective financial, operational
and customer service metrics.
• COMPETITIVE ADVANTAGE: As a large fleet owner
and large operating asset owner, including landfills, it is
paramount that we run them as efficiently as possible and
that they are properly utilised. We formed national teams
for each of the above to drive best in class performance,
removing a fragmented and siloed approach. It is
worthwhile remembering that both are highly capital
intensive and we must run them in a single, optimised way.
It has been pleasing to see that during a year of a major
RESET, our employee engagement survey showed significant
improvement, both in participation and overall engagement,
against the last survey in 2014.
Against a backdrop of muted economic activity in Australia,
we have started to see the benefits of our actions manifest
in an improved operational performance across all our
businesses. Compared to the previous corresponding period:
• Solids – Collections reported increases in underlying
revenue, EBITDA and EBIT of 3.0%, 8.4% and 5.8%
respectively.
• Solids – Post Collections reported increases in underlying
revenue, EBITDA and EBIT of 47.6%, 47.0% and
55.0% respectively.
• Liquids and Industrial Services reported a decrease
in underlying revenues of 8.7%, however increased
underlying EBITDA and EBIT by 3.0% and
14.2% respectively.
• The net costs of running our corporate functions at the
EBIT level declined 20.4%.
Additional detail on the results of our performance for the
2016 financial year are covered in subsequent pages of the
annual report.
Finally, I would like to thank our Chairman, Martin Hudson, and
the Board for the support given to me since my appointment.
In closing, this has been a very busy year at Cleanaway and I
would like to acknowledge the efforts of the more than 4,000
people who make Cleanaway the company that it is. Their
commitment to ensuring that our customer is serviced and
all waste material processed in an environmentally friendly
manner is paramount to our success, making a sustainable
future possible and continuing our journey from good
to great.
Vik Bansal
CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
9
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW1 Net external
revenue ($ millions)
$778.1m
EBITDA ($ millions)
$149.8m
4
.
3
7
1
.
4
8 7
.
4
6
7
.
5
7
1H
2015
2H
2015
1H
2016
2H
2016
EBITDA
EBITDA margin
EBIT margin
Solids – Collections Report
Cleanaway’s scale and reach takes us into
all corners of Australia. We are proud to have
one of the largest Solid Waste Collections
fleets on the road which services over 90
councils, more than 100,000 commercial
and industrial customers, and hundreds of
thousands of households all over Australia.
Over FY2016, we saw a 3% improvement in Solids Collections’ revenue, with
a pleasing 3.5% improvement in revenue for the second half of FY2016 when
compared with the corresponding period in the previous year. We are also beginning
to see volume growth across most collection categories compared to last year.
We are starting to see a number of our growth focussed initiatives converting into
increased revenues:
• Our Telesales and Save Desk functions are now fully operational and there are
early indications of improvements in our customer churn figures with new business
gained now exceeding our churn rate.
• Our pricing analytics and discipline continues to improve, however further work
and continued focus will be required into FY2017 and beyond.
• Sales productivity continues to remain an opportunity for Cleanaway nationally
– and will also remain a focus into FY2017, along with operational improvements
and a continued focus on customer service – all seen as the keys to our future growth.
Our profitability has also improved over the year with an 8.4% increase in EBITDA
to $149.8 million and a pleasing improvement in our EBITDA margin to 19.3%
compared to 18.3% last year. These improvements have been driven by the varied
and numerous revenue and cost initiatives implemented over the past 12 months and
will continue into the year ahead.
Resource Recovery not only supports the delivery of our mission to make a sustainable
future possible but is also seen as an area of potential opportunity and growth.
We have made significant infrastructure investments in this area over FY2016,
and it will remain a focus for Cleanaway into the future.
Net external revenue
EBITDA
EBITDA margin
EBIT
EBIT margin
Represents underlying results.
$ million
$ million
%
$ million
%
FY16
778.1
149.8
19.3
85.7
11.0
FY15
755.8
138.2
18.3
81.0
10.7
FY16
V FY15
3.0%
8.4%
5.8%
10
Investing in Resource
Recovery and Recycling
More capacity and more recycling
options in Hemmant, Queensland.
Our new Recycling and Resource Recovery Centre in Hemmant is an
important way we’re helping shape the region’s recycling future.
Replacing a 4,400m2 facility, which has serviced the region since
1992, the new 6,000m2 centre has the capacity to process 75,000
tonnes of recyclables per year – a 50% increase on the old facility.
But scale isn’t the only improvement. The new, drive‑through
facility also supports the Cleanaway Harvest Service, making
it easier for businesses to recycle packaging waste – such as
plastic shrink wrap, cardboard and polystyrene – helping us
achieve market competitive commodity rates for a wide range
of recoverable products. Having this capability in close proximity
to the Port of Brisbane provides easy access to export markets,
and should mean big things for the future.
PROCESS HIGHLIGHTS:
RECYCLABLES
MATERIAL
RECOVERY
RESOURCE
RECOVERY
RECYCLABLE
COMMODITIES
COMMODITIES
TRADING
11
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Net external
revenue ($ millions)
$117.6m
EBITDA ($ millions)
$87.9m
4
.
3
4
5
.
4
4
0
.
7
3
8
.
2
2
1H
2015
2H
2015
1H
2016
2H
2016
EBITDA
EBITDA margin
EBIT margin
Solids – Post
Collections Report
With one of Australia's strongest Post
Collections asset bases, made up of
a nationwide network of landfill assets and
transfer stations, Cleanaway is a leader in the
safe and sustainable management of waste.
Cleanaway owns and operates engineered landfill assets in every mainland state of
Australia. Through our expanding gas collection infrastructure, we are now collecting
around 120 million m3 of landfill gas, which is converted into more than 145 million
kWh of renewable energy; enough to power more than 36,000 homes. In 2017, the
current biogas plant at our Melbourne Regional Landfill (MRL) will be expanded to allow
us to double the amount of electricity we are generating from the site. This approach
ensures that nothing goes to ‘waste’, and that even the residual waste, which can’t
be recycled or recovered, can still be used as a resource – another way we are working
hard to make a sustainable future possible.
Our Post Collections’ revenues and earnings have both shown strong growth
over FY2016 with net external revenues and EBITDA growing 35.3% and 47.0%
respectively. Whilst MRL has been a strong contributor, we have also seen increased
volumes across most of our landfills.
As our older landfill assets in Clayton, Victoria approach closure during 2017,
we anticipate an improved profit performance from our Post Collections business
in FY2018. Volumes which would have previously gone to Clayton will be transferred
to the much more efficient and highly engineered MRL site. Further plans are also
in place to expand our transfer station facilities in Sydney and Melbourne.
Gross external revenue
Less levies and carbon tax
Net external revenue
EBITDA
EBITDA margin
EBIT
EBIT margin
$ million
$ million
$ million
$ million
%
$ million
%
Represents underlying results.
FY16
252.0
(134.4)
117.6
87.9
74.7
27.9
23.7
FY16
V FY15
47.6%
(60.4)%
35.3%
47.0%
55.0%
FY15
170.7
(83.8)
86.9
59.8
68.8
18.0
20.7
12
Sustainability in action
Turning residual waste into
energy through innovation.
Each week we collect thousands of tonnes of residual waste
from homes and businesses around Australia, and we’re
working hard to make sure we use it to its full potential.
In FY2016, we collected around 120 million cubic meters of
landfill gas, enough to create more than 145 million kilowatt
hours of renewable energy and power more than 36,000 homes
for a year.
This is a significant step toward our mission of making a
sustainable future possible, and something we’re immensely
proud of. Now, it’s making a great business story too.
PROCESS HIGHLIGHTS:
RESIDUALS/
GENERAL WASTE
TRANSFER
STATION
LANDFILL
GAS
ELECTRICITY
GENERATION
13
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Net external
revenue ($ millions)
$407.0m
EBITDA ($ millions)
$57.5m
8
.
1
3
7
.
0
3
8
.
6
2
0
.
4
2
1H
2015
2H
2015
1H
2016
2H
2016
EBITDA
EBITDA margin
EBIT margin
Liquids and Industrial
Services Report
Cleanaway is Australia’s largest hydrocarbons
recycling business and a leader in the overall
liquids and industrial services market. We
collect and recycle 130 million litres of used
mineral oil each year offsetting Australia’s
annual requirements for oil by 900,000
barrels. We also process over 600 million
litres of liquid waste each year, and provide
a wide range of environmentally focussed
industrial services around the country.
FY2016 saw external revenue in the Liquids and Industrial Services (LIS) business
decrease by 8.7% however, EBITDA increased 3.0% when compared to the same
period for the previous year.
A major restructuring was undertaken across LIS ahead of expected revenue
challenges during the year, which included the merging of the Liquids businesses,
rationalising sites across the country and the removal of management layers,
reducing the cost base and increasing earnings.
Volatility in international oil prices continue to impact revenues, with the selling
price of base and fuel oil down significantly when compared with the previous
corresponding period.
Processing volumes of hazardous liquids have declined due to continued
weakness in the manufacturing and industrial sectors. The processing volumes
of non-hazardous liquids has increased, however due to competitive pressures
in the sector, we have seen the average pricing levels down on previous years.
The Industrial Services market also faces difficult trading conditions, particularly
in the mining, industrial and oil and gas sectors which remained subdued,
however recent contract wins will see improved results in FY2017.
Net external revenue
EBITDA
EBITDA margin
EBIT
EBIT margin
Represents underlying results.
$ million
$ million
%
$ million
%
FY16
407.0
57.5
14.1
33.0
8.1
FY15
445.9
55.8
12.5
28.9
6.5
FY16
V FY15
(8.7)%
3.0%
14.2%
14
Paintback®
A world first initiative that
does what it says on the tin.
In April 2016 we were proud to support the launch of a world
first initiative. Created by the Australian paint manufacturing
industry to reduce the volume of waste paint which ends up in
landfill, Paintback® aims to collect more than 45,000 tonnes of
waste paint over the next five years. Not only will Paintback®
see waste paint diverted from landfill, but it will also maximise
the value of the recyclable materials.
A growing network of Cleanaway and Council drop off points
in every state and territory mean it’s easier for professionals
and DIY painters to do the right thing and responsibly dispose
of waste paint. Using specialist machinery, we then extract
the paint, allowing the containers to be recycled, as well as
maximising beneficial reuse through best‑practice processing
of both water and oil based paints.
PROCESS HIGHLIGHTS:
LIQUID AND
HAZARDOUS
WASTE
TREATMENT
SOLVENTS
WATER
RECYCLABLE
COMMODITIES
15
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Our People
Great policies, plans and strategies mean
little without great people to implement them.
In FY2016, we created a strong operating model, underpinned by our vision, values,
strategic pillars and organisational fit for purpose structure. These elements, coming
together as Our Cleanaway Way, create clarity of purpose and strong, measurable
alignment and focus. Bringing our people along on the journey is critical to our
ultimate success, and has been a focus over this past year. Our Cleanaway Way
has brought rigour and discipline, as well as clarity across the business about
why and how we do what we do each day.
Employee engagement
Our 2016 company-wide employee engagement survey has shown a 15%
improvement on 2014’s score. The results showed that our people are strongly
engaged with our values, and have more clarity about the future direction of the
business as well as the part they play in our success. This clarity has enabled improved
alignment, evident in our employees feeling like they’re on the same page as their
managers, with high scores relating to senior leadership and engagement.
There are already a number of programs in place to build on this positive momentum
into FY2017.
Diversity and inclusion
By daring to think and act differently, we’re actively making a difference to inclusion
and diversity in the workplace. Beyond gender, age, background and race, we
believe it’s just as important to have a diversity of thought and perspective within the
business, if we are to become a truly representative workplace.
Through FY2017 and beyond we’re driving inclusivity programs, including:
• Building our understanding of current diversity within our workforce;
• Education and training on cultural awareness;
• Creating a better understanding amongst employees of conscious
and unconscious bias;
• Providing mentoring opportunities within our workforce to drive
all aspects of our diversity measures; and
• The creation and launch of our first Reconciliation Action Plan.
Reconciliation Action Plan
We’re currently drafting our first Reconciliation Action Plan. Its launch in late 2016 will
be a positive step forward and a focus for coming years – both in our commitment to
diversity and toward fostering reconciliation within the broader Australian community.
16
Not your average pioneer
It takes a great amount of courage to leave a steady job
to pursue something more fulfilling, let alone when you’re
a mother of three teenage children. But that’s precisely
what Cass did after seeing an old, unhappy version of herself
in a former colleague.
“I thought, I don’t want to do this for the rest of my career.
If I don’t do something now, I’ll never do it.”
After tossing up a number of options in hospitality, it was
Cass’ husband, Noel, a side lift driver at Cleanaway, who
provided the inspiration and suggested she apply for her
Heavy Rigid driving licence.
“I giggled at first, but then I thought, I can do this.”
Before she knew it, Cass had booked lessons, sat the test
and passed.
Now, there are two Cleanaway side lift drivers in the Hughes
household and Cass couldn’t be happier. Cass is passionate
about driving for Cleanaway, and the role that she plays
with our customers, providing an essential service to our
communities. She also has some advice for anyone else
looking for a career change later in life.
“If you are not happy, at some point you have to take
responsibility. It is up to you to make a change and think
outside the box. It might be hard, you might think no one will
give you a chance, but keep going. Fear of change is nowhere
near as scary as putting up with a job you’re not happy with.”
17
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Total recordable
injury frequency
rate
8.9 TRIFR
t11.9% from 2015
Safety
Striving to GOAL ZERO
The safety of our team and the community in which we operate comes first, last and
everything in between.
Creating an injury free workplace is at the heart of every decision we make.
We track our progress towards an injury free workplace through improvement in our
total recordable injury frequency rate (TRIFR), which has reduced by 66% over the last
five years.
Our year on year TRIFR improved by 11.9% from 2015, which is encouraging as we
continue to strive towards GOAL ZERO. This has been supported by a continued
improvement across our suite of leading performance indicators.
At Cleanaway, our safety focusses on four key pillars:
1. Safe behaviours;
2. Fit for purpose equipment;
3. Safe systems of work; and
4. A controlled work environment.
Underpinned by a consistently visible demonstration of our commitment to safety
excellence, increasingly standardised ways of working, and a capable and engaged
workforce, we firmly believe that we can achieve GOAL ZERO.
During FY2016 we implemented a number of new processes to ensure agile,
enterprise learning from incidents and significant near misses. The renewed focus
on understanding and embedding lessons learnt into the way we work will help
us to not only manage risk but importantly avoid repeat incidents in the future.
We are committed to fostering a strong safety culture and improving safety
leadership across the business – where our people keep their safety, and that
of their workmates, front of mind always.
We will keep striving until we reach GOAL ZERO
26.6
e
t
a
r
y
c
n
e
u
q
e
r
f
y
r
u
n
j
i
e
l
b
a
d
r
o
c
e
r
l
a
t
o
T
30
25
20
15
10
5
0
16.7
12.6
10.1
8.9
2012
2013
2014
2015
2016
Note – comparative periods have been adjusted to exclude divested businesses.
Numbers restated from those originally published to ensure comparability over time.
18
Our partnerships
Helping Australian businesses
achieve their sustainability goals.
We believe that environmental sustainability and business have
a beautiful future together. Cleanaway’s waste audits deliver
critical insight into the nature of waste generated by businesses,
which helps us create tailored solutions to divert more waste
from landfill and ensure we recover and recycle more valuable
commodities. This, in turn, helps our customers meet their
sustainability targets and is another way we’re working hard
to make a sustainable future possible.
Cleanaway’s waste audit program helps our customers identify:
• Disposal errors which can lead to high contamination rates
and low recycling rates.
• Valuable commodities which can be recovered, creating
potential revenue streams.
• Opportunities for new resource recovery and recycling streams.
• Operational processes that cause stock loss and carry large
opportunity costs.
• Poor stock management practices that cause product
damage and unnecessary wastage.
Our waste audits not only help customers better understand
their waste, providing them the knowledge to help improve
their sustainability outcomes, they also produce unique insights
which can lead to operational business improvements driving
increased profit. A win for all.
19
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Renewable
Energy
Generated
(million kilowatt hours)
+145m kWh
Greenhouse
Gas Emissions
(tonnes CO2-e)
559,000t
Environment
Minimising our impact
Supporting a sustainable environment.
Just as we help our customers manage their environmental impacts, we also carefully
manage our own.
We recognise that the collection, transport, treatment and disposal of waste has the
potential to cause environmental impact. We believe that we can make a sustainable
future possible, and that’s why we work hard to minimise our impact on the air,
water, land and the communities in which we operate.
We are focussed on building on the knowledge gained and the successes achieved,
as well as investing in new techniques, technologies and other innovations. So we’re
not just following best practice, but redefining it year on year.
Sustainable landfill management
Our modern, highly engineered landfills are the product of sophisticated design,
and provide a safe and effective way to dispose of waste material. They help ensure
we don’t leave unacceptable legacy issues for future generations to manage.
They are designed and operated to ensure that regulatory requirements are met
or exceeded, and to minimise concern from our neighbours and the surrounding
communities. Monitoring the ongoing safe operation of our landfills is a daily occurrence.
Over FY2016 we made significant investments in gas collection and monitoring
infrastructure, as well as leachate management and stormwater retention.
We installed more than 100 new landfill gas monitoring bores, and have plans
for a further 70 to be installed this year.
The design of our modern landfills also maximises the potential for the capture
of valuable energy resources in the form of landfill gas. Harnessing the naturally
produced landfill gas, we generated over 145 million kWh of renewable energy
in FY2016, which is enough to power more than 36,000 homes.
We will continue to invest in landfill-gas-to-energy projects. As an expert in the
collection of landfill gas, we continue to look for new opportunities to harness
and maximise the value of this natural resource.
Tackling greenhouse gas emissions
Greenhouse gas emissions remain an important issue for the community, as well
as for our customers. We continue to work to proactively manage greenhouse gas
emissions, through best in class management of landfill gas and by working with our
customers and the wider community to create awareness in managing waste impacts.
Our Scope 1 and Scope 2 greenhouse gas emissions for FY2016 were approximately
559,000 tonnes CO2-e, which represents an increase of 14% from the prior year.
This increase is attributed to the full year effects of the acquisition of the Melbourne
Regional Landfill. Excluding the effects of the Melbourne Regional Landfill, underlying
greenhouse gas emissions reduced by 2%.
Ongoing management of these emissions is being targeted through continued
investment in gas collection and monitoring infrastructure.
20
Albury Organics
Positive reinforcement brings positive results.
Albury City Council and neighbouring shires recently shifted
the focus of their kerbside collections from landfill to recovery,
by reducing general waste pickups to a fortnightly service,
and introducing a weekly organics collection. Since launching
in April 2015, we have collected an impressive 22,000 tonnes
of organic waste from homes and businesses throughout the
region. Even more impressive are the recovery rates, which have
seen 84% of organic waste and commingled recycling diverted
from landfill, with organic contamination rates averaging 1.3%.
As well as collecting the waste, we are also responsible for
converting the organic waste into compost. We have partnered
with a local facility to date, but will this year lodge a development
application for our own local composting facility. The new facility
will incorporate Gore™ Cover composting technology, which
simulates enclosed composting on an affordable, mass scale.
PROCESS HIGHLIGHTS:
ORGANIC AND
GREEN WASTE
RESOURCE
RECOVERY
COMPOST
FERTILIZER
AND SOIL
CROPS AND
GARDENS
21
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Part of the Community
Proud supporters of Australian communities.
Great neighbours help build great communities. That’s why we’re committed
to building strong, trusted relationships with the communities in which we operate.
In FY2016, we held more than 60 Community Information Sessions at various
locations around the country.
We believe in making a sustainable future possible – and we know that the next
generation are the ones who will help us. That’s why we are passionate about
educating schools about better waste management and recycling practices.
During FY2016, we ran more than 1,480 school education sessions, engaging more
than 38,100 students.
We have a proud history of supporting Australian communities – from small,
regional sporting clubs and festivals, to national community organisations
and charities.
During FY2016, we invested over $580,000 in Australian communities,
supporting more than 66 community groups across Australia.
Camp Quality
Supporting those who support others.
Proving that laughter is indeed the best medicine, in 2016 our
Melbourne head office took on the challenge of raising funds
for Camp Quality.
Over the course of three weeks, and a number of different activities,
the team worked together to raise funds to support Camp Quality’s
travelling puppet show for primary schools which answers all the
difficult questions kids have about cancer, dispels common myths
and teaches students how to be supportive and understanding of
kids living with cancer – preventing bullying and exclusion.
This continues a proud tradition within Cleanaway of supporting those
who work hard to support others – including Starlight Foundation;
Beyond Blue; Movember; National Breast Cancer Foundation; and
many other local charities and community organisations.
Community
Information
Sessions
+60
School
Education
Sessions
+1,480
Students
Engaged
+38,100
Investment
in Australian
Communities
+$580,000
Community
Organisations
Supported
+66
22
Cleaning up Australia
A new partnership for a sustainable future.
After years of joining in with the rest of the nation on Clean
Up Australia Day, we’ve made it official and signed a multi‑year,
national partnership with Clean Up Australia. As a year‑round
advocate for sustainability and conservation, we’re thrilled
to officially be a part of a program that has made such
a massive contribution to the way Australians think about the
environment. First launched in 1989 as an initiative to clean up
Sydney Harbour, Clean Up Australia Day and year round events
now attract close to one million active volunteers who remove
the equivalent of 16,000 ute loads of rubbish from nearly
8,000 locations every year.
23
BUSINESSREVIEW2OVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW Board of Directors
Martin Hudson
CHAIRMAN OF THE BOARD
Independent Non-Executive Director since 14 September 2009 and appointed Chairman
in March 2013. Non-Executive Director of CNPR Limited (appointed December 2011).
Former Non-Executive Director of NM Superannuation Pty Ltd (the Trustee of Axa Asia
Pacific Holdings Limited’s public superannuation funds) and AMP Superannuation Ltd –
the Trustee of AMP’s public superannuation fund (April 2012 to June 2014). Significant
board and commercial experience in risk management, executive leadership, governance
and strategic direction derived from varying roles at Foster’s Group Limited (Senior Vice
President Commercial Affairs and Chief Legal Counsel), Southcorp Limited (Company
Secretary and Chief General Counsel), Pacific Dunlop Group of Companies (as General
Counsel) and for over 20 years, as a partner of national law firm Herbert Smith Freehills.
Holds tertiary qualifications in Law. Member of the Australian Institute of Company Directors.
Martin will retire as Chairman before the 2016 Annual General Meeting.
Mark Chellew
DEPUTY CHAIRMAN, CHAIRMAN OF THE HEALTH, SAFETY AND ENVIRONMENT COMMITTEE
MEMBER OF THE REMUNERATION AND NOMINATION COMMITTEE
Independent Non-Executive Director since 1 March 2013 and was appointed Deputy
Chairman on 19 February 2016. Executive Chairman of Manufacturing Australia Limited
(appointed March 2015). Former Managing Director and Chief Executive Officer of Adelaide
Brighton Limited (retired May 2014). Mark has over 30 years of experience in the building
materials and related industries, including roles such as Managing Director of Blue Circle
Cement in the United Kingdom and senior management positions within the CSR group
of companies in Australia and the United Kingdom. Holds a Bachelor of Science (Ceramic
Engineering), Masters of Engineering (Mechanical Engineering) and Graduate Diploma
in Management.
Vik Bansal
CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
Appointed to his current role on 3 August 2015 and made an Executive Director on
20 August 2015. Over 20 years’ experience in a range of executive roles in Australia, Asia and
the United States and a proven track record of leading organisations through business growth,
transition and improvement. Previously, President and Chief Operating Officer for Valmont
Industries Inc., a US$3.3 billion NYSE listed engineering and manufacturing company. Prior
to that, he held senior roles with OneSteel Ltd and Eaton Corporation in Australia. Holds
a Bachelor of Electrical Engineering with Honours and an MBA. Vik has completed the
Advanced Management Program from INSEAD and is a Fellow of the Australian Institute
of Company Directors and a Fellow of the Institute of Engineers Australia.
Ray Smith
CHAIRMAN OF THE AUDIT AND RISK COMMITTEE
MEMBER OF THE REMUNERATION AND NOMINATION COMMITTEE
Independent Non-Executive Director since 1 April 2011. Non-Executive Director of K&S
Corporation Ltd (appointed February 2008). Former Non-Executive Director of Crowe
Horwath Australasia Limited (resigned January 2015) and Warrnambool Cheese and Butter
Factory Company Holdings Limited (resigned May 2014). Trustee of the Melbourne and
Olympic Parks Trust (appointed 2008). Significant corporate and financial experience in the
areas of strategy, acquisitions, treasury and capital raisings, and was Chief Financial Officer
of Smorgon Steel Group for 11 years. Holds tertiary qualifications in Commerce. Fellow
of CPA Australia and Fellow of the Australian Institute of Company Directors.
24
Emma Stein
MEMBER OF THE AUDIT AND RISK COMMITTEE
MEMBER OF THE HEALTH, SAFETY AND ENVIRONMENT COMMITTEE
Independent Non-Executive Director since 1 August 2011. Non-Executive Director of DUET
Group (appointed June 2004), Programmed Maintenance Services Ltd (appointed June 2010)
and Alumina Limited (appointed February 2011). Former Non-Executive Director of Clough
Limited (resigned December 2013). Significant corporate experience within industrial markets
and was the UK Managing Director for French utility Gaz de France’s energy retailing
operations. Holds tertiary qualifications in Science and a Masters of Business Administration
(MBA). Honorary Fellow of the University of Western Sydney. Fellow of the Australian Institute
of Company Directors.
Terry Sinclair
MEMBER OF THE AUDIT AND RISK COMMITTEE
MEMBER OF THE REMUNERATION AND NOMINATION COMMITTEE
Independent Non-Executive Director since 1 April 2012. Chairman of Marrakech Road Pty
Limited and Director of irexchange/Netget Holdings Limited. Former Managing Director of
Service Stream Limited (resigned May 2014), Chairman of AUX Investments (jointly owned
by Qantas and Australia Post), Director of Sai Cheng Logistics (China), Director of Asia Pacific
Alliance (HK), Head of Corporate Development at Australia Post. A member of various
advisory boards for private equity ventures in e-commerce and technology/infrastructure.
Terry has significant experience across Industrial, Resources and Consumer Services sectors
including 20 years in senior management roles in BHP (Minerals, Steel and Transport/Logistics).
Holds a Masters of Business Administration (MBA), a Graduate Diploma in Management and
tertiary qualifications in Mining, including Surveying.
Mike Harding
CHAIRMAN OF THE REMUNERATION AND NOMINATION COMMITTEE
MEMBER OF THE HEALTH, SAFETY AND ENVIRONMENT COMMITTEE
Independent Non-Executive Director since 1 March 2013. Chairman of Lynas Corporation
Ltd (appointed January 2015) and Downer EDI Limited (appointed November 2010).
Former Chairman of Roc Oil Company Limited (resigned December 2014) and Non-Executive
Director of Santos Limited (resigned May 2014). Significant experience within industrial
businesses, having previously held management positions around the world with British
Petroleum (BP), including President and General Manager of BP Exploration Australia.
Holds a Masters in Science, majoring in Mechanical Engineering.
Philippe Etienne
MEMBER OF THE AUDIT AND RISK COMMITTEE
MEMBER OF THE HEALTH, SAFETY AND ENVIRONMENT COMMITTEE
Independent Non-Executive Director since 29 May 2014. Non-Executive Director of Lynas
Corporation Limited (appointed January 2015). Former Managing Director and Chief
Executive Officer of Innovia Security Pty Ltd (retired September 2014) and Non-Executive
Director of Sedgman Limited (February 2015 to November 2015). Previously held a range
of other senior executive positions with Orica in Australia, the USA and Germany including
strategy and planning and responsibility for synergy delivery of large scale acquisitions.
Holds a Bachelor of Science in Physiology and Pharmacology and a Master of Business
Administration (MBA). Graduate of the Australian Institute of Company Directors and
has completed post-graduate qualifications in marketing.
25
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 Senior Executive Team
Vik Bansal
CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
Appointed to his current role on 3 August 2015 and made an Executive Director on
20 August 2015.
Over 20 years’ experience in a range of executive roles in Australia, Asia and the United
States and a proven track record of leading organisations through business growth, transition
and improvement. Previously, President and Chief Operating Officer for Valmont Industries
Inc., a US$3.3 billion NYSE listed engineering and manufacturing company. Prior to that,
he held senior roles with OneSteel Ltd and Eaton Corporation in Australia. Holds a Bachelor
of Electrical Engineering with Honours and an MBA.
Vik has completed the Advanced Management Program from INSEAD and is a Fellow of the
Australian Institute of Company Directors and a Fellow of the Institute of Engineers Australia.
Brendan Gill
CHIEF FINANCIAL OFFICER
Brendan joined Cleanaway in September 2014.
Brendan has more than 30 years of experience as a finance professional, mainly in the
mining, steel and energy sectors.
His career included 26 years at BHP Billiton in finance, including as Vice President Finance
Carbon Steel, CFO for both the Stainless Steel Materials and Nickel businesses and Global
Lead Risk Management and Audit. Since leaving BHP Billiton, Brendan has held CFO roles,
most recently as CFO for Inova Resources (previously named Ivanhoe Australia).
Brendan has a Bachelor of Business, and is a member of CPA Australia.
Dan Last
GENERAL COUNSEL AND COMPANY SECRETARY
Dan joined Cleanaway as General Counsel and Company Secretary in March 2014.
Dan is an experienced General Counsel and Company Secretary with over 15 years’
experience in law firms and senior in-house legal roles.
Prior to joining Cleanaway, Dan was the General Counsel and Company Secretary of Foster’s
Group Limited. He has also worked in top tier law firms in Australia and overseas.
Dan has a Bachelor of Laws (Hons), a Bachelor of Commerce, is a Fellow of the Governance
Institute of Australia, and a member of the Australian Institute of Company Directors.
26
Mark Crawford
EXECUTIVE GENERAL MANAGER, ENTERPRISE SERVICES
Mark joined Cleanaway as Executive General Manager, Enterprise Services in February 2014.
Mark has more than 10 years operational experience gained in senior and executive roles.
He has worked across Australia and Asia Pacific to integrate complex business models and
has extensive transformation experience across all business disciplines.
Prior to joining Cleanaway, Mark held a number of General Management roles at Australia
Post, most recently as General Manager for the International business.
Mark holds qualifications in Information Technology.
David Aardsma
EXECUTIVE GENERAL MANAGER, SALES AND MARKETING
David joined Cleanaway as Executive General Manager, Sales and Marketing in January 2015.
David is a highly experienced sales and marketing executive with over 40 years’ experience
in the US waste management industry and a proven track record of building, transforming
and motivating world-class sales and marketing teams.
Prior to joining Cleanaway he held the position of Chief Sales and Marketing Officer at
Waste Management Inc., responsible for overseeing the company’s sales, marketing, pricing
and customer service efforts.
Johanna Birgersson
EXECUTIVE GENERAL MANAGER, HUMAN RESOURCES
Johanna joined Cleanaway in May 2014 and was appointed Executive General Manager,
Human Resources in December 2015.
Johanna has more than 10 years human resources experience gained in senior and
executive roles.
Prior to joining Cleanaway, Johanna was the Director People and Culture of TSC Group
Holdings. She has also worked across a number of industry sectors including fire and
electronic security, HVAC and refrigeration, and hospitality.
Johanna has a Bachelor of Arts and holds Post Graduate qualifications in Employee Relations
and Human Resources Management from the University of Melbourne.
27
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 Cleanaway Waste Management Limited (Cleanaway or the Company) believes
that high standards of corporate governance are critical to the achievement
of business objectives and, in turn, the creation and protection of shareholders’
interests, through effective oversight, risk management and transparency.
The Board of Cleanaway has adopted a range of charters and policies, which enshrine high standards of corporate
governance across the Company’s operations. Copies of Board and Committee charters and key policies and documents
supporting Cleanaway’s corporate governance practices are available online at http://www.cleanaway.com.au/for-investors/
corporate-governance/.These documents are regularly reviewed by the Board in conjunction with Management to ensure
that they continue to reflect any changes in governance practices and the law.
This Corporate Governance Statement was approved by the Board on 18 August 2016 and outlines Cleanaway’s key
corporate governance practices and related charters and policies as at 30 June 2016 and are consistent with the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations – 3rd Edition.
Principle 1: Lay solid foundations for management and oversight
The Cleanaway Board is responsible for the overall stewardship, strategic direction, governance and performance of the
Company. The Board operates under a Charter, which sets out its role, powers and responsibilities.
The Board’s objectives are to:
• oversee and monitor the strategic direction of Cleanaway and provide effective oversight of its management and
business activities;
• optimise Cleanaway’s performance so as to create and build sustainable value for shareholders within a framework
of appropriate risk assessment and management; and
•
seek to ensure Cleanaway acts in accordance with its legal and other obligations.
The key responsibilities of the Board in support of these objectives as set out in the Charter are as follows:
• oversight of Cleanaway, including its control and accountability systems, that seek to ensure the creation and protection
of shareholder value;
• monitoring of Cleanaway’s financial position and its ability to meet its debts and other obligations as they fall due;
• promulgating clear standards of ethical behaviour required of Directors, Senior Executives and employees, and
encouraging observance of those standards;
•
reviewing, ratifying and monitoring systems of risk management, internal compliance and control, codes of conduct and
legal compliance;
• ensuring that an appropriate health, safety and environment framework is in place to support safe workplace practices
and to comply with Cleanaway’s environmental obligations;
• contributing to the development of, and final approval of, management’s corporate strategy and performance objectives; and
• monitoring the implementation of the strategic plans and performance objectives of Cleanaway, and assessing
Cleanaway’s performance against these.
Key functions reserved to the Board as set out in the Charter are as follows:
• adopting an annual budget for the financial performance of Cleanaway and monitoring performance against it;
• approving material capital expenditures, acquisitions and divestments and other material transactions;
• approving the Chief Executive Officer’s (CEO) terms of engagement, and where required, his termination benefits;
•
reviewing the remuneration and incentive framework for senior management and all Cleanaway employees;
• approving Cleanaway’s annual report and financial report upon recommendations from the Audit and Risk Committee,
and in accordance with the Corporations Act, ASX Listing Rules and any other applicable regulations;
• approving capital management matters, including Cleanaway’s dividend policy and authorising payment of dividends;
• ensuring proper and timely financial and governance reporting to shareholders and other stakeholders;
•
reviewing on a continuing basis:
–
–
recruitment, retention and termination policies and procedures for senior management; and
executive succession planning (in particular the office of CEO);
•
reviewing, at least annually, diversity and inclusion policy, diversity targets, initiatives and progress toward their
achievement; and
• monitoring and overseeing the management of shareholder and stakeholder relations.
28
Corporate Governance The Board has delegated the responsibility of day-to-day management and the performance of Cleanaway and the
development and implementation of Board-endorsed strategy to the CEO and Management. This delegation is formally
reflected in, and governed by, delegated authority limits, which are regularly reviewed and endorsed by the Board.
Appointment of Directors and Executive Committee members
Cleanaway carefully considers the character, experience, education and skill set, as well as interests and associations, of each
potential candidate for appointment to the Board and conducts appropriate checks to verify the suitability of the candidate
prior to their appointment as a Director.
Cleanaway has appropriate procedures in place to ensure that material information relevant to a decision to elect or re-elect
a Director is disclosed in the notice of meeting provided to shareholders.
In addition to being set out in the Charter, the roles and responsibilities of Directors are formalised in the letter of appointment,
which each Director is required to sign to confirm their appointment.
Each letter of appointment specifies the term of appointment, time commitment envisaged, expectations in relation to
committee work or any other special duties attaching to the position, reporting lines, remuneration arrangements, disclosure
obligations in relation to personal interests, confidentiality obligations, insurance and indemnity entitlements and details
of the Company’s key governance policies.
Each member of the Executive Committee enters into a service contract with the Company, which sets out the material
terms of their employment, including a description of position and duties, reporting lines, remuneration arrangements and
termination rights and entitlements.
Details of contractual entitlements of Executive Committee members who are Key Management Personnel are summarised
in the Remuneration Report of the Annual Report.
Company Secretary
The Company Secretary is responsible for ensuring that Board policies and procedures are complied with and that governance
matters are addressed. The Company Secretary is accountable to the Board, through the Chairperson, on all matters to do
with the proper function of the Board.
Each Director is entitled to access the advice and services of the Company Secretary. The appointment and removal of a Company
Secretary is a matter reserved for decision by the Board.
Diversity and Inclusion
Cleanaway has a workforce made up of people with diverse values, backgrounds, skills, experiences and needs. Diversity
at Cleanaway encompasses differences in gender, ethnicity, language, age, sexual orientation, religious beliefs, political beliefs,
socio-economic status, physical and mental ability, experience and education.
Cleanaway values this diversity, and recognises the benefits that it brings to our Company, customers and other key
stakeholders. Cleanaway’s Diversity and Inclusion Policy Statement, which can be found at http://www.cleanaway.com.au/for-
investors/corporate-governance/ and the supporting processes are aimed at creating a culture where our employees understand
that each individual is unique and that managing diversity makes us more flexible, productive, creative and competitive.
Under this Policy, the Board is responsible for establishing measurable objectives for achieving diversity within Cleanaway
and assessing the progress in achieving these objectives. During the year, the Board has reviewed the Company’s progress
in achieving the objectives set for the financial year 30 June 2016.
Performance against these objectives for the period 1 July 2015 – 30 June 2016 is set out below:
TARGETS FOR 30 JUNE 2016
Increase overall female representation to 21%
Increase females in management roles to 22%
Increase females in operational roles to 4.5%
In addition:
AS AT
30 JUNE 2016
19%
20%
4.4%
AS AT
30 JUNE 2015
20%
20%
4.0%
• One of our seven Non-executive Directors is female (14% representation).
• One of our six senior executive members (comprising of the Executive Team) is female (17% representation).
The significant cost down and reduced recruitment activities during the 2016 financial year in comparison to previous year
has provided fewer opportunities to impact on our diversity and inclusion performance.
29
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 Whilst gender has been the key target since 2012, Cleanaway recognises that the span of diversity and inclusion is far
broader. Accordingly, in the current financial year there will be a range of diversity initiatives which target indigenous
engagement and further focus on age and gender inclusion.
Further details about our diversity initiatives are set out on page 16 of this Annual Report.
Cleanaway has completed a workplace profile report as required by the Workplace Gender Equality Act 2012 (WGEA)
for 2016. A copy of the Company’s WGEA report for 2016 is available online at http://www.cleanaway.com.au/careers/
Performance Evaluation
The Board considers that reviewing its performance is essential to good governance. Under its Charter, the Board is responsible
for undertaking regular reviews of its own performance and that of the Board Committees and individual Directors.
The review process is designed to help optimise performance by providing a mechanism to raise and resolve issues, and
to provide recommendations to assist the Board, Board Committees and individual Directors to enhance their effectiveness.
The Board’s performance is externally and internally evaluated from time to time. An internal evaluation of the performance
of Board members and Committees was undertaken during the course of the year.
The Board is responsible for evaluating the performance of the CEO on an annual basis, assessed against Cleanaway’s
financial performance, business transformation, management development, and enhanced safety and sustainability
performance. A performance review of the CEO was conducted in relation to his performance for the 2016 financial
year. Evaluation details are set out in the Remuneration Report. The CEO conducts performance reviews of the Executive
Committee member on an annual basis and reports on their performance to the Remuneration and Nomination Committee.
Cleanaway has a performance management system that includes a scorecard of individual performance measures and
standards. The system includes processes for the setting of objectives and the annual assessment of performance against
objectives. The performance of the Executive Committee members was reviewed by the CEO in accordance with the
performance management system in June 2016.
Principle 2: Structure the Board to add value
Cleanaway’s constitution calls for at least three but not more than 10 Directors. As at 30 June 2016, the Board comprised
of seven independent Non-Executive Directors, and one Executive Director (the CEO). As announced in February 2016,
Martin Hudson will retire as Chairman and as a Director of the Company before the 2016 Annual General Meeting and
Mark Chellew will succeed Mr Hudson as Chairman. Profiles of current Directors outlining their appointment dates,
qualifications, directorships of other listed companies (including those held at any time in the three years immediately
before the end of the financial year), experience and expertise are set out on pages 24 to 25 of this Annual Report.
Director Independence
The Board comprises a majority of independent Non-Executive Directors. The Charter states that a Non-Executive Director
is independent if he or she is not a member of management and is free of any interest, position, association or relationship
that might influence, or reasonably be perceived to influence, in a material respect, his or her capacity to bring independent
judgement to bear on issues before the Board and to act in the best interests of Cleanaway and its shareholders generally.
When determining the independent status of a Non-Executive Director, the Board will take into account the factors relevant
to assessing the independence of a director as specified by the ASX Corporate Governance Council, including whether
that Director:
•
•
•
•
is a substantial shareholder of Cleanaway or an officer of, or otherwise associated directly with, a substantial shareholder
of Cleanaway;
is or has been employed in an executive capacity by the Cleanaway Group, and there has not been a period of at least
three years between ceasing such employment and serving on the Board;
is or has within the last three years been a Partner, Director or senior employee of a provider of material professional
services to the Cleanaway Group;
is or has been within the last three years in a material business relationship (for example, as a supplier or customer) with
the Cleanaway Group, or an officer of, or otherwise associated with, someone with such a relationship;
• has a material contractual relationship with Cleanaway other than as a Director;
• has close family ties with any person who falls within any of the categories described above; or
• has been a Director of Cleanaway for such a period that his or her independence may have been compromised.
30
Corporate Governance Whether or not a material relationship exists is determined on a case-by-case basis, giving consideration to the nature
of the relationship and the specific circumstances of the Director. Materiality is considered from the perspective of the
Company, the Director, and the person or entity with which the Director has a relationship.
The Board reviews the independence of Directors before they are appointed, on an annual basis, and at any other time
where the circumstances of a Director changes such as to require reassessment.
The Board has reviewed the independence of each of the Directors in office and has determined that all Non-Executive
Directors are independent. Certain Non-Executive Directors hold directorships in companies with which Cleanaway has
commercial relationships. Details of these other directorships are set out on pages 24 to 25 of this Annual Report.
The independent status of each Director standing for re-election is identified in the notice of Annual General Meeting.
If the Board’s assessment of a Director’s independence changes, the change is disclosed to the market.
Conflicts of Interest
Directors are required to keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with
those of Cleanaway. A Director who has an actual or potential conflict of interest or a material personal interest in a matter
is required to declare that potential or actual conflict of interest to the Board. If the Board determines that there is a material
conflict of interest, the Board may require the relevant director to:
• not receive the relevant papers;
• not be present at the meeting while the matter is considered; and
• not participate in any decision on the matter.
The Board may resolve to permit a Director to have an involvement in a matter involving a potential or actual conflict of
interest. In such instances, the Board will minute full details of the basis of the determination and the nature of the conflict,
including a formal resolution concerning the matter.
Chair of the Board
The Board Charter requires an independent Non-Executive Director to hold the position of Chairperson, unless the Board
otherwise resolves.
The Chairman, Martin Hudson, is an independent Non-Executive Director and will retire as Chairman and as a Director of the
Company before the 2016 Annual General Meeting. Mark Chellew, currently an independent Non-Executive Director of the
Company, will succeed Mr Hudson as Chairman.
The Chairman’s responsibilities are set out in the Board Charter.
The roles of the Chairman and CEO are not exercised by the same person. The Chairman attends Board Committee meetings
in an ex-officio capacity.
Board Committees
Under the Company’s Constitution and as set out in the Charter, the Board may delegate any of its powers and responsibilities
to a committee of the Board to assist it to effectively and efficiently discharge its responsibilities.
The Board has established the following Committees:
• Audit and Risk Committee;
• Remuneration and Nomination Committee; and
• Health, Safety and Environment Committee.
The Charter of each Committee sets out their respective duties and responsibilities and is available online at
http://www.cleanaway.com.au/for-investors/corporate-governance/
Details of individual Director’s memberships of Committees are provided in the Director biographies on pages 24 to 25 of this
Annual Report.
All Directors are entitled to attend meetings of the Committees where there is no conflict of interest. Papers considered by
the Committees, and minutes of each Committee meeting, are provided to all Directors. The proceedings of each Committee
meeting are reported at the next Board meeting by the relevant Committee Chair.
31
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 Independent Advice
The Board, an individual Director, and each of the Committees has the authority to seek any information it requires from
any employee or external party, including the Internal and External Auditors.
After consultation with the Chairman, a Director may take such independent legal, financial or other advice as they consider
necessary to fulfil their duties, at the expense of the Company.
The Chairman may determine that any external advice received by an individual Director be circulated to the other Directors.
Induction
Cleanaway’s Director Induction Program is designed to enable new Directors to gain an understanding of, among other
things, the Company’s culture and values and its financial, strategic, operational and risk management position.
New Directors are given an induction briefing by the Company Secretary and Chairman and an induction pack containing
information about the Company, Board and Committee Charters and Company policies and procedures.
New Directors also meet with the Executive Committee to gain an insight into the Company’s business operations and the
corporate structure.
Non-Executive Directors are encouraged and given the opportunity to broaden their knowledge of the business by receiving
regular briefings on Cleanaway’s operations from Management and the Executive Committee, undertaking site visits in
different locations and receiving presentations from external parties in a range of fields.
Directors’ attendance at Board and Committee meetings
The number of Board and Committee meetings held and attendances by Directors at these meetings during the financial
year are set out on page 46 of this Annual Report.
The Non-Executive Directors meet without the presence of management during the course of regular Board meetings, and
on other occasions as required outside regular Board meetings.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee assists the Board in its oversight of Cleanaway’s:
•
•
remuneration and incentive strategy and arrangements;
recruitment, retention and succession planning for the Board;
• corporate culture and engagement; and
• diversity and inclusion strategy.
The Committee consisted of the following independent Non-Executive Directors:
R M Harding (Chairman)
R M Smith
T A Sinclair
M P Chellew
The Committee met four times during the financial year. Details of the number of meetings held and attendances are set
out on page 46 of this Annual Report.
The Committee’s key responsibilities and functions for nomination matters are as set out in the Remuneration and
Nomination Committee Charter and include, among other things:
• determining the appropriate size and composition of the Board (including skills, knowledge, diversity and experience)
and making recommendations to the Board with regard to any appropriate changes;
•
setting a formal and transparent procedure for selecting new Non-Executive Directors for appointment to the Board;
• making recommendations to the Board on the appointment, re-election and removal of Directors and appointment and
removal of key executives;
• developing and implementing Board and CEO succession plans;
• developing strategies to address Board diversity; and
• ensuring there is an appropriate induction program in place for new Non-Executive Directors, as well as ongoing training
and education programs for the Board to ensure that all Directors are provided with adequate information regarding the
operation of the business, the industry and their legal responsibilities and duties.
The Committee Charter is reviewed annually and a copy is available online at http://www.cleanaway.com.au/for-investors/
corporate-governance/
32
Corporate Governance Board Composition
When reviewing the composition of the Board and making recommendations to the Board regarding the appointment
of Directors, the Remuneration and Nomination Committee aims to ensure that the Board continues to include Directors
with an appropriate balance of skills, experience, expertise and diversity to efficiently and effectively discharge its
responsibilities and govern the Company.
Collectively, the Board has a diverse range of skills and experience relevant and adequate for the efficient and effective
management of the business. Board members, including some who are also directors of other ASX-listed companies,
together have a combination of experience in the following areas:
•
industrial services and logistics;
• corporate strategy;
• accounting;
• mergers and acquisitions;
•
•
risk management;
law, governance and regulation;
• health, safety and environment; and
• other board and management experience.
Biographies of current Directors, including details of their qualifications, tenure in office and independent status, are set
out on pages 24 to 25 of this Annual Report.
The Board considers its current membership represents an appropriate mix of skills and experience to enable the Board
to continue to effectively discharge its responsibilities and deliver the Company’s strategy and corporate objectives.
Principle 3: Promote ethical and responsible decision making
Code of Conduct
Cleanaway recognises that its reputation is an essential element to its continued success and that its reputation is directly
attributable to the ethical behaviour of those who represent it. Cleanaway has developed a Corporate Code of Conduct
(the Code) which sets out certain basic principles that all Directors, employees, contractors and consultants are expected
to follow in all dealings related to Cleanaway, to ensure that Cleanaway’s business is conducted in accordance with the laws
and regulations of all areas in which it operates.
The Code is fully endorsed by the Board and is annually reviewed and updated as necessary to ensure it reflects the highest
standards of behaviour and professionalism and the practices necessary to maintain confidence in Cleanaway’s integrity.
Any breach of the Code is considered a serious matter which may result in disciplinary action, including termination of
employment. A copy of the Code is available online at http://www.cleanaway.com.au/for-investors/corporate-governance/
Supporting the Corporate Code of Conduct are the Whistleblower Policy, Anti-Bribery and Corruption Policy, and Conflict
of Interest Policy, which further sets out the Company’s commitment to high standards of conduct and ethical behaviour
in all areas of business activity.
Employees who are aware of any serious misconduct or unethical behaviour that contravenes the Corporate Code of
Conduct, any Company policies or the law, are encouraged to report this to their Manager or make a report under the
independent whistleblower service, FairCall. The Policy provides that all reports will be investigated in an appropriate manner
and that feedback on the outcome of the investigation will be provided to the person making the report where appropriate.
The Anti-Bribery and Corruption Policy provides guidance to employees on how to recognise and deal with instances
of potential or actual bribery and corruption. The Policy also sets out circumstances where it is not appropriate to exchange
gifts or hospitality with business partners and the threshold for offering or accepting of gifts or hospitality. Proposed
donations and sponsorships must be approved in accordance with the Company’s Delegated Authority Limits Policy.
To ensure all business transactions are managed in a transparent manner that promotes confidence in the integrity,
legitimacy, impartiality and fairness of decision-making processes within Cleanaway, all personnel employed by or acting
on behalf of Cleanaway, are required to disclose their private interests in activities if their private interests have the
potential of influencing the performance of their duties and responsibilities while they are still employed by the Company.
The Company’s Conflict of Interest Policy provides comprehensive guidance to help employees manage any potential conflicts
of interest.
33
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 In addition, Cleanaway’s Securities Trading Policy reinforces the Corporations Act 2001 restrictions in relation to insider trading
and prohibits Directors, Executives and other employees from dealing in Cleanaway securities at any time if that person is in
possession of price sensitive information that has not been made publicly available. Directors, Executives and other employees
are prohibited from engaging in short-term or speculative trading in Cleanaway securities and trading in derivatives in respect
of Cleanaway securities, including performance rights issued under Cleanaway incentives schemes. This includes entering
into any hedging arrangements or acquiring financial products (such as equity swaps, caps and collars or other hedging
products) over unvested performance rights which have the effect of reducing or limiting exposure to risks associated with
the market value of Cleanaway securities. The Policy also applies to parties related to the Directors, Executives and employees
of the Company.
No Director, Executive or employee may directly or indirectly enter into any margin loan facility against Cleanaway securities
unless prior written consent of the Chairman of the Board is obtained (in the case of employees, this applies only to the
extent their margin loan is considered material).
In addition to sending annual reminders to employees regarding the above policies, these policies are also available on the
Company’s intranet and website.
Principle 4: Safeguard integrity in financial reporting
Audit and Risk Committee
In relation to audit matters, the Audit and Risk Committee assists the Board to independently verify and safeguard the
integrity of Cleanaway’s financial reporting, review and evaluate all material capital management, financing and treasury
risk management proposals and provide oversight of Cleanaway’s risk management framework.
The Committee consists of all independent Non-Executive Directors as follows:
R M Smith (Chairman)
T A Sinclair
E R Stein
P G Etienne
The Committee has appropriate financial expertise and all members are financially literate and have an appropriate
understanding of the industries in which Cleanaway operates. Details of each Committee member’s experience and
qualifications are set out in pages 24 and 25 of the Annual Report.
The Committee met four times during the financial year. Details of the number of meetings held and attendances during
the financial year are set out on page 46 of this Annual Report.
The Chairman of the Board is not permitted to Chair this Committee. The Committee’s responsibilities and functions,
as set out in the Audit and Risk Committee’s Charter, include (among other things):
•
review financial reports (including the annual report and related regulatory filings) to be issued by the Company prior
to recommending them to the Board for approval and release to the market, to ensure their integrity and compliance
with statutory and contractual requirements;
• assess the management processes supporting external reporting;
•
•
review and approve the audit plan of the External Auditors, monitor their progress against that plan, and ensure that the
annual statutory audit and half-year review are conducted in an effective manner;
review and approve the internal audit plan, ensuring that an appropriate program of internal audit activity is undertaken
each year, and monitor the progress of the Internal Auditor against that plan;
• on an annual basis, assess the performance and independence of the External and Internal Auditors;
• make recommendations for the appointment or removal of the External and the Internal Auditors;
• assess and monitor risk management and internal control systems (including the Group’s risk management framework)
to ensure that material risks are identified, monitored and appropriately managed at levels determined to be acceptable
by the Board; and
•
review and monitor the compliance with key Company policies (including Securities Trading Policy, Continuous Disclosure
Policy, Delegated Authority Levels Policy, Anti-Bribery and Corruption Policy, and the Treasury Policy).
The Committee, or any individual member, has the authority to seek any information it requires from any employee or
external party, including the Internal and External Auditors.
The Committee meets with the Internal and External Auditors without Management present on a regular basis.
The Committee Charter is reviewed annually and a copy is available online at http://www.cleanaway.com.au/for-investors/
corporate-governance/
34
Corporate Governance Assurance from CEO and CFO regarding financial statements
In accordance with sections 295A of the Corporations Act 2001 (Cth), the CEO and Chief Financial Officer (CFO) have
provided a written statement to the Board declaring that, in their opinion:
•
•
the Company’s financial statements and notes thereto comply with accounting standards, and present a true and fair
view of the Company’s and consolidated entity’s financial position and performance;
the Company’s financial records for the financial year have been properly maintained in accordance with section 286
of the Corporations Act 2001;
and also states that:
•
the financial statements and notes thereto are in accordance with the Corporations Act 2001; and
• as at the date of the written statement there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable.
The written assurance from the CEO and CFO confirms to the Board that the declarations and statements above regarding
the integrity of the financial statements is founded on a sound system of risk management and internal control and that
such system was operating effectively and efficiently in all material respects in relation to financial reporting risks.
External Auditor
Ernst & Young were appointed as the Company’s External Auditors in November 2009.
The proposed rotation of the lead External Audit partner in respect to the 2016 financial year audit was completed
in November 2015, following the conclusion of the Company’s 2015 Annual General Meeting.
All non-audit services to be undertaken by the External Auditor require the prior approval of the Chairman of the Audit
and Risk Committee. Ernst & Young’s independence declaration to the Board for the financial year ended 30 June 2016
forms part of the Directors’ Report and is set out on page 63 of this Annual Report.
The External Auditor attends the Company’s Annual General meeting to answer questions which shareholders may have
about the conduct of the external audit for the relevant financial year, the preparation and content of the Audit Report,
the accounting policies adopted by the Company and the independence of the External Auditor in relation to the conduct
of the External Audit. Shareholders attending the Annual General Meeting are made aware that they may ask such questions
of the External Auditor and are provided an opportunity to submit written questions prior to the meeting.
Principle 5: Make timely and balanced disclosure
Cleanaway is committed to complying with its continuous disclosure obligations under the ASX Listing Rules.
Cleanaway has adopted a Continuous Disclosure Policy which sets out the procedures and requirements expected of
Directors, executives and all employees of the Company, to ensure compliance with its continuous disclosure obligations
under the ASX Listing Rules and the Corporations Act 2001.
A copy of the Continuous Disclosure Policy is available online at http://www.cleanaway.com.au/for-investors/corporate-governance/
Principle 6: Respect the rights of shareholders
The Company has established a Shareholder Communications Policy, which outlines how we engage and communicate
with our investors and shareholders. A copy of the Policy is available online at http://www.cleanaway.com.au/for-investors/
corporate-governance/
Shareholders attending the Annual General Meeting are made aware that they may ask questions and are provided
an opportunity to submit written questions prior to the meeting.
Principle 7: Recognise and manage risk
The Board recognises that effective risk management processes are essential to the Company achieving its business objectives
and to the Board meeting its corporate governance responsibilities.
Audit and Risk Committee
In relation to risk oversight, the function of the Audit and Risk Committee is, among other things, to assist the Board to:
• ensure Cleanaway’s risk management framework is effective, and capable of identifying and assessing areas of potential
material risk, as well as monitoring and managing identified material risks;
• monitor material changes to Cleanaway’s risk profile; and
• assess and monitor risk management and internal control systems to ensure that material risks are reduced to or managed
at levels determined to be acceptable by the Board.
35
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 Further details regarding the Audit and Risk Committee, its membership and the number of meetings held during the
financial year are set out on pages 34 and 46 of this Annual Report.
Health, Safety and Environment Committee
Cleanaway recognises the importance of health, safety and environmental (HSE) issues and is committed to a Zero Harm
philosophy. The Health, Safety and Environment Committee assists the Board in its oversight of Cleanaway’s strategies,
systems, policies and practices in respect of HSE matters, and compliance with its legal and regulatory obligations.
The Committee consisted of the following independent Non-Executive Directors:
M P Chellew (Chairman)
E R Stein
R M Harding
P G Etienne
The Committee met four times during the financial year. Details of the number of meetings held and attendances during the
financial year are set out on page 46 of this Annual Report.
The Chairperson of the Committee must be an independent Non-Executive Director and must not be the same person as the
Chairperson of the Board.
The Committee’s key responsibilities and functions, as set out in the Health, Safety and Environment Committee Charter, include:
• understanding Cleanaway’s operations and hazards and risks associates with those operations;
• overseeing Cleanaway’s HSE framework;
• monitoring compliance with, reviewing and recommending to the Board changes to, Company HSE policies;
• considering the Cleanaway’s HSE performance and issues, assessed by reference to agreed targets and measures,
including the impact on employees, third parties and reputation of the Group;
• ensuring that appropriate actions are being taken in respect of health, safety and environment incidents, hazards and risks;
•
•
reviewing Cleanaway’s performance in relation to HSE matters as determined in internal audit reviews; and
reviewing reports which are prepared and lodged by the Company in compliance with its statutory obligations concerning
the environment.
The Committee Charter is reviewed annually and a copy is available online at http://www.cleanaway.com.au/for-investors/
corporate-governance/
Approach to Risk Management
The Board has adopted a Risk Management, Compliance and Assurance Policy that sets out Cleanaway’s commitment
to proactive enterprise risk management and compliance. The policy is supplemented by an Enterprise Risk Management
Framework that seeks to embed risk management processes into Cleanaway’s business activities. Cleanaway also has detailed
control procedures in place which cover management accounting, financial reporting, maintenance of financial records,
project appraisal, environment, health and safety, IT security, compliance and other risk management issues.
In addition to maintaining appropriate insurance, numerous risk management controls are embedded in the Company’s risk
management and reporting systems. These include:
•
risk management systems and internal controls seeking to ensure that financial reporting risks are appropriately managed;
• policies regarding the maintenance of written financial records in accordance with section 286 of the Corporations Act 2001;
• guidelines and limits for approval of all expenditure inclusive of capital expenditure and investments;
• policies and procedures for the management of financial risk and treasury operations, including hedging exposure to foreign
currencies and interest rates;
• annual budgeting and monthly reporting systems for all divisions which enable monitoring of progress against
performance targets, evaluation of trends and variances to be acted upon;
• preparation and ongoing review of five-year strategic plans for all divisions;
• health and safety programs and targets; and
• diligence procedures for acquisitions.
36
Corporate Governance Management reports to the Audit and Risk Committee on a regular basis regarding Enterprise Risk Management compliance,
the results of internal audit reviews, and the effectiveness of Cleanaway’s management of its material business risks.
The Audit and Risk Committee also reviewed Cleanaway’s Risk Management, Compliance and Assurance Policy and
Enterprise Risk Management Framework during the financial year and concluded that the Company’s risk management
processes continue to be sound and that risks are identified, monitored and appropriately managed at levels determined
to be acceptable by the Board.
A copy of the Risk Management, Compliance and Assurance Policy is available online at http://www.cleanaway.com.au/
for-investors/corporate-governance/
Internal Audit
Cleanaway has a dedicated Risk and Assurance team responsible for evaluating, reporting on and refining risk management
processes within Cleanaway and for managing the internal audit function across the Company’s operations. Cleanaway has
adopted a co-sourced approach to internal auditing with the Cleanaway Internal Audit team and KPMG jointly performing
the internal audit function in accordance with the annual internal audit plan.
KPMG were appointed to assist in the performance of the internal audit function in 2010.
The internal audit function is independent of the External Auditor, and the Head of Audit and Risk reports to the Audit and
Risk Committee. The Audit and Risk Committee approves the annual internal audit plan and regularly meets with KPMG
without Management present.
Sustainability Risks
Cleanaway identifies and manages material exposures to economic, environmental and social sustainability risks in a manner
consistent with its Risk Management, Compliance and Assurance Policy and Risk Management Framework.
Information about key sustainability risks which have the potential to materially impact Cleanaway’s ability to execute and
achieve its business strategies, and the broad approach Cleanaway takes to mitigate these risks is set out below. These
risks are not listed in order of significance, nor should they be taken to be a complete or exhaustive list of the risks and
uncertainties associated with Cleanaway.
Economic Conditions
Cleanaway provides its services and products to individuals, companies and government across a range of economic sectors
in Australia including manufacturing, industrial, construction and resources sectors. Changes in the state of the economy and
the sectors of the economy to which the Company is exposed may have an adverse impact on the demand and pricing for
Cleanaway’s services and products and the Company’s operating and financial performance.
To the extent possible, the Company manages these risks by incorporating a consideration of economic conditions and future
expectations into its corporate and financial plans and forecast.
Financial Risks
Cleanaway is exposed to a variety of financial risks, including credit risk and adverse movements in interest rates and foreign
currency exchange rates. These risks may have an adverse effect on the Company’s operating and financial performance.
Information on how Cleanaway manages these risks is included in the Notes to the Financial Statements which is on set out
on pages 98 to 101 of this Annual Report.
Health and Safety
Cleanaway’s operations involve risks to both property and personnel. A health and safety incident may lead to serious injury
or death, which may result in reputational damage and adverse operating impacts with consequential effects to Cleanaway’s
financial performance and position.
Cleanaway manages these risks by developing and implementing appropriate strategies, systems, policies and procedures
in respect of operational health and safety matters to ensure compliance with legal and regulatory obligations.
37
Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONBUSINESSREVIEW3 Regulatory Environment
Cleanaway’s operations are subject to a variety of federal, state and local laws and regulations in Australia. These laws
and regulations, and permits and licences granted by the relevant regulators, establish various standards about the types
of operations that can be undertaken and the manner in which they are undertaken. Regulatory requirements which have
impacted historical results include state-based waste levies, carbon tax, environmental regulation and planning regulations.
Changes in regulatory requirements or failure to comply with conditions of permits and licences could adversely affect
Cleanaway’s ability to continue operations on a site and in turn the Company’s financial performance.
Cleanaway manages these risks by developing and implementing appropriate systems, policies and procedures to ensure
compliance with applicable regulatory requirements. Furthermore, to the extent possible, the Company incorporates
consideration of changes in regulatory requirements into its corporate and financial plans and forecasts.
Attract and Retain Key Management
Cleanaway’s operations are dependent upon the continued performance, efforts, abilities and expertise of its key
management personnel. The loss of services of such personnel may have an adverse effect on the operations of Cleanaway
as the Company may be unable to recruit suitable replacements within a short timeframe.
Cleanaway has in place human resource strategies and remuneration and employment policies to attract, retain and motivate
key management personnel and align the interests of key personnel with those of shareholders.
Operational Risk
A prolonged and unplanned interruption to Cleanaway’s operations could significantly impact the Company’s financial
performance. Cleanaway is exposed to a variety of operational risks, including risk of site loss or damage, environmental
and climatic events, industrial disputes and systems security breaches.
Cleanaway has a range of controls and strategies in place to manage such risks, including site business continuity and crisis
management plans, inspection and maintenance procedures, compliance programs, training, site and business interruption
insurance and systems security testing and improvements.
Principle 8: Remunerate fairly and responsibly
Remuneration and Nomination Committee
In relation to remuneration and human resources matters, the Remuneration and Nomination Committee is responsible
for assisting the Board to, among other things:
• provide oversight of Cleanaway’s overall human resources strategy (including remuneration and compensation plans); and
•
support management to achieve the Company’s strategy and corporate objectives by developing the capability and
engagement of Cleanaway’s employees.
The Committee does this by ensuring Cleanaway has in place appropriate human resources strategies and remuneration
and employment policies that are consistent with best practices and business requirements, and that Cleanaway adopts
and complies with remuneration and employment policies that:
• attract, retain and motivate high calibre executives so as to ensure the sustainable success of Cleanaway for the benefit
of all stakeholders;
• are consistent with the human resource needs of Cleanaway;
• motivate management to pursue the long-term growth and success of Cleanaway within an appropriate control
framework; and
• demonstrate a clear relationship between Executive performance and remuneration.
The Committee also oversees Cleanaway’s Diversity and Inclusion Policy, diversity practices, strategy and targets, including
remuneration by gender.
The Committee Charter is reviewed annually and a copy is available online at http://www.cleanaway.com.au/for-investors/
corporate-governance/
The Committee met four times during the financial year. Further details regarding its membership, and the number
of meetings held and attendances during the financial year are set out on pages 32 and 46 of this Annual Report.
Remuneration Report
The Remuneration Report, which has been included in the Directors’ Report, provides information on Cleanaway’s
remuneration policies and payment details for Non-Executive Directors and Key Management Personnel.
38
Corporate Governance Contents of Financial Statements
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
40
48
63
64
65
66
67
68
69
116
117
Notes to the Consolidated Financial Statements
Information about the Group and basis
of preparation
Statement of compliance
1. Corporate information
2.
3. Basis of preparation
4. Critical accounting estimates and judgements
Information about our financial performance
5. Segment reporting
6. Revenue
7. Other income
8. Net finance costs
9.
Income tax
10. Earnings per share
Information about working capital
11. Cash and cash equivalents
12. Trade and other receivables
13. Inventories
14. Trade and other payables
Other information about our financial position
20. Property, plant and equipment
21. Intangible assets
22. Equity accounted investments
23. Employee benefit liabilities
24. Provisions
25. Other liabilities
Information about our group structure
26. Business combinations
27. Subsidiaries
28. Deed of cross guarantee
29. Parent entity
Information about financial risks
and unrecognised items
30. Derivative financial instruments
31. Financial risk management
32. Contingent liabilities
33. Commitments
Information about our capital structure
Other information
15. Borrowings
16. Issued capital
17. Reserves
18. Dividends and distributions
19. Capital management
34. Share-based payments
35. Auditor’s remuneration
36. Events occurring after the reporting date
37. Related party transactions
Accounting policies
38. Significant accounting policies
39. New standards adopted
40. New standards and interpretations not yet adopted
Cleanaway Waste Management Limited 2016 ANNUAL REPORT
39
OVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4 Directors’ Report
The Directors present their Report (including the Remuneration Report) together with the Consolidated Financial Statements
of the Group, consisting of Cleanaway Waste Management Limited (the Company) and its controlled entities (Cleanaway
or the Group), for the financial year ended 30 June 2016 and the Auditor’s Report thereon.
On 1 February 2016, the Company changed its name from Transpacific Industries Group Ltd to Cleanaway Waste
Management Limited, following shareholders’ approval obtained at the Annual General Meeting held on 30 October 2015.
Directors
The names of Directors of the Company at any time during or since the end of the financial year are set out below. Directors
were in office for this entire period unless otherwise stated.
M M Hudson
M P Chellew
V Bansal
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
Non-Executive Director, Chairman
Non-Executive Director, Deputy Chairman (Appointed as Deputy Chairman on 19 February 2016)
Executive Director and Chief Executive Officer (Appointed as Executive Director 20 August 2015)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
The office of Company Secretary is held by D J F Last, LLB (Hons), B.Com, FGIA, GAICD.
Particulars of Directors’ qualifications, experience and special responsibilities can be found on pages 24 to 25.
Principal activities
During the financial year the principal continuing activities of Cleanaway were:
Commercial and industrial, municipal and residential collection services for all types of solid waste streams,
including general waste, recyclables, construction and demolition waste and medical and washroom services;
Ownership and management of waste transfer stations, resource recovery and recycling facilities,
secure product destruction, quarantine treatment operations and landfills;
Sale of recovered paper, cardboard, metals and plastics to the domestic and international marketplace;
Collection, treatment, processing and recycling of liquid and hazardous waste, including industrial waste,
grease trap waste, oily waters and used mineral and cooking oils in packaged and bulk forms;
Industrial solutions including industrial cleaning, vacuum tanker loading, site remediation, sludge management,
parts washing, concrete remediation, CCTV, corrosion protection and emergency response services;
Refining and recycling of used mineral oils to produce fuel oils and base oils; and
Generation and sale of electricity produced utilising landfill gas.
There were no significant changes in the nature of the Group’s principal activities that occurred during the year.
Dividends and distributions
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2016 of 1.7 cents per
share, being an interim dividend of 0.8 cents per share and final dividend of 0.9 cents per share. The record date of the final
dividend is 21 September 2016 with payment to be made 7 October 2016. The financial effect of the final dividend has not
been brought to account in the Financial Statements for the year ended 30 June 2016 and will be recognised in a subsequent
Financial Report.
Details of distributions in respect of the financial year are as follows:
RECOGNISED (PAID AMOUNTS)
Fully paid ordinary shares
Final dividend for 2015: 0.8c per share (2014: 1.5c per share)
Interim dividend for 2016: 0.8c per share (2015: 0.7c per share)
Step-up preference securities
Distribution for 2015: $3.05 per share (fully franked at 30% tax rate)
Total dividends and distribution paid
2016
$’M
12.6
12.7
–
25.3
2015
$’M
23.7
11.1
7.6
42.4
40
40
Directors’ Report
Directors’ Report
The Directors present their Report (including the Remuneration Report) together with the Consolidated Financial Statements
of the Group, consisting of Cleanaway Waste Management Limited (the Company) and its controlled entities (Cleanaway
or the Group), for the financial year ended 30 June 2016 and the Auditor’s Report thereon.
On 1 February 2016, the Company changed its name from Transpacific Industries Group Ltd to Cleanaway Waste
Management Limited, following shareholders’ approval obtained at the Annual General Meeting held on 30 October 2015.
The names of Directors of the Company at any time during or since the end of the financial year are set out below. Directors
were in office for this entire period unless otherwise stated.
Non-Executive Director, Chairman
Non-Executive Director, Deputy Chairman (Appointed as Deputy Chairman on 19 February 2016)
Executive Director and Chief Executive Officer (Appointed as Executive Director 20 August 2015)
Directors
M M Hudson
M P Chellew
V Bansal
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
The office of Company Secretary is held by D J F Last, LLB (Hons), B.Com, FGIA, GAICD.
Particulars of Directors’ qualifications, experience and special responsibilities can be found on pages 24 to 25.
Principal activities
During the financial year the principal continuing activities of Cleanaway were:
Commercial and industrial, municipal and residential collection services for all types of solid waste streams,
including general waste, recyclables, construction and demolition waste and medical and washroom services;
Ownership and management of waste transfer stations, resource recovery and recycling facilities,
secure product destruction, quarantine treatment operations and landfills;
Sale of recovered paper, cardboard, metals and plastics to the domestic and international marketplace;
Collection, treatment, processing and recycling of liquid and hazardous waste, including industrial waste,
grease trap waste, oily waters and used mineral and cooking oils in packaged and bulk forms;
Industrial solutions including industrial cleaning, vacuum tanker loading, site remediation, sludge management,
parts washing, concrete remediation, CCTV, corrosion protection and emergency response services;
Refining and recycling of used mineral oils to produce fuel oils and base oils; and
Generation and sale of electricity produced utilising landfill gas.
There were no significant changes in the nature of the Group’s principal activities that occurred during the year.
Dividends and distributions
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2016 of 1.7 cents per
share, being an interim dividend of 0.8 cents per share and final dividend of 0.9 cents per share. The record date of the final
dividend is 21 September 2016 with payment to be made 7 October 2016. The financial effect of the final dividend has not
been brought to account in the Financial Statements for the year ended 30 June 2016 and will be recognised in a subsequent
Directors’ Report
Review of results
Financial Results
The Group’s statutory profit after income tax for the year ended 30 June 2016 was $43.1 million (2015: loss of $15.4 million).
The Group’s underlying profit after income tax (attributable to ordinary equity holders) for the year ended 30 June 2016
of $63.3 million was up by 38.5% on the prior year (2015: $45.7 million). During the year the Group has implemented
a wide number and variety of initiatives targeted at improving operating margins and overall profitability.
The streamlining and simplification of the organisational and operating structure which were designed to achieve a fit for
purpose organisation as well as a restructure of the sales function were major contributors to the improved Group results.
Details of the operating segments and a summary of the segment and Group’s results for the financial year are set out below.
Operating review
The Group comprises two operating segments being Solids and Liquids & Industrial Services. Unallocated balances include the
Group’s share of profits from equity accounted investments and corporate balances. A description of the operating segments
and a summary of the associated segment results for the year are set out below:
Solids
Core business
Collections
Commercial and industrial (C&I), municipal and residential collection services for all types of solid
waste streams, including general waste, recyclables, construction and demolition waste and
medical and washroom services as well as resource recovery and recycling facilities, commodities
trading and secure product destruction and quarantine treatment operations.
Post Collections
Ownership and management of waste transfer stations and landfills, including the generation
and sale of electricity produced utilising landfill gas.
Financial metrics
Total revenue for the Solids segment increased by 11.7% to $1,058.4 million. Underlying
EBITDA increased by 20.0% to $237.7 million.
The Collections business reported both increased external revenues and earnings for the period.
External revenue increased by 3.0% and underlying EBITDA by 8.4% compared to the previous
corresponding period.
The Post Collections business reported both increased external revenues and earnings for the
period. External revenue increased 47.6% and underlying EBITDA 47.0% compared to the
previous corresponding period.
Performance
Collections
Details of distributions in respect of the financial year are as follows:
Financial Report.
RECOGNISED (PAID AMOUNTS)
Fully paid ordinary shares
Final dividend for 2015: 0.8c per share (2014: 1.5c per share)
Interim dividend for 2016: 0.8c per share (2015: 0.7c per share)
Step-up preference securities
Distribution for 2015: $3.05 per share (fully franked at 30% tax rate)
Total dividends and distribution paid
2016
$’M
12.6
12.7
–
25.3
2015
$’M
23.7
11.1
7.6
42.4
Market review and
priorities
Overall volumes and margins have increased compared to the previous corresponding period.
The growth initiatives which are being implemented across the business contributed to increased
revenues during the year.
Post Collections
The Post Collections business recorded strong revenue and EBITDA growth during the year.
Landfill volumes increased compared to prior year. The Melbourne Regional Landfill was the
major driver of the increased revenues and earnings for the business and continues to perform
in line with expectations.
Market conditions for the Solids operating segment has remained consistent with the prior year.
The market conditions for the 2017 financial year are not expected to vary materially from the
2016 financial year. Solids’ main priorities in the 2017 financial year will revolve around
continued focus on revenue growth, reducing customer churn and increasing market share
through customer service and pricing, achieving operational improvements and deriving value
from increased resource recovery, as well as the planned bio gas expansion at the Melbourne
Regional Landfill.
40
41
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Directors’ ReportCleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Directors’ Report
Operating review (continued)
Liquids and Industrial Services
Core business
Liquids and Industrial Services is a leading operator in the areas of:
Liquids & Hazardous Waste – collection, treatment, processing, refining and recycling
of liquid and hazardous waste, including hydrocarbons, for disposal or re-sale.
Industrial Services – services include plant and asset maintenance capabilities, high pressure
cleaning, vacuum loading, hydro excavation/non-destructive digging, site remediation,
sludge management, concrete remediation, CCTV, corrosion protection and emergency
response services.
Financial metrics
Total revenue decreased by 8.3% to $436.6 million, as a result of continued weak market
conditions and low oil prices. Underlying EBITDA increased by 3.0% from $55.8 million
to $57.5 million.
Performance
Liquid volumes, particularly in the hazardous liquids area, declined and continue to reflect
weakness in the industrial and manufacturing sectors of the Australian economy. Non-hazardous
liquid volumes were higher however average prices were lower than prior year.
Waste oil collections volumes declined during the period with selling prices of both base and fuel
oil down significantly compared to the previous corresponding period due to continuing volatility
in global oil prices.
The Industrial Services segment was flat as activity in the mining and resource processing sectors
remain soft on the back of lower commodity prices.
The improvement in underlying earnings and margins is the result of significant restructuring
activities and improvements in cost management.
Market review and
priorities
Market conditions for Liquids and Industrial Services remained difficult over the 2016 financial
year as the demand for services from the manufacturing and industrial sectors remained weak.
The market conditions for the 2017 financial year are not expected to vary materially from the
2016 financial year.
Liquids and Industrial Services’ main priorities in the 2017 financial year will be to maintain tight
cost control and key contracts.
42
42
Directors’ Report
Directors’ Report
Operating review (continued)
Liquids and Industrial Services
Core business
Liquids and Industrial Services is a leading operator in the areas of:
Liquids & Hazardous Waste – collection, treatment, processing, refining and recycling
of liquid and hazardous waste, including hydrocarbons, for disposal or re-sale.
Industrial Services – services include plant and asset maintenance capabilities, high pressure
cleaning, vacuum loading, hydro excavation/non-destructive digging, site remediation,
sludge management, concrete remediation, CCTV, corrosion protection and emergency
Financial metrics
Total revenue decreased by 8.3% to $436.6 million, as a result of continued weak market
conditions and low oil prices. Underlying EBITDA increased by 3.0% from $55.8 million
response services.
to $57.5 million.
Performance
Liquid volumes, particularly in the hazardous liquids area, declined and continue to reflect
weakness in the industrial and manufacturing sectors of the Australian economy. Non-hazardous
liquid volumes were higher however average prices were lower than prior year.
Waste oil collections volumes declined during the period with selling prices of both base and fuel
oil down significantly compared to the previous corresponding period due to continuing volatility
in global oil prices.
The Industrial Services segment was flat as activity in the mining and resource processing sectors
remain soft on the back of lower commodity prices.
The improvement in underlying earnings and margins is the result of significant restructuring
activities and improvements in cost management.
Market review and
Market conditions for Liquids and Industrial Services remained difficult over the 2016 financial
priorities
year as the demand for services from the manufacturing and industrial sectors remained weak.
The market conditions for the 2017 financial year are not expected to vary materially from the
2016 financial year.
Liquids and Industrial Services’ main priorities in the 2017 financial year will be to maintain tight
cost control and key contracts.
Directors’ Report
Operating review (continued)
Group results
Solids
Liquids and Industrial Services
Equity accounted investments
Waste management
Corporate
EBITDA 3
Depreciation and amortisation
EBIT 4
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing
operations
Profit for the period from
discontinued operations
Profit/(loss) after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
Step-up preference security holders
STATUTORY 1
2016
$’M
226.2
50.9
1.3
278.4
(21.5)
256.9
(160.8)
96.1
(34.5)
61.6
(18.5)
2015
$’M
187.1
(27.3)
1.4
161.2
(30.3)
130.9
(134.8)
(3.9)
(27.1)
(31.0)
7.4
UNDERLYING
ADJUSTMENTS 2
UNDERLYING 1
2016
$’M
11.5
6.6
–
18.1
6.3
24.4
2.1
26.5
–
26.5
(8.0)
2015
$’M
10.9
83.1
–
94.0
6.4
100.4
1.0
101.4
(0.9)
100.5
(23.0)
2016
$’M
237.7
57.5
1.3
296.5
(15.2)
281.3
(158.7)
122.6
(34.5)
88.1
(26.5)
2015
$’M
198.0
55.8
1.4
255.2
(23.9)
231.3
(133.8)
97.5
(28.0)
69.5
(15.6)
43.1
(23.6)
18.5
77.5
61.6
53.9
–
43.1
44.8
(1.7)
–
43.1
8.2
(15.4)
(23.6)
0.6
7.6
(15.4)
–
18.5
18.5
–
–
18.5
(8.2)
69.3
69.3
–
–
69.3
–
61.6
63.3
(1.7)
–
61.6
–
53.9
45.7
0.6
7.6
53.9
1
The use of the term ‘Statutory’ refers to IFRS financial information and ‘Underlying’ refers to non-IFRS financial information. Underlying earnings are
categorised as non-IFRS financial information and therefore have been presented in compliance with ASIC Regulatory Guide 230 – Disclosing non-IFRS
information. Underlying adjustments have been considered in relation to their size and nature, and have been adjusted from the Statutory information,
for disclosure purposes, to assist readers to better understand the financial performance of the underlying business in each reporting period. These
adjustments include transactions or costs that on their own or in combination with a number of similar transactions contribute more than five percent
of profit/(loss) after tax. Underlying adjustments are assessed on a consistent basis year-on-year and include both favourable and unfavourable items.
The exclusion of these items provides a result which, in the Directors’ view, is more closely aligned with the ongoing operations of the Group. The non-IFRS
financial information is unaudited.
2 Details of adjustments from Statutory to Underlying financial information are set out on page 44.
3
4
EBITDA represents earnings before interest, income tax, and depreciation and amortisation expense.
EBIT represents earnings before interest and income tax expense.
42
43
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Directors’ ReportCleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Directors’ Report
Operating review (continued)
The following table reconciles profit/(loss) from continuing and discontinued operations after income tax
(attributable to ordinary equity holders) to underlying profit after income tax (attributable to ordinary equity holders):
Profit/(loss) from continuing and discontinued operations after income
tax (attributable to ordinary equity holders)
Underlying adjustments to EBITDA:
Costs associated with restructuring
Costs associated with rebranding
Costs associated with the fleet grounding
Impairment of assets
Net proceeds from disposal of investments and costs of acquisitions
Other costs
Total underlying adjustments to EBITDA
Underlying adjustments to EBIT:
Depreciation and amortisation
Total underlying adjustments to EBIT
Underlying adjustments to net finance costs:
Net change in derivative financial instrument and US denominated borrowing
Total underlying adjustments to net finance costs
Underlying adjustments to income tax:
Tax impacts of underlying adjustments to EBITDA and finance costs
Total underlying adjustments to income tax
Gain on sale of NZ business after items transferred from reserves and income tax
Profit for the period from discontinued operations
Underlying profit after income tax (attributable to ordinary
equity holders)
NOTES
2016
$’M
2015
$’M
44.8
(23.6)
1
2
3
4
5
6
7
21.1
3.6
–
–
–
(0.3)
24.4
2.1
2.1
–
–
(8.0)
(8.0)
–
–
–
–
15.5
77.5
5.8
1.6
100.4
1.0
1.0
(0.9)
(0.9)
(23.0)
(23.0)
(8.2)
(8.2)
63.3
45.7
1
2
3
4
5
6
7
Relates to costs associated with organisational restructure (as announced by the CEO at the Annual General Meeting held on 30 October 2015) to achieve
a fit for purpose organisation under a revised operating model. Organisational restructure costs include the costs of actual and planned redundancies which
meet the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. In addition, restructuring costs include costs associated with
ceased projects and site closures resulting from a comprehensive operational review as part of the organisational structure and operating model revision.
Relates to costs incurred during the period to rebrand the Group to ‘Cleanaway’ (effective 1 February 2016) and reflect only part of a program of spend
to be incurred through to 30 June 2018 when the rebranding project is anticipated to conclude.
Relates to costs associated with the grounding of the Group’s fleet.
Relates to impairment of plant and equipment and intangible assets. Refer to note 21 in the Consolidated Financial Statements.
Relates to the net realised gain or loss on disposal of investments, sale of properties and assets and acquisition costs.
The current period amount relates to accelerated depreciation associated with the site closures referred to it note 1 above. The prior period amount relates
to costs associated with the fleet grounding.
Relates to net changes in the mark-to-market valuation of derivative financial instruments and the re-measurement of the related US denominated
borrowing to the spot rate at period end.
44
44
Directors’ Report
Directors’ Report
Operating review (continued)
The following table reconciles profit/(loss) from continuing and discontinued operations after income tax
(attributable to ordinary equity holders) to underlying profit after income tax (attributable to ordinary equity holders):
Profit/(loss) from continuing and discontinued operations after income
tax (attributable to ordinary equity holders)
NOTES
2016
$’M
2015
$’M
44.8
(23.6)
Net proceeds from disposal of investments and costs of acquisitions
Underlying adjustments to EBITDA:
Costs associated with restructuring
Costs associated with rebranding
Costs associated with the fleet grounding
Impairment of assets
Other costs
Total underlying adjustments to EBITDA
Underlying adjustments to EBIT:
Depreciation and amortisation
Total underlying adjustments to EBIT
Underlying adjustments to net finance costs:
Net change in derivative financial instrument and US denominated borrowing
Total underlying adjustments to net finance costs
Underlying adjustments to income tax:
Tax impacts of underlying adjustments to EBITDA and finance costs
Total underlying adjustments to income tax
Gain on sale of NZ business after items transferred from reserves and income tax
Profit for the period from discontinued operations
Underlying profit after income tax (attributable to ordinary
equity holders)
1
2
3
4
5
6
7
21.1
3.6
–
–
–
(0.3)
24.4
2.1
2.1
–
–
–
–
(8.0)
(8.0)
–
–
15.5
77.5
5.8
1.6
100.4
1.0
1.0
(0.9)
(0.9)
(23.0)
(23.0)
(8.2)
(8.2)
63.3
45.7
1
Relates to costs associated with organisational restructure (as announced by the CEO at the Annual General Meeting held on 30 October 2015) to achieve
a fit for purpose organisation under a revised operating model. Organisational restructure costs include the costs of actual and planned redundancies which
meet the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. In addition, restructuring costs include costs associated with
ceased projects and site closures resulting from a comprehensive operational review as part of the organisational structure and operating model revision.
2
Relates to costs incurred during the period to rebrand the Group to ‘Cleanaway’ (effective 1 February 2016) and reflect only part of a program of spend
to be incurred through to 30 June 2018 when the rebranding project is anticipated to conclude.
Relates to costs associated with the grounding of the Group’s fleet.
Relates to impairment of plant and equipment and intangible assets. Refer to note 21 in the Consolidated Financial Statements.
Relates to the net realised gain or loss on disposal of investments, sale of properties and assets and acquisition costs.
3
4
5
6
The current period amount relates to accelerated depreciation associated with the site closures referred to it note 1 above. The prior period amount relates
7
Relates to net changes in the mark-to-market valuation of derivative financial instruments and the re-measurement of the related US denominated
to costs associated with the fleet grounding.
borrowing to the spot rate at period end.
Directors’ Report
Operating review (continued)
Principal risks
The material business risks that could adversely impact the Group’s financial prospects in future periods are economic growth
and the regulatory environment.
Economic growth
Regulatory
environment
The state of the economy and the sectors of the economy to which the Group is exposed
materially impacts future prospects. Factors which have impacted results in recent periods
include increases and decreases in GDP and CPI, increases and decreases in the manufacturing,
industrials and construction industries and resource sector activity.
The regulatory environment materially impacts future prospects. Regulatory requirements which
have impacted historical results include state-based waste levies, carbon tax, environmental
regulations and planning regulations. Regulatory requirements, including environmental
regulations impacting waste management activities, have increased over time and could
potentially increase in the future.
The Group manages these risks in accordance with ASX Principle 7: Recognise and manage risk as set out in the Corporate
Governance Statement.
Financial position review
Operating cash flow increased 8.2% (2015: decrease of 21.2%) to $190.7 million (2015: $176.2 million). The Group’s net
assets have increased from $1,754.7 million to $1,781.5 million.
At balance date the Group had total syndicated debt facilities of $600.0 million (2015: $600.0 million), US Private Placement
Notes of US$48.0 million (2015: US$48.0 million) and an uncommitted bank guarantee facility of $60.0 million
(2015: $40.0 million).
Significant changes in the state of affairs
Other than matters mentioned in this Report, no other significant changes in the state of affairs of the Group occurred
during the financial year under review.
Events subsequent to reporting date
On 1 July 2016 the Group acquired the assets and business of Waste 2 Resources Group for $8.5 million. The Waste 2
Resources Group provides waste collection and recovery services in South East Queensland. The initial accounting for the
business combination is incomplete at the time the Group’s financial statements were authorised for issue, and accordingly
details of the financial effect of the business combination have not been disclosed.
On 25 July 2016 the Group acquired the non-controlling interest in Cleanaway Refiners Pty Ltd (formerly Transpacific Refiners
Pty Ltd) for $2.5 million. Prior to the acquisition the Group held a 50% controlling interest in this entity. Given that the
Group already controlled this entity prior to this acquisition, the transaction does not represent a business combination and
will be accounted for in equity as a transaction between equity holders.
Likely developments and expected results of operations
The Group will continue to pursue strategies aimed at improving the profitability, return on capital employed and market
position of its principal activities during the next financial year.
Disclosures of information regarding the likely developments in the operations of the Group and the expected results
of those operations in future financial years have been included in the Operating Review section of this Report.
Environmental regulation
The Group’s operations are subject to significant environmental regulation and the Group holds environmental licences
for its sites.
The Group is committed to achieving the highest standards of environmental performance. There were no material breaches
of environmental statutory requirements and no material prosecutions during the year. Aggregate fines paid during the year
to the date of signing this Annual Report were $47,102 (2015: $110,473).
The Group is registered under the National Greenhouse and Energy Reporting Act 2007, under which it is required to report
energy consumption and greenhouse gas emissions for its Australian facilities.
44
45
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Directors’ ReportCleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Directors’ Report
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its
audit engagement agreement, against claims by third parties arising from the audit (for an unspecified amount). No payment
has been made to indemnify Ernst & Young during or since the end of the financial year.
Directors’ meetings
The number of Directors’ meetings and Committee meetings, and the number of meetings attended by each of the Directors
who was a member of the Board and the relevant Committee, during the financial year were:
BOARD
MEETINGS
AUDIT AND
RISK COMMITTEE
HEALTH, SAFETY AND
ENVIRONMENT COMMITTEE
REMUNERATION AND
NOMINATION COMMITTEE
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
Directors
M M Hudson 1
M P Chellew 2
V Bansal
R M Smith 3
E R Stein
T A Sinclair
R M Harding 4
P G Etienne
8
8
8
8
8
8
8
8
8
7
8
8
8
8
8
8
–
–
–
4
4
4
–
4
–
–
–
4
3
3
–
4
–
4
–
–
4
–
4
4
–
4
–
–
3
–
3
4
–
4
–
4
–
4
4
–
–
4
–
4
–
3
3
–
1 Chairman of the Board.
2 Deputy Chairman of the Board and Chairman of Health, Safety and Environment Committee.
3 Chairman of Audit and Risk Committee.
4 Chairman of Remuneration and Nomination Committee.
Directors’ interests
The relevant interest of each Director in the shares and performance rights over such instruments issued by Cleanaway Waste
Management Limited, as notified by the Directors to the Australian Securities Exchange in accordance with section 205G(1)
of the Corporations Act 2001, as at 30 June 2016 is as follows:
Directors
M M Hudson
M P Chellew
V Bansal
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
ORDINARY
SHARES
PERFORMANCE
RIGHTS
75,258
25,000
–
65,715
66,549
38,789
12,644
13,737
–
–
3,167,167
–
–
–
–
–
Shares under option
During the financial year ended 30 June 2016 and up to the date of this Report, no options were granted over unissued
shares. As at the date of this Report there are no unissued ordinary shares of the Company under option.
Details of performance rights granted under the short term incentive and long term incentive offers in the 2016 and 2015
financial year are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2016 are
10,747,370 (2015: 14,015,315). Performance rights outstanding at the date of this report are 9,873,287.
Shares issued on the exercise of performance rights
During the financial year ended 30 June 2016 and up to the date of this report, the Company issued 1,245,350 shares as
a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June 2015 and
up to the date of the 2015 report, the Company issued 696,239 ordinary shares as a result of the exercise of performance
rights that vested on 30 June 2015.
46
46
Directors’ Report
Directors’ Report
Directors’ Report
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its
audit engagement agreement, against claims by third parties arising from the audit (for an unspecified amount). No payment
has been made to indemnify Ernst & Young during or since the end of the financial year.
Directors’ meetings
The number of Directors’ meetings and Committee meetings, and the number of meetings attended by each of the Directors
who was a member of the Board and the relevant Committee, during the financial year were:
BOARD
MEETINGS
AUDIT AND
RISK COMMITTEE
HEALTH, SAFETY AND
REMUNERATION AND
ENVIRONMENT COMMITTEE
NOMINATION COMMITTEE
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
Directors
M M Hudson 1
M P Chellew 2
V Bansal
R M Smith 3
E R Stein
T A Sinclair
R M Harding 4
P G Etienne
8
8
8
8
8
8
8
8
8
7
8
8
8
8
8
8
–
–
–
4
4
4
–
4
–
–
–
4
3
3
–
4
–
4
–
–
4
–
4
4
–
4
–
–
3
–
3
4
–
4
–
4
–
4
4
–
1 Chairman of the Board.
2 Deputy Chairman of the Board and Chairman of Health, Safety and Environment Committee.
3 Chairman of Audit and Risk Committee.
4 Chairman of Remuneration and Nomination Committee.
Directors’ interests
The relevant interest of each Director in the shares and performance rights over such instruments issued by Cleanaway Waste
Management Limited, as notified by the Directors to the Australian Securities Exchange in accordance with section 205G(1)
of the Corporations Act 2001, as at 30 June 2016 is as follows:
–
4
–
4
–
3
3
–
–
–
–
–
–
–
–
ORDINARY
PERFORMANCE
SHARES
RIGHTS
–
3,167,167
75,258
25,000
65,715
66,549
38,789
12,644
13,737
Directors
M M Hudson
M P Chellew
V Bansal
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
Shares under option
During the financial year ended 30 June 2016 and up to the date of this Report, no options were granted over unissued
shares. As at the date of this Report there are no unissued ordinary shares of the Company under option.
Details of performance rights granted under the short term incentive and long term incentive offers in the 2016 and 2015
financial year are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2016 are
10,747,370 (2015: 14,015,315). Performance rights outstanding at the date of this report are 9,873,287.
Shares issued on the exercise of performance rights
During the financial year ended 30 June 2016 and up to the date of this report, the Company issued 1,245,350 shares as
a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June 2015 and
up to the date of the 2015 report, the Company issued 696,239 ordinary shares as a result of the exercise of performance
rights that vested on 30 June 2015.
Directors’ and officers’ insurance
During the financial year, the Company paid insurance premiums to insure the Directors and Officers of the Company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the Directors and Officers in their capacity as Directors and Officers of entities in the Group, and any other payments
arising from liabilities incurred by the Directors and Officers in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a wilful breach of duty by the Directors and Officers or the improper use by the
Directors and Officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against
legal costs and those relating to other liabilities. Disclosure of the premium paid is not permitted under the terms of the
insurance contract.
Non-audit services
The Company may decide to employ the auditors on assignments additional to their statutory audit duties where the
auditors’ expertise and experience with the Company and/or the Group are important. No non-audit services were provided
during the year ended 30 June 2016. During the year ended 30 June 2015, non-audit services included due diligence services
and other advisory services.
Details of the amounts paid or payable to the auditor and its related practices for audit and non-audit services are set
out below.
Audit services
Audit related services
Non-audit services
Due diligence services
Other advisory services
Total
2016
$
1,435,270
9,000
2015
$
1,547,365
104,467
–
–
1,444,270
197,142
165,510
2,014,484
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 63.
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191 issued by the Australian Securities and
Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the Directors’
Report have been rounded off in accordance with that Legislative Instrument to the nearest hundred thousand dollars or,
in certain cases, to the nearest dollar.
This Report, including the Remuneration Report set out on pages 48 to 62, is made in accordance with a resolution
of the Board.
M M Hudson
Non-Executive Director and Chairman
V Bansal
Chief Executive Officer and Managing Director
Melbourne, 19 August 2016
46
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Remuneration Report (Audited)
Introduction
The Directors of Cleanaway Waste Management Limited present the Company’s Remuneration Report (Report) which forms
part of the Directors’ Report for the financial year ended 30 June 2016.
This Report outlines the remuneration arrangements for Key Management Personnel (KMP) of the Group in accordance with
the requirements of the Corporations Act 2001 and its Regulations. The information in this Report has been audited
as required by section 308(3C) of the Corporations Act 2001.
Contents
The Report contains the following sections:
1. Key management personnel
2. Governance and role of the board
3. Non-Executive Directors’ remuneration
4. Executive reward strategy and framework
5. Executive key management personnel – reward outcomes
6. Executive key management personnel – contract terms
7. Executive key management personnel – additional remuneration tables
8. Shareholdings and other related party transactions
1.
1. Key management personnel
Key management personnel
PAGE
48
49
49
51
52
59
60
62
For the purposes of this Report, KMP are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or indirectly, including any Director (whether Executive
or otherwise) of the Company.
Consistent with last year’s Report, this includes the Non-Executive Directors, Chief Executive Officer (CEO) & Managing
Director, Chief Financial Officer (CFO) and Executive General Manager – Sales & Marketing. Key changes during the year were:
The appointment of Mr Bansal as CEO & Managing Director;
The departure of Mr Perko as the Managing Director of the Solids business; and
The departure of Mr Roderick as the Managing Director of the Liquids and Industrial Services business.
The KMP disclosed in this Report for the year ended 30 June 2016 are detailed in the following table:
NAME
TITLE
PERIOD KMP
(IF LESS THAN FULL YEAR)
NON-EXECUTIVE DIRECTORS
M M Hudson
M P Chellew
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
EXECUTIVES
V Bansal
D A Aardsma
B J Gill
FORMER EXECUTIVES
J Perko
A G Roderick
Chairman and Non-Executive Director
Deputy Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer (CEO) & Managing Director
Executive General Manager – Sales & Marketing
Chief Financial Officer (CFO) 1
From 3 August 2015
Managing Director Solids
Managing Director Liquids and Industrial Services
Until 11 September 2015
Until 31 March 2016
1 Mr Gill was also acting CEO from 26 June 2015 to 3 August 2015.
48
48
Remuneration Report (Audited)
Remuneration Report (Audited)
Remuneration Report (Audited)
Introduction
The Directors of Cleanaway Waste Management Limited present the Company’s Remuneration Report (Report) which forms
part of the Directors’ Report for the financial year ended 30 June 2016.
This Report outlines the remuneration arrangements for Key Management Personnel (KMP) of the Group in accordance with
the requirements of the Corporations Act 2001 and its Regulations. The information in this Report has been audited
as required by section 308(3C) of the Corporations Act 2001.
Contents
The Report contains the following sections:
1. Key management personnel
2. Governance and role of the board
3. Non-Executive Directors’ remuneration
4. Executive reward strategy and framework
5. Executive key management personnel – reward outcomes
6. Executive key management personnel – contract terms
7. Executive key management personnel – additional remuneration tables
8. Shareholdings and other related party transactions
1. Key management personnel
PAGE
48
49
49
51
52
59
60
62
For the purposes of this Report, KMP are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or indirectly, including any Director (whether Executive
or otherwise) of the Company.
Consistent with last year’s Report, this includes the Non-Executive Directors, Chief Executive Officer (CEO) & Managing
Director, Chief Financial Officer (CFO) and Executive General Manager – Sales & Marketing. Key changes during the year were:
The appointment of Mr Bansal as CEO & Managing Director;
The departure of Mr Perko as the Managing Director of the Solids business; and
The departure of Mr Roderick as the Managing Director of the Liquids and Industrial Services business.
The KMP disclosed in this Report for the year ended 30 June 2016 are detailed in the following table:
Chairman and Non-Executive Director
Deputy Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
NAME
TITLE
NON-EXECUTIVE DIRECTORS
M M Hudson
M P Chellew
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
EXECUTIVES
V Bansal
D A Aardsma
B J Gill
FORMER EXECUTIVES
J Perko
A G Roderick
Chief Executive Officer (CEO) & Managing Director
From 3 August 2015
Executive General Manager – Sales & Marketing
Chief Financial Officer (CFO) 1
Managing Director Solids
Managing Director Liquids and Industrial Services
Until 11 September 2015
Until 31 March 2016
2. Governance and role of the board
2. Governance and role of the board
2A. Remuneration and nomination committee
The Remuneration and Nomination Committee (Committee) assists the Board in its oversight of the Group’s: remuneration
and incentives strategy and arrangements; recruitment, retention and succession plans for the Board and Executive
management team; corporate culture and engagement; and diversity and inclusion strategy.
The Committee’s charter is available online at: http://www.cleanaway.com.au/for-investors/corporate-governance/
The Committee is comprised entirely of independent Non-Executive Directors: Mike Harding (Chairman), Ray Smith, Terry
Sinclair and Mark Chellew. Other Non-Executive Directors, who are not Committee members, are entitled to attend meetings
as observers. The CEO and other Executives are invited to attend Committee meetings as required, however they do not
participate in decisions concerning their own arrangements.
2B. Engagement of remuneration consultants
Under the Committee’s charter, the Committee, or any individual member, has the authority, with the Chairperson’s
consent, to seek any information it requires from any employee or external party.
In accordance with the Corporations Act 2001, any engagement of a remuneration consultant to provide a remuneration
recommendation in respect of KMP must be approved and received by the Committee. The remuneration recommendation
must be accompanied by a declaration from the remuneration consultant that it was free from undue influence of KMP.
For the year ended 30 June 2016, the Committee did not receive any remuneration recommendation as defined in the
Corporations Act 2001 from remuneration consultants in relation to KMP.
Since 1 July 2016, the Committee has engaged 3 degrees consulting Pty Ltd to provide information and advice regarding
the Company’s short term and long term incentive plans, CEO remuneration and Non-Executive Director fees.
3. Non-Executive Directors’ remuneration
3. Non-Executive Directors’ remuneration
3A. Current Non-Executive Director fees
The remuneration received by Non-Executive Directors for the years ended 30 June 2016 and 30 June 2015 is set out in the
following table:
PERIOD KMP
(IF LESS THAN FULL YEAR)
NON-EXECUTIVE DIRECTORS
M M Hudson
M P Chellew
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
Total
FINANCIAL YEAR
SALARY AND FEES
$
SUPERANNUATION
BENEFITS 1
$
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
280,692
251,712
132,724
132,722
141,878
141,875
114,418
114,415
114,418
114,415
132,724
132,722
114,418
114,415
1,031,272
1,002,276
19,308
23,913
12,609
12,609
13,478
13,478
10,869
10,869
10,869
10,869
12,609
12,609
10,869
10,869
90,611
95,216
TOTAL
$
300,000
275,625
145,333
145,331
155,356
155,353
125,287
125,284
125,287
125,284
145,333
145,331
125,287
125,284
1,121,883
1,097,492
1 Mr Gill was also acting CEO from 26 June 2015 to 3 August 2015.
1
For comparative purposes, 2015 amounts have been restated to exclude a quarterly superannuation contribution relating to 2014 which was previously
incorrectly included.
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Remuneration Report (Audited)
3. Non-Executive Directors’ remuneration (continued)
3. Non-Executive Directors’ remuneration (continued)
3B. Aggregate fee limit
The current aggregate amount of remuneration that can be paid to Non-Executive Directors of $1,200,000 was approved
by shareholders at the Company’s 2010 Annual General Meeting.
For the year ended 30 June 2016, the aggregate remuneration paid to all Non-Executive Directors was $1,121,883.
This represents an increase of 2.2% compared with FY2015 and reflects the increase in the Chairman’s fee to $300,000
effective 1 July 2015 which brought the Chairman’s fee in line with peer companies and recognised the increased effort
required of the role of Chairman.
Fee structure
3C.
Aside from the 0.25% Superannuation Guarantee increases effective 1 July 2013 and 1 July 2014 respectively, the base
Non-Executive Director fee and Committee Chairman fees have not increased since 2010.
The fee structure (inclusive of superannuation) for the year ended 30 June 2016 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
300,000
125,287
AUDIT AND
RISK COMMITTEE
$
30,069
–
HEALTH, SAFETY AND
ENVIRONMENT
COMMITTEE
$
20,046
–
REMUNERATION AND
NOMINATION
COMMITTEE
$
20,046
–
As a result of a review of Non-Executive Director fees, the Board have approved, with effect from 1 July 2016, a 2.5%
increase in the Non-Executive Director fee and the introduction of a Committee membership fee of $5,000 for each
Committee membership. Note, the Chairman’s fee and the fees for chairing a Board committee remain unchanged.
In introducing this change, the Board took into consideration a number of factors including: the reduced size of the Board
as a result of Mr Hudson’s retirement, the intent that fees are in line with peer companies (having regard to market
capitalisation, industry sector and key competitors) and to provide adequate recompense for the additional time commitment
of Committee membership.
The fee structure (inclusive of superannuation) from 1 July 2016 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
300,000
128,419
AUDIT AND
RISK COMMITTEE
$
30,069
5,000
HEALTH, SAFETY AND
ENVIRONMENT
COMMITTEE
$
20,046
5,000
REMUNERATION AND
NOMINATION
COMMITTEE
$
20,046
5,000
50
50
Remuneration Report (Audited)
Remuneration Report (Audited)
Remuneration Report (Audited)
3. Non-Executive Directors’ remuneration (continued)
4. Executive reward strategy and framework
4. Executive reward strategy and framework
3B. Aggregate fee limit
The current aggregate amount of remuneration that can be paid to Non-Executive Directors of $1,200,000 was approved
by shareholders at the Company’s 2010 Annual General Meeting.
For the year ended 30 June 2016, the aggregate remuneration paid to all Non-Executive Directors was $1,121,883.
This represents an increase of 2.2% compared with FY2015 and reflects the increase in the Chairman’s fee to $300,000
effective 1 July 2015 which brought the Chairman’s fee in line with peer companies and recognised the increased effort
required of the role of Chairman.
3C.
Fee structure
Aside from the 0.25% Superannuation Guarantee increases effective 1 July 2013 and 1 July 2014 respectively, the base
Non-Executive Director fee and Committee Chairman fees have not increased since 2010.
The fee structure (inclusive of superannuation) for the year ended 30 June 2016 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
RISK COMMITTEE
AUDIT AND
HEALTH, SAFETY AND
REMUNERATION AND
ENVIRONMENT
COMMITTEE
NOMINATION
COMMITTEE
$
300,000
125,287
30,069
20,046
20,046
$
–
$
–
$
–
As a result of a review of Non-Executive Director fees, the Board have approved, with effect from 1 July 2016, a 2.5%
increase in the Non-Executive Director fee and the introduction of a Committee membership fee of $5,000 for each
Committee membership. Note, the Chairman’s fee and the fees for chairing a Board committee remain unchanged.
In introducing this change, the Board took into consideration a number of factors including: the reduced size of the Board
as a result of Mr Hudson’s retirement, the intent that fees are in line with peer companies (having regard to market
capitalisation, industry sector and key competitors) and to provide adequate recompense for the additional time commitment
of Committee membership.
The fee structure (inclusive of superannuation) from 1 July 2016 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
RISK COMMITTEE
AUDIT AND
HEALTH, SAFETY AND
REMUNERATION AND
ENVIRONMENT
COMMITTEE
NOMINATION
COMMITTEE
$
300,000
128,419
$
30,069
5,000
$
20,046
5,000
$
20,046
5,000
4A. Strategy and framework
The Group’s remuneration strategy is designed to attract, retain and motivate high calibre Executives to ensure the
sustainable success of the Group for the benefit of all stakeholders.
The Board ensures that executive remuneration satisfies the following key criteria for good remuneration governance practices:
Aligned to the Group’s business strategy;
Competitive and reasonable as benchmarked against the external market;
Performance linked to individual and financial performance; and
Aligned to shareholder value.
The Board, upon the recommendation of the Remuneration and Nomination Committee, has developed and adopted
a structure driven by these key criteria which comprises a mix of fixed and variable remuneration components.
In undertaking a review of the Company’s short term incentive plan, it became apparent that when STI deferral was
introduced, both the quantum and time period of deferral selected were in excess of market peers and accordingly the STI
deferral structure was a de-motivator for Executives. As a result of the review, the Board determined that, while STI deferral
would be retained, it would be appropriate to reduce both the deferral quantum and period for the CEO (from 50% and
two years) and other Executive KMP (from 33% and one year) to 20% and one year for both.
The Board considers that this change will ensure that the Company’s remuneration framework will remain market
competitive for talent – in terms of both the motivation and reward of the current management team and attraction
of future talent.
4B. Remuneration elements and mix
For the year ended 30 June 2016, the total remuneration packages for Executive KMP (with the exception of Mr Aardsma)
consist of the following elements:
TOTAL FIXED
REMUNERATION (TFR)
SHORT TERM INCENTIVE
(STI)
LONG TERM INCENTIVE
(LTI)
Annual fixed
remuneration,
including
superannuation
and other
non-monetary
benefits
CEO:
Target STI of 75%
of TFR and a stretch
of 150% of TFR.
Other Executive
KMP:
Target STI of 50%
of TFR and a stretch
of 100% of TFR.
CEO:
Target LTI of 75%
of TFR and a stretch
of 150% of TFR.
Other Executive
KMP:
Target LTI of 25%
of TFR and a stretch
of 50% of TFR.
80% payable as cash; and 20% allocated
as performance rights with vesting deferred
for 1 year.
Allocated as performance rights with vesting
linked to relative TSR and ROIC over a 3 year
performance period.
See section 5 for further detail on each of the elements listed above.
4C. Shareholding guideline
From 1 July 2015, the CEO and Executive team are encouraged to build and maintain a shareholding in the Company
equivalent to:
CEO – 100% of annual total fixed remuneration (TFR); and
Executive Team – 50% of annual TFR.
It is expected that this shareholding will be accumulated within five years from 1 July 2015, or the initial appointment date
to an Executive role, whichever is later.
The number of performance rights and ordinary shares in the Company held by each Executive KMP is set out in Tables 7A, 7B
and 8A.
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5. Executive key management personnel – reward outcomes
5. Executive key management personnel – reward outcomes
5A. Remuneration received
The remuneration received or receivable by Executive KMP for the years ended 30 June 2016 and 30 June 2015 is set out
in the following table:
FINANCIAL
YEAR
SALARY
AND FEES
$
OTHER
CASH
$
NON-
MONETARY
BENEFITS
$
SHARE-
BASED
PAYMENTS 1
$
STI
CASH
$
POST
EMPLOY-
MENT
BENEFITS
$
TERMINATION
PAY
$
TOTAL
$
PERFOR-
MANCE
RELATED
B J Gill
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal 2
D A Aardsma 3
2016 1,082,300
2016
2015
2016
2015
648,537 260,000
498,439 86,507
607,066
438,148
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
J Perko 4
164,539
752,820
486,882
707,561
–
A G Roderick 5
R C Boucher Jr 6
S G Cummins
Total
– 956,150
573,600
–
– 214,800
–
–
60,090 668,895 17,699
–
99,391
–
–
26,826
–
– 165,162 19,308
1,034 49,194 14,300
– 2,785,134
– 1,581,528
611,772
–
– 1,006,336
502,676
–
36,909 (191,812)
40,019 373,704
–
–
2016
–
–
2015
4,544 (194,431) 14,481
–
2016
4,443 453,641 18,783
–
2015
–
–
2016
–
2015 1,506,068 500,000
2015
8,853
–
203,867
2016 2,989,324 260,000 1,744,550 211,221 447,814 51,488
– 114,667 642,267 41,936
2015 4,106,903 586,507
–
–
(234,272)
10,287
32,800
9,545
–
–
–
–
–
–
–
668,861
9,636
–
– 1,166,543
980,337
– 1,184,428
10,287
–
30,315 2,069,183
598,954
586,947
668,861 6,373,258
629,269 6,121,549
58%
36%
0%
38%
10%
0%
32%
0%
38%
0%
24%
0%
1
Share-based payments consist of performance rights. The fair value of the performance rights is measured at the date of grant using Monte Carlo simulation
and the Black Scholes model and is allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the
portion of the fair value of the performance rights recognised as an expense in each reporting period, net of any reversals for forfeited performance rights
or changes in the probability of performance rights vesting. Performance rights include the expense relating to the deferred share component of STI.
2 Non-monetary benefits comprise costs associated with Mr Bansal’s accommodation in Melbourne and personal travel between Sydney and Melbourne.
Share-based payments comprise the expense relating to the one-off allocation of 328,947 performance rights to the value of $250,000, as disclosed
in the prior year, the FY2016 LTI allocation, and the deferred share component of FY2016 STI.
3 Other cash comprises Mr Aardsma’s international service premium reflecting the expatriate nature of his assignment. Non-monetary benefits comprise costs
associated with Mr Aardsma’s relocation from the USA, personal travel between Australia and the USA, health insurance, tax preparation and car parking.
4 KMP until 11 September 2015. Non-monetary benefits comprises costs associated with Mr Perko’s personal travel between Australia and the USA and
health insurance. No termination pay provided.
5 KMP until 31 March 2016. Non-monetary benefits comprise costs associated with provision of a fuel card and e-tag. Termination pay represents payment
in lieu of notice.
6 KMP until 26 June 2015. During the year ended 30 June 2016, the Company paid PwC $10,287 for the preparation of Mr Boucher’s Australian and US
tax returns.
An explanation of the key remuneration elements (TFR, STI and LTI) as well as FY2016 outcomes is provided in the
following sections.
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5. Executive key management personnel – reward outcomes
5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5A. Remuneration received
in the following table:
The remuneration received or receivable by Executive KMP for the years ended 30 June 2016 and 30 June 2015 is set out
FINANCIAL
YEAR
SALARY
AND FEES
$
OTHER
CASH
$
NON-
STI
MONETARY
SHARE-
BASED
CASH
BENEFITS
PAYMENTS 1
BENEFITS
POST
EMPLOY-
$
$
MENT
TERMINATION
PAY
$
TOTAL
PERFOR-
MANCE
$
RELATED
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal 2
D A Aardsma 3
2016 1,082,300
– 956,150
60,090 668,895 17,699
648,537 260,000
573,600
498,439 86,507
99,391
26,826
– 214,800
– 165,162 19,308
1,034 49,194 14,300
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
B J Gill
J Perko 4
A G Roderick 5
R C Boucher Jr 6
2016
2015
2016
2015
2016
2015
2016
2015
2016
607,066
438,148
164,539
752,820
486,882
707,561
–
$
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
36,909 (191,812)
40,019 373,704
4,544 (194,431) 14,481
668,861
980,337
4,443 453,641 18,783
– 1,184,428
–
10,287
30,315 2,069,183
10,287
32,800
2015 1,506,068 500,000
S G Cummins
2015
203,867
9,545
(234,272)
8,853
598,954
586,947
Total
2016 2,989,324 260,000 1,744,550 211,221 447,814 51,488
668,861 6,373,258
2015 4,106,903 586,507
– 114,667 642,267 41,936
629,269 6,121,549
– 2,785,134
– 1,581,528
–
611,772
– 1,006,336
–
502,676
–
9,636
– 1,166,543
58%
36%
0%
38%
10%
0%
32%
0%
38%
0%
24%
0%
1
Share-based payments consist of performance rights. The fair value of the performance rights is measured at the date of grant using Monte Carlo simulation
and the Black Scholes model and is allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the
portion of the fair value of the performance rights recognised as an expense in each reporting period, net of any reversals for forfeited performance rights
or changes in the probability of performance rights vesting. Performance rights include the expense relating to the deferred share component of STI.
2 Non-monetary benefits comprise costs associated with Mr Bansal’s accommodation in Melbourne and personal travel between Sydney and Melbourne.
Share-based payments comprise the expense relating to the one-off allocation of 328,947 performance rights to the value of $250,000, as disclosed
in the prior year, the FY2016 LTI allocation, and the deferred share component of FY2016 STI.
3 Other cash comprises Mr Aardsma’s international service premium reflecting the expatriate nature of his assignment. Non-monetary benefits comprise costs
associated with Mr Aardsma’s relocation from the USA, personal travel between Australia and the USA, health insurance, tax preparation and car parking.
4 KMP until 11 September 2015. Non-monetary benefits comprises costs associated with Mr Perko’s personal travel between Australia and the USA and
health insurance. No termination pay provided.
5 KMP until 31 March 2016. Non-monetary benefits comprise costs associated with provision of a fuel card and e-tag. Termination pay represents payment
6 KMP until 26 June 2015. During the year ended 30 June 2016, the Company paid PwC $10,287 for the preparation of Mr Boucher’s Australian and US
An explanation of the key remuneration elements (TFR, STI and LTI) as well as FY2016 outcomes is provided in the
in lieu of notice.
tax returns.
following sections.
5B. Total fixed remuneration
TFR consists of base salary plus statutory superannuation contributions and other non-monetary benefits such as car parking.
Executives receive a fixed remuneration package which is reviewed annually by the Committee and the Board taking into
consideration the following factors:
Company and individual performance;
The responsibilities of the role;
The qualifications and experience of the incumbent; and
Benchmark market data including those companies with which the Company competes for talent.
There are no guaranteed base pay increases included in any Executive KMP contract.
FY2016 total fixed remuneration outcomes
As previously disclosed, Mr Bansal commenced with the Company on 3 August 2015 with a TFR of $1,200,000. For the
year ended 30 June 2016, reflecting his appointment during the year, the fixed remuneration package of Mr Bansal has
not increased.
Similarly, reflecting the fixed term nature of his contract, the fixed remuneration package of Mr Aardsma has not increased
since his appointment on 15 January 2015.
For the year ended 30 June 2016, Mr Gill received a total increase in TFR of 3.6% from $600,000 to $621,688. The majority
of this increase related to Mr Gill’s annual salary review outcome of 2.5% effective 1 October 2015 and was consistent with
the increases provided to other Executives and staff. The remainder of the increase related to adjustments to his TFR as part
of the Company’s superannuation arrangements and transition to employee paid parking.
As previously disclosed, for the period Mr Gill was in the role of Acting CEO, he received a monthly allowance of $8,000 in
order to provide temporary and partial compensation for his additional responsibilities and duties. Reflecting his appointment
in the Acting CEO role from 26 June 2015 to 3 August 2015, Mr Gill received a total payment of $9,477.
FY2016 short term incentive
5C.
For the year ended 30 June 2016, the CEO, some but not all of the other Executive KMP, other senior executives and eligible
employees participated in the Cleanaway Short Term Incentive (STI) Plan. Executive KMP who did not participate in the
FY2016 STI were: Mr Perko – departure and Mr Roderick – redundancy. As outlined in section 4B:
the CEO has a target STI opportunity of 75% of TFR and a maximum STI opportunity of 150% of TFR (being two times
target); and
other Executive KMP have a target STI opportunity of 50% of TFR and a maximum STI opportunity of 100% of TFR.
Note, Mr Gill’s opportunity remained unchanged for the period he was in the role of Acting CEO.
For the year ended 30 June 2016, in order to align their maximum STI opportunity as a percentage of target with that of the
CEO (i.e. two times target), the maximum STI opportunity for other Executive KMP was increased from 93.75% to 100% of TFR.
Mr Aardsma, participated in the FY2016 STI on a pro-rata basis from 1 January 2016. Prior to that, for calendar year 2015,
Mr Aardsma participated in an Annual Assignment Achievement Bonus plan with a target opportunity of $300,000 and
a maximum opportunity of $600,000. Any payment under this plan was subject to Mr Aardsma’s achievement of growth
transformation milestones as agreed with the CEO and was payable entirely in cash. The transition to the FY2016 STI plan
was made to better align Mr Aardsma’s financial metrics and reward outcomes with the CEO and other Executive KMP.
Any STI remains payable entirely in cash.
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
The FY2016 STI plan was revised in order to focus participants on the financial, health, safety and environment and,
if applicable, employee engagement metrics that are key to the sustainable success of Cleanaway. The details of the
FY2016 Plan are summarised in the following table.
Performance period
1 July 2015 – 30 June 2016
Gateway
Payments under the FY2016 STI plan are subject to the achievement of Cleanaway’s
FY2016 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) target.
The Board considers EBITDA to be an appropriate performance measure as it aligns with
Cleanaway’s focus on generating cash flow from the existing asset base and financial
results that management can influence. Significant extraordinary events are included
as a discretionary item for the Board to consider.
Financial metrics – 80% weighting
Health, Safety and Environment metrics – 20% weighting
Employee Engagement modifier – which has the potential to reduce the STI payment
by 10%
Key Performance
Metrics upon which any
FY2016 STI payment is
based
Financial metrics
The three financial metrics and their respective weightings are:
Group EBITDA – 30% weighting
Group Net Revenue – 20% weighting. Included as it reflects growth in our business.
Group Net Profit After Tax Return on Invested Capital (NPAT ROIC) – 30% weighting.
Included as it is aligns with Cleanaway’s focus on improving the returns from the net
assets employed in our business.
Each financial metric has a threshold, target and stretch level of performance which
is based on the Company’s FY2016 budget and with STI outcomes as follows:
Below threshold – 0%
At threshold – 75% of on-target STI opportunity
At target – 100% of on-target STI opportunity
At stretch – 200% of on-target STI opportunity
Health, Safety &
Environment metrics
Payments under the Health, Safety & Environment (HSE) metrics are subject to gateway
conditions that:
there are no work-related deaths (applicable to the Health & Safety metric); and
there are no significant rated environmental incidents (applicable to the
Environmental metric).
The two HSE metrics and their respective weightings are:
Group Total Recordable Injury Frequency Rate (TRIFR) – 15% weighting. Included
as it measures the outcome of our injury prevention strategies and programs.
Group Environmental Incidents – 5% weighting. Included as it measures the outcome
effectiveness of our environmental risk management strategies and programs.
Employee Engagement
modifier
Each HSE metric has a threshold, target and stretch level of performance with STI
outcomes as per the financial metrics schedule above.
A participant’s final STI payment will be reduced by 10% if the Group’s Employee
Engagement is below target.
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5. Executive key management personnel – reward outcomes (c)
The FY2016 STI plan was revised in order to focus participants on the financial, health, safety and environment and,
if applicable, employee engagement metrics that are key to the sustainable success of Cleanaway. The details of the
FY2016 Plan are summarised in the following table.
Performance period
1 July 2015 – 30 June 2016
Gateway
Payments under the FY2016 STI plan are subject to the achievement of Cleanaway’s
FY2016 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) target.
The Board considers EBITDA to be an appropriate performance measure as it aligns with
Cleanaway’s focus on generating cash flow from the existing asset base and financial
results that management can influence. Significant extraordinary events are included
as a discretionary item for the Board to consider.
Key Performance
Financial metrics – 80% weighting
Metrics upon which any
FY2016 STI payment is
based
by 10%
Health, Safety and Environment metrics – 20% weighting
Employee Engagement modifier – which has the potential to reduce the STI payment
Financial metrics
The three financial metrics and their respective weightings are:
Health, Safety &
Environment metrics
conditions that:
Payments under the Health, Safety & Environment (HSE) metrics are subject to gateway
Group EBITDA – 30% weighting
Group Net Revenue – 20% weighting. Included as it reflects growth in our business.
Group Net Profit After Tax Return on Invested Capital (NPAT ROIC) – 30% weighting.
Included as it is aligns with Cleanaway’s focus on improving the returns from the net
assets employed in our business.
Each financial metric has a threshold, target and stretch level of performance which
is based on the Company’s FY2016 budget and with STI outcomes as follows:
Below threshold – 0%
At threshold – 75% of on-target STI opportunity
At target – 100% of on-target STI opportunity
At stretch – 200% of on-target STI opportunity
there are no work-related deaths (applicable to the Health & Safety metric); and
there are no significant rated environmental incidents (applicable to the
Environmental metric).
The two HSE metrics and their respective weightings are:
Group Total Recordable Injury Frequency Rate (TRIFR) – 15% weighting. Included
as it measures the outcome of our injury prevention strategies and programs.
Group Environmental Incidents – 5% weighting. Included as it measures the outcome
effectiveness of our environmental risk management strategies and programs.
Each HSE metric has a threshold, target and stretch level of performance with STI
outcomes as per the financial metrics schedule above.
Employee Engagement
A participant’s final STI payment will be reduced by 10% if the Group’s Employee
modifier
Engagement is below target.
Remuneration Report (Audited)
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
FY2016 short term incentive outcomes
The progress Cleanaway has achieved in its operational business performance for the year ended 30 June 2016 is reflected
in its improved financial, TRIFR and environmental and employee engagement outcomes.
The STI payments received or receivable by Executive KMP for the year ended 30 June 2016 reflect these financial and
non-financial results and are summarised in the following table:
EXECUTIVE KEY MANAGEMENT PERSONNEL
2016
V Bansal
D A Aardsma 3
2016
2015
2016
2015
B J Gill
TOTAL STI
$
1,195,200
573,600
–
268,500
–
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL 4
J Perko
CASH
COMPONENT 1
$
DEFERRED SHARE
COMPONENT 1
$
PERCENTAGE OF
TARGET STI
OPPORTUNITY 2
PERCENTAGE OF
MAXIMUM STI
OPPORTUNITY 2
956,150
573,600
–
214,800
–
239,050
–
–
53,700
–
146.0%
127.5%
–
86.4%
–
A G Roderick
R C Boucher
S G Cummins
2016
2015
2016
2015
2016
2015
2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73.0%
63.7%
–
43.2%
–
–
–
–
–
–
–
–
1 As summarised in section 4B, for the CEO and other Executive KMP (with the exception of Mr Aardsma) 80% of any STI is payable as cash and 20%
is payable as performance rights with vesting deferred for one year; for Mr Aardsma 100% of any STI is payable as cash.
2 Calculated based on total STI as a percentage of the pro-rata target and maximum STI opportunities respectively.
3 Calculated including Mr Aardsma’s CY2015 Annual Assignment Achievement Bonus and pro-rata participation in the FY2016 STI plan from 1 January 2016.
4 As a result of their departures during the year, Mr Perko and Mr Roderick forfeited their participation in the FY2016 STI. Mr Boucher was not a KMP during
the year and did not participate in the FY2016 STI.
5D. Prior short term incentive awards
As a result of Mr Perko’s departure, he forfeited the 66,275 performance rights allocated to him in relation to the FY2014
STI. Mr Perko did not receive an FY2015 STI payment or participate in the FY2016 STI.
As Mr Roderick’s departure was due to his role being made redundant, the Board exercised its discretion to treat him as
a ‘good leaver’ with respect to his deferred FY2014 STI payment. As a result, he retained the 43,736 performance rights
allocated to him in relation to the FY2014 STI – these performance rights vested and became exercisable on 30 June 2016.
Mr Roderick did not receive a FY2015 STI payment and was not eligible for a FY2016 STI payment.
FY2016 long term incentive
5E.
Offers under the Cleanaway Long Term Incentive (LTI) Plan are made on an annual basis. For the year ended 30 June 2016,
an LTI offer was made to Mr Bansal following shareholder approval at the Company’s 2015 AGM as well as to other senior
executives including Mr Gill. Other Executive KMP did not receive an FY2016 LTI offer for the following reasons: Mr Perko
– departure; Mr Roderick – redundancy; and Mr Aardsma – does not participate given his fixed term contract.
The details of the FY2016 LTI offer are summarised in the table on the next page. The details of previous LTI offers that
remain outstanding as at 30 June 2016 are summarised in section 5F.
For all LTI offers, the number of performance rights offered at target is calculated by dividing a participant’s LTI opportunity
by Cleanaway’s volume weighted average share price. As outlined in section 4B:
the CEO has a target LTI opportunity of 75% of TFR and a maximum LTI opportunity of 150% of TFR (being two times
target); and
other Executive KMP have a target LTI opportunity of 25% of TFR and a maximum LTI opportunity of 50% of TFR.
The number of performance rights granted to each Executive KMP for the year ended 30 June 2016 is outlined in section 7A.
The number of performance rights each Executive KMP has on issue as at 30 June 2016 is outlined in section 7B.
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
For all LTI offers, where a participant ceases employment prior to the end of the performance period, the performance rights
are forfeited unless the Board applies its discretion. The Board also has discretion to determine the extent of vesting in the
event of a change of control, or where a participant dies, becomes permanently disabled, retires or is made redundant.
During the year ended 30 June 2016, no such discretion was exercised.
The structure of the FY2016 LTI is summarised as follows:
Performance period
3 years: 1 July 2015 – 30 June 2018
Overview
Performance rights, vesting of which is subject to:
Relative Total Shareholder Return (50%): The Board considers relative TSR to be an
appropriate performance measure for CEO and other Executive KMP reward as it focuses
on the extent to which shareholder returns are generated relative to the performance
of Industrial companies of similar size. Relative TSR is calculated as the total return (being
income and capital gain) of the Company over the performance period compared with
a peer group of companies (being the constituents of the S&P/ASX200 Industrial
Sector Index).
Return On Invested Capital (50%): The Board considers ROIC to be an appropriate
performance measure for CEO and other Executive KMP reward as it focuses on
managing both the financial returns and the invested capital base used to generate
those returns. ROIC is calculated for each year of the performance period, as underlying
net profit after tax divided by invested capital.
Relative Total Shareholder Return (TSR) Ranking against the constituents of the S&P/ASX200
Industrial Sector Index:
Below 50th percentile – 0% vesting
50th percentile – 50% vesting
50th to 75th percentile – straight line vesting between 50% and 100%
75th percentile and above – 100% vesting
Average Return On Invested Capital (ROIC) to be achieved:
Below 4.6% – 0% vesting
4.6% – 20% vesting
4.6% to 5.6% – straight line vesting between 20% and 50%
5.6% to 7.6% – straight line vesting between 50% and 100%
7.6% and above – 100% vesting
Relative TSR
performance standard
(measured over 3 years:
1 July 2015 to 30 June
2018)
ROIC performance
standard
(measured over 3 years:
1 July 2015
to 30 June 2018)
Vesting date
14 days after the release of the FY2018 results
Grant date fair value
for accounting purposes
As a share-based payment, the performance rights were valued for accounting and reporting
purposes using Monte Carlo simulation and the Black Scholes Model.
Fair value of grant to CEO:
Relative TSR tranche: $0.32
ROIC tranche: $0.63
Fair value of grant to other Executive KMP:
Relative TSR tranche: $0.42
ROIC tranche: $0.72
Issued: 5,646,390, all of which remain on issue as at 30 June 2016
Number of performance
rights issued and
number remaining
on issue as at
30 June 2016
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5. Executive key management personnel – reward outcomes (c)
5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
Prior long term incentive awards
5F.
The following table outlines the terms of the outstanding LTI offers made from FY2013 to FY2015:
FY2013 LTI AWARD
FY2014 LTI AWARD
FY2015 LTI AWARD
Performance period
4 years: 1 July 2012
to 30 June 2016
4 years: 1 July 2013
to 30 June 2017
Up to 4 years: 1 July 2014
to 30 June 2018 1
Overview
Relative TSR
performance
standards
EPS / ROIC
performance
standards
Performance rights, vesting of which is
subject to:
Relative TSR (50%)
Earnings Per Share (50%)
Performance rights, vesting of which is
subject to:
Relative TSR (25%)
Return on Invested Capital (25%)
Strategic Initiatives (50%)
TSR Ranking against the constituents of the S&P /ASX200 Industrial Sector Index:
Below 50th percentile – 0% vesting
50th percentile – 50% vesting
50th to 75th percentile – straight line vesting between 50% and 100%
75th percentile and above – 100% vesting
EPS in final year of performance period:
Below 10 cents per share – 0% vesting
10 cents per share – 50% vesting
10 to 12.8 cents per share – straight line
vesting between 50% and 75%
12.8 to 14.0 cents per share – straight
line vesting between 75% and 100%
Average ROIC:
Below 4.29% – 0% vesting
4.29% – 20% vesting
4.29% to 5.29% – straight line
vesting between 20% and 50%
5.29% to 7.29% – straight line vesting
between 50% and 100%
14.0 cents per share and above – 100% vesting
7.29% and above – 100% vesting
ROIC performance
Average Return On Invested Capital (ROIC) to be achieved:
Strategic Initiatives
Not applicable
Not applicable
Vesting date
14 days after the
release of the
FY2016 results
14 days after the
release of the
FY2017 results
The first Strategic Initiative applied to the
former CEO only. As disclosed in last year’s
Report it was satisfied with the successful
completion of the Melbourne Regional
Landfill acquisition. The details of the
remaining Strategic Initiatives have not
been disclosed as they relate to significant
strategic objectives, and disclosure would
be prejudicial to the Company’s interests.
The nature of these targets will be
disclosed following completion of the
performance period.
14 days after the release of the FY2017
and FY2018 results
Grant date fair value
for accounting
purposes 2
Relative TSR
tranche: $0.49
Relative TSR
tranche: $0.93
EPS tranche: $0.75
EPS tranche: $1.18
Relative TSR tranche: $0.17
ROIC & Strategic tranches: $0.68
Number of awards
remaining on issue
as at 30 June 2016
786,366
1,480,949
1,912,388
1 A three year performance period applies to the relative TSR and ROIC performance measures of the FY2015 LTI; the strategic initiatives are assessed over four years.
2 As a share-based payment, the portion of the performance rights relating to market based conditions were valued for accounting and reporting purposes using the
Monte Carlo simulation method and the portion relating to EPS or ROIC using the Black Scholes Model.
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For all LTI offers, where a participant ceases employment prior to the end of the performance period, the performance rights
are forfeited unless the Board applies its discretion. The Board also has discretion to determine the extent of vesting in the
event of a change of control, or where a participant dies, becomes permanently disabled, retires or is made redundant.
During the year ended 30 June 2016, no such discretion was exercised.
The structure of the FY2016 LTI is summarised as follows:
Performance period
3 years: 1 July 2015 – 30 June 2018
Overview
Performance rights, vesting of which is subject to:
Relative Total Shareholder Return (50%): The Board considers relative TSR to be an
appropriate performance measure for CEO and other Executive KMP reward as it focuses
on the extent to which shareholder returns are generated relative to the performance
of Industrial companies of similar size. Relative TSR is calculated as the total return (being
income and capital gain) of the Company over the performance period compared with
a peer group of companies (being the constituents of the S&P/ASX200 Industrial
Sector Index).
Return On Invested Capital (50%): The Board considers ROIC to be an appropriate
performance measure for CEO and other Executive KMP reward as it focuses on
managing both the financial returns and the invested capital base used to generate
those returns. ROIC is calculated for each year of the performance period, as underlying
net profit after tax divided by invested capital.
Relative TSR
Relative Total Shareholder Return (TSR) Ranking against the constituents of the S&P/ASX200
performance standard
Industrial Sector Index:
(measured over 3 years:
1 July 2015 to 30 June
2018)
Below 50th percentile – 0% vesting
50th percentile – 50% vesting
50th to 75th percentile – straight line vesting between 50% and 100%
75th percentile and above – 100% vesting
standard
(measured over 3 years:
1 July 2015
to 30 June 2018)
Below 4.6% – 0% vesting
4.6% – 20% vesting
4.6% to 5.6% – straight line vesting between 20% and 50%
5.6% to 7.6% – straight line vesting between 50% and 100%
7.6% and above – 100% vesting
Vesting date
14 days after the release of the FY2018 results
Grant date fair value
As a share-based payment, the performance rights were valued for accounting and reporting
for accounting purposes
purposes using Monte Carlo simulation and the Black Scholes Model.
Fair value of grant to CEO:
Relative TSR tranche: $0.32
ROIC tranche: $0.63
Fair value of grant to other Executive KMP:
Relative TSR tranche: $0.42
ROIC tranche: $0.72
Number of performance
Issued: 5,646,390, all of which remain on issue as at 30 June 2016
rights issued and
number remaining
on issue as at
30 June 2016
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
Prior year long term incentive outcomes
Of the outstanding LTI awards, only the FY2013 award was formally tested during FY2016. Based on the Company’s relative
TSR and EPS performance over the performance period (from 1 July 2012 to 30 June 2016), the offer will vest partially – with
the relative TSR tranche vesting at 53.4% and the EPS tranche lapsing in full.
Current Executive KMP
None of the current Executive KMP participated in the FY2013 LTI.
Former Executive KMP
As a result of Mr Perko’s departure, he forfeited the 1,237,160 performance rights allocated to him in relation to the FY2014
and FY2015 LTI. Mr Perko did not participate in the FY2016 LTI given his departure prior to the grant.
As a result of Mr Roderick’s departure, he forfeited the 1,520,011 performance rights allocated to him in relation to the
FY2013, FY2014 and FY2015 LTIs. Mr Roderick did not participate in the FY2016 LTI given his departure prior to the grant.
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5. Executive key management personnel – reward outcomes (c)
6. Executive key management personnel – contract terms
6. Executive key management personnel – contract terms
Prior year long term incentive outcomes
Of the outstanding LTI awards, only the FY2013 award was formally tested during FY2016. Based on the Company’s relative
TSR and EPS performance over the performance period (from 1 July 2012 to 30 June 2016), the offer will vest partially – with
the relative TSR tranche vesting at 53.4% and the EPS tranche lapsing in full.
6A. CEO and Executive KMP (with the exception of Mr Aardsma)
The CEO (Mr Bansal) and other Executive KMP (with the exception of Mr Aardsma) are employed on the basis of an Executive
Service Agreement (Agreement). These Agreements contain a range of terms and conditions including remuneration and
other benefits, notice periods and termination benefits. The key contract terms are as follows:
None of the current Executive KMP participated in the FY2013 LTI.
Current Executive KMP
Former Executive KMP
As a result of Mr Perko’s departure, he forfeited the 1,237,160 performance rights allocated to him in relation to the FY2014
and FY2015 LTI. Mr Perko did not participate in the FY2016 LTI given his departure prior to the grant.
As a result of Mr Roderick’s departure, he forfeited the 1,520,011 performance rights allocated to him in relation to the
FY2013, FY2014 and FY2015 LTIs. Mr Roderick did not participate in the FY2016 LTI given his departure prior to the grant.
Contract term: no fixed term.
Notice period: 12 months (resignation or termination without cause).
Redundancy: 12 months’ notice.
Any payment in lieu of notice and/or redundancy is not to exceed average annual base salary as defined by the Corporations
Act 2001 over the previous three years.
The Company may terminate Agreements immediately for cause, in which case the Executive is not entitled to any payment
in lieu of notice or contractual compensation.
The Agreements also provide for an Executive’s participation in the STI and LTI plans subject to Board approval of their
eligibility and in accordance with the terms and conditions of the respective plans.
In addition, Mr Bansal is entitled to relocation support, with the Company covering the costs associated with Mr Bansal
relocating from Sydney to Melbourne including: flights to Melbourne; temporary accommodation until the end of CY2016;
personal and household item removal cost and insurance; and a set-up allowance of $10,000 gross. The cost to the Group
in providing this support to Mr Bansal for the year ended 30 June 2016 is summarised in section 5A.
6B. Other Executive KMP (Mr Aardsma)
Mr Aardsma is employed on the basis of a fixed term Agreement. Mr Aardsma’s Agreement provides for:
Contract term: two years, with the option for Cleanaway and Mr Aardsma to mutually agree to extend the Agreement
for a further one year.
International assignment assistance: support for Mr Aardsma and his family in moving from the United States to Australia.
This support includes an international service premium and motor vehicle allowance, coverage of costs associated with
moving personal and household items, health care coverage and tax advice for the duration of his appointment, and
flights to and from the USA annually. The cost to the Group in providing this assistance to Mr Aardsma for the year
ended 30 June 2016 is summarised in section 5A.
Annual Bonus: opportunity to earn an Annual Assignment Achievement Bonus (Bonus) of $300,000 at target
($600,000 at maximum) in lieu of participation in the Company’s STI and LTI plans. Note, as outlined in section 5C,
for the year ended 30 June 2016, Mr Aardsma, participated in the FY2016 STI on a pro-rata basis from 1 January 2016.
Prior to that, for calendar year 2015, Mr Aardsma participated in the Bonus plan. There is no Bonus plan for CY2016.
The outcomes under both the CY2015 Bonus plan and pro-rata FY2016 STI are also detailed in section 5C.
6C. Additional remuneration
As a result of Mr Perko’s departure, he forfeited the 1,184,210 performance rights allocated to him in relation to the
retention arrangement entered into at the beginning of the year ended 30 June 2016 and disclosed in last year’s Report.
At the time of a new CEO coming on-board, the arrangement with Mr Perko was intended to secure his services during the
transformation of the Company.
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Remuneration Report (Audited)
7.
7. Executive key management personnel – additional remuneration tables
Executive key management personnel – additional remuneration tables
7A. Performance rights granted and movement during the year
The aggregate number of performance rights in the Company that were granted as compensation, exercised or lapsed
in relation to each Executive KMP for the year ended 30 June 2016 is set out in the following table:
YEAR ENDED
30 JUNE 2016
BALANCE AT
1 JULY 2015
NUMBER
RIGHTS
GRANTED
DURING THE
YEAR 1
NUMBER
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
D A Aardsma
B J Gill
–
–
671,140
3,167,167
–
490,134
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
J Perko 4
A G Roderick
1,303,435
1,974,273
1,184,210
–
VALUE OF
RIGHTS
GRANTED
DURING THE
YEAR 2
$
1,589,312
–
277,416
RIGHTS
EXERCISED
DURING THE
YEAR
NUMBER
VALUE OF
RIGHTS
EXERCISED
DURING THE
YEAR 3
$
LAPSED/
CANCELLED
DURING THE
YEAR
NUMBER
BALANCE AT
30 JUNE 2016
NUMBER
MAXIMUM
TOTAL YET
TO VEST
NUMBER
–
–
–
–
–
–
–
–
–
3,167,167
–
1,161,274
3,167,167
–
1,161,274
900,000
–
–
(205,263)
–
(134,447)
(2,487,645)
(1,725,274)
–
43,736
–
–
1
2
Performance rights were granted to the CEO under the LTIP – 2016 Offer on 30 October 2015 and Deferred Equity Plan – Sign-on Award on 20 August 2015
and to other Executive KMP under the LTIP – 2016 Offer on 17 March 2016.
The fair value of performance rights granted to the CEO calculated using Monte Carlo simulation and the Black Scholes Model, is $0.32 to $0.63 per
Performance Right under the LTIP – 2016 Offer and $0.72 per Performance Right under the Sign-on Award. The fair value of performance rights granted
to other Executive KMP calculated using Monte Carlo simulation method and the Black Scholes Model, is $0.42 to $0.72 per Performance Right under the
LTIP – 2016 Offer.
3 Calculated per Performance Right as the market value of Cleanaway shares on the date of exercise.
4 As a result of Mr Perko’s departure, he forfeited the 1,184,210 performance rights allocated to him in relation to the retention arrangement entered into
at the beginning of the year ended 30 June 2016 and disclosed in last year’s Report.
7B. Performance rights as at 30 June 2016
The number of performance rights included in the balance at 30 June 2016 for the Executive KMP is set out in the
following table:
ISSUED
2013
LTI
2014
STI
2014
LTI
2015
LTI
2016
OTHER
2016
LTI
BALANCE AT
30 JUNE 2016
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal 1
–
–
D A Aardsma
–
B Gill
–
–
–
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
J Perko
A G Roderick
–
–
–
43,736
–
–
–
–
–
–
–
671,140
328,947 2,838,220 3,167,167
–
490,134 1,161,274
–
–
–
–
–
–
–
–
–
–
43,736
–
43,736
VESTED &
EXERCISABLE
AT THE END
OF THE YEAR
–
–
–
1 As disclosed in last year’s Report, on joining Cleanaway, Mr Bansal received a one-off allocation of 328,947 performance rights with vesting subject
to a two-year service condition.
No terms of performance rights transactions have been altered by the Company during the reporting period. The Board has
not previously exercised its discretion to allow the early vesting of any performance rights under any of the incentive plans.
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Remuneration Report (Audited)
Remuneration Report (Audited)
7. Executive key management personnel – additional remuneration tables
7.
7. Executive key management personnel – additional remuneration tables (c)
Executive key management personnel – additional remuneration tables (continued)
7C. Securities trading policy
The Company prohibits Executives from entering into any hedging arrangements or acquiring financial products (such
as equity swaps, caps and collars or other hedging products) over unvested performance rights which have the effect
of reducing or limiting exposure to risks associated with the market value of the Company’s securities.
No Directors or Executive KMP may directly or indirectly enter into any margin loan facility against the Company’s securities
unless the prior written consent of the Chairman of the Board is obtained.
7D. Company performance
Over recent years, Cleanaway has been addressing a number of operational, transformational and strategic challenges.
This is reflected in the financial performance summarised for key metrics below. Importantly, for remuneration purposes,
the Board takes a more holistic view of performance than the metrics summarised below. These are described in more detail
in section 5 of this Report.
FY2012
FY2013
FY2014
FY2015
FY2016
Profit/(Loss) attributable to
ordinary equity holders – $’M
EPS – cents
Underlying EPS – cents
Dividends per share – cents
Shares on issue – number
Share price at 30 June
Change in share price
12.5
0.9
4.3
–
1,578,209,025
$0.73
($0.09)
(218.7) 1
(13.9)
4.4
–
1,578,563,490
$0.80
$0.07
11.5 2
0.7
5.8
1.5
1,579,323,967
$1.01
$0.21
(23.6) 3
(1.5)
2.9
1.5
1,579,914,690
$0.77
($0.24)
44.8 4
2.8
4.0
1.7
1,586,344,605
$0.80
$0.03
1
2
3
4
Includes underlying adjustments of $286.6 million after tax.
Includes underlying adjustments of $80.5 million after tax.
Includes underlying adjustments of $69.3 million after tax.
Includes underlying adjustments of $18.5 million after tax.
7A. Performance rights granted and movement during the year
The aggregate number of performance rights in the Company that were granted as compensation, exercised or lapsed
in relation to each Executive KMP for the year ended 30 June 2016 is set out in the following table:
BALANCE AT
DURING THE
DURING THE
DURING THE
DURING THE
DURING THE
BALANCE AT
RIGHTS
GRANTED
YEAR 1
NUMBER
VALUE OF
RIGHTS
GRANTED
RIGHTS
EXERCISED
YEAR 2
$
YEAR
NUMBER
VALUE OF
RIGHTS
EXERCISED
YEAR 3
LAPSED/
CANCELLED
YEAR
30 JUNE 2016
NUMBER
NUMBER
MAXIMUM
TOTAL YET
TO VEST
NUMBER
YEAR ENDED
30 JUNE 2016
1 JULY 2015
NUMBER
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
D A Aardsma
B J Gill
–
–
3,167,167
1,589,312
–
671,140
490,134
277,416
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
J Perko 4
1,303,435
1,184,210
900,000
–
–
$
–
–
–
–
(2,487,645)
–
–
–
–
–
–
–
3,167,167
3,167,167
1,161,274
1,161,274
A G Roderick
1,974,273
–
(205,263)
(134,447)
(1,725,274)
43,736
1
Performance rights were granted to the CEO under the LTIP – 2016 Offer on 30 October 2015 and Deferred Equity Plan – Sign-on Award on 20 August 2015
and to other Executive KMP under the LTIP – 2016 Offer on 17 March 2016.
2
The fair value of performance rights granted to the CEO calculated using Monte Carlo simulation and the Black Scholes Model, is $0.32 to $0.63 per
Performance Right under the LTIP – 2016 Offer and $0.72 per Performance Right under the Sign-on Award. The fair value of performance rights granted
to other Executive KMP calculated using Monte Carlo simulation method and the Black Scholes Model, is $0.42 to $0.72 per Performance Right under the
LTIP – 2016 Offer.
3 Calculated per Performance Right as the market value of Cleanaway shares on the date of exercise.
4 As a result of Mr Perko’s departure, he forfeited the 1,184,210 performance rights allocated to him in relation to the retention arrangement entered into
at the beginning of the year ended 30 June 2016 and disclosed in last year’s Report.
7B. Performance rights as at 30 June 2016
The number of performance rights included in the balance at 30 June 2016 for the Executive KMP is set out in the
following table:
ISSUED
V Bansal 1
D A Aardsma
B Gill
J Perko
A G Roderick
EXECUTIVE KEY MANAGEMENT PERSONNEL
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
2013
LTI
2014
STI
2014
LTI
2015
LTI
2016
OTHER
2016
BALANCE AT
AT THE END
LTI
30 JUNE 2016
OF THE YEAR
VESTED &
EXERCISABLE
–
–
–
–
–
–
–
–
–
43,736
–
–
–
–
–
–
–
–
–
328,947 2,838,220 3,167,167
671,140
490,134 1,161,274
–
–
–
–
–
–
–
43,736
43,736
1 As disclosed in last year’s Report, on joining Cleanaway, Mr Bansal received a one-off allocation of 328,947 performance rights with vesting subject
to a two-year service condition.
No terms of performance rights transactions have been altered by the Company during the reporting period. The Board has
not previously exercised its discretion to allow the early vesting of any performance rights under any of the incentive plans.
–
–
–
–
–
–
–
–
–
–
–
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Remuneration Report (Audited)Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
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8. Shareholdings and other related party transactions
8. Shareholdings and other related party transactions
8A. Shareholdings
The movement for the year ended 30 June 2016 in the number of ordinary shares in the Company held, directly or indirectly
or beneficially, by each KMP, including their related parties, is detailed in the following table:
NAME
NON-EXECUTIVE DIRECTOR
M M Hudson
M P Chellew
R M Smith
E R Stein 1
T A Sinclair
R M Harding
P G Etienne
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
D A Aardsma
B J Gill
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
J Perko 2
A G Roderick 3
BALANCE
AT THE START
OF THE YEAR
RECEIVED DURING
THE YEAR ON THE
EXERCISE OF RIGHTS
OTHER
CHANGES DURING
THE YEAR
BALANCE
AT THE END
OF THE YEAR
75,258
25,000
65,715
66,549
38,789
12,644
13,737
–
–
–
–
–
–
–
–
–
–
–
–
–
128,755
–
–
205,263
–
–
–
–
–
–
–
–
280,000
–
–
–
75,258
25,000
65,715
66,549
38,789
12,644
13,737
–
280,000
–
128,755
205,263
1
2
3
The number of ordinary shares disclosed as the balance at the start of the year includes 12,976 shares held in a custodian account not previously disclosed.
Balance reflects holdings on date of departure being 11 September 2015.
Balance reflects holdings on date of departure being 31 March 2016.
Loans to Executive key management personnel
8B.
There were no loans to Executive KMP made during the period and no outstanding balances at reporting date.
8C. Other transactions and balances with Executive key management personnel and their
related parties
Some of the Directors hold, or have previously held, positions in companies with which Cleanaway has commercial
relationships which are based on normal terms and conditions on an arm’s length basis. Those positions and companies can
be found on pages 24 to 25 and include Programmed Maintenance Services Limited, Downer EDI and K&S Corporation.
Transactions with these entities are not considered related party transactions where the relationship is limited to common
Non-Executive Directorship including any Chairperson roles. The Board has assessed all of the relationships between the
Group and companies in which Directors hold or held positions and has concluded that in all cases the relationships do not
interfere with the Directors’ exercise of objective, unfettered or independent judgement or their ability to act in the best
interest of the Group.
Transactions during the year that amounted to related party transaction are limited to transactions with NGT Marketing.
Mr Martin Hudson, a Non-Executive Director and Chairman of the Group, holds a beneficial interest in NGT Marketing.
During the year the Group provided waste collections services to NGT Marketing for which it earned revenues on normal
commercial terms. The value of these services were not material at $2,466 only.
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Remuneration Report (Audited)
8. Shareholdings and other related party transactions
8A. Shareholdings
The movement for the year ended 30 June 2016 in the number of ordinary shares in the Company held, directly or indirectly
or beneficially, by each KMP, including their related parties, is detailed in the following table:
BALANCE
AT THE START
RECEIVED DURING
THE YEAR ON THE
OF THE YEAR
EXERCISE OF RIGHTS
OTHER
CHANGES DURING
THE YEAR
BALANCE
AT THE END
OF THE YEAR
NAME
NON-EXECUTIVE DIRECTOR
M M Hudson
M P Chellew
R M Smith
E R Stein 1
T A Sinclair
R M Harding
P G Etienne
V Bansal
D A Aardsma
B J Gill
J Perko 2
A G Roderick 3
1
2
3
EXECUTIVE KEY MANAGEMENT PERSONNEL
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
75,258
25,000
65,715
66,549
38,789
12,644
13,737
–
–
–
–
128,755
205,263
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75,258
25,000
65,715
66,549
38,789
12,644
13,737
–
–
128,755
205,263
280,000
280,000
The number of ordinary shares disclosed as the balance at the start of the year includes 12,976 shares held in a custodian account not previously disclosed.
Balance reflects holdings on date of departure being 11 September 2015.
Balance reflects holdings on date of departure being 31 March 2016.
8B.
Loans to Executive key management personnel
There were no loans to Executive KMP made during the period and no outstanding balances at reporting date.
8C. Other transactions and balances with Executive key management personnel and their
related parties
Some of the Directors hold, or have previously held, positions in companies with which Cleanaway has commercial
relationships which are based on normal terms and conditions on an arm’s length basis. Those positions and companies can
be found on pages 24 to 25 and include Programmed Maintenance Services Limited, Downer EDI and K&S Corporation.
Transactions with these entities are not considered related party transactions where the relationship is limited to common
Non-Executive Directorship including any Chairperson roles. The Board has assessed all of the relationships between the
Group and companies in which Directors hold or held positions and has concluded that in all cases the relationships do not
interfere with the Directors’ exercise of objective, unfettered or independent judgement or their ability to act in the best
interest of the Group.
Transactions during the year that amounted to related party transaction are limited to transactions with NGT Marketing.
Mr Martin Hudson, a Non-Executive Director and Chairman of the Group, holds a beneficial interest in NGT Marketing.
During the year the Group provided waste collections services to NGT Marketing for which it earned revenues on normal
commercial terms. The value of these services were not material at $2,466 only.
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Cleanaway
Waste Management Limited
(Formerly Transpacific Industries Group Ltd)
As lead auditor for the audit of Cleanaway Waste Management Limited for the financial year ended
30 June 2016, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cleanaway Waste Management Limited and the entities it controlled
during the financial year.
Ernst & Young
Brett Croft
Partner
19 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Auditor’s Independence DeclarationCleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Consolidated Income Statement
For the year ended 30 June 2016
Continuing operations
Revenue
Other income
Share of profits from equity accounted investments
Raw materials and inventory
Waste disposal and collection
Employee expenses
Depreciation and amortisation
Repairs and maintenance
Fuel expenses
Leasing charges
Freight expenses
Impairment of assets
Change in fair value of land and buildings
Other expenses
Profit/(loss) from operations
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing operations after income tax
Discontinued operations
Profit for the year from discontinued operations
Profit/(loss) after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
Step-up preference security holders
Profit/(loss) after income tax
NOTES
6
7
8
9
2016
$’M
2015
$’M
1,455.1
1.6
1.3
(67.5)
(311.2)
(565.9)
(160.8)
(85.5)
(37.6)
(27.4)
(16.5)
–
(0.2)
(89.3)
96.1
(34.5)
61.6
(18.5)
43.1
–
43.1
44.8
(1.7)
–
43.1
1,384.9
4.1
1.4
(70.8)
(269.3)
(552.6)
(134.8)
(95.1)
(46.8)
(31.5)
(17.9)
(77.5)
(0.5)
(97.5)
(3.9)
(27.1)
(31.0)
7.4
(23.6)
8.2
(15.4)
(23.6)
0.6
7.6
(15.4)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
64
64
Consolidated Income StatementFor the year ended 30 June 2016
Consolidated Income Statement
For the year ended 30 June 2016
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2016
Share of profits from equity accounted investments
Continuing operations
Revenue
Other income
Raw materials and inventory
Waste disposal and collection
Employee expenses
Depreciation and amortisation
Repairs and maintenance
Fuel expenses
Leasing charges
Freight expenses
Impairment of assets
Change in fair value of land and buildings
Other expenses
Profit/(loss) from operations
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing operations after income tax
Discontinued operations
Profit for the year from discontinued operations
Profit/(loss) after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
Step-up preference security holders
Profit/(loss) after income tax
2016
$’M
2015
$’M
1,455.1
1,384.9
NOTES
6
7
1.6
1.3
(67.5)
(311.2)
(565.9)
(160.8)
(85.5)
(37.6)
(27.4)
(16.5)
–
(0.2)
(89.3)
96.1
(34.5)
61.6
(18.5)
43.1
–
43.1
44.8
(1.7)
–
43.1
4.1
1.4
(70.8)
(269.3)
(552.6)
(134.8)
(95.1)
(46.8)
(31.5)
(17.9)
(77.5)
(0.5)
(97.5)
(3.9)
(27.1)
(31.0)
7.4
(23.6)
8.2
(15.4)
(23.6)
0.6
7.6
(15.4)
8
9
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
NOTES
Profit/(loss) after income tax
Other comprehensive income
Revaluation of land and buildings
Net comprehensive income recognised directly in equity
Total comprehensive income/(loss) for the year
Attributable to:
Ordinary equity holders
Non-controlling interest
Step-up preference security holders
Total comprehensive income/(loss) for the year
Earnings/(loss) per share attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
10
10
Earnings/(loss) per share attributable to the ordinary equity holders
of the Company from continuing operations:
Basic earnings per share (cents)
Diluted earnings per share (cents)
2016
$’M
43.1
3.1
3.1
46.2
47.9
(1.7)
–
46.2
2.8
2.8
2.8
2.8
2015
$’M
(15.4)
1.4
1.4
(14.0)
(22.2)
0.6
7.6
(14.0)
(1.5)
(1.5)
(2.0)
(2.0)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
64
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Consolidated Statement of Comprehensive IncomeFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Consolidated Balance Sheet
As at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Derivative financial instruments
Assets held for sale
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Net deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Borrowings
Employee benefits
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Employee benefits
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Parent entity interest
Non-controlling interest
Total equity
NOTES
2016
$’M
2015
$’M
11
12
13
30
20
21
22
9
14
15
23
24
25
15
23
24
25
16
17
48.3
224.3
16.7
–
10.9
8.8
14.3
323.3
897.1
1,544.0
11.1
134.3
2,586.5
2,909.8
178.8
10.7
0.8
39.9
59.8
23.2
313.2
358.6
8.4
341.5
106.6
815.1
1,128.3
1,781.5
2,076.4
43.3
(344.8)
1,774.9
6.6
1,781.5
37.0
227.1
16.8
4.7
8.6
6.6
10.7
311.5
860.4
1,539.7
12.2
145.9
2,558.2
2,869.7
178.8
–
0.7
43.2
75.5
30.4
328.6
351.0
8.5
336.1
90.8
786.4
1,115.0
1,754.7
2,072.1
38.6
(364.3)
1,746.4
8.3
1,754.7
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
66
66
Consolidated Balance SheetAs at 30 June 2016
Consolidated Balance Sheet
As at 30 June 2016
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Derivative financial instruments
Assets held for sale
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Net deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Borrowings
Employee benefits
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Employee benefits
Provisions
Other liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Parent entity interest
Non-controlling interest
Total equity
Total non-current liabilities
11
12
13
30
20
21
22
9
14
15
23
24
25
15
23
24
25
16
17
37.0
227.1
16.8
4.7
8.6
6.6
10.7
311.5
860.4
1,539.7
12.2
145.9
2,558.2
2,869.7
–
0.7
43.2
75.5
30.4
351.0
8.5
336.1
90.8
786.4
48.3
224.3
16.7
–
10.9
8.8
14.3
323.3
897.1
1,544.0
11.1
134.3
2,586.5
2,909.8
10.7
0.8
39.9
59.8
23.2
358.6
8.4
341.5
106.6
815.1
178.8
178.8
313.2
328.6
1,128.3
1,781.5
1,115.0
1,754.7
2,076.4
43.3
(344.8)
1,774.9
6.6
2,072.1
38.6
(364.3)
1,746.4
8.3
1,781.5
1,754.7
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
NOTES
2016
$’M
2015
$’M
PARENT ENTITY INTEREST
At 1 July 2015
Profit/(loss) for period
Other comprehensive income
Total comprehensive
income for the year
Share-based payments
Dividends paid
Balance at 30 June 2016
At 1 July 2014
(Loss)/profit for period
Other comprehensive income
Total comprehensive
income for the year
Share-based payments
Reduction in
non-controlling interest
Dividends paid
Distribution to step-up
preference security holders
Redemption of step-up
preference securities
Transfer to retained earnings
Balance at 30 June 2015
ORDINARY
SHARES
$’M
2,072.1
–
–
–
–
4.3
2,076.4
2,071.8
–
–
–
0.3
–
–
–
RESERVES
$’M
38.6
–
3.1
3.1
1.6
–
43.3
33.9
–
1.4
1.4
2.7
–
–
–
RETAINED
EARNINGS
$’M
(364.3)
44.8
–
44.8
–
(25.3)
(344.8)
(305.3)
(23.6)
–
(23.6)
–
–
(34.8)
TOTAL
$’M
1,746.4
44.8
3.1
47.9
1.6
(21.0)
1,774.9
1,800.4
(23.6)
1.4
(22.2)
3.0
–
(34.8)
NON-
CONTROLLING
INTEREST
$’M
8.3
(1.7)
–
STEP-UP
PREFERENCE
SECURITIES
$’M
–
–
–
TOTAL
EQUITY
$’M
1,754.7
43.1
3.1
46.2
1.6
(21.0)
1,781.5
–
–
–
–
249.8
7.6
–
2,058.7
(15.4)
1.4
7.6
–
–
–
(14.0)
3.0
(0.8)
(34.8)
(1.7)
–
–
6.6
8.5
0.6
–
0.6
–
(0.8)
–
–
–
–
(7.6)
(7.6)
–
–
2,072.1
–
0.6
38.6
–
(0.6)
(364.3)
–
–
1,746.4
–
–
8.3
(249.8)
–
–
(249.8)
–
1,754.7
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
66
67
67
Consolidated Statement of Changes in EquityFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes refunded/(paid)
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Payments for purchase of businesses
Proceeds from disposal of investments
Proceeds from disposal of property, plant and equipment
Dividends received from equity accounted investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of debt and equity raising costs
Payment of dividends to ordinary equity holders
Repayment of loans to related parties
Distribution to step-up preference security holders
Redemption of step-up preference securities
Net cash used in financing activities
NOTES
2016
$’M
2015
$’M
1,602.2
(1,398.0)
0.7
(21.6)
7.4
190.7
1,518.6
(1,323.8)
2.2
(11.9)
(8.9)
176.2
11
(141.9)
(11.6)
(16.1)
–
4.2
2.6
(162.8)
21.0
(16.0)
(0.6)
(21.0)
–
–
–
(16.6)
11.3
37.0
48.3
(173.7)
(2.2)
(163.7)
8.4
7.2
1.4
(322.6)
320.0
(30.0)
(2.8)
(34.8)
(1.5)
(7.6)
(250.0)
(6.7)
(153.1)
190.1
37.0
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
68
68
Consolidated Statement of Cash FlowsFor the year ended 30 June 2016
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes refunded/(paid)
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Payments for purchase of businesses
Proceeds from disposal of investments
Proceeds from disposal of property, plant and equipment
Dividends received from equity accounted investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of debt and equity raising costs
Payment of dividends to ordinary equity holders
Repayment of loans to related parties
Distribution to step-up preference security holders
Redemption of step-up preference securities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
NOTES
2016
$’M
2015
$’M
1,602.2
(1,398.0)
1,518.6
(1,323.8)
0.7
(21.6)
7.4
190.7
(141.9)
(11.6)
(16.1)
–
4.2
2.6
21.0
(16.0)
(0.6)
(21.0)
–
–
–
(16.6)
11.3
37.0
48.3
2.2
(11.9)
(8.9)
176.2
(173.7)
(2.2)
(163.7)
8.4
7.2
1.4
320.0
(30.0)
(2.8)
(34.8)
(1.5)
(7.6)
(250.0)
(6.7)
(153.1)
190.1
37.0
11
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
1.
1. Corporate information
Corporate information
Cleanaway Waste Management Limited and its subsidiaries (the Group) is a group domiciled and incorporated in Australia.
The Consolidated Financial Report of Cleanaway Waste Management Limited consists of the Consolidated Financial
Statements of the Group and the Group’s interest in associates and jointly controlled entities.
The Consolidated Financial Statements of the Group for the year ended 30 June 2016 were authorised for issue in accordance
with a resolution of the Directors on 19 August 2016.
2. Statement of compliance
2. Statement of compliance
The Consolidated Financial Report is a general purpose financial report which has been prepared on a going concern
basis and in accordance with the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board. The Financial Report also complies with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
(162.8)
(322.6)
3. Basis of preparation
3. Basis of preparation
The Financial Report has been prepared on the basis of historical cost, except for the revaluation of certain non-current
assets (non-landfill land and buildings) and financial instruments. Cost is based on the fair values of the consideration given
in exchange for assets.
The Financial Report is presented in Australian dollars and all values are rounded to the nearest hundred thousand dollar, except
when otherwise indicated. This presentation is consistent with the requirements of Legislative Instrument 2016/191, issued by
the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements.
Comparative Information
The classification of certain balance sheet items has been modified to better reflect the underlying nature of the items.
Comparative amounts have been restated accordingly for consistency. The comparative balance sheet has also been restated
for the impact of the final adjustments to the purchase price allocation for Melbourne Regional Landfill. Refer to note 26 for
further detail.
In order to present comparable segment information, the prior period segment note has been restated to reflect a revised
inter-segment sales split. Refer to note 5 for further detail.
4. Critical accounting estimates and judgements
4. Critical accounting estimates and judgements
The preparation of the Financial Report requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group’s accounting policies. Actual results may vary from these
estimates under different assumptions and conditions. Significant accounting estimates and judgements in the Consolidated
Financial Report are:
Recoverable amount of property, plant and equipment and intangible assets
(a)
Each asset or cash generating unit (CGU) is evaluated every reporting period to determine whether there are any indications
of impairment or reversal of previously recognised impairment losses. If any such indication exists, a formal estimate
of recoverable amount is performed and where the carrying amount exceeds the recoverable amount an impairment loss
is recognised. Goodwill and other intangible assets with an indefinite life are tested for impairment on an annual basis,
irrespective of whether there is an indication of impairment.
The recoverable amount of each CGU is determined based on value-in-use calculations which require the use of estimates
and assumptions. The calculations use cash flow projections based on forecasts approved by management. The discounted
cash flows of the CGUs, other than those associated with landfill assets, are determined using three year forecasted cash
flows and a terminal value calculation. These cash flows include estimates and assumptions related to revenue growth,
capital expenditure, terminal value growth rates, oil prices (in relation to oil recycling activities) and expense profile.
68
69
69
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
4. Critical accounting estimates and judgements (continued)
4. Critical accounting estimates and judgements (continued)
Cash flows from the landfill assets include estimates and assumptions in relation to: waste volumes over the life of the landfill,
cell development capital expenditure, waste mix, revenue and growth, expense profile, and value and timing of land sales.
These estimates and assumptions are subject to risk and uncertainty; such that there is a possibility that changes in
circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances
some or all of the assets may be impaired or a previous impairment charge reversed. Any potential impact arising from
an impairment or reversal of an impairment would be recorded in the Consolidated Income Statement.
Further details on the Group’s impairment assessment and policy are disclosed in note 21 and note 38(e).
Landfill asset depreciation
(b)
Landfill assets comprise the acquisition of landfill land, airspace, cell development costs, site infrastructure and landfill site
improvement costs, and remediation assets. Landfill airspace, cell development costs and remediation assets are depreciated
on a usage basis. This depreciation method requires significant estimation of compaction rates, airspace and future costs.
Therefore changes in these estimates will cause changes in depreciation rates. The depreciation rates are calculated based
on the most up to date accounting estimates and applied prospectively.
Further details on the Group’s landfill asset accounting policy are disclosed in note 38(k).
Provision for landfill remediation and rectification
(c)
The Group’s remediation and rectification provisions are calculated based on the present value of the future cash outflows
expected to be incurred to remediate landfills which will include the costs of capping the landfill site, remediation and
rectification costs and post-closure monitoring activities. The measurement of the provisions requires significant estimates
and assumptions such as: discount rate, inflation rate, assessing the requirements of the Environment Protection Authority
(EPA) or other government authorities, the timing, extent and costs of activity required and the area of the landfill to be
remediated or rectified, which is determined by volumetric aerial surveys. These uncertainties may result in future actual
expenditure differing from the amounts currently provided.
The provisions for remediation and rectification for each landfill site are periodically reviewed and updated based on the facts
and circumstances available at the time. Changes to the estimated future costs for remediating open sites, still accepting
waste, are recognised in the balance sheet by adjusting both the remediation asset and provision. For closed sites, changes
to the estimated costs are recognised in the income statement. Changes to estimated costs related to rectification provisions
are recognised in the Consolidated Income Statement.
Further details on the Group’s landfill remediation accounting policy are disclosed in note 38(o).
Taxation
(d)
Deferred tax assets, including those arising from tax losses not recouped, capital losses and temporary differences, are
recognised in the Consolidated Balance Sheet, only where it is considered more likely than not that they will be recovered,
which is dependent on the generation of sufficient future taxable profits. Management considers that it is probable that
future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the amount
of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits.
These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in
circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities
recognised on the Consolidated Balance Sheet and the amount of other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding credit or charge to the Consolidated Income Statement.
Further details on the Group’s taxation accounting policy are disclosed in note 38(d).
70
70
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
4. Critical accounting estimates and judgements (continued)
5. Segment reporting
5. Segment reporting
Cash flows from the landfill assets include estimates and assumptions in relation to: waste volumes over the life of the landfill,
cell development capital expenditure, waste mix, revenue and growth, expense profile, and value and timing of land sales.
These estimates and assumptions are subject to risk and uncertainty; such that there is a possibility that changes in
circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances
some or all of the assets may be impaired or a previous impairment charge reversed. Any potential impact arising from
an impairment or reversal of an impairment would be recorded in the Consolidated Income Statement.
Further details on the Group’s impairment assessment and policy are disclosed in note 21 and note 38(e).
(b)
Landfill asset depreciation
Landfill assets comprise the acquisition of landfill land, airspace, cell development costs, site infrastructure and landfill site
improvement costs, and remediation assets. Landfill airspace, cell development costs and remediation assets are depreciated
on a usage basis. This depreciation method requires significant estimation of compaction rates, airspace and future costs.
Therefore changes in these estimates will cause changes in depreciation rates. The depreciation rates are calculated based
on the most up to date accounting estimates and applied prospectively.
Further details on the Group’s landfill asset accounting policy are disclosed in note 38(k).
(c)
Provision for landfill remediation and rectification
The Group’s remediation and rectification provisions are calculated based on the present value of the future cash outflows
expected to be incurred to remediate landfills which will include the costs of capping the landfill site, remediation and
rectification costs and post-closure monitoring activities. The measurement of the provisions requires significant estimates
and assumptions such as: discount rate, inflation rate, assessing the requirements of the Environment Protection Authority
(EPA) or other government authorities, the timing, extent and costs of activity required and the area of the landfill to be
remediated or rectified, which is determined by volumetric aerial surveys. These uncertainties may result in future actual
expenditure differing from the amounts currently provided.
The provisions for remediation and rectification for each landfill site are periodically reviewed and updated based on the facts
and circumstances available at the time. Changes to the estimated future costs for remediating open sites, still accepting
waste, are recognised in the balance sheet by adjusting both the remediation asset and provision. For closed sites, changes
to the estimated costs are recognised in the income statement. Changes to estimated costs related to rectification provisions
are recognised in the Consolidated Income Statement.
Further details on the Group’s landfill remediation accounting policy are disclosed in note 38(o).
(d)
Taxation
Deferred tax assets, including those arising from tax losses not recouped, capital losses and temporary differences, are
recognised in the Consolidated Balance Sheet, only where it is considered more likely than not that they will be recovered,
which is dependent on the generation of sufficient future taxable profits. Management considers that it is probable that
future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the amount
of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits.
These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in
circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities
recognised on the Consolidated Balance Sheet and the amount of other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding credit or charge to the Consolidated Income Statement.
Further details on the Group’s taxation accounting policy are disclosed in note 38(d).
The Group has identified its operating segments on the basis of how the Chief Operating Decision Maker reviews internal
reports about components of the Group in order to assess the performance and allocation of resources to a particular
segment. Information reported to the Group’s Chief Executive Officer (Chief Operating Decision Maker) for the purpose
of performance assessment and resource allocation is specifically focused on the following segments:
Solids
Comprises the collection, treatment, recycle and disposal of all types of solid waste streams, including general waste,
recyclables, construction and demolition waste and medical and washroom services. Solids owns and manages waste
transfer stations, resource recovery and recycling facilities, secure product destruction, quarantine treatment operations
and landfills and participates in commodities trading of recovered paper, cardboard, metals and plastics to the domestic
and international marketplace. Solids also generate and sell electricity produced utilising landfill gas.
Liquids and Industrial Services
Comprises the collection, treatment, processing and recycling of liquid and hazardous waste, including industrial waste,
grease trap waste, oily waters and used mineral and cooking oils in packaged and bulk forms for resale, disposal and to
produce fuel oils and base oils, as well as services including industrial cleaning, vacuum tanker loading, site remediation,
sludge management, parts washing, concrete remediation, CCTV, corrosion protection and emergency response services.
Unallocated balances include the Group’s share of profits from equity accounted investments and corporate balances.
Corporate balances relate to shared services functions that are not directly attributable to an identifiable segment. These
functions include management, finance, legal, information technology, marketing, and human resources that provide
support to the other segments identified above.
No operating segments have been aggregated to form the reportable segments.
Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be
used for more than one period.
The Group has the following allocation policies:
Sales between segments are on normal commercial terms; and
Corporate charges are allocated where possible based on estimated usage of Corporate resources.
Segment assets and liabilities have not been disclosed as these are not provided to the Chief Operating Decision Maker.
This information is provided at a Group level only.
Finance income and expenses and fair value gains and losses on financial assets are not allocated to individual segments
as the underlying instruments are managed on a group basis. Current taxes, deferred taxes and certain financial assets and
liabilities are not allocated to those segments as they are also managed on a group basis.
Inter-segment revenues are eliminated on consolidation.
70
71
71
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
5. Segment reporting (continued)
5. Segment reporting (continued)
2016
Revenue
Sales of goods and services
PSO benefits 1
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Costs associated with restructuring
Costs associated with rebranding
Other underlying adjustments
Depreciation in underlying adjustments
Depreciation and amortisation
EBIT
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
Property, plant and equipment
Intangible assets
1
Product Stewardship for Oil benefits.
OPERATING SEGMENTS
UNALLOCATED
LIQUIDS AND
INDUSTRIAL
SERVICES
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
SOLIDS
$’M
CORPORATE
$’M
ELIMINATIONS
$’M
GROUP
$’M
1,030.1
–
15.8
12.5
1,058.4
237.7
(11.8)
–
0.3
(2.1)
(124.1)
100.0
392.9
14.1
1.8
27.8
436.6
57.5
(5.7)
(0.9)
–
–
(24.5)
26.4
–
–
–
–
–
1.3
–
–
–
–
–
1.3
–
–
0.4
–
0.4
(15.2)
(3.6)
(2.7)
–
–
(10.1)
(31.6)
–
–
–
(40.3)
(40.3)
–
–
–
–
–
–
–
1,423.0
14.1
18.0
–
1,455.1
281.3
(21.1)
(3.6)
0.3
(2.1)
(158.7)
96.1
(34.5)
61.6
(18.5)
43.1
100.6
–
34.4
–
–
–
6.9
11.6
–
–
141.9
11.6
72
72
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
OPERATING SEGMENTS
UNALLOCATED
LIQUIDS AND
INDUSTRIAL
SERVICES
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
SOLIDS
$’M
CORPORATE
ELIMINATIONS
$’M
$’M
GROUP
$’M
5. Segment reporting (continued)
Sales of goods and services
1,030.1
392.9
2016
Revenue
PSO benefits 1
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Costs associated with restructuring
Costs associated with rebranding
Other underlying adjustments
Depreciation in underlying adjustments
Depreciation and amortisation
EBIT
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
1,058.4
436.6
–
15.8
12.5
237.7
(11.8)
–
0.3
(2.1)
(124.1)
100.0
14.1
1.8
27.8
57.5
(5.7)
(0.9)
–
–
(24.5)
26.4
Property, plant and equipment
Intangible assets
100.6
–
34.4
–
1
Product Stewardship for Oil benefits.
1.3
1.3
–
–
–
–
–
–
–
–
–
–
–
–
0.4
0.4
(15.2)
(3.6)
(2.7)
–
–
–
–
–
(10.1)
(31.6)
6.9
11.6
(40.3)
(40.3)
–
–
–
–
–
–
–
–
–
–
–
–
1,423.0
14.1
18.0
–
1,455.1
281.3
(21.1)
(3.6)
0.3
(2.1)
(158.7)
96.1
(34.5)
61.6
(18.5)
43.1
141.9
11.6
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
5. Segment reporting (continued)
5. Segment reporting (continued)
OPERATING SEGMENTS
UNALLOCATED
2015
Revenue
Sales of goods and services
PSO benefits
Other revenue
Inter-segment sales 1
Total revenue
Underlying EBITDA
Costs associated with fleet
grounding
Impairment of assets
Net loss on disposal of
investments, site closures and
acquisition costs
Other underlying adjustments
Depreciation in underlying adjustments
Depreciation and amortisation
EBIT
Net finance costs
Loss before income tax
Income tax benefit
Loss from continuing
operations after income tax
Net profit from discontinued
operations after income tax
Loss from continuing and
discontinued operations after
income tax
Capital expenditure:
Property, plant and equipment
Intangible assets
LIQUIDS AND
INDUSTRIAL
SERVICES
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
CORPORATE
$’M
ELIMINATIONS
$’M
GROUP
$’M
SOLIDS
$’M
926.5
–
8.1
12.6
947.2
198.0
(6.6)
–
(4.3)
–
(0.6)
(99.0)
87.5
430.6
15.3
1.5
28.5
475.9
55.8
(5.6)
(77.5)
–
–
(0.4)
(26.9)
(54.6)
–
–
–
–
–
1.4
–
–
–
–
–
–
1.4
1.0
–
1.9
–
2.9
(23.9)
(3.3)
–
(1.5)
(1.6)
–
(7.9)
(38.2)
–
–
–
(41.1)
(41.1)
–
–
–
–
–
–
–
–
–
–
1,358.1
15.3
11.5
–
1,384.9
231.3
(15.5)
(77.5)
(5.8)
(1.6)
(1.0)
(133.8)
(3.9)
(27.1)
(31.0)
7.4
(23.6)
8.2
(15.4)
173.7
2.2
111.5
–
41.9
–
–
–
20.3
2.2
1
Inter-segment sales have been restated from $79.4 million to $12.6 million for Solids and from $90.5 million to $28.5 million for Liquids and Industrial
Services. The corresponding elimination to present Group revenue decreased from $169.9 million to $41.1 million. This restatement is due to the elimination
of ‘intra-segment’ sales of $128.8 million where sales occur within the respective segments and is consistent with the current period presentation.
72
73
73
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
6. Revenue
6. Revenue
Sale of goods and services
Product Stewardship for Oil (PSO) benefits
Other revenue
Refer to note 38(a) for the Group’s accounting policy on revenue.
7. Other income
7. Other income
Gain on disposal of property, plant and equipment
Gain on disposal of investments
Net foreign currency exchange (losses)/gains
8. Net finance costs
8. Net finance costs
Finance costs
Interest on borrowings
Amortisation of capitalised transaction costs
Unwind of discount on provisions and other liabilities
Foreign currency exchange loss on USPP borrowings
Change in fair value of derivative instruments related to USPP borrowings
Finance income
Interest revenue
Net finance costs
Refer to note 38(c) for the Group’s accounting policy on finance costs.
2016
$’M
1,423.0
14.1
18.0
1,455.1
2015
$’M
1,358.1
15.3
11.5
1,384.9
2016
$’M
1.4
0.3
(0.1)
1.6
2016
$’M
(19.9)
(1.3)
(14.0)
(2.3)
2.3
(35.2)
0.7
0.7
(34.5)
2015
$’M
1.0
3.0
0.1
4.1
2015
$’M
(15.3)
(1.1)
(13.8)
(11.6)
12.5
(29.3)
2.2
2.2
(27.1)
74
74
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
6. Revenue
Sale of goods and services
Product Stewardship for Oil (PSO) benefits
Other revenue
Refer to note 38(a) for the Group’s accounting policy on revenue.
7. Other income
Gain on disposal of property, plant and equipment
Gain on disposal of investments
Net foreign currency exchange (losses)/gains
8. Net finance costs
Finance costs
Interest on borrowings
Amortisation of capitalised transaction costs
Unwind of discount on provisions and other liabilities
Foreign currency exchange loss on USPP borrowings
Change in fair value of derivative instruments related to USPP borrowings
Finance income
Interest revenue
Net finance costs
1,423.0
1,358.1
1,455.1
1,384.9
2016
$’M
14.1
18.0
2016
$’M
1.4
0.3
(0.1)
1.6
2016
$’M
(19.9)
(1.3)
(14.0)
(2.3)
2.3
(35.2)
0.7
0.7
2015
$’M
15.3
11.5
2015
$’M
1.0
3.0
0.1
4.1
2015
$’M
(15.3)
(1.1)
(13.8)
(11.6)
12.5
(29.3)
2.2
2.2
Refer to note 38(c) for the Group’s accounting policy on finance costs.
(34.5)
(27.1)
9.
9.
Income tax
Income tax
(a) Amounts recognised in the Consolidated Income Statement
Current tax expense/(benefit)
Current year
Adjustments in respect of prior years
Deferred tax expense/(benefit)
Origination and reversal of temporary differences
Adjustments in respect of prior years
Income tax expense/(benefit)
2016
$’M
2015
$’M
10.2
(2.7)
7.5
8.0
3.0
11.0
18.5
3.0
(1.4)
1.6
(6.4)
(2.6)
(9.0)
(7.4)
(b) Amounts recognised directly in equity
Deferred income tax expense on items charged directly to equity for the year totalled $1.1 million (2015: $0.3 million), which
relate to the tax effect of items recognised in the asset revaluation reserve of $1.4 million expense (2015: $0.3 million) and
the employee equity benefits reserve of $0.3 million benefit (2015: $Nil).
(c)
Reconciliation between tax expense and pre-tax net profit at the statutory rate
Profit/(loss) before tax
From continuing operations
From discontinued operations
Income tax using the corporation tax rate of 30% (2015: 30%)
Increase/(decrease) in income tax expense due to:
Share of profits from equity accounted investments
Non-deductible expenses
Impairment write downs of assets
Adjustments in respect of prior years
Research and development tax credits
Employee share plan expenses
Gain on sale of New Zealand business
Utilisation of previously unrecognised capital tax losses
Other
Income tax expense/(benefit)
Comprises:
Income tax expense/(benefit) from continuing operations
Income tax expense/(benefit) from discontinued operations
Income tax expense/(benefit)
2016
$’M
61.6
–
61.6
18.5
(0.4)
0.4
–
0.3
(2.0)
1.4
–
–
0.3
18.5
18.5
–
18.5
2015
$’M
(31.0)
8.2
(22.8)
(6.8)
(0.4)
0.4
10.2
(4.0)
(2.0)
(1.2)
(3.5)
(0.9)
0.8
(7.4)
(7.4)
–
(7.4)
74
75
75
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
9.
9.
Income tax (continued)
Income tax (continued)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2016
Deferred tax assets
PP&E
Employee benefits
Provisions
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
2015
Deferred tax assets
PP&E
Employee benefits
Provisions
Tax losses
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
RECOGNISED
IN PROFIT OR
LOSS
$’M
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
$’M
OPENING
BALANCE
$’M
RECOGNISED
DIRECTLY IN
EQUITY
$’M
ACQUIRED IN
BUSINESS
COMBINATION
$’M
OTHER
$’M
CLOSING
BALANCE
$’M
61.2
15.2
128.1
8.2
(47.3)
(19.5)
145.9
(9.2)
1.9
(5.0)
(2.2)
3.4
0.1
(11.0)
(1.4)
–
–
–
–
–
(1.4)
–
–
–
0.3
–
–
0.3
–
–
–
–
–
–
–
–
–
–
0.5
–
–
0.5
50.6
17.1
123.1
6.8
(43.9)
(19.4)
134.3
RECOGNISED
IN PROFIT OR
LOSS
$’M
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
$’M
OPENING
BALANCE
$’M
RECOGNISED
DIRECTLY IN
EQUITY
$’M
ACQUIRED IN
BUSINESS
COMBINATION
$’M
OTHER
$’M
CLOSING
BALANCE
$’M
42.1
14.8
115.3
16.1
4.9
–
(18.3)
174.9
19.4
0.4
3.0
(16.1)
3.3
0.2
(1.2)
9.0
(0.3)
–
–
–
–
–
–
(0.3)
–
–
–
–
–
–
–
–
–
–
9.8
–
–
(47.5)
–
(37.7)
–
–
–
–
–
–
–
–
61.2
15.2
128.1
–
8.2
(47.3)
(19.5)
145.9
76
76
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
9.
Income tax (continued)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2016
PP&E
Deferred tax assets
Employee benefits
Provisions
Other
Deferred tax liabilities
Intangible assets
Other
Deferred tax assets
Employee benefits
2015
PP&E
Provisions
Tax losses
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
OPENING
BALANCE
$’M
61.2
15.2
128.1
8.2
(47.3)
(19.5)
145.9
42.1
14.8
115.3
16.1
4.9
–
(18.3)
174.9
LOSS
$’M
(9.2)
1.9
(5.0)
(2.2)
3.4
0.1
19.4
0.4
3.0
(16.1)
3.3
0.2
(1.2)
9.0
RECOGNISED
IN PROFIT OR
COMPREHENSIVE
RECOGNISED
IN OTHER
INCOME
$’M
(1.4)
RECOGNISED
DIRECTLY IN
ACQUIRED IN
BUSINESS
EQUITY
COMBINATION
$’M
$’M
OTHER
$’M
CLOSING
BALANCE
$’M
–
–
–
–
–
–
–
–
–
–
–
(0.3)
0.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.8
(47.5)
–
0.5
–
–
–
–
–
0.5
–
–
–
–
–
–
–
–
50.6
17.1
123.1
6.8
(43.9)
(19.4)
134.3
61.2
15.2
128.1
–
8.2
(47.3)
(19.5)
145.9
(0.3)
–
(37.7)
Net deferred tax assets
(11.0)
(1.4)
0.3
RECOGNISED
IN PROFIT OR
COMPREHENSIVE
RECOGNISED
IN OTHER
LOSS
$’M
INCOME
$’M
OPENING
BALANCE
$’M
RECOGNISED
DIRECTLY IN
ACQUIRED IN
BUSINESS
EQUITY
COMBINATION
$’M
$’M
OTHER
$’M
CLOSING
BALANCE
$’M
10. Earnings per share
10. Earnings per share
From continuing and discontinuing operations
Basic earnings per share (cents)
Diluted earnings per share (cents)
From discontinued operations
Basic earnings per share (cents)
Diluted earnings per share (cents)
(i)
Basic earnings per share
2016
2.8
2.8
–
–
2015
(1.5)
(1.5)
0.5
0.5
Basic earnings per share is calculated by dividing the net profit after income tax attributable to ordinary equity holders
of the Group by the weighted average number of ordinary shares outstanding during the financial year.
Reconciliation of earnings used as the numerator in calculating basic earnings per share:
Profit/(loss) from continuing operations
Profit from discontinued operations
Net loss/(profit) attributable to non-controlling interests
Distribution to step-up preference security holders
Profit/(loss) from continuing and discontinued operations after tax
attributable to ordinary equity holders
Reconciliation of weighted average number of ordinary shares:
2016
$’M
43.1
–
1.7
–
44.8
2015
$’M
(23.6)
8.2
(0.6)
(7.6)
(23.6)
Issued ordinary shares at 1 July
Effect of shares issued under dividend reinvestment plan
Effect of shares issued under employee incentive plans
Effect of shares issued under employee contract
Weighted average number of ordinary shares used as the denominator
in calculating earnings per share
2016
1,579,914,690
2,777,898
546,917
–
2015
1,579,323,967
–
330,220
68,388
1,583,239,505
1,579,722,575
(ii)
Diluted earnings per share
Diluted earnings per share adjusts basic earnings per share to take into account the after income tax effect of interest and
other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed
to have been issued for no consideration in relation to dilutive potential ordinary shares.
Dilutive potential ordinary shares are limited to performance rights issued under the Group’s long term and short term
incentive plans. Refer note 34 for details. The dilutive effect of the performance rights on basic earnings per share reported
above is not material.
76
77
77
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
11. Cash and cash equivalents
11. Cash and cash equivalents
(a)
Composition of cash and cash equivalents
Cash at bank and on hand
Short-term deposits
Refer to note 38(g) for the Group’s accounting policy on cash and cash equivalents.
2016
$’M
48.3
–
48.3
(b)
Reconciliation of profit after income tax to net cash flows from operating activities
2016
$’M
43.1
Profit/(loss) from continuing and discontinuing operations after income tax
Adjustments for:
Income tax expense/(benefit)
Net finance costs
Share of profits from equity accounted investments
Depreciation and amortisation expense
Share-based payments expense
Impairment of assets
Change in fair value of non-landfill land and buildings
Change in fair value of derivatives and underlying US denominated borrowings
Net gain on disposal of property, plant and equipment
Net gain on sale of business
Other non-cash items
Net cash flow from operating activities before changes in assets and liabilities
Changes in assets and liabilities adjusted for effects of purchase of controlled entities during
the financial period:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventories
Increase/(decrease) in payables
Increase/(decrease) in employee benefits
Increase/(decrease) in other liabilities
Increase/(decrease) in other provisions
Cash generated from operating activities
Net interest paid
Income taxes refunded/(paid)
Net cash from operating activities
18.5
34.5
(1.3)
160.8
1.3
–
0.2
–
(1.7)
–
1.6
257.0
2.8
(3.7)
(0.6)
1.5
(3.8)
(3.3)
(45.7)
204.2
(20.9)
7.4
190.7
2015
$’M
36.9
0.1
37.0
2015
$’M
(15.4)
(7.4)
27.1
(1.4)
134.8
2.7
77.5
0.5
(0.9)
(1.0)
(12.8)
1.6
205.3
7.9
4.3
(0.6)
(12.3)
5.9
(0.6)
(15.1)
194.8
(9.7)
(8.9)
176.2
78
78
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Profit/(loss) from continuing and discontinuing operations after income tax
Adjustments for:
Income tax expense/(benefit)
Net finance costs
Share of profits from equity accounted investments
Depreciation and amortisation expense
Share-based payments expense
Impairment of assets
Change in fair value of non-landfill land and buildings
Change in fair value of derivatives and underlying US denominated borrowings
Net gain on disposal of property, plant and equipment
Net gain on sale of business
Other non-cash items
Net cash flow from operating activities before changes in assets and liabilities
Changes in assets and liabilities adjusted for effects of purchase of controlled entities during
the financial period:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventories
Increase/(decrease) in payables
Increase/(decrease) in employee benefits
Increase/(decrease) in other liabilities
Increase/(decrease) in other provisions
Cash generated from operating activities
Net interest paid
Income taxes refunded/(paid)
Net cash from operating activities
160.8
134.8
2016
$’M
48.3
–
48.3
2016
$’M
43.1
18.5
34.5
(1.3)
1.3
–
0.2
–
(1.7)
–
1.6
257.0
2.8
(3.7)
(0.6)
1.5
(3.8)
(3.3)
(45.7)
204.2
(20.9)
7.4
190.7
2015
$’M
36.9
0.1
37.0
2015
$’M
(15.4)
(7.4)
27.1
(1.4)
2.7
77.5
0.5
(0.9)
(1.0)
(12.8)
1.6
205.3
7.9
4.3
(0.6)
(12.3)
5.9
(0.6)
(15.1)
194.8
(9.7)
(8.9)
176.2
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
11. Cash and cash equivalents
(a)
Composition of cash and cash equivalents
Cash at bank and on hand
Short-term deposits
12. Trade and other receivables
12. Trade and other receivables
Trade receivables
Provision for doubtful debts
Other receivables
Refer to note 38(g) for the Group’s accounting policy on cash and cash equivalents.
(b)
Reconciliation of profit after income tax to net cash flows from operating activities
Refer to note 38(h) for the Group’s accounting policy on trade and other receivables.
The ageing of the Group’s trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days or more
The movement in the provision for doubtful debts during the year was as follows:
Opening balance
Impairment recognised
Utilisation of provision
Closing balance
2016
$’M
225.7
(7.8)
217.9
6.4
224.3
2016
$’M
157.5
42.0
15.3
10.9
225.7
2016
$’M
6.5
4.4
(3.1)
7.8
2015
$’M
225.9
(6.5)
219.4
7.7
227.1
2015
$’M
131.9
61.5
25.4
7.1
225.9
2015
$’M
2.8
4.9
(1.2)
6.5
No single customer’s annual revenue is greater than 2.6% (2015: 3.1%) of the Group’s total revenue. Trade and other
receivables that are neither past due or impaired are considered to be of a high credit quality.
13.
13. Inventories
Inventories
Raw materials and consumables – at cost 1
Work in progress – at cost
Finished goods – at cost
2016
$’M
10.5
–
6.2
16.7
2015
$’M
10.4
0.4
6.0
16.8
1
Prior year balance has been restated to correct the purchase price allocation of the MRL acquisition. Refer to note 26 for details of the adjustment.
Refer to note 38(i) for the Group’s accounting policy on inventories.
14. Trade and other payables
14. Trade and other payables
Trade payables
Other payables and accruals
Refer to note 38(m) for the Group’s accounting policy on trade and other payables.
2016
$’M
85.5
93.3
178.8
2015
$’M
81.3
97.5
178.8
78
79
79
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
15. Borrowings
15. Borrowings
Unsecured
Loans from related parties
Other
Total current
Unsecured
Bank loans
US Private Placement Notes
Other
Total non-current
Total borrowings
2016
$’M
0.5
0.3
0.8
293.9
64.7
–
358.6
359.4
2015
$’M
0.5
0.2
0.7
288.2
62.5
0.3
351.0
351.7
Bank loans are net of capitalised transaction costs of $1.1 million (2015: $1.8 million). Refer to note 38(n) for the Group’s
accounting policy on borrowings.
Financing facilities
The facility limits and maturity profile of the Group’s main financing facilities are as follows:
FACILITY
Syndicated Facility Agreement
US Private Placement Notes (USPP)
Uncommitted bank guarantee facility
Facility A
Facility B
Facility C
working capital tranche
4 year revolver
5 year revolver
10 year tenure
AMOUNT
$135 million
$130 million
$335 million
US$48 million
$60 million
MATURITY
1 July 2017
1 July 2019
1 July 2020
17 December 2017
31 December 2016
The USPP Notes have been swapped to AUD fixed rate debt to mitigate the foreign currency risk arising from these
borrowings. Refer to note 30 for information on the derivative financial instrument. The USPP facility was fully drawn
down at reporting date.
The headroom available in the Group’s facilities at 30 June 2016 is summarised below:
Syndicated Facility Agreement
US Private Placement Notes (USPP)
Bank guarantee facilities 1
Facility A 1
Facility B 2
Facility C 2
AVAILABLE
$’M
135.0
130.0
335.0
64.7
61.6
726.3
UTILISED
$’M
(58.0)
(130.0)
(165.0)
(64.7)
(57.3)
(475.0)
NOT UTILISED
$’M
77.0
–
170.0
–
4.3
251.3
1
2
These facilities include $115.3 million (2015: $114.4 million) in guarantees and letters of credit which are not included in the Consolidated Balance Sheet.
These facilities represent the amount drawn down as ‘bank loans’ excluding the capitalised transaction costs of $1.1 million (2015: $1.8 million).
The headroom available in the Group’s facilities at 30 June 2015 is summarised below:
Syndicated Facility Agreement
US Private Placement Notes (USPP)
Bank guarantee facilities
Facility A
Facility B
Facility C
AVAILABLE
$’M
135.0
130.0
335.0
62.5
40.0
702.5
UTILISED
$’M
(81.0)
(125.0)
(165.0)
(62.5)
(35.5)
(469.0)
NOT UTILISED
$’M
54.0
5.0
170.0
–
4.5
233.5
80
80
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
15. Borrowings
Unsecured
Loans from related parties
Other
Total current
Unsecured
Bank loans
US Private Placement Notes
Other
Total non-current
Total borrowings
accounting policy on borrowings.
Financing facilities
Bank loans are net of capitalised transaction costs of $1.1 million (2015: $1.8 million). Refer to note 38(n) for the Group’s
The facility limits and maturity profile of the Group’s main financing facilities are as follows:
FACILITY
Syndicated Facility Agreement
working capital tranche
Facility A
Facility B
Facility C
4 year revolver
5 year revolver
10 year tenure
AMOUNT
$135 million
$130 million
$335 million
MATURITY
1 July 2017
1 July 2019
1 July 2020
US$48 million
17 December 2017
$60 million
31 December 2016
US Private Placement Notes (USPP)
Uncommitted bank guarantee facility
The USPP Notes have been swapped to AUD fixed rate debt to mitigate the foreign currency risk arising from these
borrowings. Refer to note 30 for information on the derivative financial instrument. The USPP facility was fully drawn
down at reporting date.
The headroom available in the Group’s facilities at 30 June 2016 is summarised below:
AVAILABLE
NOT UTILISED
Syndicated Facility Agreement
US Private Placement Notes (USPP)
Bank guarantee facilities 1
Facility A 1
Facility B 2
Facility C 2
Syndicated Facility Agreement
US Private Placement Notes (USPP)
Bank guarantee facilities
Facility A
Facility B
Facility C
$’M
135.0
130.0
335.0
64.7
61.6
726.3
$’M
135.0
130.0
335.0
62.5
40.0
702.5
UTILISED
$’M
(58.0)
(130.0)
(165.0)
(64.7)
(57.3)
(475.0)
UTILISED
$’M
(81.0)
(125.0)
(165.0)
(62.5)
(35.5)
(469.0)
$’M
77.0
170.0
–
–
4.3
251.3
$’M
54.0
5.0
170.0
–
4.5
233.5
1
2
These facilities include $115.3 million (2015: $114.4 million) in guarantees and letters of credit which are not included in the Consolidated Balance Sheet.
These facilities represent the amount drawn down as ‘bank loans’ excluding the capitalised transaction costs of $1.1 million (2015: $1.8 million).
The headroom available in the Group’s facilities at 30 June 2015 is summarised below:
AVAILABLE
NOT UTILISED
2016
$’M
0.5
0.3
0.8
293.9
64.7
–
358.6
359.4
2015
$’M
0.5
0.2
0.7
288.2
62.5
0.3
351.0
351.7
16.
16. Issued capital
Issued capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs
incurred by the Company arising on the issue of capital are recognised directly in equity as a reduction of the share capital
received.
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number
of shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Ordinary shares have no par value.
Opening balance
Issue of shares under dividend reinvestment plan
Issue of shares under employee incentive plan
Issue of shares under employment contract
Closing balance
2016
2015
NUMBER
OF SHARES
1,579,914,690
5,776,895
653,020
–
1,586,344,605
$’M
2,072.1
4.3
–
–
2,076.4
NUMBER
OF SHARES
1,579,323,967
–
375,538
215,185
1,579,914,690
$’M
2,071.8
–
–
0.3
2,072.1
17. Reserves
17. Reserves
Asset revaluation reserve
Employee equity benefits reserve
2016
$’M
34.9
8.4
43.3
2015
$’M
31.8
6.8
38.6
(a) Asset revaluation reserve
The asset revaluation reserve is used to record revaluations of non-landfill land and buildings. Refer to note 38(k) for further
details on the Group’s non-landfill land and buildings valuation policy.
Opening balance
Revaluation of land and buildings (net of tax)
Transferred to retained earnings
Closing balance
2016
$’M
31.8
3.1
–
34.9
2015
$’M
29.8
1.4
0.6
31.8
Employee equity benefits reserve
(b)
The employee equity benefits reserve is used to record the value of equity benefits provided to employees as part of their
remuneration. Refer to note 34 for further details on these share-based payment plans.
Opening balance
Share-based payment expense (net of tax)
Closing balance
2016
$’M
6.8
1.6
8.4
2015
$’M
4.1
2.7
6.8
80
81
81
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
18. Dividends and distributions
18. Dividends and distributions
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2016 of 1.7 cents per
share, being an interim dividend of 0.8 cents per share and final dividend of 0.9 cents per share. The record date of the final
dividend is 21 September 2016 with payment to be made on 7 October 2016.
Details of distributions in respect of the financial year are as follows:
Dividends paid/payable during the period
Final dividend relating to prior period
Interim dividend relating to current period
Step-up preference securities
Distribution for 2015 (fully franked at 30% tax rate)
Dividends determined in respect of the period
Interim dividend relating to current period
Final dividend relating to current period
Dividends paid/payable during the period
Final dividend relating to prior period
Interim dividend relating to current period
Step-up preference securities
Distribution for 2015 (fully franked at 30% tax rate)
Dividends determined in respect of the period
Interim dividend relating to current period
Final dividend relating to current period
Franking credit balance
2016
$’M
12.6
12.7
–
25.3
12.7
14.3
27.0
2015
$’M
23.7
11.1
7.6
42.4
11.1
12.6
23.7
2016
CENTS PER
SHARE
2015
CENTS PER
SHARE
0.8
0.8
–
1.6
0.8
0.9
1.7
1.5
0.7
305.0
307.2
0.7
0.8
1.5
The available amounts are based on the balance of the franking account at year end, adjusted for:
(a) Franking credits that will arise from the payment of current tax liabilities;
(b) Franking debits that will arise from the payment of franked or partially franked dividends recognised as a liability at the
year end; and
(c) Franking credits that will arise from the receipt of dividends recognised as receivables by the Tax Consolidated Group
at the year end.
30% franking credits available for subsequent financial years 1
1
The payment of the final 2016 dividend determined after 30 June 2016 will reduce the franking account by $6.1 million.
2016
$’M
12.8
2015
$M
19.9
82
82
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
18. Dividends and distributions
19. Capital management
19. Capital management
When managing capital, management’s objective is to ensure that the Group uses a mix of funding options, with the objectives
of optimising returns to equity holders and prudent risk management. The facility limits and maturity profile of the Group’s main
financing facilities are contained in note 15.
The capital structure of the Group comprises debt, which includes borrowings, cash and cash equivalents and equity
attributable to equity holders of the parent, such equity comprising issued capital, reserves and retained earnings as disclosed
in the Consolidated Balance Sheet. The Group is subject to and complies with externally imposed capital requirements.
The gearing ratio of the Group at reporting date was as follows:
Current borrowings
Non-current borrowings
Less cash and cash equivalents
Net debt
Total equity
Gearing ratio 1
1
The gearing ratio is calculated as Net debt divided by Net debt plus Total equity.
2016
$’M
0.8
358.6
(48.3)
311.1
1,781.5
14.9%
2015
$’M
0.7
351.0
(37.0)
314.7
1,754.7
15.2%
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2016 of 1.7 cents per
share, being an interim dividend of 0.8 cents per share and final dividend of 0.9 cents per share. The record date of the final
dividend is 21 September 2016 with payment to be made on 7 October 2016.
Details of distributions in respect of the financial year are as follows:
Dividends paid/payable during the period
Final dividend relating to prior period
Interim dividend relating to current period
Step-up preference securities
Distribution for 2015 (fully franked at 30% tax rate)
Dividends determined in respect of the period
Interim dividend relating to current period
Final dividend relating to current period
Dividends paid/payable during the period
Final dividend relating to prior period
Interim dividend relating to current period
Step-up preference securities
Distribution for 2015 (fully franked at 30% tax rate)
Dividends determined in respect of the period
Interim dividend relating to current period
Final dividend relating to current period
2016
$’M
12.6
12.7
–
25.3
12.7
14.3
27.0
0.8
0.8
–
1.6
0.8
0.9
1.7
2015
$’M
23.7
11.1
7.6
42.4
11.1
12.6
23.7
1.5
0.7
305.0
307.2
0.7
0.8
1.5
2016
CENTS PER
SHARE
2015
CENTS PER
SHARE
Franking credit balance
year end; and
at the year end.
The available amounts are based on the balance of the franking account at year end, adjusted for:
(a) Franking credits that will arise from the payment of current tax liabilities;
(b) Franking debits that will arise from the payment of franked or partially franked dividends recognised as a liability at the
(c) Franking credits that will arise from the receipt of dividends recognised as receivables by the Tax Consolidated Group
30% franking credits available for subsequent financial years 1
1
The payment of the final 2016 dividend determined after 30 June 2016 will reduce the franking account by $6.1 million.
2016
$’M
12.8
2015
$M
19.9
82
83
83
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
20. Property, plant and equipment
20. Property, plant and equipment
2016
Opening net book value
Additions
Acquisitions of businesses
Net movement in landfill assets
Disposals
Transfer of assets
Transfer to assets held for sale
Revaluations
Project and site closures
Depreciation
Closing net book value
Cost or fair value
Accumulated depreciation
Net book value
2015
Opening net book value
Additions 2
Acquisitions of businesses
Net movement in landfill asset
Disposals
Transfer of assets 2
Revaluations
Impairment of assets
Depreciation
Closing net book value
Cost or fair value
Accumulated depreciation
Net book value
NON-LANDFILL
LAND AND
BUILDINGS
$’M
153.9
–
–
–
(0.5)
4.7
–
4.5
(0.4)
(2.0)
160.2
164.7
(4.5)
160.2
NON-LANDFILL
LAND AND
BUILDINGS
$’M
148.6
–
–
–
–
7.7
0.7
–
(3.1)
153.9
159.1
(5.2)
153.9
LANDFILL
ASSETS
$’M
142.6
–
–
28.9
–
70.8
–
–
–
(43.7)
198.6
476.5
(277.9)
198.6
LANDFILL
ASSETS
$’M
127.6
–
13.1
24.7
–
11.2
–
–
(34.0)
142.6
376.3
(233.7)
142.6
LEASEHOLD
IMPROVEMENTS
$’M
32.8
–
–
–
–
3.2
–
–
–
(4.0)
32.0
38.4
(6.4)
32.0
LEASEHOLD
IMPROVEMENTS
$’M
6.7
–
–
–
(0.1)
27.7
–
–
(1.5)
32.8
35.4
(2.6)
32.8
PLANT AND
EQUIPMENT
$’M
441.8
–
–
–
(2.0)
106.4
–
–
–
(99.0)
447.2
1,362.8
(915.6)
447.2
CAPITAL WORK
IN PROGRESS
$’M
89.3
164.1
0.2
–
–
(187.7)
(2.2)
–
(4.6)
–
59.1
59.1
–
59.1
PLANT AND
EQUIPMENT
$’M
428.8
–
14.2
–
(5.0)
140.1
–
(43.4)
(92.9)
441.8
1,343.5
(901.7)
441.8
CAPITAL WORK
IN PROGRESS 1
$’M
110.3
183.7
–
–
–
(204.7)
–
–
–
89.3
89.3
–
89.3
TOTAL
$’M
860.4
164.1
0.2
28.9
(2.5)
(2.6)
(2.2)
4.5
(5.0)
(148.7)
897.1
2,101.5
(1,204.4)
897.1
TOTAL
$’M
822.0
183.7
27.3
24.7
(5.1)
(18.0)
0.7
(43.4)
(131.5)
860.4
2,003.6
(1,143.2)
860.4
1
2
The 2015 capital work in progress balance has been adjusted to reflect $2.2 million of additions which have been transferred to intangibles.
The additions and transfer of assets rows have been restated to reflect that all additions are initially recognised as capital work in progress and then
transferred to the appropriate property, plant and equipment category once the asset is ready for use.
84
84
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
20. Property, plant and equipment
20. Property, plant and equipment (continued)
20. Property, plant and equipment (continued)
LANDFILL
LEASEHOLD
PLANT AND
CAPITAL WORK
ASSETS
IMPROVEMENTS
EQUIPMENT
IN PROGRESS
2016
Additions
Opening net book value
Acquisitions of businesses
Net movement in landfill assets
Disposals
Transfer of assets
Transfer to assets held for sale
Revaluations
Project and site closures
Depreciation
Closing net book value
Cost or fair value
Accumulated depreciation
Net book value
2015
Opening net book value
Additions 2
Acquisitions of businesses
Net movement in landfill asset
Disposals
Transfer of assets 2
Revaluations
Impairment of assets
Depreciation
Closing net book value
Cost or fair value
Accumulated depreciation
Net book value
NON-LANDFILL
LAND AND
BUILDINGS
$’M
153.9
–
–
–
(0.5)
4.7
–
4.5
(0.4)
(2.0)
160.2
164.7
(4.5)
160.2
–
–
–
–
7.7
0.7
–
(3.1)
153.9
159.1
(5.2)
153.9
NON-LANDFILL
LAND AND
BUILDINGS
$’M
148.6
$’M
142.6
28.9
70.8
–
–
–
–
–
–
(43.7)
198.6
476.5
(277.9)
198.6
$’M
127.6
–
13.1
24.7
11.2
–
–
–
(34.0)
142.6
376.3
(233.7)
142.6
$’M
32.8
–
–
–
–
–
–
–
3.2
(4.0)
32.0
38.4
(6.4)
32.0
$’M
6.7
–
–
–
(0.1)
27.7
–
–
(1.5)
32.8
35.4
(2.6)
32.8
$’M
441.8
(2.0)
106.4
–
–
–
–
–
–
(99.0)
447.2
1,362.8
(915.6)
447.2
$’M
428.8
–
14.2
–
(5.0)
140.1
–
(43.4)
(92.9)
441.8
1,343.5
(901.7)
441.8
–
(1,204.4)
59.1
897.1
$’M
89.3
164.1
0.2
(187.7)
(2.2)
–
–
–
–
(4.6)
59.1
59.1
(204.7)
$’M
110.3
183.7
–
–
–
–
–
–
89.3
89.3
–
89.3
TOTAL
$’M
860.4
164.1
0.2
28.9
(2.5)
(2.6)
(2.2)
4.5
(5.0)
(148.7)
897.1
2,101.5
TOTAL
$’M
822.0
183.7
27.3
24.7
(5.1)
(18.0)
0.7
(43.4)
(131.5)
860.4
2,003.6
(1,143.2)
860.4
LANDFILL
LEASEHOLD
ASSETS
IMPROVEMENTS
PLANT AND
CAPITAL WORK
EQUIPMENT
IN PROGRESS 1
1
2
The 2015 capital work in progress balance has been adjusted to reflect $2.2 million of additions which have been transferred to intangibles.
The additions and transfer of assets rows have been restated to reflect that all additions are initially recognised as capital work in progress and then
transferred to the appropriate property, plant and equipment category once the asset is ready for use.
Accounting for landfill assets
The Group is responsible for a total of 17 landfills (2015: 17 landfills). Of the 17 landfills, nine are closed. Those that are open
are expected to close between 2017 and 2070. The Group’s remediation provisions are based on an average 30 year
post-closure period.
It is the Group’s policy at time of development or acquisition of a landfill and at each reporting date to:
(a) Capitalise the cost of cell development to landfill assets;
(b) Capitalise the cost of purchased landfill assets;
(c) Depreciate the capitalised landfill assets over the useful life of the landfill asset or site; and
(d) Recognise income generated from the landfill assets in the reporting period earned.
Refer to note 38(k) for further details on the Group’s accounting policy on landfill assets.
Valuations of non-landfill land and buildings
Non-landfill land and buildings are shown at fair value in the Consolidated Balance Sheet, based on periodic valuations by
external independent valuers, less subsequent depreciation of buildings. The current valuation selection process ensures that
each property is valued at least every three years. Land and buildings are combined for the purposes of determining fair value
as this is how management view its property and associated value. The fair values are reviewed at the end of each reporting
period to ensure that the carrying value of land and buildings is not materially different to their fair values.
Any revaluation increment (net of tax) is credited to the asset revaluation reserve included in the equity section of the
Consolidated Balance Sheet. Any revaluation decrement directly offsetting a previous increment in the same asset is directly
offset against the surplus in the asset revaluation reserve, otherwise it is charged to the Consolidated Income Statement.
The following table shows an analysis of the fair values of land and buildings recognised in the Consolidated Balance Sheet
by level of the fair value hierarchy:
2016
Residential
Regional industrial
Metropolitan industrial
Total
2015
Residential
Regional industrial
Metropolitan industrial
Total
LEVEL 1
$’M
–
–
–
–
–
–
–
–
LEVEL 2
$’M
1.7
–
–
1.7
1.7
–
–
1.7
LEVEL 3
$’M
–
44.2
112.5
156.7
–
40.0
108.9
148.9
TOTAL 1
$’M
1.7
44.2
112.5
158.4
1.7
40.0
108.9
150.6
AMOUNT
EXPENSED
$’M
–
(0.2)
–
(0.2)
–
(0.5)
–
(0.5)
1
The amounts in this table are based on the most recent valuation for each property and does not take into account subsequent accumulated
depreciation recognised.
Amounts taken to the Consolidated Income Statement are shown in change in fair value of land and buildings.
There were no transfers between levels during the year.
Level 2 valuations are based on a direct comparison approach whereby a property’s fair value is estimated based on
comparable transactions and are then adjusted to take into account any differences in the assets. The unit of comparison
applied by the Group is the price per square metre (sqm).
84
85
85
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
20. Property, plant and equipment (continued)
20. Property, plant and equipment (continued)
The following table presents the details of the valuation approaches used under Level 3:
Regional
industrial
Metropolitan
industrial
VALUATION
TECHNIQUE
Summation
Capitalisation
Direct comparison
Summation
Capitalisation
Direct comparison
KEY UNOBSERVABLE
INPUTS
Price per square metre
Depreciation replacement cost
Capitalisation rate
Leased income per square metre
Price per square metre
Price per square metre
Depreciation replacement cost
Capitalisation rate
Leased income per square metre
Price per square metre
RANGE
2016
$5-250
$207-1019
9.75%
$125
$60-1401
$15-360
$35-671
7%-10%
$40-94
$70-1831
RANGE
2015
$60-250
$0-1500
9.25%
$75-130
$70-525
$15-285
$0-1500
7.25%-10%
$95-225
$300-1725
Under the summation method a property’s fair value is estimated based on comparable transactions for the land on a price
per square metre basis together with an estimate of the cost to replace any buildings or structures on site less depreciation.
Under the income capitalisation method, a property’s fair value is estimated based on the normalised net operating lease
income generated by the property, which is divided by the capitalisation rate (discounted by a rate of return). Significant
increases/(decreases) in any of the significant unobservable inputs, in isolation, under the direct comparison, summation
or capitalisation methods would result in a significantly higher/(lower) fair value measurement.
If non-landfill land and buildings were measured using the cost model, the carrying amounts would be as follows:
Land
Cost
Buildings
Cost
Accumulated depreciation
Closing net book value
21.
21. Intangible assets
Intangible assets
2016
$’M
2015
$’M
82.2
82.3
71.1
(21.4)
49.7
68.5
(20.0)
48.5
Opening net book value
Additions 1
Acquisitions of businesses 2
Disposals
Transfers from PPE
Impairment of intangible assets
Amortisation
Net book value
Cost
Accumulated amortisation
Net book value
GOODWILL
2016
$’M
1,195.5
–
0.4
–
–
–
–
1,195.9
1,195.9
–
1,195.9
2015
$’M
1,190.6
–
39.0
–
–
(34.1)
–
1,195.5
1,195.5
–
1,195.5
OTHER INTANGIBLES
TOTAL
2016
$’M
344.2
15.9
0.2
(1.7)
1.6
–
(12.1)
348.1
407.8
(59.7)
348.1
2015
$’M
81.4
4.9
261.2
–
–
–
(3.3)
344.2
391.8
(47.6)
344.2
2016
$’M
1,539.7
15.9
0.6
(1.7)
1.6
–
(12.1)
1,544.0
1,603.7
(59.7)
1,544.0
2015
$’M
1,272.0
4.9
300.2
–
–
(34.1)
(3.3)
1,539.7
1,587.3
(47.6)
1,539.7
1
2
The 2015 additions for other intangibles have been adjusted to reflect $2.2 million of additions which have been transferred from property, plant
and equipment and $0.5 million of carbon credit unit additions which have been transferred from other assets.
Finalisation of the purchase price allocation of the MRL acquisition resulted in a consequential reduction in goodwill.
86
86
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
20. Property, plant and equipment (continued)
21.
21. Intangible assets (continued)
Intangible assets (continued)
The following table presents the details of the valuation approaches used under Level 3:
Regional
industrial
VALUATION
TECHNIQUE
Summation
KEY UNOBSERVABLE
INPUTS
Price per square metre
Depreciation replacement cost
Capitalisation
Capitalisation rate
Leased income per square metre
Direct comparison
Price per square metre
Metropolitan
Summation
Price per square metre
industrial
Depreciation replacement cost
Capitalisation
Capitalisation rate
Leased income per square metre
Direct comparison
Price per square metre
RANGE
2016
$5-250
$207-1019
9.75%
$125
$60-1401
$15-360
$35-671
7%-10%
$40-94
$70-1831
RANGE
2015
$60-250
$0-1500
9.25%
$75-130
$70-525
$15-285
$0-1500
7.25%-10%
$95-225
$300-1725
Under the summation method a property’s fair value is estimated based on comparable transactions for the land on a price
per square metre basis together with an estimate of the cost to replace any buildings or structures on site less depreciation.
Under the income capitalisation method, a property’s fair value is estimated based on the normalised net operating lease
income generated by the property, which is divided by the capitalisation rate (discounted by a rate of return). Significant
increases/(decreases) in any of the significant unobservable inputs, in isolation, under the direct comparison, summation
or capitalisation methods would result in a significantly higher/(lower) fair value measurement.
If non-landfill land and buildings were measured using the cost model, the carrying amounts would be as follows:
2016
$’M
2015
$’M
82.2
82.3
71.1
(21.4)
49.7
68.5
(20.0)
48.5
Land
Cost
Buildings
Cost
Accumulated depreciation
Closing net book value
21. Intangible assets
Opening net book value
1,195.5
1,190.6
1,539.7
1,272.0
Acquisitions of businesses 2
0.4
39.0
Impairment of intangible assets
(34.1)
Additions 1
Disposals
Transfers from PPE
Amortisation
Net book value
Cost
Accumulated amortisation
Net book value
GOODWILL
2016
$’M
2015
$’M
OTHER INTANGIBLES
TOTAL
2016
$’M
2016
$’M
344.2
15.9
0.2
(1.7)
1.6
–
(12.1)
348.1
407.8
(59.7)
348.1
2015
$’M
81.4
4.9
261.2
–
–
–
(3.3)
344.2
391.8
(47.6)
344.2
15.9
0.6
(1.7)
1.6
–
(12.1)
1,544.0
1,603.7
(59.7)
1,544.0
2015
$’M
4.9
300.2
–
–
(34.1)
(3.3)
1,539.7
1,587.3
(47.6)
1,539.7
–
–
–
–
–
–
–
–
–
–
–
1,195.9
1,195.9
1,195.5
1,195.5
1,195.9
1,195.5
1
The 2015 additions for other intangibles have been adjusted to reflect $2.2 million of additions which have been transferred from property, plant
and equipment and $0.5 million of carbon credit unit additions which have been transferred from other assets.
2
Finalisation of the purchase price allocation of the MRL acquisition resulted in a consequential reduction in goodwill.
Intangible assets are monitored at an operating segment level for the Solids business (formerly Cleanaway) and at
a cash-generating unit (CGU) level for the Liquids and Industrial Services business. CGUs for the Liquids and Industrial
Services business consists of:
Liquids & Hazardous Waste, excluding Hydrocarbons (formerly Technical Services);
Hydrocarbons; and
Industrial Services (formerly EMR).
The carrying amount of goodwill and intangible assets allocated to the operating segment or CGUs is as follows:
2016
Goodwill 1
Brand names
Other intangible assets
Total
2015
Goodwill
Brand names
Other intangible assets
Total
LIQUIDS &
HAZARDOUS
WASTE
$’M
58.4
–
1.0
59.4
INDUSTRIAL
SERVICES
$’M
47.9
–
–
47.9
CORPORATE
$’M
–
–
10.1
10.1
TOTAL
$’M
1,195.9
78.6
269.5
1,544.0
70.0
–
0.2
70.2
36.3
–
–
36.3
–
–
2.2
2.2
1,195.5
78.6
265.6
1,539.7
SOLIDS
$’M
1,089.6
78.6
258.4
1,426.6
1,089.2
78.6
263.2
1,431.0
1 The goodwill allocation across the Liquids and Industrial Services business has been revised in 2016 to reflect the impact of organisational restructures.
At 30 June 2016, other intangible assets include the Melbourne Regional Landfill asset of $242.2 million (2015:
$245.8 million) and customer contracts of $5.2 million (2015: $11.8 million).
The increase in goodwill and other intangibles in 2015 was due to the acquisition of the Melbourne Regional Landfill,
Dimeo Waste Services and Riverland businesses during the 2015 financial year. Refer to note 26.
Annual impairment testing
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment
losses. Goodwill and brand names are not amortised but are subject to impairment testing. In accordance with the Group’s
accounting policies, the Group performs its impairment testing annually at 30 June. Goodwill and non-current assets are
however reviewed at each reporting period to determine whether there is an indicator of impairment. Where an indicator
of impairment exists, a formal review is undertaken to estimate the recoverable amount of related assets.
Results of impairment testing
Based on impairment testing performed, the recoverable amounts of each CGU exceed the carrying amounts at 30 June 2016.
The results of the impairment testing are summarised in the table below:
Intangible assets
Property, plant and equipment
Total impairment
HYDROCARBONS
TOTAL
2016
$’M
–
–
–
2015
$’M
34.1
43.4
77.5
2016
$’M
–
–
–
2015
$’M
34.1
43.4
77.5
Impairment in the prior period related to the Hydrocarbons CGU. The Hydrocarbons CGU refines and recycles used mineral
oils to produce fuel oils and base oils. In the prior period the CGU was experiencing increased collection costs and low sales
price indices for fuel and base oils, which led to a significant decline in results for the Hydrocarbon business. Despite
continued price weakness and volatility during the financial year ended 30 June 2016, there is no need for further
impairment at 30 June 2016, particularly given the benefits of the Cost Reduction Program and associated capital spend
management referred to later in this note. Whilst there are a range of possible outcomes, the current modelling shows
headroom of $52.5 million. Until a sustainable level of earnings exists to demonstrate the modelled cash flows will be
achieved, the Directors believe that it is too early to reverse the impairment.
86
87
87
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
21.
Intangible assets (continued)
21. Intangible assets (continued)
Key assumptions used for annual impairment testing
The recoverable amounts of the operating segment or CGUs have been based on value-in-use calculations using three year
forecasted cash flows. These calculations use cash flow projections based on actual operating results, the 2017 budget
approved by the Board and the latest three year strategic plan adjusted for known developments and changes in information
since the plan was formulated.
The terminal growth and discount rate assumptions used in the 30 June 2015 impairment testing were reviewed and have
been determined to remain valid for the 30 June 2016 testing. The terminal value growth rate has been based on published
long-term growth rates. The discount rate has been based on an industry Weighted Average Cost of Capital (WACC) with
cash flow projections being adjusted for CGU specific risks.
Forecast revenue, EBITDA and capital spend assumptions used in the 30 June 2015 impairment testing have been adjusted
for known and anticipated future operational changes and additional potential risk identified since 30 June 2015. These
changes are reflected in the summary of key assumptions table below. Based on these key assumptions the recoverable
amount of each CGU continues to exceed the carrying amounts at 30 June 2016.
The table below provides a summary of the key assumptions used in the impairment testing at 30 June 2016 and the
corresponding percentages for 30 June 2015:
ASSUMPTIONS
Revenue growth 1,2
EBITDA growth 1,2
Capital spend rate 3
Terminal value growth rate
Post-tax discount rate
Pre-tax discount rate
SOLIDS
LIQUIDS & HAZARDOUS
WASTE
JUNE
2016
3.7%
5.7%
10.1%
3.0%
7.7%
11.0%
JUNE
2015
6.3%
8.5%
10.5%
3.0%
7.7%
11.0%
JUNE
2016
2.6%
5.8%
5.2%
2.0%
7.7%
11.0%
JUNE
2015
4.0%
24.3%
7.8%
2.0%
7.7%
11.0%
HYDROCARBONS
INDUSTRIAL SERVICES
JUNE
2016
1.3%
6.4%
6.8%
2.0%
7.7%
11.0%
JUNE
2015
2.8%
4.7%
8.5%
2.0%
7.7%
11.0%
JUNE
2016
3.8%
18.0%
4.3%
2.0%
7.7%
11.0%
JUNE
2015
0.2%
11.4%
5.7%
2.0%
7.7%
11.0%
1
The Melbourne Regional Landfill (MRL), acquired on 28 February 2015, has now been fully transitioned into the existing business and is therefore
not separately identified.
2 Growth rates have been calculated with 30 June 2016 revenue and underlying normalised EBITDA as a base.
Reflects capital spend as a percentage of revenue, calculated as the three year average of forecast spend.
3
Revenue growth assumptions
Solids’ forecast revenue growth is based on expected volume and price growth considering business as usual with the growth
transformation program, implemented across major markets in order to increase sales revenue, now fully embedded in the
business. Growth rates have been determined with reference to external sources including the Reserve Bank of Australia GDP
growth and CPI forecast, industry reports and industry specific forecasts that are closely linked to waste generation. The
forecast revenue growth as at 30 June 2016 has been adjusted given a reduction in actual and forecast CPI and significant
organisational changes since August 2015. Organisational changes include a comprehensive Cost Reduction Program which
has impacted all activities of the Group and has been a high priority of management accompanied by a new operating model
for the business.
Liquid & Hazardous Waste, Hydrocarbons and Industrial Services forecast revenue growth considers GDP and CPI, adjusted
for management’s best estimate of growth achievable in the current economic and competitive environment. Industrial
Services’ forecast revenue growth includes the benefit of recent major contract wins.
EBITDA growth assumptions
EBITDA growth is primarily the result of changes in the revenue growth assumptions outlined above, together with the
continued benefits of the Cost Reduction Program implemented partway through the 2016 financial year. Controls are
in place to ensure that costs remain at the lower levels currently achieved.
The Liquid & Hazardous Waste CGU reflects a decrease in the EBITDA growth from 30 June 2015 as a significant portion
of the cost reductions have been achieved in the 2016 financial year resulting in a lower forward-looking EBITDA growth rate.
The Industrial Services CGU reflects an increase in the EBITDA growth from 30 June 2015 due to major contract wins,
benefits from the removal of divisional overhead structures as part of the cost reduction initiatives and the coinciding review
of overhead allocations.
88
88
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
21. Intangible assets (continued)
21.
Intangible assets (continued)
21. Intangible assets (continued)
Key assumptions used for annual impairment testing
Capital spend assumptions
The recoverable amounts of the operating segment or CGUs have been based on value-in-use calculations using three year
forecasted cash flows. These calculations use cash flow projections based on actual operating results, the 2017 budget
approved by the Board and the latest three year strategic plan adjusted for known developments and changes in information
Capital spend incorporates consideration of industry benchmarks but also reflects the continued focus on managing capital
spend as part of the overall Cost Reduction and Capital Efficiency Program. The Solids segment is the most capital intensive
part of the business and Industrial Services CGU is the least as its primary source of revenue is technical labour services.
since the plan was formulated.
The terminal growth and discount rate assumptions used in the 30 June 2015 impairment testing were reviewed and have
been determined to remain valid for the 30 June 2016 testing. The terminal value growth rate has been based on published
long-term growth rates. The discount rate has been based on an industry Weighted Average Cost of Capital (WACC) with
cash flow projections being adjusted for CGU specific risks.
Forecast revenue, EBITDA and capital spend assumptions used in the 30 June 2015 impairment testing have been adjusted
for known and anticipated future operational changes and additional potential risk identified since 30 June 2015. These
changes are reflected in the summary of key assumptions table below. Based on these key assumptions the recoverable
amount of each CGU continues to exceed the carrying amounts at 30 June 2016.
The table below provides a summary of the key assumptions used in the impairment testing at 30 June 2016 and the
corresponding percentages for 30 June 2015:
LIQUIDS & HAZARDOUS
SOLIDS
WASTE
HYDROCARBONS
INDUSTRIAL SERVICES
JUNE
2016
3.7%
5.7%
3.0%
7.7%
JUNE
2015
6.3%
8.5%
3.0%
7.7%
10.1%
10.5%
JUNE
2016
2.6%
5.8%
5.2%
2.0%
7.7%
JUNE
2015
4.0%
24.3%
7.8%
2.0%
7.7%
JUNE
2016
1.3%
6.4%
6.8%
2.0%
7.7%
JUNE
2015
2.8%
4.7%
8.5%
2.0%
7.7%
JUNE
2016
3.8%
18.0%
4.3%
2.0%
7.7%
JUNE
2015
0.2%
11.4%
5.7%
2.0%
7.7%
11.0%
11.0%
11.0%
11.0%
11.0%
11.0%
11.0%
11.0%
ASSUMPTIONS
Revenue growth 1,2
EBITDA growth 1,2
Capital spend rate 3
Terminal value growth rate
Post-tax discount rate
Pre-tax discount rate
not separately identified.
1
The Melbourne Regional Landfill (MRL), acquired on 28 February 2015, has now been fully transitioned into the existing business and is therefore
2 Growth rates have been calculated with 30 June 2016 revenue and underlying normalised EBITDA as a base.
3
Reflects capital spend as a percentage of revenue, calculated as the three year average of forecast spend.
Revenue growth assumptions
Solids’ forecast revenue growth is based on expected volume and price growth considering business as usual with the growth
transformation program, implemented across major markets in order to increase sales revenue, now fully embedded in the
business. Growth rates have been determined with reference to external sources including the Reserve Bank of Australia GDP
growth and CPI forecast, industry reports and industry specific forecasts that are closely linked to waste generation. The
forecast revenue growth as at 30 June 2016 has been adjusted given a reduction in actual and forecast CPI and significant
organisational changes since August 2015. Organisational changes include a comprehensive Cost Reduction Program which
has impacted all activities of the Group and has been a high priority of management accompanied by a new operating model
for the business.
Liquid & Hazardous Waste, Hydrocarbons and Industrial Services forecast revenue growth considers GDP and CPI, adjusted
for management’s best estimate of growth achievable in the current economic and competitive environment. Industrial
Services’ forecast revenue growth includes the benefit of recent major contract wins.
EBITDA growth assumptions
EBITDA growth is primarily the result of changes in the revenue growth assumptions outlined above, together with the
continued benefits of the Cost Reduction Program implemented partway through the 2016 financial year. Controls are
in place to ensure that costs remain at the lower levels currently achieved.
The Liquid & Hazardous Waste CGU reflects a decrease in the EBITDA growth from 30 June 2015 as a significant portion
of the cost reductions have been achieved in the 2016 financial year resulting in a lower forward-looking EBITDA growth rate.
The Industrial Services CGU reflects an increase in the EBITDA growth from 30 June 2015 due to major contract wins,
benefits from the removal of divisional overhead structures as part of the cost reduction initiatives and the coinciding review
of overhead allocations.
Impact of possible changes in key assumptions
Any variation in the key assumptions used to determine recoverable amount would result in a change to the estimated
recoverable amount. If variations in assumptions had a negative impact on recoverable amount it could indicate a requirement
for some impairment of non-current assets. If variations in assumptions had a positive impact on recoverable amount it could
indicate a requirement for a reversal of previously impaired non-current assets, with the exception of goodwill.
Estimated reasonably possible changes (absolute numbers) in the key assumptions would have the following approximate
impact on impairment of each CGU as at 30 June 2016:
Decrease in CAGR% – Revenue
Decrease in CAGR% – EBITDA
Increase in capital spend rate
Decrease in terminal value growth rate
Increase in post-tax discount rate
REASONABLY
POSSIBLE CHANGE
1% to 2%
2% to 3%
0.5% to 1%
1%
0.3% to 1%
SOLIDS
$’M
Nil – (201.9)
Nil
Nil – (6.3)
Nil
Nil – (62.9)
LIQUIDS &
HAZARDOUS
WASTE
$’M
Nil – (9.2)
Nil
Nil
Nil
Nil
HYDROCARBONS
$’M
Nil
Nil
Nil
Nil
Nil
INDUSTRIAL
SERVICES
$’M
Nil
Nil
Nil
Nil
Nil
Whilst the table above outlines management’s best estimates of key assumptions and reasonably possible changes in these,
changes in the level of business activity may also materially impact the determination of recoverable amount. Should the
macroeconomic factors that are specific to the Australian domestic market change, this could impact the level of activity
in the market as well as competition and thereby affect the Group’s revenue and cost initiatives. If conditions change
unfavourably, changes in recoverable amount estimates may arise.
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are held
constant. In reality, a change in one of the aforementioned assumptions may accompany a change in another assumption.
Action is also usually taken to respond to adverse changes in economic assumptions that may mitigate the impact of any
such change.
Modelling incorporating the assumptions identified in the key assumptions table provides that the recoverable amount
exceeds the carrying amount (headroom) as outlined below. The recoverable amount of the operating segment or CGUs
would equal its carrying amount if the key assumptions were to change as follows:
Headroom $’M
Decrease in CAGR% – Revenue 1
Decrease in CAGR% – EBITDA 1
Increase in capital spend rate 1
Decrease in terminal value growth rate 1,2
Increase in post-tax discount rate 1
LIQUIDS &
HAZARDOUS
WASTE
$’M
66.3
1.7%
8.0%
1.6%
3.5%
3.1%
HYDROCARBONS
$’M
52.5
8.0%
7.6%
1.4%
4.6%
3.9%
SOLIDS
$’M
317.7
1.2%
3.1%
1.0%
1.3%
0.8%
INDUSTRIAL
SERVICES
$’M
52.6
3.1%
8.0%
1.1%
2.7%
2.4%
1
2
Percentage changes presented above represents the absolute change in the assumption value (for example post-tax discount rate increasing by 0.8%
from 7.7% to 8.5%).
Liquids & Hazardous Waste, Hydrocarbons and Industrial Services terminal value would reflect negative value as it is currently modelled at 2%.
Refer to note 38(l) for further details on the Group’s intangible assets accounting policy.
88
89
89
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
22. Equity accounted investments
22. Equity accounted investments
The Group holds a 50% interest in the following equity accounted investments but does not have control. Control is
achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. The Group does not have power over these entities either
through management control or voting rights.
OWNERSHIP INTEREST
REPORTING
DATE
2016
%
2015
%
50
50
50
50
50
50
50
50
NAME OF ENTITY
Solids:
Wonthaggi Recyclers Pty Ltd
Earthpower Technologies Sydney Pty Ltd
COUNTRY
Australia
Australia
30 June
30 June
Liquids and Industrial Services:
Total Waste Management Pty Ltd
Western Resource Recovery Pty Ltd
Australia
Australia
31 December
31 December
Share of equity accounted investments’ balance sheet
Total assets
Total liabilities
Net assets as reported by equity accounted investments
Share of net assets equity accounted
Share of equity accounted investments’ revenue and profit
Revenues (100%)
Expenses
Profit before income tax (100%)
Share of profit before income tax
Share of income tax expense
Share of net profit recognised
CARRYING VALUE
OF INVESTMENT
2016
$’M
0.5
–
4.6
6.0
11.1
2016
$’M
29.0
(6.8)
22.2
11.1
2016
$’M
40.9
(37.6)
3.3
1.7
(0.4)
1.3
2015
$’M
0.5
0.4
4.5
6.8
12.2
2015
$’M
30.5
(6.1)
24.4
12.2
2015
$’M
43.6
(39.7)
3.9
1.9
(0.5)
1.4
Impairment losses and commitments
During the year the equity accounted investments were tested for impairment and no adjustments were made as a result
(2015: $Nil). As at the reporting date the Group had no contractual obligation to provide funding for capital commitments
of equity accounted investments (2015: $Nil).
90
90
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
22. Equity accounted investments
23. Employee benefit liabilities
23. Employee benefit liabilities
The Group holds a 50% interest in the following equity accounted investments but does not have control. Control is
achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. The Group does not have power over these entities either
through management control or voting rights.
OWNERSHIP INTEREST
REPORTING
DATE
2016
%
2015
%
CARRYING VALUE
OF INVESTMENT
NAME OF ENTITY
Solids:
COUNTRY
Australia
Australia
Wonthaggi Recyclers Pty Ltd
Earthpower Technologies Sydney Pty Ltd
30 June
30 June
Liquids and Industrial Services:
Total Waste Management Pty Ltd
Western Resource Recovery Pty Ltd
Australia
31 December
Australia
31 December
50
50
50
50
50
50
50
50
Share of equity accounted investments’ balance sheet
Total assets
Total liabilities
Net assets as reported by equity accounted investments
Share of net assets equity accounted
Share of equity accounted investments’ revenue and profit
Revenues (100%)
Expenses
Profit before income tax (100%)
Share of profit before income tax
Share of income tax expense
Share of net profit recognised
Impairment losses and commitments
During the year the equity accounted investments were tested for impairment and no adjustments were made as a result
(2015: $Nil). As at the reporting date the Group had no contractual obligation to provide funding for capital commitments
of equity accounted investments (2015: $Nil).
2016
$’M
0.5
–
4.6
6.0
11.1
2016
$’M
29.0
(6.8)
22.2
11.1
2016
$’M
40.9
(37.6)
3.3
1.7
(0.4)
1.3
2015
$’M
0.5
0.4
4.5
6.8
12.2
2015
$’M
30.5
(6.1)
24.4
12.2
2015
$’M
43.6
(39.7)
3.9
1.9
(0.5)
1.4
Current
Annual leave
Long service leave
Other
Total current employee benefit liabilities
Non-current
Long service leave
Total non-current employee benefit liabilities
Refer to note 38(q) for the Group’s accounting policy on employee benefits.
24. Provisions
24. Provisions
Current
Rectification provisions
Remediation provisions
Other
Total current provisions
Non-current
Rectification provisions
Remediation provisions
Other
Total non-current provisions
2016
$’M
22.6
11.8
5.5
39.9
8.4
8.4
2016
$’M
14.7
31.5
13.6
59.8
39.8
288.1
13.6
341.5
2015
$’M
22.6
16.6
4.0
43.2
8.5
8.5
2015
$’M
27.6
31.0
16.9
75.5
42.8
284.1
9.2
336.1
Included in other provisions is an amount of $12.8 million (2015: $12.8 million) in relation to workers compensation
self-insurance of the Group under the Comcare scheme. The workers compensation self-insurance provision is reassessed
annually based on actuarial advice.
The table below provides a roll forward of the rectification and remediation provisions:
Opening balance
Provisions made
Provisions used or reversed
Provisions acquired
Unwinding of discount
Change in discount rate
Change in assumptions 1
Rectification and remediation work
Closing balance
RECTIFICATION
REMEDIATION
OTHER
TOTAL
2016
$’M
70.4
–
–
–
1.3
–
–
(17.2)
54.5
2015
$’M
69.2
3.0
–
–
2.6
1.3
1.0
(6.7)
70.4
2016
$’M
315.1
20.3
–
–
6.9
–
8.2
(30.9)
319.6
2015
$’M
278.5
–
–
32.6
11.2
23.6
(22.6)
(8.2)
315.1
2016
$’M
26.1
10.1
(9.0)
–
–
–
–
–
27.2
2015
$’M
26.2
7.8
(7.9)
–
–
–
–
–
26.1
2016
$’M
411.6
30.4
(9.0)
–
8.2
–
8.2
(48.1)
401.3
2015
$’M
373.9
10.8
(7.9)
32.6
13.8
24.9
(21.6)
(14.9)
411.6
1
The change in assumptions represents changes in environmental guidelines and cost estimates.
The provision for remediation has been estimated using current expected costs and techniques applicable to the operation
of each landfill and the disturbed area. These costs have been adjusted for the future value of the expected costs at the time
of works being required. These costs have then been discounted to estimate the required provision at a rate of 2.81%
(2015: 2.81%).
Refer to note 38(o) for a summary of the accounting policy for provisions for landfill remediation and rectification.
90
91
91
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
25. Other liabilities
25. Other liabilities
Current
Deferred settlement liabilities resulting from business combinations
Landfill creation liability
Deferred revenue
Other liabilities
Total current other liabilities
Non-current
Deferred settlement liabilities resulting from business combinations
Landfill creation liability
Other liabilities
Total non-current other liabilities
26. Business combinations
26. Business combinations
2016
$’M
4.9
12.1
1.6
4.6
23.2
75.0
28.4
3.2
106.6
2015
$’M
13.2
15.9
1.3
–
30.4
76.3
3.3
11.2
90.8
Year ended 30 June 2016
There were no significant business combinations during the year ended 30 June 2016.
Year ended 30 June 2015
Melbourne Regional Landfill (MRL)
As reported in the 30 June 2015 Annual Report, the Group acquired the MRL business, including existing licences and
permits, from Boral Ltd on 28 February 2015. The MRL site is the largest in the Melbourne area and is a key infrastructure
asset for the Cleanaway business providing operating efficiencies, volume growth and synergies through internalisation.
At 30 June 2015 provisionally determined fair values were reported. Subsequent to 30 June 2015, final fair values for the
business combination were determined. Comparative amounts for 30 June 2015 have been restated in this financial report
for final determined fair values and a misstatement relating to inventory.
92
92
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
25. Other liabilities
Current
Landfill creation liability
Deferred revenue
Other liabilities
Total current other liabilities
Non-current
Landfill creation liability
Other liabilities
Total non-current other liabilities
Deferred settlement liabilities resulting from business combinations
Deferred settlement liabilities resulting from business combinations
2016
$’M
4.9
12.1
1.6
4.6
23.2
75.0
28.4
3.2
106.6
2015
$’M
13.2
15.9
1.3
–
30.4
76.3
3.3
11.2
90.8
26. Business combinations
Year ended 30 June 2016
There were no significant business combinations during the year ended 30 June 2016.
Year ended 30 June 2015
Melbourne Regional Landfill (MRL)
As reported in the 30 June 2015 Annual Report, the Group acquired the MRL business, including existing licences and
permits, from Boral Ltd on 28 February 2015. The MRL site is the largest in the Melbourne area and is a key infrastructure
asset for the Cleanaway business providing operating efficiencies, volume growth and synergies through internalisation.
At 30 June 2015 provisionally determined fair values were reported. Subsequent to 30 June 2015, final fair values for the
business combination were determined. Comparative amounts for 30 June 2015 have been restated in this financial report
for final determined fair values and a misstatement relating to inventory.
26. Business combinations (continued)
26. Business combinations (continued)
The restated aggregated fair value of the identifiable assets and liabilities at the date of acquisition were:
FAIR VALUE RECOGNISED ON ACQUISITION
Assets
Trade receivables
Inventory 1
Property, plant and equipment
Intangible assets 1
Liabilities
Trade payables
Employee entitlements
Deferred tax liability 2
Remediation provision
Total identifiable net assets at fair value
Goodwill arising on acquisition 2
Purchase consideration transferred
PROVISIONAL FAIR VALUE
REPORTED
AT 30 JUNE 2015
$’M
9.4
8.2
26.7
255.0
299.3
(20.0)
(0.1)
(66.7)
(32.6)
(119.4)
179.9
66.7
246.6
ADJUSTMENTS TO
PROVISIONAL FAIR VALUE
AND MISSTATEMENT
$’M
–
(2.7)
–
2.7
–
–
–
30.0
–
30.0
30.0
(30.0)
–
FINAL
FAIR VALUE
$’M
9.4
5.5
26.7
257.7
299.3
(20.0)
(0.1)
(36.7)
(32.6)
(89.4)
209.9
36.7
246.6
1 Half year reporting at 31 December 2015 identified that final fair values had been determined. Subsequent to release of the half year financial report it was
identified that inventory fair values included inventory owned by the acquiree which contractually did not form part of the acquisition. This has been
corrected by restating each of the affected financial statement line items and, as a result, the 30 June 2015 comparative balance sheet.
2 A comprehensive review of the tax implications of the transaction resulted in a change in the provisional tax position adopted. As a result, the deferred
tax liability has decreased by $30.0 million with a consequential reduction in goodwill within the provisional accounting period.
From the date of acquisition to 30 June 2015, the MRL business contributed $31.5 million of revenue and $3.9 million
to profit before tax from continuing operations of the Group. If the business combination had taken place at the beginning
of the year, revenue from continuing operations would have been $89.8 million and profit before tax from continuing
operations for the Group would have been $20.5 million for the year ended 30 June 2015.
The intangible assets identified as part of the acquisition included customer contracts and landfill assets, including leasehold
land, licences and agreements, airspace and support. Landfill assets have a finite useful life as they relate to the available
land, licences and airspace acquired which is separately identifiable from goodwill. Customer contracts have been fair valued
at $8.7 million based on the expected cash flows under the existing contracted term discounted back to present value.
The remaining intangible landfill asset has been fair valued based on the expected cash flows over the life of the landfill
discounted back to present value. Each of these intangibles will be amortised over the life of the asset.
The deferred tax liability of $36.7 million mainly comprises the tax effect of the accelerated depreciation for tax purposes
of tangible and intangible assets. Entries to account for this deferred tax liability are taken to goodwill. Goodwill is allocated
entirely to the Solids segment.
A deferred consideration liability of $89.9 million was recognised at the acquisition date resulting from transaction payments
for site preparation and operation under the agreement to be paid to Boral over the life of the landfill. These transactions
have been estimated using a discounted cash flow method at a long term borrowing rate of 7%.
PURCHASE CONSIDERATION
Cash paid
Deferred settlement
Total consideration
Analysis of cash flows on acquisition:
Cash paid
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
Transaction costs of the acquisition are included in other expenses in the Consolidated Income Statement.
$’M
156.7
89.9
246.6
156.7
8.7
165.4
92
93
93
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
26. Business combinations (continued)
26. Business combinations (continued)
Dimeo Waste Services
On 1 May 2015, the Group acquired the Dimeo Waste Services business, a leading C&I waste collection business in the Sydney
CBD and surrounding areas. From the date of acquisition to 30 June 2015, the Dimeo business contributed $0.5 million of
revenue and $0.1 million to profit before tax from continuing operations of the Group. If the business combination had taken
place at the beginning of the year, revenue from continuing operations would have been $6.5 million and profit before tax
from continuing operations for the Group would have been $0.8 million for the year ended 30 June 2015.
The aggregated fair value of the identifiable assets and liabilities as at the date of acquisition were:
FAIR VALUE RECOGNISED ON ACQUISITION
Assets
Property, plant and equipment
Intangibles
Liabilities
Deferred tax liability
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration transferred
$’M
1.1
3.7
4.8
(1.1)
(1.1)
3.7
2.0
5.7
The intangible assets identified as part of the acquisition included customer contracts and goodwill. Customer contracts have
been fair valued at $3.7 million based on the expected cash flows under the existing contracted term discounted back to
present value. Customer contracts will be amortised over the life of the asset.
The deferred tax liability of $1.1 million mainly comprises the tax effect of the accelerated depreciation for tax purposes
of tangible and intangible assets. Entries to account for this deferred tax liability are taken to goodwill. Goodwill is allocated
entirely to the Solids segment.
PURCHASE CONSIDERATION
Cash paid
Deferred settlement
Total consideration
Analysis of cash flows on acquisition:
Cash paid
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
Transaction costs of the acquisition are included in other expenses in the Consolidated Income Statement.
$’M
4.5
1.2
5.7
4.5
–
4.5
94
94
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
On 1 May 2015, the Group acquired the Dimeo Waste Services business, a leading C&I waste collection business in the Sydney
CBD and surrounding areas. From the date of acquisition to 30 June 2015, the Dimeo business contributed $0.5 million of
revenue and $0.1 million to profit before tax from continuing operations of the Group. If the business combination had taken
place at the beginning of the year, revenue from continuing operations would have been $6.5 million and profit before tax
from continuing operations for the Group would have been $0.8 million for the year ended 30 June 2015.
The aggregated fair value of the identifiable assets and liabilities as at the date of acquisition were:
FAIR VALUE RECOGNISED ON ACQUISITION
Property, plant and equipment
Assets
Intangibles
Liabilities
Deferred tax liability
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration transferred
entirely to the Solids segment.
PURCHASE CONSIDERATION
Cash paid
Deferred settlement
Total consideration
The intangible assets identified as part of the acquisition included customer contracts and goodwill. Customer contracts have
been fair valued at $3.7 million based on the expected cash flows under the existing contracted term discounted back to
present value. Customer contracts will be amortised over the life of the asset.
The deferred tax liability of $1.1 million mainly comprises the tax effect of the accelerated depreciation for tax purposes
of tangible and intangible assets. Entries to account for this deferred tax liability are taken to goodwill. Goodwill is allocated
Analysis of cash flows on acquisition:
Cash paid
Net cash flow on acquisition
Transaction costs of the acquisition (included in cash flows from operating activities)
Transaction costs of the acquisition are included in other expenses in the Consolidated Income Statement.
$’M
1.1
3.7
4.8
(1.1)
(1.1)
3.7
2.0
5.7
$’M
4.5
1.2
5.7
4.5
–
4.5
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
26. Business combinations (continued)
27. Subsidiaries
27. Subsidiaries
Dimeo Waste Services
The Group’s principal subsidiaries at 30 June 2016 are set out below.
EFFECTIVE INTEREST 3
Cleanaway Waste Management Limited – Parent (formerly Transpacific Industries Group Ltd)
Transpacific Co Pty Ltd 2
Transpacific Resources Pty Ltd 2
Environmental Recovery Services Pty Ltd 2
ERS Australia Pty Ltd 2
Cleanaway Operations Pty Ltd 2 (formerly Transpacific Industries Pty Ltd)
Cleanaway Organics Pty Ltd 2 (formerly Transpacific Organics Pty Ltd)
Mann Waste Management Pty Ltd 2
Nationwide Oil Pty Ltd 2
NQ Resource Recovery Pty Ltd 2
Olmway Pty Ltd 1
Transpacific Biofuels Pty Ltd 1
Transpacific Environmental Services Pty Ltd 2
Cleanaway Refiners Pty Ltd 1 (formerly Transpacific Refiners Pty Ltd)
Cleanaway Superior Pak Pty Ltd 2 (formerly Transpacific Superior Pak Pty Ltd)
Transwaste Technologies (1) Pty Ltd
Transwaste Technologies Pty Ltd 2
Transpacific Baxter Pty Ltd 2
Baxter Business Pty Ltd 2
Cleanaway Pty Ltd 2 (formerly Transpacific Cleanaway Pty Ltd)
Enviroguard Pty Ltd 2
Cleanaway Hygiene Pty Ltd 2 (formerly Transpacific Cleanaway Hygiene Pty Ltd)
Cleanaway Recycling Pty Ltd (formerly Transpacific Recycling Pty Ltd)
Cleanaway Landfill Holdings Pty Ltd 2 (formerly Transpacific Landfill Holdings Pty Ltd)
Landfill Land Holdings Pty Ltd 2
Landfill Operations Pty Ltd 2
Western Landfill Pty Ltd 2
Cleanaway Industrial Solutions Pty Ltd 2 (formerly Transpacific Industrial Solutions Pty Ltd)
Cleanaway Solid Waste Pty Ltd 2 (formerly Transpacific Waste Management Pty Ltd)
Rubus Holdings Pty Ltd 2
Rubus Intermediate One Pty Ltd 2
Rubus Intermediate Two Pty Ltd 2
Transpacific Cleanaway Holdings Pty Ltd 2
Cleanaway Resource Recycling Pty Ltd 2 (formerly Transpacific Resource Recycling Pty Ltd)
Waste Management Pacific (SA) Pty Ltd 2
Waste Management Pacific Pty Ltd 2
2016
%
100
100
100
100
100
100
100
100
100
100
50
50
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2015
%
100
100
100
100
100
100
100
100
100
100
50
50
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. As subsidiaries, the Group has power over the investees through management control and the casting vote
of Cleanaway Refiners Pty Ltd, Olmway Pty Ltd and Transpacific Biofuels Pty Ltd. The Group has the capacity to dominate decision making in relation to the
relevant activities so as to enable those entities to operate as part of the Group in pursuing its objectives. The Group acquired the non-controlling interest
of Cleanaway Refiners Pty Ltd post 30 June 2016. Refer to note 36 for details.
These subsidiaries have entered into a deed of cross guarantee with Cleanaway Waste Management Limited on 29 June 2007 pursuant to ASIC Class Order
98/1418 and are relieved from the requirement to prepare and lodge an audited Financial Report. Refer to note 28 for Consolidated Statement of Profit
or Loss and Other Comprehensive Income and Consolidated Balance Sheet of the entities who are a party to the Deed of Cross Guarantee.
2
3 All entities were incorporated in Australia.
94
95
95
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
28. Deed of cross guarantee
28. Deed of cross guarantee
The Consolidated Statement of Profit or Loss and Other Comprehensive Income and the Consolidated Balance Sheet of the
entities who are a party to the Deed of Cross Guarantee are:
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Continuing operations
Revenue
Other income
Share of profits from equity accounted investments
Raw materials and inventory
Waste disposal and collection
Employee expenses
Depreciation and amortisation
Repairs and maintenance
Fuel expenses
Leasing charges
Freight expenses
Impairment of assets
Change in fair value of land and buildings
Other expenses
Profit/(loss) from operations
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing operations after income tax
Discontinued operations
Profit for the year from discontinued operations
Profit/(loss) after income tax
Other comprehensive income
Revaluation of land and buildings
Net comprehensive income recognised directly in equity
Total comprehensive income/(loss) for the year
Refer to note 27 for details of subsidiaries who are a party to the Deed of Cross Guarantee.
2016
$’M
2015
$’M
1,432.6
2.2
1.3
(50.0)
(311.2)
(565.5)
(156.8)
(85.0)
(37.1)
(26.8)
(15.3)
–
(0.2)
(87.9)
100.3
(34.4)
65.9
(18.8)
47.1
–
47.1
3.1
3.1
50.2
1,353.0
1.2
1.2
(52.0)
(268.0)
(548.4)
(132.8)
(93.7)
(46.0)
(30.8)
(16.4)
(75.7)
(0.5)
(94.7)
(3.6)
(35.0)
(38.6)
7.2
(31.4)
8.2
(23.2)
–
–
(23.2)
96
96
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
28. Deed of cross guarantee
28. Deed of cross guarantee (continued)
28. Deed of cross guarantee (continued)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income and the Consolidated Balance Sheet of the
entities who are a party to the Deed of Cross Guarantee are:
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Share of profits from equity accounted investments
Continuing operations
Revenue
Other income
Raw materials and inventory
Waste disposal and collection
Employee expenses
Depreciation and amortisation
Repairs and maintenance
Fuel expenses
Leasing charges
Freight expenses
Impairment of assets
Change in fair value of land and buildings
Other expenses
Profit/(loss) from operations
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing operations after income tax
Discontinued operations
Profit for the year from discontinued operations
Profit/(loss) after income tax
Other comprehensive income
Revaluation of land and buildings
Net comprehensive income recognised directly in equity
Total comprehensive income/(loss) for the year
Refer to note 27 for details of subsidiaries who are a party to the Deed of Cross Guarantee.
2016
$’M
2015
$’M
1,432.6
1,353.0
2.2
1.3
(50.0)
(311.2)
(565.5)
(156.8)
(85.0)
(37.1)
(26.8)
(15.3)
–
(0.2)
(87.9)
100.3
(34.4)
65.9
(18.8)
47.1
–
47.1
3.1
3.1
50.2
1.2
1.2
(52.0)
(268.0)
(548.4)
(132.8)
(93.7)
(46.0)
(30.8)
(16.4)
(75.7)
(0.5)
(94.7)
(3.6)
(35.0)
(38.6)
7.2
(31.4)
8.2
(23.2)
–
–
(23.2)
BALANCE SHEET
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other assets
Total current assets
Other financial assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Income tax payable
Borrowings
Employee benefits
Provisions
Other
Total current liabilities
Borrowings
Employee benefits
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
2016
$’M
2015
$’M
47.6
223.9
14.4
–
33.6
319.5
89.6
866.5
1,539.7
10.6
133.3
2,639.7
2,959.2
173.2
10.7
0.3
39.6
59.8
22.9
306.5
358.6
8.3
341.5
109.4
817.8
1,124.3
1,834.9
2,076.4
41.7
(283.2)
1,834.9
35.2
222.5
17.8
4.4
19.3
299.2
252.1
836.1
1,558.0
11.6
111.6
2,769.4
3,068.6
215.2
–
0.2
42.9
72.2
0.8
331.3
351.0
8.5
336.1
262.5
958.1
1,289.4
1,779.2
2,071.8
37.7
(330.3)
1,779.2
The effect of the deed is that all subsidiaries that are parties to the deed have guaranteed to pay any deficiency in the event
of winding up of any subsidiary or if they do not meet their obligations under the terms of overdrafts, loans, leases or other
liabilities subject to the guarantee.
96
97
97
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
29. Parent entity
29. Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total
Loss for the period
Total comprehensive loss for the period
The parent entity guarantees the contractual commitments of its subsidiaries as requested.
30. Derivative financial instruments
30. Derivative financial instruments
Derivatives – at fair value
2016
$’M
14.2
2,620.9
12.9
465.2
2,076.4
70.9
8.4
2,155.7
(6.7)
(6.7)
2015
$’M
21.7
2,625.3
16.0
443.5
2,072.1
102.9
6.8
2,181.8
(61.7)
(61.6)
2016
$’M
10.9
10.9
2015
$’M
8.6
8.6
The derivative balance relates to a foreign currency swap held by the Group to hedge against foreign currency movements
in the USPP Notes. Refer to note 38(j) for the Group’s accounting policy on derivative financial instruments.
31. Financial risk management
31. Financial risk management
The Group is exposed to market risk, credit risk and liquidity risk and its senior management oversees the management
of these risks. The Group has in place a Treasury Policy that focuses on managing these risks. The policy is reviewed by the
Audit and Risk Committee and approved by the Board. The treasury activities are reported to the Audit and Risk Committee
and Board on a regular basis with the ultimate responsibility being borne by the Chief Financial Officer (CFO).
The Group’s overall financial risk management focuses on mitigating the potential financial effects to the Group’s financial
performance. The Group also enters into derivative transactions to manage the interest rate and currency risks arising from
the Group’s operations and its sources of finance. It is the Group’s policy that no speculative trading in financial instruments
shall be undertaken.
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk includes foreign currency risk and interest rate risk.
Foreign currency risk
Foreign currency risk arises as a result of having assets denominated in a currency that is not the Group’s functional currency
(balance sheet risk) or from transactions or cash flows denominated in a foreign currency (cash flow risk). Foreign currency
risk is not material to the Group.
The US Private Placement (USPP) Notes currency risk has been economically hedged by a foreign currency swap for the
currency exposure which has been in place since inception and converts to AUD fixed rate debt. Although the Group’s
related foreign currency risk has been economically hedged, hedge accounting has not been applied. The foreign currency
risk associated with the USPP Notes is fully hedged by the related foreign currency swap arrangement.
98
98
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
29. Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total
Loss for the period
Derivatives – at fair value
Total comprehensive loss for the period
The parent entity guarantees the contractual commitments of its subsidiaries as requested.
30. Derivative financial instruments
2016
$’M
14.2
12.9
465.2
70.9
8.4
(6.7)
(6.7)
2,620.9
2,625.3
2,076.4
2,072.1
2,155.7
2,181.8
2015
$’M
21.7
16.0
443.5
102.9
6.8
(61.7)
(61.6)
2016
$’M
10.9
10.9
2015
$’M
8.6
8.6
The derivative balance relates to a foreign currency swap held by the Group to hedge against foreign currency movements
in the USPP Notes. Refer to note 38(j) for the Group’s accounting policy on derivative financial instruments.
31. Financial risk management
The Group is exposed to market risk, credit risk and liquidity risk and its senior management oversees the management
of these risks. The Group has in place a Treasury Policy that focuses on managing these risks. The policy is reviewed by the
Audit and Risk Committee and approved by the Board. The treasury activities are reported to the Audit and Risk Committee
and Board on a regular basis with the ultimate responsibility being borne by the Chief Financial Officer (CFO).
The Group’s overall financial risk management focuses on mitigating the potential financial effects to the Group’s financial
performance. The Group also enters into derivative transactions to manage the interest rate and currency risks arising from
the Group’s operations and its sources of finance. It is the Group’s policy that no speculative trading in financial instruments
shall be undertaken.
(a) Market risk
Foreign currency risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk includes foreign currency risk and interest rate risk.
Foreign currency risk arises as a result of having assets denominated in a currency that is not the Group’s functional currency
(balance sheet risk) or from transactions or cash flows denominated in a foreign currency (cash flow risk). Foreign currency
risk is not material to the Group.
The US Private Placement (USPP) Notes currency risk has been economically hedged by a foreign currency swap for the
currency exposure which has been in place since inception and converts to AUD fixed rate debt. Although the Group’s
related foreign currency risk has been economically hedged, hedge accounting has not been applied. The foreign currency
risk associated with the USPP Notes is fully hedged by the related foreign currency swap arrangement.
31. Financial risk management (continued)
31. Financial risk management (continued)
The value of the USPP Notes at 30 June 2016 and 30 June 2015 is shown in the table below:
US PRIVATE PLACEMENT NOTES
30 June 2016
30 June 2015
Interest rate risk
USD
$’M
48.0
48.0
AUD
$’M
64.7
62.5
Interest rate risk is the risk that the fair value of the financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. The Group’s exposure primarily relates to its exposure to variable interest
rates on borrowings.
At 30 June 2016, there were no interest rate swaps in place.
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
Fixed rate instruments
USPP borrowings (USD)
Other
Variable rate instruments
Borrowings
30 JUNE 2016
30 JUNE 2015
WEIGHTED
AVERAGE
INTEREST RATE
%
10.8
8.0
WEIGHTED
AVERAGE
INTEREST RATE
%
10.8
8.0
BALANCE
$’M
(64.7)
(0.8)
(65.5)
BALANCE
$’M
(62.5)
(1.0)
(63.5)
3.6
(293.9)
(293.9)
3.8
(288.2)
(288.2)
The Group’s fixed rate borrowings are carried at amortised cost and therefore not subject to interest rate risk since neither
the carrying amount nor the future cash flows will fluctuate due to a change in market interest rates.
An analysis of the interest rates over the 12 month period was performed to determine a reasonable possible change
in interest rates on the variable rate borrowings. A change of 100 basis points in interest rates at the reporting date would
have increased/(decreased) profit or loss by $3.0 million (2015: $2.9 million).
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
contractual obligations, with the maximum exposure being equal to the carrying amount of these instruments. Management
has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed
on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets.
For certain export sales the Group requires the vendor to provide a letter of credit.
The Group minimises concentrations of credit risk by undertaking transactions with a large number of customers. In addition,
receivable balances are monitored on an ongoing basis with the intention that the Group’s exposure to bad debts is minimised.
Credit risk on foreign exchange contracts is minimal as counterparties are large Australian and international banks with
acceptable credit ratings determined by a recognised ratings agency. Credit risk from balances with banks and financial
institutions is managed by the Group’s treasury department in accordance with the Group’s Treasury policy where the Group
only deals with large reputable financial institutions.
98
99
99
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
31. Financial risk management (continued)
31. Financial risk management (continued)
The Group’s maximum exposure to credit risk at the reporting date was:
CARRYING AMOUNT
Cash and cash equivalents (excluding bank overdrafts)
Trade and other receivables
Derivative financial instruments
NOTES
11
12
30
2016
$’M
48.3
224.3
10.9
283.5
2015
$’M
37.0
227.1
8.6
272.7
Refer to note 12 for an analysis of credit risk and impairment associated with the Group’s trade receivables balance.
Liquidity risk
(c)
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s objective
is that the Group has access to sufficient cash resources to meet its financial obligations as they fall due, including taxes
and dividends, and to provide funds for capital expenditure and investment opportunities as they arise.
The Group regularly reviews existing funding arrangements and assesses future funding requirements based upon known
and forecast information. The Group’s liquidity position is reported to the Board on a monthly basis.
The headroom in the Group’s syndicated facilities at 30 June 2016 is $251.3 million (2015: $233.5 million). The current
portion of the Group’s borrowings at 30 June 2016 is $0.8 million (2015: $0.7 million). The Group considers liquidity risk
to be low due to the level of headroom available and the maturity profile of existing facilities.
The following table discloses the contractual maturities of financial liabilities, including estimated interest payment and
excluding the impact of netting agreements:
2016
US Private Placement Notes
Loans from related parties
Unsecured bank loans
Trade and other payables
Other liabilities
Total
2015
US Private Placement Notes
Loans from related parties
Unsecured bank loans
Trade and other payables
Other liabilities
Total
< 1
YEAR
$’M
7.0
0.5
10.6
178.8
21.6
218.5
6.8
0.5
10.1
178.8
29.1
225.3
1 – 2
YEARS
$’M
68.2
–
10.6
–
22.4
101.2
6.8
–
10.1
–
8.2
25.1
2 – 5
YEARS
$’M
–
–
311.5
–
30.0
341.5
65.2
–
305.9
–
26.6
397.7
> 5
YEARS
$’M
–
–
–
–
209.6
209.6
CONTRACTUAL
CASH FLOWS
$’M
75.2
0.5
332.7
178.8
283.6
870.8
–
–
–
–
214.9
214.9
78.8
0.5
326.1
178.8
278.8
863.0
CARRYING
AMOUNT
$’M
64.7
0.5
293.9
178.8
128.2
666.1
62.5
0.5
288.2
178.8
119.9
649.9
The Group has bank guarantees and insurance bonds in place in respect of its contractual performance related obligations.
These guarantees and indemnities only give rise to a liability where the Group fails to perform its contractual obligations.
In the event that the Group does not meet its contractual obligations, these instruments are immediately callable and have
a maximum exposure of $128.7 million (2015: $128.0 million) in relation to these bank guarantees and insurance bonds.
Refer to note 33(c) for details of the Group’s guarantees.
Financial assets and liabilities measured at fair value
(d)
All assets and liabilities for which fair value is measured or disclosed in the financial statements are classified within the fair
value hierarchy on the basis of nature, characteristics and risks and described as follows based on the lower level of input
that is significant to the fair value measurement as a whole.
Level 1 – the fair value is calculated using prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset
of liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
100
100
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
31. Financial risk management (continued)
31. Financial risk management (continued)
31. Financial risk management (continued)
The Group’s maximum exposure to credit risk at the reporting date was:
There were no transfers between levels during the year.
CARRYING AMOUNT
Cash and cash equivalents (excluding bank overdrafts)
Trade and other receivables
Derivative financial instruments
NOTES
11
12
30
2016
$’M
48.3
224.3
10.9
283.5
2015
$’M
37.0
227.1
8.6
272.7
Refer to note 12 for an analysis of credit risk and impairment associated with the Group’s trade receivables balance.
(c)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s objective
is that the Group has access to sufficient cash resources to meet its financial obligations as they fall due, including taxes
and dividends, and to provide funds for capital expenditure and investment opportunities as they arise.
The Group regularly reviews existing funding arrangements and assesses future funding requirements based upon known
and forecast information. The Group’s liquidity position is reported to the Board on a monthly basis.
The headroom in the Group’s syndicated facilities at 30 June 2016 is $251.3 million (2015: $233.5 million). The current
portion of the Group’s borrowings at 30 June 2016 is $0.8 million (2015: $0.7 million). The Group considers liquidity risk
to be low due to the level of headroom available and the maturity profile of existing facilities.
The following table discloses the contractual maturities of financial liabilities, including estimated interest payment and
excluding the impact of netting agreements:
2016
US Private Placement Notes
Loans from related parties
Unsecured bank loans
Trade and other payables
Other liabilities
Total
2015
US Private Placement Notes
Loans from related parties
Unsecured bank loans
Trade and other payables
Other liabilities
Total
< 1
YEAR
$’M
7.0
0.5
10.6
178.8
21.6
218.5
6.8
0.5
10.1
178.8
29.1
225.3
1 – 2
YEARS
$’M
68.2
10.6
–
–
22.4
101.2
6.8
10.1
–
–
8.2
25.1
2 – 5
YEARS
$’M
–
–
–
311.5
30.0
341.5
65.2
305.9
–
–
26.6
397.7
> 5
CONTRACTUAL
YEARS
CASH FLOWS
CARRYING
AMOUNT
$’M
–
–
–
–
209.6
209.6
–
–
–
–
214.9
214.9
$’M
75.2
0.5
332.7
178.8
283.6
870.8
78.8
0.5
326.1
178.8
278.8
863.0
$’M
64.7
0.5
293.9
178.8
128.2
666.1
62.5
0.5
288.2
178.8
119.9
649.9
The Group has bank guarantees and insurance bonds in place in respect of its contractual performance related obligations.
These guarantees and indemnities only give rise to a liability where the Group fails to perform its contractual obligations.
In the event that the Group does not meet its contractual obligations, these instruments are immediately callable and have
a maximum exposure of $128.7 million (2015: $128.0 million) in relation to these bank guarantees and insurance bonds.
Refer to note 33(c) for details of the Group’s guarantees.
(d)
Financial assets and liabilities measured at fair value
All assets and liabilities for which fair value is measured or disclosed in the financial statements are classified within the fair
value hierarchy on the basis of nature, characteristics and risks and described as follows based on the lower level of input
that is significant to the fair value measurement as a whole.
Level 1 – the fair value is calculated using prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset
of liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The Group enters into currency rate swaps with financial institutions with investment grade credit ratings. These derivatives
are valued using techniques with market observable inputs. The valuation techniques include forward pricing and swap
models, using present value calculations.
The following table provides the fair value measurement hierarchy of the Group’s derivative financial instruments:
2016
Assets
Derivative financial instruments – USD foreign currency swap
LEVEL 1
$’M
LEVEL 2
$’M
LEVEL 3
$’M
TOTAL
$’M
–
10.9
–
10.9
2015
Assets
Derivative financial instruments – USD foreign currency swap
–
8.6
–
8.6
The carrying value of all financial assets and liabilities other than derivative financial instruments approximate fair value.
32. Contingent liabilities
32. Contingent liabilities
Taxation authority reviews
The New Zealand Taxation Authority is currently reviewing particular aspects of the Group’s tax position which have arisen
during the period of the Group’s ownership of the New Zealand business. While assessments have been issued in respect
of some aspects of this review, no amounts of tax are currently payable by the Group, as discussions with Inland Revenue
in relation to these matters are still continuing and the tax audit process has not yet concluded. At this time, it is too early
to identify the outcomes and related adjustments that may arise, if any. The timing, in respect of the resolution of these
matters, will depend on the outcome of the continuing discussions with Inland Revenue, the completion of the tax audit
process and the initiation and conclusion of any court proceedings, if deemed necessary.
Other claims
Certain companies within the Group are party to various legal actions or commercial disputes or negotiations that have arisen
in the normal course of business. It is expected that any liabilities or assets arising from these legal actions would not have
a material effect on the Group.
33. Commitments
33. Commitments
(a) Operating lease commitments
The Group leases property, plant and equipment under operating leases expiring over terms generally not exceeding ten
years. Leases generally provide the Group with a right of renewal at which time all terms are renegotiated. Future minimum
rentals payable under non-cancellable operating lease rentals are payable as follows:
Within one year
Between one and five years
More than five years
2016
$’M
23.3
64.2
48.5
136.0
2015
$’M
15.9
41.2
12.2
69.3
100
101
101
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
33. Commitments (continued)
33. Commitments (continued)
Capital expenditure and other commitments
(b)
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Property, plant and equipment
Intangible assets
2016
$’M
48.0
3.4
51.4
2015
$’M
29.1
–
29.1
Guarantees
(c)
The Group is, in the normal course of business, required to provide guarantees and letters of credit on behalf of subsidiaries
and associates in respect of their contractual performance related obligations. These guarantees and indemnities only give
rise to a liability where the entity concerned fails to perform its contractual obligations.
Bank guarantees outstanding at balance date in respect of financing facilities
Bank guarantees outstanding at balance date in respect of contractual performance
Insurance bonds outstanding at balance date in respect of contractual performance
2016
$’M
–
115.3
13.4
128.7
2015
$’M
0.7
113.7
13.6
128.0
34. Share-based payments
34. Share-based payments
Total share-based payment expense included in the Consolidated Income Statement is set out in note 17(b).
Performance rights outstanding at the reporting date consist of the following grants:
OFFER
GRANT DATE
END OF
PERFORMANCE
OR SERVICE
PERIOD
PERFORMANCE
RIGHTS
AT 30 JUNE 2015
GRANTED
DURING THE
PERIOD
VESTED DURING
THE PERIOD
FORFEITED/
EXPIRED DURING
THE PERIOD
PERFORMANCE
RIGHTS
AT 30 JUNE 2016
LONG TERM INCENTIVE PLAN
2012 LTI
2013 LTI
2014 LTI
2015 LTI
2016 LTI (A)
2016 LTI (B)
28 Sep 2011 30 Jun 2015
19 Jun 2013 30 Jun 2016
24 Mar 2014 30 Jun 2017
10 Mar 2015 30 Jun 2017
30 Oct 2015 30 Jun 2018
16 Mar 2016 30 Jun 2018
SHORT TERM INCENTIVE PLAN
2013 STI
2014 STI
13 Sep 2013 30 Jun 2015
1 & 29 Oct 2014 30 Jun 2016
OTHER GRANTS
EEA
One-off A
One-off B
Total
Vested and exercisable at 30 June 2016
1 Jun 2010 30 Jun 2015
20 Aug 2015 3 Aug 2017
1 Jul 2015 23 Jun 2016
1,095,005
1,704,400
3,273,436
4,210,624
–
–
105,516
920,850
–
–
–
–
2,838,220
2,808,170
(547,504)
–
–
–
–
–
(547,501)
(918,034)
(1,792,487)
(2,298,236)
–
–
–
786,366
1,480,949
1,912,388
2,838,220
2,808,170
–
–
(105,516)
–
–
(328,520)
–
592,330
2,705,484
–
–
14,015,315
–
328,947
1,184,210
7,159,547
–
–
–
(653,020)
(2,705,484)
–
(1,184,210)
(9,774,472)
–
328,947
–
10,747,370
592,330
The vesting date for LTI offers is on or after the date which is 14 days after the date on which the annual financial results
of the Group for the financial year associated with the end of the performance period is released to the ASX. Other offers
vest on or after the end of the relevant performance or service period.
102
102
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
33. Commitments (continued)
34. Share-based payments (continued)
34. Share-based payments (continued)
Long term incentive (LTI) plan
(a)
The Cleanaway LTI plan is designed to provide long-term incentives for senior executives to deliver long-term shareholder
returns. Under the plan, participants are granted performance rights which only vest if certain performance standards
are met.
Offers made in previous reporting periods
The following table outlines the terms of the outstanding LTI offers made in previous reporting periods which remain
on issue:
The Group is, in the normal course of business, required to provide guarantees and letters of credit on behalf of subsidiaries
and associates in respect of their contractual performance related obligations. These guarantees and indemnities only give
rise to a liability where the entity concerned fails to perform its contractual obligations.
PERFORMANCE PERIOD
Overview
2013 LTI AWARD
4 YEARS: 1 JULY 2012
TO 30 JUNE 2016
2014 LTI AWARD
4 YEARS: 1 JULY 2013
TO 30 JUNE 2017
2015 LTI AWARD
UP TO 4 YEARS: 1 JULY 2014
TO 30 JUNE 2018
Performance rights, of which:
Performance rights, of which:
Up to 50% vest if a certain relative TSR
Measured over 3 years to 30 June 2017
ranking is achieved against the
constituents of the S&P/ASX 200
Industrial Sector Index
Up to 50% vest if a certain earnings per
share target is achieved
Up to 25% vest if a certain relative TSR
ranking is achieved against constituents
of the S&P/ASX 200 Industrial Sector
Index
Up to 25% vest if a certain Return on
Invested Capital target is achieved
Measured over 4 years to 30 June 2018
Up to 50% vest if certain strategic
initiatives are achieved
Offer made in current reporting period – 2016 LTI award
During the period, the Group issued performance rights attached to the Group’s LTI plan to the CEO (grant A) and other
senior executives (grant B). The performance rights will vest in two equal tranches if the following performance hurdles,
tested independently, are met:
• Tranche 1 – Up to 50% of the performance rights vest if a certain relative TSR ranking is achieved against constituents
of the S&P/ASX 200 Industrial Sector Index.
• Tranche 2 – Up to 50% of performance rights vest if a certain Return on Invested Capital (ROIC) target is achieved.
Performance rights granted during the period were fair valued by an external party using the Monte Carlo Simulation and
Black Scholes model.
The following table sets out the assumptions made in determining the fair value of these performance rights:
SCHEME
Number of rights
Grant date
Performance period
Risk free interest rate (%)
Volatility 1 (%)
Fair value – Relative TSR tranche
Fair value – ROIC tranche
2016 LTI – GRANT A
2,838,220
30 October 2015
1 July 2015 – 30 June 2018
1.82%
32.5%
$0.32
$0.63
2016 LTI – GRANT B
2,808,170
16 March 2016
1 July 2015 – 30 June 2018
2.04%
32.5%
$0.42
$0.72
1
Expected volatility is based on the historic volatility of Cleanaway shares over a range of periods.
102
103
103
2016
$’M
48.0
3.4
51.4
2015
$’M
29.1
–
29.1
2016
$’M
–
115.3
13.4
128.7
2015
$’M
0.7
113.7
13.6
128.0
(b)
Capital expenditure and other commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Property, plant and equipment
Intangible assets
(c)
Guarantees
Bank guarantees outstanding at balance date in respect of financing facilities
Bank guarantees outstanding at balance date in respect of contractual performance
Insurance bonds outstanding at balance date in respect of contractual performance
34. Share-based payments
Total share-based payment expense included in the Consolidated Income Statement is set out in note 17(b).
Performance rights outstanding at the reporting date consist of the following grants:
END OF
OFFER
GRANT DATE
PERIOD
AT 30 JUNE 2015
PERIOD
THE PERIOD
THE PERIOD
AT 30 JUNE 2016
PERFORMANCE
PERFORMANCE
GRANTED
FORFEITED/
PERFORMANCE
OR SERVICE
RIGHTS
DURING THE
VESTED DURING
EXPIRED DURING
RIGHTS
LONG TERM INCENTIVE PLAN
2012 LTI
2013 LTI
2014 LTI
2015 LTI
2016 LTI (A)
2016 LTI (B)
28 Sep 2011 30 Jun 2015
19 Jun 2013 30 Jun 2016
24 Mar 2014 30 Jun 2017
10 Mar 2015 30 Jun 2017
30 Oct 2015 30 Jun 2018
16 Mar 2016 30 Jun 2018
SHORT TERM INCENTIVE PLAN
1,095,005
1,704,400
3,273,436
4,210,624
–
–
2,838,220
2,808,170
2013 STI
2014 STI
13 Sep 2013 30 Jun 2015
1 & 29 Oct 2014 30 Jun 2016
105,516
920,850
(105,516)
OTHER GRANTS
EEA
One-off A
One-off B
Total
1 Jun 2010 30 Jun 2015
2,705,484
20 Aug 2015 3 Aug 2017
1 Jul 2015 23 Jun 2016
–
–
328,947
1,184,210
7,159,547
Vested and exercisable at 30 June 2016
–
–
–
–
–
–
–
(547,504)
(547,501)
(918,034)
(1,792,487)
(2,298,236)
–
–
–
–
–
–
–
–
–
–
786,366
1,480,949
1,912,388
2,838,220
2,808,170
–
–
–
(328,520)
592,330
(2,705,484)
(1,184,210)
–
328,947
–
–
–
592,330
14,015,315
(653,020)
(9,774,472)
10,747,370
The vesting date for LTI offers is on or after the date which is 14 days after the date on which the annual financial results
of the Group for the financial year associated with the end of the performance period is released to the ASX. Other offers
vest on or after the end of the relevant performance or service period.
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
34. Share-based payments (continued)
34. Share-based payments (continued)
The performance targets of the 2016 LTI award are set out in the table below.
Relative TSR tranche
(measured over 3 years: 1 July 2015 to 30 June 2018)
ROIC tranche
(measured over 3 years: 1 July 2015 to 30 June 2018)
TSR Ranking against the constituents of the S&P/ASX200 Industrial
Sector Index:
Below 50th percentile – 0% vesting
50th percentile – 50% vesting
50th to 75th percentile – straight line vesting between 50%
and 100%
75th percentile and above – 100% vesting
Average ROIC to be achieved:
Below 4.6% – 0% vesting
4.6% – 20% vesting
4.6% to 5.6% – straight line vesting between 20% and 50%
5.6% to 7.6% – straight line vesting between 50% and 100%
7.6% and above – 100% vesting
Short term incentive (STI) plan
(b)
The Cleanaway STI plan is an annual plan that is used to motivate and reward senior executives across a range of
performance measures over the financial year. Under the plan, participants are granted a combination of cash and rights
to deferred shares if certain performance standards are met. The Group uses EBITDA targets as the main performance
standard for the STI plan. Vesting of the performance rights granted is deferred for one year.
(c) Other grants
Executive Engagement Award (EEA)
On 1 June 2010, the Group issued performance rights attached to an Executive Engagement Award. These performance
rights lapsed on 30 June 2015 as the required hurdles were not met.
One-off grant A
On joining Cleanaway, the CEO was entitled to a one-off allocation of 328,947 performance rights to the value of $250,000
with vesting subject to a two-year service condition.
One-off grant B
A one-off allocation of 1,184,210 performance rights was made to a former senior Executive under a retention arrangement.
These performance rights were forfeited upon departure.
35. Auditor’s remuneration
35. Auditor’s remuneration
Details of the amounts paid or payable to the auditor and its related practices for audit and non-audit services are set
out below.
Ernst & Young:
Audit services
Audit related services
Non-audit services
Due diligence services
Other advisory services
2016
$
2015
$
1,435,270
9,000
1,547,365
104,467
–
–
1,444,270
197,142
165,510
2,014,484
104
104
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
34. Share-based payments (continued)
36. Events occurring after the reporting date
36. Events occurring after the reporting date
On 1 July 2016 the Group acquired the assets and business of Waste 2 Resources Group for $8.5 million. The Waste 2
Resources Group provides waste collection and recovery services in South East Queensland. The initial accounting for the
business combination is incomplete at the time the Group’s financial statements were authorised for issue, and accordingly
details of the financial effect of the business combination have not been disclosed.
On 25 July 2016 the Group acquired the non-controlling interest in Cleanaway Refiners Pty Ltd (formerly Transpacific Refiners
Pty Ltd) for $2.5 million. Prior to the acquisition the Group held a 50% controlling interest in this entity. Given that the
Group already controlled this entity prior to this acquisition, the transaction does not represent a business combination and
will be accounted for in equity as a transaction between equity holders.
37. Related party transactions
37. Related party transactions
4.6% to 5.6% – straight line vesting between 20% and 50%
5.6% to 7.6% – straight line vesting between 50% and 100%
7.6% and above – 100% vesting
(a) Key management personnel
Disclosures relating to key management personnel (KMP) are set out in the Remuneration Report on pages 48 to 62.
The KMP compensation included in employee expenses are as follows:
(b)
Short term incentive (STI) plan
The Cleanaway STI plan is an annual plan that is used to motivate and reward senior executives across a range of
performance measures over the financial year. Under the plan, participants are granted a combination of cash and rights
to deferred shares if certain performance standards are met. The Group uses EBITDA targets as the main performance
standard for the STI plan. Vesting of the performance rights granted is deferred for one year.
Short-term employee benefits
Post-employment benefits
Termination benefits
Equity compensation benefits
2016
$
6,236,367
142,099
668,861
447,814
7,495,141
2015
$
5,810,353
137,152
629,269
642,267
7,219,041
Transactions with Director-related entities do not represent related party transactions where the relationship is limited to
a Non-Executive Directorship including any Chairperson roles. Transactions during the year that amounted to related party
transaction are limited to transactions with NGT Marketing. Mr Martin Hudson, a Non-Executive Director and Chairman
of the Group, holds a beneficial interest in NGT Marketing. During the year the Group provided waste collections services
to NGT Marketing for which it earned revenues on normal commercial terms. The value of these services were not material
at $2,466 only.
(b) Wholly-owned Group transactions
The wholly-owned Group consists of Cleanaway Waste Management Limited and its wholly-owned entities listed at note 27.
Transactions between Cleanaway Waste Management Limited and other entities in the wholly-owned Group during the
years ended 30 June 2016 and 30 June 2015 consisted of:
(i) Loans advanced by Cleanaway Waste Management Limited and other wholly-owned entities;
(ii) Loans repaid to Cleanaway Waste Management Limited and other wholly-owned entities;
(iii) The payment of interest on the above loans;
(iv) The payment of dividends to Cleanaway Waste Management Limited and other wholly-owned entities;
(v) Management fees charged to wholly-owned entities; and
(vi) Sales between wholly-owned entities.
The above transactions are all eliminated on consolidation.
(c) Other related parties
There were no material transactions with, or amounts receivable from or payable to, other related parties during the year
ended 30 June 2016 and 30 June 2015.
104
105
105
The performance targets of the 2016 LTI award are set out in the table below.
Relative TSR tranche
TSR Ranking against the constituents of the S&P/ASX200 Industrial
(measured over 3 years: 1 July 2015 to 30 June 2018)
Sector Index:
Below 50th percentile – 0% vesting
50th percentile – 50% vesting
50th to 75th percentile – straight line vesting between 50%
and 100%
75th percentile and above – 100% vesting
ROIC tranche
(measured over 3 years: 1 July 2015 to 30 June 2018)
Average ROIC to be achieved:
Below 4.6% – 0% vesting
4.6% – 20% vesting
(c) Other grants
Executive Engagement Award (EEA)
One-off grant A
One-off grant B
On 1 June 2010, the Group issued performance rights attached to an Executive Engagement Award. These performance
rights lapsed on 30 June 2015 as the required hurdles were not met.
On joining Cleanaway, the CEO was entitled to a one-off allocation of 328,947 performance rights to the value of $250,000
with vesting subject to a two-year service condition.
A one-off allocation of 1,184,210 performance rights was made to a former senior Executive under a retention arrangement.
These performance rights were forfeited upon departure.
35. Auditor’s remuneration
Details of the amounts paid or payable to the auditor and its related practices for audit and non-audit services are set
out below.
Ernst & Young:
Audit services
Audit related services
Non-audit services
Due diligence services
Other advisory services
2016
$
2015
$
1,435,270
1,547,365
9,000
104,467
–
–
197,142
165,510
1,444,270
2,014,484
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies
38. Significant accounting policies
The following significant accounting policies have been adopted in the preparation and presentation of the Consolidated
Financial Report. These policies have been consistently applied to all years presented unless otherwise stated.
Revenue
(a)
Amounts disclosed as revenue represent the fair value of consideration received or receivable, including environmental levies
but excluding goods and services taxes paid. Revenue from the sale of goods is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered
passed to the buyer at the time of delivery of goods to customers. Revenue from the rendering of services is recognised upon
completion of performing the services. Revenue is recognised for the major business activities as follows:
Solids
Revenue from collection and disposal of waste is recognised when the service has been performed. In some circumstances,
revenue may be earned from the collection of the waste, however costs related to the treatment and disposal of that waste
is yet to be incurred. Unprocessed waste may give rise to deferred revenue, where invoices to customers are raised in
advance of performance obligations being completed, or require an accrual for the costs of disposing of residual waste
to be created once the Group has an obligation for disposal. These amounts are reflected as deferred revenue or accruals
in the financial statements as appropriate.
Liquids and Industrial Services
Revenue from collection and treatment of liquid waste is recognised when the waste has been collected and treated.
Contract revenue is measured by reference to labour hours incurred to date and actual costs incurred.
Revenue from sale of oil and by-products is recognised on shipment or passing of control of the goods.
Interest
Interest revenue is recognised on an accruals basis, taking into account the interest rates applicable to the financial assets.
Dividends
Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates
or joint venture entities are accounted for in accordance with the equity method of accounting.
Repairs and maintenance
(b)
Plant and equipment of the Group is required to be overhauled on a regular basis. This is managed as part of an ongoing
major cyclical maintenance program. The cost of this maintenance is recognised as an expense as incurred, except where
it relates to the replacement of a component of an asset, or where it extends the useful life of the asset, in which case the
costs are capitalised and depreciated in accordance with the Group’s policy. Other routine operating maintenance, repair
and minor renewal costs are also recognised as expenses as incurred.
Finance costs
(c)
Finance costs are recognised as expenses in the period in which they are incurred.
Finance costs include foreign exchange movements of the US Private Placement (USPP) borrowings which are offset by
a corresponding foreign currency swap agreement. This foreign currency swap has not been formally designated as a hedge and
therefore does not qualify for hedge accounting. The derivative financial instrument is carried at fair value on the Consolidated
Balance Sheet with any changes in fair value being recognised in finance costs in the Consolidated Income Statement.
106
106
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
The following significant accounting policies have been adopted in the preparation and presentation of the Consolidated
Financial Report. These policies have been consistently applied to all years presented unless otherwise stated.
Amounts disclosed as revenue represent the fair value of consideration received or receivable, including environmental levies
but excluding goods and services taxes paid. Revenue from the sale of goods is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered
passed to the buyer at the time of delivery of goods to customers. Revenue from the rendering of services is recognised upon
completion of performing the services. Revenue is recognised for the major business activities as follows:
(a)
Revenue
Solids
Revenue from collection and disposal of waste is recognised when the service has been performed. In some circumstances,
revenue may be earned from the collection of the waste, however costs related to the treatment and disposal of that waste
is yet to be incurred. Unprocessed waste may give rise to deferred revenue, where invoices to customers are raised in
advance of performance obligations being completed, or require an accrual for the costs of disposing of residual waste
to be created once the Group has an obligation for disposal. These amounts are reflected as deferred revenue or accruals
in the financial statements as appropriate.
Liquids and Industrial Services
Revenue from collection and treatment of liquid waste is recognised when the waste has been collected and treated.
Contract revenue is measured by reference to labour hours incurred to date and actual costs incurred.
Revenue from sale of oil and by-products is recognised on shipment or passing of control of the goods.
Interest revenue is recognised on an accruals basis, taking into account the interest rates applicable to the financial assets.
Interest
Dividends
Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates
or joint venture entities are accounted for in accordance with the equity method of accounting.
(b)
Repairs and maintenance
Plant and equipment of the Group is required to be overhauled on a regular basis. This is managed as part of an ongoing
major cyclical maintenance program. The cost of this maintenance is recognised as an expense as incurred, except where
it relates to the replacement of a component of an asset, or where it extends the useful life of the asset, in which case the
costs are capitalised and depreciated in accordance with the Group’s policy. Other routine operating maintenance, repair
and minor renewal costs are also recognised as expenses as incurred.
(c)
Finance costs
Finance costs are recognised as expenses in the period in which they are incurred.
Finance costs include foreign exchange movements of the US Private Placement (USPP) borrowings which are offset by
a corresponding foreign currency swap agreement. This foreign currency swap has not been formally designated as a hedge and
therefore does not qualify for hedge accounting. The derivative financial instrument is carried at fair value on the Consolidated
Balance Sheet with any changes in fair value being recognised in finance costs in the Consolidated Income Statement.
Income tax
(d)
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, the deferred income
tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantially enacted at the reporting date and are
expected to apply when the related deferred income asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset
where there is a legally enforceable right to offset current tax assets and liabilities and they relate to income taxes levied
by the same taxation authority on the same taxable entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
The Company and all its wholly-owned Australian resident entities are part of a Tax-Consolidated Group under Australian taxation
law. Cleanaway Waste Management Limited is the Head Entity in the Tax-Consolidated Group. The Tax-Consolidated Group has
entered into a tax sharing and a tax funding agreement.
Impairment of assets
(e)
A financial asset is assessed at each reporting date to determine whether there is objective evidence that it is impaired.
Impairment losses on financial assets are directly written off to the Consolidated Income Statement. Impairment of loans and
receivables is recognised when it is probable that the carrying amount will not be recovered in full due to significant financial
difficulty or other loss event of the debtor.
Goodwill and intangible assets that have an indefinite useful life are not amortised but are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other
than goodwill that previously suffered an impairment loss are reviewed for possible reversal of the impairment loss at each
subsequent reporting date.
Foreign currency
(f)
Foreign currency transactions are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the reporting date are translated into Australian dollars at the
foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the
Consolidated Income Statement and are reported on a net basis. Non-monetary assets and liabilities that are measured
in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
Cash and cash equivalents
(g)
Cash and cash equivalents comprise cash at banks, short-term deposits and petty cash balances. Cash at bank earns interest
at floating rates based on daily bank deposit rates. Short-term deposits are at call, and earn interest at the respective
short-term deposit rates.
Trade and other receivables
(h)
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
Trade receivables are generally due for settlement within 30 days and therefore are all classified as current. Collectability
of trade debtors is reviewed on an ongoing basis. Debts which are known as uncollectable are written off when identified.
A provision for impairment is raised when collection of an amount is no longer probable.
The Group’s exposure to credit risk related to trade and other receivables is disclosed in note 31(b).
Inventories
(i)
Inventories are valued at the lower of cost and net realisable value. The cost of inventories is based on the method most
appropriate to each particular class of inventory and includes expenditure incurred in acquiring the inventories, production
or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of
manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal
operating capacity.
Derivative financial instruments
(j)
The Group has a derivative financial instrument in place to manage its exposure to foreign exchange movements in the value
of the USPP borrowings which are denominated in USD.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. As noted in note 31(a), this derivative is not designated as a hedge
and therefore all fair value movements are recorded in finance costs in the Consolidated Income Statement.
(k)
Property, plant and equipment
Landfill assets
The Group owns landfill assets. A landfill site may be either developed or purchased by the Group.
Landfill assets comprise the acquisition of landfill land, cell development costs, site infrastructure and landfill site
improvement costs and the asset related to future landfill site restoration and aftercare costs (landfill remediation asset).
Landfill land will be recognised separately from other landfill related assets when it is considered to have value at the end of
the landfill site’s useful life for housing or commercial development. This land is not depreciated; it is carried at its original
cost and tested for impairment.
Cell development costs include excavation costs, cell lining costs and leachate collection costs. Cell development costs are
capitalised as incurred. Closed cells are capped and may return a future revenue stream to the Group, such as from the sale
of landfill gas.
The landfill remediation assets comprises capping costs and costs to remediate and monitor the site over the life of the
landfill including post closure. Capping costs together with cost of aftercare (see Provision for landfill remediation in note
38(o)) are recognised upon commencement of cell development. The depreciation, for cell development costs and the
remediation asset, is calculated by the tonnes of airspace consumed during the reporting period divided into the total
airspace available at the beginning of the reporting period, such that all costs are fully depreciated upon receiving last waste
into the landfill. A landfill is deemed full when its permitted airspace is consumed and it cannot legally accept any more
waste. Alternatively, a landfill may be deemed full earlier should other factors exist, for example, if it is not economically
viable to continue accepting waste.
Site infrastructure and landfill site improvement costs include capital works such as site access roads and other capital costs
relating to multiple cells on the landfill site. These costs are capitalised as incurred and depreciated using the useful life of the
asset or the life of the landfill up until receiving last waste.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
Cash and cash equivalents comprise cash at banks, short-term deposits and petty cash balances. Cash at bank earns interest
at floating rates based on daily bank deposit rates. Short-term deposits are at call, and earn interest at the respective
A landfill may be disposed of as an operating landfill or it may be retained until post-closure and then sold. The Group’s
policy on landfill sales is as follows:
Landfill sales
•
•
If the landfill is sold as an operating landfill, recognise the profit on sale of an asset; or
If the completed landfill is intended to be sold and meet the relevant requirements, transfer the landfill balance to
non-current assets held for sale.
Non-landfill land and buildings
Non-landfill land and buildings are shown at fair value, based on periodic valuations (at least every three years) by external
independent valuers, less subsequent depreciation of buildings. The fair values are recognised in the Consolidated Financial
Statements of the Group, and are reviewed at the end of each reporting period to ensure that the carrying value of land and
buildings is not materially different to their fair values.
Movements in market prices and the level of transactions impact the ability of the Group to estimate fair value.
Any revaluation increase arising on the revaluation of land and buildings is credited to the asset revaluation reserve, except
to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in profit or loss,
in which case the increase is credited to the Consolidated Income Statement to the extent of the decrease previously
charged. A decrease in carrying amount arising on the revaluation of land and buildings is charged as an expense in the
Consolidated Income Statement to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating
to a previous revaluation of that asset.
Depreciation on revalued buildings is charged to the Consolidated Income Statement. On the subsequent sale or retirement
of a revalued property, the attributable revaluation surplus remaining in the asset revaluation reserve, net of any related
deferred taxes, is transferred directly to retained earnings.
Plant and equipment
Plant and equipment, and equipment under finance lease are stated at cost less accumulated depreciation and impairment.
Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its
intended use. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by
discounting the amounts payable in the future to their present value as at the date of acquisition. Purchased software that
is integral to the functionality of the related equipment is capitalised as part of that equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from
disposal with the carrying amount of the property, plant and equipment and are recognised net within “other income”
in the Consolidated Income Statement. When revalued assets are sold, the amounts included in the revaluation reserve are
transferred to retained earnings.
Depreciation
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation
of assets, with the exception of landfill remediation and cell development assets, is calculated on a straight-line basis so
as to write off the net cost or revalued amount of each asset over its expected useful life to the Group. Leasehold
improvements are depreciated over the period of the lease or estimated useful lives, whichever is the shorter, using the
straight-line method. Landfill remediation and cell development assets are depreciated on a usage basis over the individual
landfill expected life.
Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items.
The expected useful lives are as follows:
Buildings and site improvements
Plant and equipment
Leasehold improvements
Landfill assets
15 to 40 years
2.5 to 20 years
5 to 10 years
1 to 50 years
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(g)
Cash and cash equivalents
short-term deposit rates.
(h)
Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
Trade receivables are generally due for settlement within 30 days and therefore are all classified as current. Collectability
of trade debtors is reviewed on an ongoing basis. Debts which are known as uncollectable are written off when identified.
A provision for impairment is raised when collection of an amount is no longer probable.
The Group’s exposure to credit risk related to trade and other receivables is disclosed in note 31(b).
(i)
Inventories
Inventories are valued at the lower of cost and net realisable value. The cost of inventories is based on the method most
appropriate to each particular class of inventory and includes expenditure incurred in acquiring the inventories, production
or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of
manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal
operating capacity.
(j)
Derivative financial instruments
The Group has a derivative financial instrument in place to manage its exposure to foreign exchange movements in the value
of the USPP borrowings which are denominated in USD.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. As noted in note 31(a), this derivative is not designated as a hedge
and therefore all fair value movements are recorded in finance costs in the Consolidated Income Statement.
(k)
Property, plant and equipment
Landfill assets
The Group owns landfill assets. A landfill site may be either developed or purchased by the Group.
Landfill assets comprise the acquisition of landfill land, cell development costs, site infrastructure and landfill site
improvement costs and the asset related to future landfill site restoration and aftercare costs (landfill remediation asset).
Landfill land will be recognised separately from other landfill related assets when it is considered to have value at the end of
the landfill site’s useful life for housing or commercial development. This land is not depreciated; it is carried at its original
cost and tested for impairment.
Cell development costs include excavation costs, cell lining costs and leachate collection costs. Cell development costs are
capitalised as incurred. Closed cells are capped and may return a future revenue stream to the Group, such as from the sale
of landfill gas.
The landfill remediation assets comprises capping costs and costs to remediate and monitor the site over the life of the
landfill including post closure. Capping costs together with cost of aftercare (see Provision for landfill remediation in note
38(o)) are recognised upon commencement of cell development. The depreciation, for cell development costs and the
remediation asset, is calculated by the tonnes of airspace consumed during the reporting period divided into the total
airspace available at the beginning of the reporting period, such that all costs are fully depreciated upon receiving last waste
into the landfill. A landfill is deemed full when its permitted airspace is consumed and it cannot legally accept any more
waste. Alternatively, a landfill may be deemed full earlier should other factors exist, for example, if it is not economically
viable to continue accepting waste.
Site infrastructure and landfill site improvement costs include capital works such as site access roads and other capital costs
relating to multiple cells on the landfill site. These costs are capitalised as incurred and depreciated using the useful life of the
asset or the life of the landfill up until receiving last waste.
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
(l)
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired business, subsidiary or associate at the date of acquisition. Goodwill on the acquisition of businesses
or subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates.
Goodwill is not amortised. Instead goodwill is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses
on the disposal of a business include the carrying amount of goodwill relating to the business sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing.
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding,
is recognised in the Consolidated Income Statement as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new
or substantially improved products and processes, is capitalised if the product or process is technically and commercially
feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the costs
of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.
Borrowing costs related to the development of qualifying assets are also capitalised. Other development expenditure is
recognised in the Consolidated Income Statement as an expense as incurred. Capitalised development expenditure is stated
at cost less accumulated amortisation and impairment losses.
Other intangible assets
Other intangible assets include customer contracts recognised on business combinations and licences. Other intangible assets
that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Amortisation
Amortisation is charged to the Consolidated Income Statement on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite (e.g. brand names). Goodwill and intangible assets with an indefinite useful
life are systematically tested for impairment at each reporting date. Other intangible assets are amortised from the date they
are available for use. The estimated useful lives of customer contracts are 3 to 10 years.
(m) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid within 45 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months after the reporting period.
Other payables and accruals includes tipping and disposal costs accruals as well as general accruals.
Borrowings
(n)
Borrowings are initially recognised at fair value of the consideration received net of issue costs incurred. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the Consolidated Income Statement over the period of the borrowings on an effective interest basis.
Foreign exchange gains and losses arising on borrowings are reflected in finance costs in the Consolidated Income Statement.
Borrowings are derecognised when the obligation specified in the contract is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or
other expenses.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
(l)
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired business, subsidiary or associate at the date of acquisition. Goodwill on the acquisition of businesses
or subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates.
Goodwill is not amortised. Instead goodwill is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses
on the disposal of a business include the carrying amount of goodwill relating to the business sold.
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding,
is recognised in the Consolidated Income Statement as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new
or substantially improved products and processes, is capitalised if the product or process is technically and commercially
feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the costs
of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.
Borrowing costs related to the development of qualifying assets are also capitalised. Other development expenditure is
recognised in the Consolidated Income Statement as an expense as incurred. Capitalised development expenditure is stated
at cost less accumulated amortisation and impairment losses.
Other intangible assets include customer contracts recognised on business combinations and licences. Other intangible assets
that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Other intangible assets
Amortisation
Amortisation is charged to the Consolidated Income Statement on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite (e.g. brand names). Goodwill and intangible assets with an indefinite useful
life are systematically tested for impairment at each reporting date. Other intangible assets are amortised from the date they
are available for use. The estimated useful lives of customer contracts are 3 to 10 years.
(m) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid within 45 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months after the reporting period.
Other payables and accruals includes tipping and disposal costs accruals as well as general accruals.
(n)
Borrowings
Borrowings are initially recognised at fair value of the consideration received net of issue costs incurred. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the Consolidated Income Statement over the period of the borrowings on an effective interest basis.
Foreign exchange gains and losses arising on borrowings are reflected in finance costs in the Consolidated Income Statement.
Borrowings are derecognised when the obligation specified in the contract is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or
other expenses.
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
Goodwill is allocated to cash-generating units for the purpose of impairment testing.
requirements.
Provision for landfill remediation and rectification
(o)
Landfill sites are constructed to receive waste in accordance with a licence. These licences generally require that once
a landfill is full, it is left in a condition as specified by the Environmental Protection Authority (EPA) or other government
authorities, and monitored for a defined period of time (usually 30 years).
Therefore remediation occurs on an ongoing basis, as the landfill is operating, at the time the landfill closes and through
post-closure. Remediation comprises:
•
the costs associated with capping landfills (covering the waste within the landfill); and
• costs associated with remediating and monitoring the landfill in accordance with the licence or environmental
The constructive obligation to remediate the landfill sites is triggered upon commencement of cell development. Accordingly
landfill remediation costs are provided for when development commences and at the same time a landfill remediation asset
is recognised.
The provision is stated at the present value of the future cash outflows expected to be incurred, which increases each period
due to the passage of time and is recognised in current and non-current provisions in the Consolidated Balance Sheet.
The annual change in the net present value of the provision due to the passage of time is recognised in the Consolidated
Income Statement as a time value adjustment in finance costs.
Due to the long term nature of remediation obligations, changes in estimates occur over time. Any change in the provision
for future landfill site restoration and aftercare costs arising from a change in estimate of those costs, and related to landfill
sites which are still accepting waste, is recognised as an addition or reduction to the remediation asset in the Consolidated
Balance Sheet. Changes to the remediation provision once last customer waste is received, are expensed to the Consolidated
Income Statement.
Rectification provisions differ to remediation. Rectification costs must be provided for at a reporting period end when there
is an obligation to bring an asset back to the normal operating standard required under the licence and EPA or council
requirements. Rectification provisions are calculated based on the net present value of all costs expected to rectify the site.
All rectification costs are expensed to the Consolidated Income Statement.
Provisions
(p)
A provision is recognised in the Consolidated Balance Sheet when the Group has a present legal or constructive obligation
as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
(q)
Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and vesting sick leave expected to be settled
within 12 months of the reporting date are recognised in other payables and employee benefits in respect of employees’
services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Employee benefit on-costs
Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities when the
employee benefits to which they relate are recognised as liabilities.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in employee
benefits and is measured in accordance with the other employee benefits described above. The liability for long service leave
expected to be settled more than 12 months from the reporting date is recognised in employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on the corporate bond rate with terms
to maturity and currency that match, as closely as possible, the timing of estimated future cash outflows.
Short term incentive (STI) compensation plans
A liability for employee benefits in the form of STI’s is recognised when it is probable that STI criteria has been achieved
and an amount is payable in accordance with the terms of the STI plan. Liabilities for STI’s are expected to be settled within
12 months and are measured at the amounts expected to be paid when they are settled.
Share-based payment transactions
Share-based payments are provided to Executives and employees via the Cleanaway Waste Management Limited Annual
Incentive Plan and the Long Term Incentive Plan.
Share-based compensation payments are measured at fair value at the date of grant and expensed to employee benefit
expense with a corresponding increase in the employee benefits reserve over the period in which the service and, where
applicable, performance conditions are fulfilled. Fair value is measured by using the Monte Carlo simulation or the
Black-Scholes option pricing model, the term of the Performance Right, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term
of the Performance Right.
Fair value measurement
(r)
The Group measures financial instruments, such as derivatives and non-financial assets such as land and buildings, at fair
value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
•
•
In the principle market for the asset or liability, or
In the absence of a principle market, in the most advantageous market for the asset or liability.
The principle or the most advantageous market must be accessible by the Group.
The fair value of an asset or liability is measured using the assumptions that the market participants act in their economic
best interest.
A fair value measurement of non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use.
The Group uses the following valuation techniques that are appropriate in the circumstances and for which sufficient data is
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs:
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable;
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
38. Significant accounting policies (continued)
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in employee
benefits and is measured in accordance with the other employee benefits described above. The liability for long service leave
expected to be settled more than 12 months from the reporting date is recognised in employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on the corporate bond rate with terms
to maturity and currency that match, as closely as possible, the timing of estimated future cash outflows.
Short term incentive (STI) compensation plans
A liability for employee benefits in the form of STI’s is recognised when it is probable that STI criteria has been achieved
and an amount is payable in accordance with the terms of the STI plan. Liabilities for STI’s are expected to be settled within
12 months and are measured at the amounts expected to be paid when they are settled.
Share-based payment transactions
Incentive Plan and the Long Term Incentive Plan.
Share-based payments are provided to Executives and employees via the Cleanaway Waste Management Limited Annual
Share-based compensation payments are measured at fair value at the date of grant and expensed to employee benefit
expense with a corresponding increase in the employee benefits reserve over the period in which the service and, where
applicable, performance conditions are fulfilled. Fair value is measured by using the Monte Carlo simulation or the
Black-Scholes option pricing model, the term of the Performance Right, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term
of the Performance Right.
(r)
Fair value measurement
value at each balance sheet date.
The Group measures financial instruments, such as derivatives and non-financial assets such as land and buildings, at fair
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
In the principle market for the asset or liability, or
In the absence of a principle market, in the most advantageous market for the asset or liability.
The principle or the most advantageous market must be accessible by the Group.
The fair value of an asset or liability is measured using the assumptions that the market participants act in their economic
•
•
best interest.
A fair value measurement of non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use.
The Group uses the following valuation techniques that are appropriate in the circumstances and for which sufficient data is
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs:
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable;
is unobservable.
(s)
(i)
Basis of consolidation
Subsidiaries
The Consolidated Financial Report comprises the financial statements of the Group and its subsidiaries as at 30 June 2016.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee;
Rights arising from the contractual arrangements; and
The Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
Consolidated Income Statement from the date the Group gains control until the date when the Group ceases to control
the subsidiary.
All intra-group balances, transactions and unrealised gains and losses resulting from intra-group transactions are eliminated
in full.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented
separately in the Consolidated Income Statement and within equity in the Consolidated Balance Sheet, separately from
parent shareholders’ equity.
If the Group loses control over a subsidiary it derecognises the related assets (including goodwill), liabilities, non-controlling
interest and other components of equity, while any resultant gain or loss is recognised in the Consolidated Income
Statement. Any investment retained is recognised at fair value.
(ii)
Equity accounted investments
Equity accounted investments are those entities over which the Group has either significant influence (associate entities) or
joint control and has rights to the net assets of the entity (joint venture entities). The Group does not have power over these
entities either through management control or voting rights. Investments in associates and joint ventures are accounted for
using the equity method of accounting and are collectively referred to as “equity accounted investments” in this report.
Under the equity method of accounting, the investments in associates and joint ventures are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the associate or joint venture
in the Consolidated Income Statement. Dividends received from associates and joint ventures are recognised as a reduction
in the carrying amount of the investment.
Where the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate or joint venture.
Unrealised gains on transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the
associates and joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment
of the asset transferred. Accounting policies of the associates and joint ventures have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Business combinations
(t)
Business combinations are accounted for using the acquisition method, whereby the identifiable assets, liabilities and
contingent liabilities (identifiable net assets) are measured using their fair values at the date of acquisition. Goodwill arises
in a business combination when the consideration transferred to the acquiree is greater than the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed. Acquisition related costs, incurred in a business
combination transaction, are expensed as incurred.
112
113
113
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
39. New standards adopted
39. New standards adopted
The following new and revised Standards and Interpretations have been adopted in the current year and have had no
material impact on the amounts reported in these Consolidated Financial Statements:
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
40. New standards and interpretations not yet adopted
40. New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2016 and have not been applied in preparing these consolidated financial statements. Those which may be relevant
to the Group are set out below. The Group does not plan to adopt these standards early.
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
1 January 2018
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
30 June 2019
1 January 2018
30 June 2019
1 January 2019
30 June 2020
New standards
STANDARD/INTERPRETATION
AASB 9 Financial Instruments, and the relevant amending standards
AASB 9 replaces AASB 139. This standard includes a model for classification
and measurement, a single, forward-looking ‘expected loss’ impairment model
and a substantially-reformed approach to hedge accounting.
AASB 15 Revenue from Contracts with Customers, and the relevant
amending standards
AASB 15 replaces the existing revenue recognition standards AASB 111
Construction Contracts, AASB 118 Revenue and related Interpretations. AASB
15 specifies the accounting treatment for revenue arising from contracts with
customers (except for contracts within the scope of other accounting
standards).The core principle of AASB 15 is that an entity recognises revenue
to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations
(e) Step 5: Recognise revenue when (or as) a performance obligation is satisfied
AASB 16 Leases, and the relevant amending standards
AASB 16 supersedes AASB 117 Leases. The key features of AASB 16 from
a lessee perspective are as follows:
Lessees are required to recognise assets and liabilities for all leases with
a term of more than 12 months, unless the underlying asset is of low value.
A lessee measures right-of-use assets similarly to other non-financial assets
and lease liabilities similarly to other financial liabilities.
Assets and liabilities arising from a lease are initially measured on a present
value basis. The measurement includes non-cancellable lease payments
(including inflation-linked payments), and also includes payments to be
made in optional periods if the lessee is reasonably certain to exercise an
option to extend the lease, or not to exercise an option to terminate
the lease.
Conclusions relating to the likely impact on the Group of adopting the new standards identified above are pending
completion of detailed impact assessments.
114
114
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
39. New standards adopted
40. New standards and interpretations not yet adopted (continued)
40. New standards and interpretations not yet adopted (continued)
The following new and revised Standards and Interpretations have been adopted in the current year and have had no
Amendments from improvement projects
material impact on the amounts reported in these Consolidated Financial Statements:
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
STANDARD/INTERPRETATION
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting
for Acquisitions of Interests in Joint Operations
This amendment amends AASB 11 Joint Arrangements to provide guidance
on the accounting for acquisitions of interests in joint operations in which the
activity constitutes a business.
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification
of Acceptable Methods of Depreciation and Amortisation
The IASB has clarified that the use of revenue-based methods to calculate the
depreciation of an asset is not appropriate because revenue generated by an
activity that includes the use of an asset generally reflects factors other than the
consumption of the economic benefits embodied in the asset.
AASB 2014-9 Amendments to Australian Accounting Standards – Equity
Method in Separate Financial Statements
This amendment amends AASB 127 Separate Financial Statements, and
consequentially amends AASB 1 First-time Adoption of Australian Accounting
Standards and AASB 128 Investments in Associates and Joint Ventures, to allow
entities to use the equity method of accounting for investments in subsidiaries,
joint ventures and associates in their separate financial statements.
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments require:
(a) A full gain or loss to be recognised when a transaction involves a business
(whether it is housed in a subsidiary or not); and
(b) A partial gain or loss to be recognised when a transaction involves assets
that do not constitute a business, even if these assets are housed
in a subsidiary.
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure
Initiative: Amendments to AASB 101
The amendments are designed to further encourage companies to apply
professional judgement in determining what information to disclose in the
financial statements.
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
1 January 2016
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
The amendments from improvement projects identified above are not expected to have a material impact on the Group.
114
115
115
40. New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2016 and have not been applied in preparing these consolidated financial statements. Those which may be relevant
to the Group are set out below. The Group does not plan to adopt these standards early.
EFFECTIVE FOR ANNUAL
EXPECTED TO BE
REPORTING PERIODS
INITIALLY APPLIED IN THE
BEGINNING ON OR AFTER
FINANCIAL YEAR ENDING
1 January 2018
30 June 2019
AASB 15 Revenue from Contracts with Customers, and the relevant
1 January 2018
30 June 2019
New standards
STANDARD/INTERPRETATION
AASB 9 Financial Instruments, and the relevant amending standards
AASB 9 replaces AASB 139. This standard includes a model for classification
and measurement, a single, forward-looking ‘expected loss’ impairment model
and a substantially-reformed approach to hedge accounting.
amending standards
AASB 15 replaces the existing revenue recognition standards AASB 111
Construction Contracts, AASB 118 Revenue and related Interpretations. AASB
15 specifies the accounting treatment for revenue arising from contracts with
customers (except for contracts within the scope of other accounting
standards).The core principle of AASB 15 is that an entity recognises revenue
to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations
(e) Step 5: Recognise revenue when (or as) a performance obligation is satisfied
AASB 16 Leases, and the relevant amending standards
AASB 16 supersedes AASB 117 Leases. The key features of AASB 16 from
a lessee perspective are as follows:
Lessees are required to recognise assets and liabilities for all leases with
a term of more than 12 months, unless the underlying asset is of low value.
A lessee measures right-of-use assets similarly to other non-financial assets
and lease liabilities similarly to other financial liabilities.
Assets and liabilities arising from a lease are initially measured on a present
value basis. The measurement includes non-cancellable lease payments
(including inflation-linked payments), and also includes payments to be
made in optional periods if the lessee is reasonably certain to exercise an
option to extend the lease, or not to exercise an option to terminate
the lease.
1 January 2019
30 June 2020
Conclusions relating to the likely impact on the Group of adopting the new standards identified above are pending
completion of detailed impact assessments.
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2016Cleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes together with the additional disclosures included in the Directors’ Report designated
as audited, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for
the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations),
and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable;
(d) this declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section s295A of the Corporations Act 2001 for the financial year ended 30 June 2016; and
(e) as at the date of this declaration, there are reasonable grounds to believe that the members of the closed Consolidated
Group identified in note 27 will be able to meet any obligation or liabilities to which they are or may become subject to,
by virtue of the deed of cross guarantee.
This declaration is made in accordance with a resolution of the Directors.
M M Hudson
Non-Executive Director and Chairman
V Bansal
Chief Executive Officer and Managing Director
Melbourne, 19 August 2016
116
116
Directors’ Declaration
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor's report to the members of Cleanaway Waste
Management Limited
(Formerly Transpacific Industries Group Ltd)
Report on the financial report
We have audited the accompanying financial report of Cleanaway Waste Management Limited, which
comprises the consolidated balance sheet as at 30 June 2016, the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors' declaration of the
consolidated entity comprising the company and the entities it controlled at the year's end or from time
to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration,
a copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
117117
Independent Auditor’s ReportCleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4Cleanaway Waste Management Limited 2016 ANNUAL REPORT Opinion
In our opinion:
a.
the financial report of Cleanaway Waste Management Limited is in accordance with the
Corporations Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2016
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in pages 48 to 62 of the directors' report for the year
ended 30 June 2016. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Cleanaway Waste Management Limited for the year ended
30 June 2016, complies with section 300A of the Corporations Act 2001.
Ernst & Young
Brett Croft
Partner
Melbourne
19 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
118
Independent Auditor’s Report Other Information
Top 20 Shareholders as at 19 August 2016
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
PETER & LYNDY WHITE FOUNDATION PTY LTD
CITICORP NOMINEES PTY LIMITED
BOND STREET CUSTODIANS LIMITED
JJ RICHARDS & SONS PTY LTD
RANK NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14 WESTREET INVESTMENTS PTY LTD
15
16
17
18
19
20
Top 20 holders of FULLY PAID ORDINARY SHARES
Total Remaining Holders Balance
Total Fully Paid Ordinary Shares on Issue
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BRISPOT NOMINEES PTY LTD
CAMROCK (AUSTRALIA) PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED
UNITS
410,200,691
394,383,956
191,249,348
187,830,977
59,966,648
30,526,978
26,555,272
20,051,993
15,446,000
13,478,814
12,214,021
9,105,218
8,891,724
8,454,000
8,320,000
7,814,037
7,435,190
6,603,425
6,592,171
6,160,792
1,431,281,255
155,655,680
1,586,936,935
% OF
UNITS
25.85
24.85
12.05
11.84
3.78
1.92
1.67
1.26
0.97
0.85
0.77
0.57
0.56
0.53
0.52
0.49
0.47
0.42
0.42
0.39
90.19
9.81
100.00
Substantial Shareholders
The number of shares held by substantial shareholders as disclosed in the shareholding notices given to the Company
as at 19 August 2016 were:
Cooper Investors Pty Limited
Schroder Investment Management Australia Limited
FIL Limited
Marathon Asset Management LLP
Dimensional Fund Advisors
Perpetual Limited and subsidiaries
Commonwealth Bank of Australia
140,380,864
133,535,666
103,132,914
95,153,793
94,987,449
79,677,844
79,572,069
8.85%
8.41%
6.50%
6.00%
5.99%
5.02%
5.01%
An entity has a substantial shareholding if the total votes attaching to shares in which the entity and their associates have
a relevant interest is 5% or more. The list of the 20 largest shareholders is based on the number of shares held in the name
of each shareholder on the register of members, even if the shareholder holds the share as a nominee (i.e. no beneficial or
relevant interest in the shares). The list of the 20 largest shareholders of the Company and the list of substantial shareholders
of the Company differ for this reason.
Statement of Quoted Securities
The Company's total number of shares on issue as at 19 August 2016 was 1,586,936,935 ordinary fully paid shares.
At 19 August 2016 the total number of shareholders owing these shares was 8,319 on the register of members maintained
by Computershare Investor Services Pty Ltd.
90.19% of total issued capital is held by or on behalf of the 20 largest shareholders.
119119
119
Other InformationCleanaway Waste Management Limited 2016 ANNUAL REPORTCleanaway Waste Management Limited 2016 ANNUAL REPORTOVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT4OVERVIEWCORPORATE INFORMATIONOTHER INFORMATIONBUSINESSREVIEWFINANCIAL REPORT55OTHERINFORMATION
Other Information
Voting Rights
Under the Company's Constitution, every member is entitled to vote who is present at a general meeting of the Company
in person or by proxy or by attorney or, in the case of a corporation, by representative, shall, upon a show of hands, have
one vote only.
Proxies – Where a member is entitled to cast two or more votes it may appoint not more than two proxies or attorneys.
Where a member appoints two proxies, neither proxy is entitle to a vote on a show of hands.
Poll – On a poll, every member entitled to vote shall, whether present in person or by proxy or attorney or, in the case
of a corporation, by representative, have one vote for every share held by the member.
At 19 August 2016, there were 9,873,287 performance rights on issue to 16 executives under the Company’s incentive
schemes. Voting rights will be attached to the unissued ordinary shares when the performance rights have been exercised.
Distribution Schedule of Shareholders
NO. OF SHARES
1-1,000
2,132
1,001-5,000
2,628
5,001-10,000
1,240
10,001-100,000
2,103
100,001 AND OVER
216
TOTAL
8,319
The number of shareholders each holding less than a marketable parcel of the Company's ordinary shares ($500 in value)
at 19 August 2016 was 1,156.
Securities Exchange Listing
The shares of the Company are listed on the Australian Securities Exchange under the code CWY. CWY was delisted from
the New Zealand Exchange on 23 June 2016.
Company Secretary
Dan Last
Registered Office and Principal Office
Level 4, 441 St Kilda Road, Melbourne, VIC 3004. Telephone: +61 3 8397 5100
Share Registry
Computershare Investor Services Pty Limited, 117 Victoria Street, West End, QLD 4101. Telephone: 1300 850 505 (within
Australia) and +61 3 9415 4000 (outside Australia)
120120
120
Other Information
This Annual Report is printed on ecoStar. ecoStar is an environmentally responsible paper made Carbon Neutral.
The greenhouse gas emissions of the manufacturing process including transportation of the finished product to BJ Ball
Papers Warehouses has been measured by the Edinburgh Centre for Carbon Neutral Company and the fibre source has
been independently certified by the Forest Stewardship Council (FSC®). ecoStar is manufactured from 100% Post Consumer
Recycled paper in a Process Chlorine Free environment under the ISO 14001 environmental management system.
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