2018 ANNUAL REPORT
MAKING A SUSTAINABLE
FUTURE POSSIBLE
CLEANAWAY WASTE MANAGEMENT LIMITED ABN: 74 101 155 220
CONTENTS
SECTION 1
OVERVIEW
SECTION 2
BUSINESS REVIEW
The Acquisition of Toxfree
2018 Year at a Glance
Chairman’s Report
CEO’s Report
Footprint 2025
2
4
6
8
12
Solids Collections Report
Solids Post Collections Report
14
16
Liquids & Industrial Services Report 18
SECTION 3
SUSTAINABILITY
REVIEW
SECTION 4
CORPORATE
INFORMATION
Operating Environment:
Recycling Crisis or Opportunity?
A better place to work
A better approach to safety
Better community partnerships
Better customer relationships
Better environmental outcomes
Better management of
greenhouse gas emissions
SECTION 5
FINANCIAL
REPORT
Financial Statements
Directors' Report
20
22
24
26
28
30
32
39
40
Board of Directors
Senior Executive Team
34
36
SECTION 6
OTHER
INFORMATION
Other Information
135
The Company’s 2018 Annual General Meeting will be held at 10am
(Brisbane time) on Thursday 25 October 2018 at the Long Room,
Customs House, 399 Queen Street, Brisbane Queensland 4000.
2018 Corporate Governance Statement and Appendix 4G Disclosures
Shareholders are encouraged to read the Company’s Corporate Governance
Statement and our disclosures in accordance with the Appendix 4G of the
ASX Listing Rules in the Investor section of the Company’s website at:
www.cleanaway.com.au/forinvestors/corporate-governance
Cleanaway Waste Management Limited
We’re focused on
transforming the value
of waste, and delivering
on our mission of making
a sustainable future possible.
A SMARTER WAY
A BETTER WAY
A CLEANER WAY
2018 ANNUAL REPORT
1
OVERVIEW
THE ACQUISITION
OF TOXFREE
In December 2017, we announced the
acquisition of Toxfree by means of a
recommended scheme of arrangement.
On 25 May 2018 we marked the first day
of operation, as one stronger business.
The acquisition accelerates
our Footprint 2025 strategy as
Toxfree brings with it a number
of strategically important prized
assets, as well as a dedicated
and skilled team of almost
1,500 people across Australia. It
strengthens our market leadership
across all segments including the
fast-growing medical waste and
health services market, through the
inclusion of Daniels Health.
To ensure the entire Toxfree
and Daniels Health team felt part
of the Cleanaway family from Day
One, Cleanaway sent senior leaders
to every Toxfree and Daniels
Health site in Australia to welcome
them to the team, establishing
strong relationships and building
an early understanding of each
other’s businesses.
The integration of the Toxfree
and Daniels Health businesses
into Cleanaway is well underway,
and we anticipate a smooth
completion over a two-year
period, delivering an anticipated
$35 million in synergies.
An integrated network, stronger than the sum of its parts
Toxfree and Daniels Health’s capabilities, combined with
Cleanaway’s services have created a network stronger than
that of any other waste management company in Australia.
+
+
22
Cleanaway Waste Management Limited Singapore
260+
Sites
CLEANAWAY SITES
TOXFREE SITES
DANIELS HEALTH SITES
5,900+
Employees
4,000+
Vehicles
115+
Licenced infrastructure
assets
88+
Municipal
Councils
~140,000
Commercial & Industrial
Customers
~10,000
Health Services
Customers
3
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT OVERVIEW
2018 YEAR AT A GLANCE
As Australia’s leading total waste management solutions company, with
a dedicated team, national integrated network, and one of the largest
fleets on the road, Cleanaway is proud to continue working toward our
mission of making a sustainable future possible.
STATUTORY RESULTS
$1,714.3 million revenue
$1,564.9 million net revenue 1
$323.1 million EBITDA
$149.3 million EBIT
$103.3 million NPAT 2
2.5¢/share dividend
5.6¢/share eps
▲17.9%
▲15.9%
▲2.9%
▲4.3%
▲42.5%
▲19.0%
▲27.3%
UNDERLYING RESULTS
$1,714.3 million revenue
$1,564.9 million net revenue 1
$339.7 million EBITDA
$166.4 million EBIT
$97.8 million NPAT 2
2.5¢/share dividend
5.3¢/share eps
▲17.9%
▲15.9%
▲12.7%
▲16.4%
▲26.2%
▲19.0%
▲12.8%
1 Net revenue is a non-IFRS measure and excludes landfill levies. 2 Attributable to ordinary equity holders.
We recycled...
>320,000t
Paper and cardboard
>16,000t
Plastic packaging
>14,500t
Steel
~50,000t
Organic liquid waste
re-used as nutrient
~42,000t
Biosolids re-used
as nutrient
~125ML
Used oil collected
for reprocessing
44
Cleanaway Waste Management Limited FINANCIAL HIGHLIGHTS
NET REVENUE
($ millions)
EBITDA1
($ millions)
EPS1
(cents)
DIVIDEND
(cents)
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
1 Underlying financial results.
Community investments
$1,564.9m
$339.7m
5.3¢
2.5¢
Amount invested in
Australian communities
Number of education
programs held
Number of
students engaged
$795,000+
1,250+
30,000+
~5,000t
E-waste 2
~1.1M
Scope
1
and
Scope
2
~740kt CO2-e
Sharpsmart collectors washed
through Daniels robotic washlines 2
Greenhouse gas
emissions
~126M m3
>140M kWh
Landfill gas captured to
generate renewable energy
Renewable energy
generated
>28,700 homes
Enough renewable energy
generated to power
2 Toxfree and Daniels Health volumes presented on an annualised basis.
5
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT OVERVIEW
CHAIRMAN’S
REPORT
It is with great pleasure that I present to
you the Cleanaway Waste Management
Limited 2018 Annual Report.
Cleanaway’s performance across
FY2018 has continued the strong
positive trends we have reported
over the past three years, across all
key financial and safety metrics. Our
move into the ASX 100 during FY2018
reflects shareholders’ confidence in the
leadership of the Company, and that
we are headed in the right direction.
During the year we completed the
acquisition of Tox Free Solutions
Limited (Toxfree), a major waste
management company with a
national footprint of operations
and infrastructure assets. This
acquisition is highly complementary
to Cleanaway’s existing operations
and further strengthens our total
waste management services across
the country.
Toxfree’s capabilities complement
our existing business, solidifying
our market leading position and
broadening the suite of services we
offer. We have now created a more
integrated, stronger total waste
management solutions business,
with an unrivalled network of prized
assets, a highly skilled team of more
than 5,900 people and 4,000+
vehicles on the road each day.
The integration of the Toxfree business
is on track and is expected to be
completed by the end of FY2020.
Completion of the acquisition
of Toxfree effectively occurred
on 11 May 2018 and the results
reported for the year include the
results of Toxfree for a seven-week
period only.
“In the 2018 financial year your Company
has continued to implement a number
of strategies that have improved
financial performance and enhanced
its reputation as the leading total waste
management company in Australia.”
6
6
Cleanaway Waste Management Limited
Net revenue, which represents gross
revenue less landfill levies collected
and passed through to the customer,
increased 15.9% to $1.56 billion
compared to the corresponding period
last year. This led to an increase in
EBITDA of 2.9% to $323.1 million
and EBIT, which was up 4.3% to
$149.3 million.
These results were due to improved
profit performances by our three
businesses – Solids Collections,
Solids Post Collections, and Liquids
& Industrial Services.
On an underlying basis, EBITDA
increased 12.7% to $339.7 million
and EBIT increased by 16.4% to
$166.4 million.
I am further pleased to report that
on a statutory basis, our net profit
after tax exceeded our underlying
net profit after tax increasing 42.5%
to $103.3 million. Earnings per share
increased 27.3% to 5.6 cents. The
earnings per share reflects the equity
issued during December 2017/January
2018 for the Toxfree acquisition.
per share, an increase of 19.0% on
the total dividend paid last year.
The financial condition of Cleanaway
remains strong. Our balance sheet
is in excellent shape with all our
debt ratios well within our banking
covenant requirements. Our average
debt maturity at 30 June 2018 is
4.2 years and we have just under
$280 million of headroom under
our banking facilities.
Our strong financial and operational
performance and confidence in the
future growth of the Company has
again allowed the Board to increase
dividends paid to shareholders. The
Board have declared a fully franked
final dividend of 1.4 cents per share,
payable on 4 October 2018. This
represents an increase of 27.3%
from the 1.1 cent final dividend
paid last year.
Combined with the interim dividend
of 1.1 cents per share paid earlier in
the year, the dividends declared in
respect of FY2018 totalled 2.5 cents
While the financial performance of the
Company is important, a major focus
of the Board and Management remains
the health and safety of our employees
and contractors. Our business,
like most industrial, logistics and
infrastructure businesses, face daily
operational and situational hazards.
We have a responsibility to ensure all
our employees and contractors go
Home Safe every day. A great deal
of effort is expended throughout the
Company to make sure this is the
case and I am pleased to report that
our total recordable injury frequency
rate has reduced by 18.4% to 6.2,
compared to the previous year. While
this is an improvement, there is further
work to do to get to Goal Zero.
This year we have further enhanced
our Sustainability Report, included
in this annual report. It provides
information about a range of initiatives
and priorities which outline how we
are working toward our mission of
making a sustainable future possible.
In closing, I would like to thank
the management team, led by Vik
Bansal, and all our employees for their
considerable efforts in continuing to
improve the Company’s performance
and their work toward making a
sustainable future possible. I would
also like to thank my fellow Board
members for their continued support
this past year.
I look forward to reporting on our
progress next year.
Mark Chellew
Chairman
7
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT OVERVIEW
CEO’S
REPORT
8
8
Cleanaway Waste Management Limited
“I am pleased to present results reflecting
the strategies we have implemented
over the past three years. Once again
we have delivered on our promise
of achieving continued growth across
our business.”
Over the past three years I have
reported on the strategies we have
been implementing to take Cleanaway
from being a good company, to a
great one. I am pleased to report that
in FY2018 we have, as promised,
continued down this path. The work
undertaken by our management team,
along with all our employees, has once
again delivered another year of growth
for Cleanaway.
With a diversified portfolio across
Australia’s rapidly growing waste
market, we are the market leader
in every sector in which we operate.
Having the largest network of prized
assets across the country means we
can offer our customers a better range
of services, in more places, than any
other waste management company
in Australia.
Making sure our people go Home Safe
every day
Safety is at the heart of everything
we do. And for the seventh year in
succession we have seen a reduction
in our total recordable injury frequency
rate. Over the past year, the rate has
reduced a further 18.4% from the
same time last year to 6.2. Whilst
this is a great effort by our team, we
remain focused on reaching Goal Zero
– ensuring that everyone, employees
and contractors alike, can go Home
Safe, every day.
Strengthening our business through
the acquisition of Toxfree
A major highlight of FY2018 was the
completion of our acquisition of Tox
Free Solutions Limited (Toxfree). This
consolidated Cleanaway’s position as
Australia’s leading waste management
company, strengthening our integrated
total waste management offer. Toxfree
is highly complementary to our existing
business and the acquisition creates
significant operating leverage across
all our business units.
Toxfree accelerates the implementation
of our Footprint 2025 strategy,
strengthening our network of prized
infrastructure assets across the country.
Toxfree also brings with it Daniels
Health, a market leading, vertically
integrated provider of specialised,
healthcare waste management
services, which includes the collection,
transport and treatment of sharps
and clinical waste.
Over the past few months I have
come to know the Toxfree and
Daniels Health teams, and I am
greatly encouraged to see the cultural
alignment which already exists - with
a shared focus on sustainability, service
and innovation.
million. You will find more detailed
analysis on the performance of our
operations on subsequent pages
of this annual report.
In FY2018 we commenced a number
of significant new contracts – including
Brisbane City Council, Chevron
Wheatstone, Coles, New South Wales’
Central Coast and the Container
Deposit Scheme in New South Wales.
As sizeable contracts, each has
incurred significant ramp up costs,
impacting margins in the short term.
We expect this margin pressure to
ease in FY2019 as we complete the
mobilisation phase of these contracts
and move into ongoing operations.
Over the past three years we have
maintained that a well-managed waste
management company should be
able to generate significant free cash
flow through a disciplined approach
to cash and capital expenditure. I am
pleased to report that this discipline
has been maintained in FY2018, with
our free cash flow increasing 86.6%
to $117.0 million during the year.
The integration of the Toxfree
businesses is progressing as planned.
We are confident that the integration
will deliver significant value to
shareholders – approximately $35
million in annual synergies as we bring
the two businesses together. This work
is expected to be completed by the
end of FY2020.
Strong financial and operational
discipline driving improved
performance in FY2018
We have again seen improved
performances across Cleanaway’s three
core businesses at the close of FY2018:
• Solids – Collections reported
increases in net revenue, EBITDA
and EBIT of 12.0%, 2.9% and 2.0%
respectively.
• Solids – Post Collections reported
increases in net revenue, EBITDA
and EBIT of 25.8%, 21.3% and
45.4% respectively.
• Liquids & Industrial Services reported
increases in net revenue, EBITDA
and EBIT of 3.8%, 7.0% and 10.6%
respectively.
The acquisition process of the Toxfree
business was effectively concluded
on 11 May 2018, which led to seven
weeks of contribution in our results
for FY2018.
On an underlying basis, net
revenues increased 15.9% to
$1.56 billion, as did net profit after
tax, which rose 26.2% to $97.8
9
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT OVERVIEW
CEO’S REPORT
(CONTINUED)
Continuing our strategic focus on growth
and company‑wide improvement
Over the past three years we have undertaken a focused
and strategic program of growth, to make a sustainable
future possible for all our stakeholders – customers,
investors, employees and the community. A core
component of this remains our Five Pillars, or our ‘Five Cs’,
which continue to drive our strategic focus.
In FY2018 we launched Our Customer Principles to
support our first strategic pillar ‘Customer for Growth’,
delivering a best in class customer experience across each
of many customer interaction points. I am excited to see
early improvements and the enthusiasm with which this is
being embraced across the team. I look forward to sharing
the results in FY2019 as we continue to embed this work
across the business.
Our Five Strategic Pillars
Providing clarity and focus
Pillar 1
Pillar 2
Customer
for Growth
Continuous
Improvement
for Cost
Pillar 3
Capital
for Cash
Pillar 4
Pillar 5
Clarity
for Alignment
Competitive
Advantage
through Excellence
& Digitisation
Delivering a best in
class and consistent
customer experience
to achieve stronger
growth
Always fit for purpose
organisation with
unrelenting focus
on productivity
and cost
Pursuing effective
and disciplined
capital management
Ensuring transparency
and accountability
across the organisation
Using technology
and digitised process
to ensure agility and
competitive advantage
External
Internal
10
10
Cleanaway Waste Management Limited
enthusiasm in integrating our
Reflect RAP into the way we work
and I look forward to seeing the steps
we are able to make in the future as
we prepare to launch our Innovate
RAP in FY2019.
In closing, I would like to take this
opportunity to thank the Board
for their continuous support and
counsel over this past year.
FY2018 has again been a very busy
year at Cleanaway and I need to
acknowledge the efforts of the
more than 5,900 people who make
Cleanaway the company that it is and
who work hard each day to make
a sustainable future possible.
It is their commitment to ensuring
that our customers are serviced and
all waste is processed in a sustainable
manner, that is the real key to
our success.
Vik Bansal
Chief Executive Officer and Managing Director
Making headway in our
Footprint 2025 strategy
Over FY2018 we have continued
to strengthen our network of prized
infrastructure assets, our ‘Footprint
2025’ strategy. This strategy is focused
on the optimisation of the waste value
chain from collection to disposal, with
a focus on resource recovery. We are
committed to investing in our network
now, to ensure we can sustainably
manage the waste generated across
Australia well into the future.
This investment was focused in New
South Wales during FY2018, where
our footprint of prized infrastructure
assets wasn’t as strong as other parts
of Australia, including:
• Commissioning a new
technologically advanced sorting line
at our processing facility in Sydney’s
Eastern Creek, servicing New South
Wales’ Container Deposit Scheme.
• Commencing the construction of
a new transfer station and resource
recovery centre on our existing
landfill site in Western Sydney.
When completed, this facility will be
licenced to process 300,000 tonnes
of putrescible waste each year.
In addition, in July 2018 we entered
into an agreement to acquire a
controlling interest in the ResourceCo
Refuse Derived Fuel facility located
in Western Sydney. The ResourceCo
facility will take 250,000 tonnes of
dry commercial & industrial waste and
convert it into a process engineered
fuel, used in the cement manufacturing
industry, diverting material that was
previously destined for landfill and
replacing fossil fuels.
Expanding our network of these
prized infrastructure assets is
critical, as it allows us to be
highly competitive when it comes
to winning new contracts.
Recycling: Crisis or Opportunity?
Our operating environment as
we look to FY2019
Much has been written about the
impact of China’s decision to either
ban or impose severe contamination
restrictions on the import of recyclable
material – in fact, you can read more
on this later in this Annual Report. This
has significantly changed the game
and has heavily impacted the global
market for recyclable commodities.
The most heavily impacted
commodities are lower grades
of mixed papers and plastics –
traditionally collected from kerbside
household ‘commingled’ recycling
bins. These products are the most
difficult to deal with, due to the mix
of materials and traditionally high
levels of contamination. We have long
been advocates for education as a tool
to change consumer behaviour, a focus
which is more important now than
ever. We are also highly supportive
of moves to assist the local recycling
industry and build an effective circular
economy within Australia, allowing
us to reuse and recycle our own
waste on-shore.
Our people remain at the heart
of who we are
I remain encouraged by the
participation in our company-wide
employee engagement survey, which
has again increased year on year. We
remain focused on listening to, and
addressing the feedback we receive
through these annual surveys, working
towards a highly engaged team across
the board.
As we complete our Reflect
Reconciliation Action Plan (RAP),
we are proud to help close the gap
between Indigenous and Torres Strait
Islander peoples and other Australians.
Our team has demonstrated great
11
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT OVERVIEW
FOOTPRINT 2025
Prized assets added
to our Footprint 2025
CLEANAWAY PRIZED ASSETS
TOXFREE PRIZED ASSETS
DANIELS HEALTH PRIZED ASSETS
Cleanaway’s Footprint
2025 strategy is our
waste management plan
for a sustainable future.
The primary focus of our
Footprint 2025 strategy is
resource recovery in all its
forms. Across Collections,
Resource Recovery, Alternative
Waste Disposal and Landfill,
we’re investing in the right
integrated network to allow
us to recover more resource
across the value chain.
In the last three years we
have invested close to a
billion dollars in our future
footprint, including our recent
acquisition of Toxfree. And
we’re not done yet.
We have significantly grown
our Footprint 2025 by adding
a number of prized assets
across the country.
1212
Cleanaway Waste Management Limited Some of the highlights include:
New South Wales
Eastern Creek
Wetherill Park
Erskine Park
Silverwater
St Mary’s
and Windsor
Victoria
Melbourne Regional
Landfill
Dandenong
Dandenong
Laverton
Sorting and recycling of glass,
plastic, aluminium and cardboard
containers collected via the NSW
Container Deposit Scheme
Waste to Processed Engineered
Fuels (PEF) facility – converts dry
commercial & industrial waste
previously destined for landfill to
fuel used in the cement industry
Transfer station and resource
recovery facility – currently
under construction to safely
handle 300,000 tonnes of
putrescible waste per annum
Incinerator – destroying waste
health materials as well as
hazardous liquid waste
Waste Treatment and Resource
Recovery – processing contaminated
water, soils, packaged hazardous
waste and chemicals
Highly engineered landfill for the
safe disposal of waste material –
incorporates electricity generation
from landfill gas, with four additional
landfill gas powered generators
added in FY2018
Organic facility – converting organic
waste into compost – under
construction
E-waste processing facility utilising
Blubox technology
Incinerator that destroys waste
health materials
South Australia
Adelaide
Western Australia
Kwinana
Welshpool
Network of transfer stations to
consolidate and safely transport
waste for disposal
Industrial and hazardous waste
treatment facility
Transfer station – currently under
construction
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3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT BUSINESS OVERVIEW
SOLIDS
COLLECTIONS
REPORT
DELIVERING AN ESSENTIAL SERVICE
TO OUR COMMUNITY
In February 2018 the first trucks rolled out of our Somersby
depot at 2:30am to begin Collection services for NSW’s
Central Coast Council.
Home to more than 331,000 residents, the Central Coast
Council is one of the largest councils in Australia. Their
residents can now rely on Cleanaway for the collection of
general waste, recycling, green waste, and bulk kerbside
waste, as well as the collection of dumped rubbish, and the
management of park, beach and litter bins.
We partner with more than 88 municipal councils across
Australia, servicing millions of homes, businesses and
community facilities each week. The latest Cleanaview
technology provides significant value to the Central Coast
Council and is now rolling out across more municipal
contracts to give our customers a near real time view of the
services we provide. This increased visibility helps councils
to provide better service to ratepayers – another way we’re
working hard to make a sustainable future possible.
14
14
Cleanaway Waste Management Limited
NET
REVENUE
($ millions)
$907.9m
With one of the largest fleets in Australia, and the largest Solid
Waste Collections fleet on the road, we are proud to service
more than 88 municipal councils, and over 140,000 Commercial &
Industrial customers, covering all corners of Australia.
Solids Collections net revenue
increased 12.0% in FY2018 driven by
major contract wins in the municipal
and commercial & industrial segments,
further supported by underlying
volume and price growth across
major Collection activities.
EBITDA also increased 2.9% to $165.5
million. Our Collections margins
experienced some downward pressure
during the year largely driven by
industry wide changes to the recycling
and commodities markets as a result
of China’s National Sword program.
This program resulted in a dramatic
lift in the required acceptable quality
of recyclable commodities, which in
turn directly increased the cost of
processing to achieve compliance
with that higher quality grade. While
commodity pricing was softer in
the second half of FY2018, some
recovery was experienced in the fourth
quarter, although not to the levels
we previously experienced.
A further negative impact on
Collections margins during the year
was the ramp up costs associated with
major new contracts such as Brisbane
City Council, Chevron Wheatstone,
Coles, Central Coast and the Container
Deposit Scheme in NSW. Pricing
performance and organic volume
growth for FY2018 was pleasing and
margin improvement remains a key
focus in FY2019.
The recent acquisitions of Toxfree
nationally and Tip Top ‘n’ Tidy in NSW
will provide synergy opportunities and
operating leverage, which will be a key
area of focus in the new financial year.
FY2018
FY2017
FY2018
V FY2017
$ million
$ million
%
907.9
165.5
18.2
$ million
100.8
%
11.1
810.5
160.9
19.9
98.8
12.2
12.0%
2.9%
2.0%
Net revenue
EBITDA
EBITDA margin
EBIT
EBIT margin
Represents underlying results.
EBITDA
($ millions)
$165.5m
165.5
160.9
19.9
160.9
165.5
18.2
19.9
18.2
18.4
19.2
18.4
19.2
149.8
149.8
11.0
11.0
12.2
12.2
11.1
11.1
10.8
138.2
10.8
138.2
FY
2015
FY
2016
FY
2017
FY
2018
FY
2015
FY
2016
FY
2017
FY
2018
EBITDA
EBITDA margin
EBIT margin
15
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
BUSINESS OVERVIEW
SOLIDS
POST COLLECTIONS
REPORT
DIVERTING WASTE FROM LANDFILL TO FUEL
LOCAL INDUSTRY
On 31 July 2018, Federal Environment and Energy Minister, Josh
Frydenberg, and NSW Minister for the Environment, Gabrielle Upton
unveiled a new state-of-the-art resource recovery facility at Wetherill
Park in Sydney – the largest of its kind in Australia. A joint venture
between Australian companies ResourceCo and Cleanaway, the
facility is part financed by the Clean Energy Finance Corporation
(CEFC) and the New South Wales Environmental Trust.
Cleanaway ResourceCo Resource Recovery Facility (RRF) at Wetherill
Park is licensed to receive up to 250,000 tonnes per annum of dry
commercial & industrial and mixed construction & demolition waste
through the facility. Recyclable commodities such as metal, clean
timber and inert materials are recovered, and the balance of non-
recyclable waste is converted into a baseload energy source, known
as Process Engineered Fuel (PEF). PEF is used as a substitute for fossil
fuels in industrial applications in both domestic and offshore markets.
“Investment in resource recovery and innovative waste‑to‑energy
solutions is essential to making a sustainable future possible, and
one of the ways we’re delivering on our Footprint 2025 strategy.”
Cleanaway CEO and Managing Director, Vik Bansal.
16
16
Cleanaway Waste Management Limited
NET
REVENUE
($ millions)
$232.8m
From transfer stations to engineered landfills, Cleanaway has
one of the strongest Post Collections footprints in Australia.
We’re proud to be a leader in the safe
and sustainable management of waste.
As we work toward our Footprint 2025
strategy, we continue to grow our
network of prized assets – supporting
Australia’s waste management
infrastructure well into the future.
Solids Post Collections net revenue
increased 25.8% to $232.8 million,
supported by a full year of operation
of the South East Melbourne Transfer
Station. Profitability improved with a
21.3% increase in EBITDA to $116.6
million. EBITDA margins reduced
slightly due to the mix of volumes
through our existing landfills. EBIT
margin improved 320 basis points
during the year to 24.2% as we
continued to transition away from
our older landfills in the South East
of Melbourne and reduced operating
costs at Melbourne Regional Landfill.
Overall landfill volumes were up in New
South Wales, Queensland and Victoria.
We successfully installed new power
generating units at Melbourne Regional
Landfill during the year, effectively
doubling our electricity generating
capacity at the site – demonstrating
our focus on extracting maximum value
from all waste streams. The Melbourne
Regional Landfill now generates
approximately 8.8 megawatts of
renewable electricity by capturing
landfill gas, enough to power on
average 13,000 Victorian homes.
We continue to invest in our Footprint
2025 strategy with the Erskine Park
Transfer Station and Resource Recovery
Facility in Western Sydney expected
to be fully operational in the first half
of FY2019. This strategy is further
supported by the recent acquisition of
a controlling interest in ResourceCo,
producing resource derived fuels
through a major new facility in Sydney.
FY2018
FY2017
FY2018
V FY2017
$ million
$ million
$ million
%
$ million
%
382.2
232.8
116.6
50.1
56.4
24.2
288.7
185.0
96.1
51.9
38.8
21.0
32.4%
25.8%
21.3%
45.4%
Gross revenue
Net revenue
EBITDA
EBITDA margin
EBIT
EBIT margin
Represents underlying results.
EBITDA
($ millions)
$116.6m
116.6
96.1
51.9
50.1
87.9
49.7
45.9
59.8
21.0
24.2
13.8
15.8
FY
2015
FY
2016
FY
2017
FY
2018
EBITDA
EBITDA margin
EBIT margin
17
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
BUSINESS OVERVIEW
LIQUIDS &
INDUSTRIAL
SERVICES REPORT
HOME SAFE
Home Safe is a key value at Cleanaway – the safety of
ourselves, our team and of the communities in which we
operate is integral to who we are and what we do. One of the
ways we assess safety is by recording the number of days our
sites have gone without experiencing a Lost Time Injury (LTI).
Cleanaway’s Liquid Waste Services grease trap processing
site in Padstow, NSW has reached more than 2,400 LTI-free
days – meaning the site hasn’t had an LTI in over six years.
Safety Walks, Toolbox Talks, Health and Safety training, and
reporting near misses are just some of the ways Padstow
and the rest of our sites are working to ensure that every
employee goes Home Safe every day. Most importantly, each
and every person working on site is actively taking ownership
of their safety and the safety of their colleagues.
18
18
Cleanaway Waste Management Limited
NET
REVENUE
($ millions)
$440.2m
Cleanaway is Australia’s leading Liquids and Industrial Services
business – a position which has been further strengthened
by the acquisition of Toxfree in 2018. We are also the largest
hydrocarbons recycling business in Australia.
Liquids and Industrial Services net
revenue increased 3.8% to $440.2
million, driven by increased volumes
in hazardous and packaged waste
together with strong performances
in the contracted Industrial Services
markets. The second half of FY2018
saw an increase in revenue of 4.4%
compared to the same period
in FY2017.
An increased focus on cost control
and internalisation of waste disposal
saw EBITDA improve 7.0% to $63.0
million while EBITDA margins were
14.3%, up from 13.9% in FY2017.
The Hydrocarbons business saw
increased demand for fuel oil and base
oils across most markets, supported
by improved commodity pricing and
increased refinery production uptime
across all facilities.
The new management team in the
Liquids and Hazardous business
has driven revenue growth while
maintaining cost discipline. Our
Industrial Services business improved
overall EBITDA performance
underpinned by the contracted
services market. The pipeline for
resources and infrastructure services
remains strong, supported by the
re-signing of a number of major
contracts. Further optimisation of
the sales function to secure volumes
and increase market share remains
a key focus into FY2019.
This business segment should be a
major beneficiary from the Toxfree
acquisition and the integration of the
businesses has commenced to ensure
the benefits are fully realised.
FY2018
FY2017
FY2018
V FY2017
Net external revenue
$ million
440.2
424.0
EBITDA
EBITDA margin
EBIT
EBIT margin
$ million
%
$ million
%
63.0
14.3
35.5
8.1
58.9
13.9
32.1
7.6
3.8%
7.0%
10.6%
Represents underlying results.
EBITDA
($ millions)
$63.0m
55.8 57.5
58.9
63.0
13.2
13.9
7.6
7.6
14.3
8.1
11.7
6.1
FY
2015
FY
2016
FY
2017
FY
2018
EBITDA
EBITDA margin
EBIT margin
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3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
OPERATING ENVIRONMENT
RECYCLING CRISIS
OR OPPORTUNITY?
THE IMPACT OF CHINA’S NATIONAL SWORD POLICY
Waste has increasingly become a
common topic of conversation in schools,
on our televisions, across social media
and importantly, in the top echelons of
government. Now is the time to harness this
wide‑reaching interest and start making
lasting changes to develop a sustainable
local recycling industry.
Until recently, historically strong overseas
markets for recovered commodities made
it more attractive to export some of our
recyclable waste – instead of managing
it domestically.
During FY2018, China dramatically
changed that dynamic, imposing
restrictions on the imports of 24 types
of materials – known as the National
Sword policy. China had previously
imported more than 30 million tonnes of
recyclable waste from all over the world
each year. As expected, the magnitude
of this change has had a significant
impact both here and across the world.
The key issue for Australia’s recycling
industry from the National Sword
policy is the new, far stricter standards
for mixed paper and mixed plastics –
the products traditionally recovered
from the commingled kerbside
recycling bins Australians diligently
put out each week. Whilst this is a
convenient way for householders to
separate their recyclable materials –
fibre (cardboard and paper), glass,
plastics and metals – to be recovered,
it does create complexities at the
processing stage.
Plastics and fibre can still be imported
into China, however the National
Sword policy now requires a very low
level of contamination. The majority of
kerbside recycling systems simply aren’t
able to produce a material stream with
such a low level of contamination.
The strategic, long-term answer is
not to keep finding the next off-shore
market for our commingled refuse,
but to encourage investment in the
domestic processing capacity. We also
2020
Cleanaway Waste Management Limited need to educate, sort, recycle and reuse
locally based on a set of consistent
standards. This will take a much
stronger level of alignment between
all levels of government as well as
commitment from industry to use an
increased percentage of recyclable
materials in the production of new
goods, and, of course, the continuing
education and partnership with
communities all over Australia.
Greater Education Required
Australians remain strongly
supportive of more responsible waste
management and recycling policies.
An Australian Council of Recycling
survey, conducted earlier this year,
found that 91% of respondents
support a national action plan
on recycling, and 88% support new
requirements for packaging to be
recyclable and for national education
to help reduce contamination in
kerbside recycling.
We are working closely with both
councils and the broader community
to reduce the level of contamination
in commingled recycling. We continue
to invest in community education
teams, and are utilising social media
to educate the community on good
recycling practices.
To help consumers improve recycling
behaviours at home, and make more
informed choices on how they dispose
of packaging waste, the Australian
Packaging Covenant Organisation
(APCO), in conjunction with Planet Ark,
launched the Australasian Recycling
Label earlier this year, clearly outlining
what product packaging is made from
so consumers can correctly recycle
it after use. Whilst it’s a voluntary
scheme, it is gaining support.
The Need for a Coordinated
National Response
A meeting of Australian Environment
Ministers in April 2018 endorsed a
target of making 100% of Australian
packaging recyclable or reusable by
2025. Whilst this is an encouraging
commitment, the pathways to this goal
remain unclear. A coordinated national
response, and effective partnerships
at all levels, is required to sustainably
respond to this crisis and ensure
that we’re working to a consistent
and transparent set of standards
across the board.
We see this ‘crisis’ as an opportunity
to disrupt the complacency which has
clouded our good intentions. We will
continue to agitate for a coordinated
response to the challenges the
industry faces – to make a sustainable
future possible, for all Australians.
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3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT SUSTAINABILITY REVIEW 2018
MAKING A SUSTAINABLE FUTURE
POSSIBLE FOR PEOPLE
A better place to work
At Cleanaway, we believe that our mission of ‘making a sustainable future
possible’ includes making a sustainable future possible for our people.
To do this, we’re focused on making Cleanaway a better place to work.
Workforce Profile
Gender
18%
Female
Age
5,900+
Employees
82%
Male
Employment type
Note: includes Cleanaway and Toxfree employees
Strength through diversity
In FY2018 we maintained our focus
on embedding a culture which values
diversity across all aspects of our
business. Our workforce is made up of
people with diverse values, backgrounds,
skills, experiences and needs. Through
embracing this diversity we can create
a more robust business, as well as
strengthening our connection with and
care for our people, our customers, and
the community.
Our Diversity & Inclusion Engagement
Plan 2017 – 2020 was launched in
FY2018, and is focused on building
a culture of inclusiveness where our
employees feel engaged, awareness
of behaviours is increased, and biases
are recognised, positively explored,
and managed.
The plan is designed to foster a culture
that values difference and promotes
opportunities for all employees.
It includes initiatives to empower
employees to be more conscious and
inclusive in their approach, providing
opportunities for teams to positively
impact their immediate workplace and
drive change from within. The plan is
built on five pillars, to be governed and
continuously reviewed by the Enterprise
Leadership Team along with Cleanaway’s
Diversity and Inclusion Working Group.
<20
20-29
30-39
40-49
50-59
60+
Full time
Part time
Casual
%
1
15
24
29
24
7
%
86
3
11
Workforce profile:
Become a diversity employer of choice
for ability, religion, ethnicity and race.
Pay equity:
Balance gender equality.
Talent management:
Think inclusively.
Engagement and retention:
Provide flexible working
arrangement options.
Diversity awareness:
Increase employment opportunities
for all through education and
work experience.
2222
Cleanaway Waste Management Limited Diversity & Inclusion
Engagement Plan 2017 – 2020
FY2018 Focus and Achievements
Balancing gender – attracting
and retaining key talent to lead
from the front
A focus through FY2018 has been
on increasing female representation
at senior levels across our business.
We know that increased female
representation at the senior level
drives increased female participation
across all other levels of the business.
2018 Workplace Gender Equality
Agency (WGEA) Report
Each year we submit an annual gender
report to WGEA. Key highlights and
improvements from the defined period
of April 2017 – March 2018 are:
• An increase in female promotions,
in comparison to the previous year,
with 40.2% of employees receiving a
promotion being women (compared
to 31.7% in 2017).
– 18.6% of all manager promotions
were awarded to women (12.2%
in 2017)
– 58.8% of all non-manager
promotions were awarded to
women (41.2% in 2017)
• We have seen a significant reduction
in the percentage of female
managers resigning from 23.5% in
2017 to 14.5% in 2018.
In FY2019 we will maintain this focus,
extending it across the Toxfree and
Daniels Health businesses.
Talent and Capability
Cleanaway’s Leadership Model was
also launched in FY2018 – and is built
around creating a performance-based
culture – a culture of accountability,
focused on winning, without
consistent intervention.
Built around three C’s – Capability,
Commitment and Compatibility – the
model is designed to:
• Provide a high degree of clarity
around performance expectations
• Build a new generation of leaders
who passionately believe in our
shared ‘Why’ and fully understand
our ‘How’ and ‘What’
• Create new and exciting
opportunities for our people to
succeed within an agreed framework
of performance and behaviours
• Communicate simply, well and often
• Lead by example, and from the front.
REFLECT – Reconciliation Action Plan (RAP) 2016 – 2018
We commenced our reconciliation journey in June 2016 when we introduced our first Reflect RAP.
Our Reflect RAP has focused on building foundations and awareness around relationships, respect and opportunities
for reconciliation. Some of our achievements to date include:
• Establishing our RAP Working
Group, supporting our
reconciliation journey through
the delivery of the RAP
• Introducing Acknowledgement
of Country protocols and
Aboriginal and Torres Strait
Islander (ATSI) cultural
awareness training
• Developing our RAP brand with
our Aboriginal artwork – ‘My
Country My Community’ by
Edikan (2016) from Noongar
Country in Western Australia
• Introducing new supplier
relationships for labour hire
arrangements, cleaning services,
office supplies and more
• Formal sponsorships of annual
• Establishing a joint venture
Reconciliation Week and
NAIDOC events
with Karlayura Group, a 100%
Aboriginal owned profit for
purpose business
• Donations to Kowanayama
Aboriginal Shire Council,
QLD – waste collection truck
and fruit trees and Cherbourg
Aboriginal Mission, QLD –
plant sorting equipment
• Partnering with Murdi
Paaki Regional Enterprise
Corporation to deliver the CDS
program to Western NSW
INNOVATE – Reconciliation Action Plan (RAP) 2018 – 2020 DRAFT
Our learnings and insight gained over the last two years is forming a basis for developing our next Innovate RAP which
is focused on ensuring engagement activities that are meaningful, mutually beneficial and sustainable.
PROVING IT’S NEVER TOO LATE TO CHANGE YOUR PATH
Apprenticeships and traineeships help thousands of Australians each year to build
strong careers. They’re important not only for people starting out in their careers,
but also for those making a change – to a new role or industry.
Darren Carter was working as a supervisor in the civil construction industry before he
decided to make a change and start a mature aged apprenticeship to become a heavy-
vehicle mechanic with our Solid Waste Services team at Narangba in Queensland.
Cleanaway has offered a positive working environment for him as he completes his
qualification, with a solid career path and flexibility. “It’s provided me with a good
family and work balance, as I get to spend time with my wife and son while still
being able to provide for them”, he says, “it’s one of the best decisions I’ve made.”
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3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT SUSTAINABILITY REVIEW 2018
MAKING A SUSTAINABLE FUTURE POSSIBLE FOR PEOPLE
A better approach to safety
At Cleanaway, we believe that everyone should be able to go
Home Safe, every day. As we continue to work toward Goal
Zero, the safety of our people, and the communities in which
we work, comes first, last and everything in between.
We are firm advocates for visible safety leadership across
our business, but also believe that safety is a personal
responsibility for every staff member. Through this top‑down
and bottom‑up approach, we believe that we will reach Goal
Zero by choice not chance.
FY2018 Safety Performance
One of the key safety performance
measures we use across our
business is our Total Recordable
Injury Frequency Rate (TRIFR), which
is calculated in the number of
recordable injuries for every million
hours worked.
However, any injury is avoidable, and
we remain focused on our journey
toward Goal Zero.
At the end of FY2018 both
Cleanaway and Toxfree’s TRIFR has
continued to decline, down 18.4%
from 7.6 for FY2017 to 6.2. This is
an overall year-on-year reduction in
TRIFR since FY2012.
Leading indicators to embed
safety across all levels
Our annual TRIFR measures the
effectiveness of the safety measures
put in place across the year to
produce a quantitative result.
To reach Goal Zero, we are focusing
on leading safety indicators to ensure
safety is a key focus, not only for all
levels of management, but for every
one of our people:
• Safety Walks enable management
and workers to understand that
controls are in place for the task
at hand and to ensure they are
satisfactory. By demonstrating
safety leadership and
understanding our worksite safety
processes we further Cleanaway’s
Home Safe value.
• Closing of corrective actions within
agreed timeframes is key to ensure
that we embed and verify our safety
processes and behaviours.
• HSE training continues to be
a key focus for the operational
teams ensuring skills and
competencies are verified. Improved
reporting and site level visibility
is ensuring best practice with
licensed and authorised operators
in the field.
TOTAL RECORDABLE
INJURY FREQUENCY
RATE
6.2 TRIFR
▼18.4% from FY2017
Improved safety partnerships
to reach Goal Zero
As we work to fully integrate
the Toxfree and Daniels Health
businesses into Cleanaway, we have
realigned our Health and Safety focus
to better support our Operating Model.
This focus will strengthen the
partnership and integration of our
Health and Safety function with our
operational leadership across all levels
and areas of our business.
2424
Cleanaway Waste Management Limited 30
TRIFR
FY2012 - FY2018
e
t
a
r
25
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
20
15
10
5
0
26.6
16.7
12.6
10.6
Employees
Contractors
10.8
1.6
9.2
7.6
1.0
6.6
6.2
0.5
5.7
2012
2013
2014
2015
2016
2017
2018
SAFETY FOR ALL SEASONS
Over the past few years we’ve seen a seasonal trend emerge, where injuries spike over the Christmas and New
Year period. This is due to a number of factors – such as an increase in the number of cars on the road, children
on school holidays, and increased demand on our workforce as employees take leave, coupled with being one of
the busiest times of the year for the waste management industry. In FY2018 we launched a targeted campaign
to increase safety mindfulness amongst our staff. Led by CEO and Managing Director, Vik Bansal, it was a key
focus for all levels of leadership from November through to January. By reminding our team to be mindful of
their personal safety, look out for the safety of their teammates, and speak up if something wasn’t right, we
maintained our TRIFR at levels far below the traditional seasonal spike we’ve seen in past years. This will continue
to be an area of focus for Cleanaway into the future, making sure we can all go Home Safe, every day.
25
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
SUSTAINABILITY REVIEW 2018
MAKING A SUSTAINABLE FUTURE POSSIBLE FOR PEOPLE
Better community partnerships
Lasting change takes partnership – and we are committed
to building better partnerships with the community to
make a sustainable future possible for all Australians.
Investing in the community
In recent years we have seen a
marked change in the community’s
interest in recycling and waste.
Our education teams work closely
with Australian communities –
from schools and kindergartens,
to shopping centres, apartment
buildings, community fairs and
businesses to improve recycling
behaviours – at work and at home.
Harnessing social media to
engage a new generation
Cleanaway has been processing
recyclables on behalf of our
customers for almost 30 years.
In May 2018, as councils were
grappling with the impact of China’s
National Sword policy, limiting the
import of low-grade plastic from
overseas markets, Cleanaway launched
a national social media campaign to
educate households and communities
about contamination – what it is, and
how to keep it out of the recycling bin.
Over two months we shared 15 original
videos, a number of animations, as well
as a series of downloadable posters
and educational articles, reaching some
200,000 people. We also surveyed our
social media followers, the results of
which allowed us to create additional
content to further correct recycling
myths. Our videos were viewed by over
150,000 1 people, with content creating
2626
500,000 1 impressions, and shared,
downloaded and commented on by
78,000 1 residents, community groups
and councils around the country.
Australians are overwhelmingly
supportive of sustainable waste
management practices. We know
that it can be hard to make the most
of your kerbside recycling service,
and recycle more while keeping
contamination levels low. We’re here
to help make that easier for households
all over Australia.
1 Facebook and LinkedIn only.
Educating the next
generation to make a
sustainable future possible
In FY2018 our education team in NSW
delivered the kNOw Waste program
to 711 schools across NSW, reaching
more than 21,000 students.
The program is delivered in preschools,
primary schools and secondary
schools across NSW to promote
the importance of sustainability
and recycling. The program aims
to improve children’s knowledge about
waste issues, while teaching positive
environmental behaviours.
Taught by a team of qualified
Environmental Educators, the program
has been delivered to around 200,000
students over the past decade. The
team also offers community education
classes and craft reuse workshops, run
in local libraries during school holidays.
Cleanaway Waste Management Limited 1,250+
School Education Sessions
30,000+
students engaged
105+
Community
Information Sessions
at various locations
around the country
$795,000+
donated
to support more than
85+
communities
around Australia
HELPING THE KOWANYAMA COMMUNITY GET BACK ON THE ROAD
SUPPORTING COMMUNITIES TO MAKE A SUSTAINABLE FUTURE POSSIBLE
The Kowanyama Aboriginal Shire Council in Queensland reached out to Cleanaway in the hope that we may be able
to donate a used side lift waste collection vehicle to the community. The Council’s vehicle was over 12 years old and
in a poor state of repair. Despite the best efforts of local mechanics, it was off the road for repairs more often than
it was working, and the cost to repair was becoming a huge expense for the small community.
Kowanyama is a remote Indigenous community located more than 600km north-west of Cairns. The community has
a population of approximately 1,200 people, with more than 90% identifying as Indigenous. The community is accessible
by road for up to five months of the year during the dry season, and only accessible by air during other times.
After reviewing our fleet and upcoming contract requirements, we identified a side lift vehicle that would meet
Kowanyama Council’s needs. It was given a full service and upgrade by our Noosa team to meet the challenging
environment it would operate in and was transported north to be donated to the Council.
Not only does this help the local council and support the Kowanyama community, it’s another way we’re delivering
on our Reconciliation Action Plan, and honouring our commitment to make a sustainable future possible for all
Australians – including Aboriginal and Torres Strait Island communities.
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3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT SUSTAINABILITY REVIEW 2018
MAKING A SUSTAINABLE FUTURE POSSIBLE FOR PEOPLE
Better customer relationships
Customer for Growth is our first strategic pillar – and we’re
investing in our people, systems and processes to deliver
a best in class and consistent customer experience across
all customer touchpoints.
Stronger partnerships to
improve service
In FY2018 we realigned our Customer
Service team to better support our
Operating Model, strengthening local
focus on customer service. Customer
Service Managers are embedded
within each business unit, working
with leaders, customer service and
operations teams to drive measurement
and understanding of the local issues
impacting customers. In partnership
with operational leadership teams,
Customer Service Managers can
facilitate change to positively impact
our customers and consistently improve
the quality of every interaction they
have with us.
Making things easier
We know that our customers have
better things to do than spend their
time managing their waste. And we
know just how much customers value
a good customer service experience
– every time.
In FY2018 we began a project to
improve customer access as well
as the quality of each customer
interaction.
We launched new customer contact
centres in each mainland state to
service our Liquids metro customers,
and also in NSW and QLD to service
our Industrial Services’ customer
base. This improved infrastructure
and dedicated focus will make it
easier and simpler for our customers
to manage their waste services, and
to have queries resolved quickly and
effectively. In FY2019 we will continue
to build capability across the network.
We have also recently launched our
new customer portal, accessible
from the home page of our website.
This portal will provide our customers
with three core functions – ‘My
Bill Explained’, ‘Pay My Bill’, and
‘View My Account’. This will provide
on-line access to customers’ account
information, including the ability
to view, download, and print key
account documents, including invoices
and statements. Customers can also
pay their bills online through our new
customer portal. We’re making it easier
for customers to view, understand and
pay invoices in one location.
Putting our customers at the
centre of the conversation
‘If you’re not
serving a customer,
you are serving
someone who is’.
In FY2018 we launched our ‘Think
Customer’ program which covers all
sites and all roles. As this program
is embedded into the way we work,
we will ensure that each and every
person in our team understands the
impact they have on our customer,
highlighting their unique line of sight.
At Cleanaway – every customer is
important – from the largest, to the
smallest. We’re on a journey to ensure
that all our employees – no matter
where they work or what they do
– understand the impact their role
has on our customer, and how
we can work together to make a
sustainable future possible.
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Cleanaway Waste Management Limited 29
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORTOur Customer PrinciplesCaring about your businessWhether it’s big or small, complex or simple – we know you need a partner who takes the time to care about you and your business.Making it easyWe know that you’ve got better things to do than spend hoursmanaging your waste – you’ve got a business to run. We’re here to make it easy – meaning you can get back to what you do best.Doing what we sayYou can trust us that when we say we’ll do something – it’ll bedone. And if for whatever reason it can’t, we’ll tell you about it,and offer you a solution as quickly as we can.Giving you real options We know that sometimes all you need is a simple service, while at other times you need a service ‘with the lot’. We’ll give you real options and explain the detail around each so that you can make an informed decision.Always delivering you valueNo matter how much you spend with us, we will always deliver you real value on that spend, so you can feel confident that you always win when you deal with us. SUSTAINABILITY REVIEW 2018
MAKING A SUSTAINABLE FUTURE
POSSIBLE FOR THE PLANET
Better environmental outcomes
At Cleanaway, we believe in making a sustainable future possible. This
means looking at waste differently. We’re consistently looking for ways
to reduce the impact of our operations, working with our customers to
help them better manage their impacts, and of course always looking for
new ways to recover more from what others see as ‘waste’.
Structured to drive
better outcomes
As Australia’s leading total waste
management solutions company,
we understand our responsibilities
to all our stakeholders, including the
communities in which we operate,
customers, regulators and shareholders.
Australians trust us to safely and
sustainably manage their waste
– a responsibility we take seriously.
We are focused on providing strong
environmental leadership and
partnership across our operations to
drive better environmental outcomes
– including regulatory performance,
improvement programs and stronger
engagement with state-based
environmental regulators.
This is supported across all levels
of leadership – with environmental
specialists aligned to our strategic
business units who understand the
specific requirements of each area of
our business and our national network
of licensed waste management sites.
Our Environment team is embedded
into each geographic area to work
alongside our operational leaders,
providing ongoing expertise and
support, and to consistently challenge
the way we do things to ensure we’re
servicing our customers in a way that
makes a sustainable future possible.
A standardised approach
to sustainable management
of prized assets
Standardisation of better environmental
practice across all states is a key area
of focus for our Environment team.
We operate within the environmental
regulatory framework prescribed by
each state and territory.
Each employee and contractor is
responsible for ensuring that regulatory
obligations are met and environmental
risk is managed in accordance with our
Environment Policy.
Effective management of our
environmental obligations is
underpinned by our environmental
management system, which is certified
to ISO14001 by an internationally
accredited body, also providing
the framework for continuous
improvement and supporting our audit
and governance activities.
During FY2018 the team undertook a
targeted environmental review across
our prized assets to identify both site-
specific improvement programs and
opportunities for standardisation across
our business. These standardisation
opportunities included:
• Stormwater Management
• Air Quality Management
• Tank, Pit and Bund Management
• Chemical Management
• Waste Acceptance.
Further work to embed standardised
practices and environmental
management efficiencies across the
enterprise will continue in FY2019.
Education, partnership
and advocacy
As a nation, we have a significant
challenge ahead of us following China’s
National Sword policy, which has seen
allowable levels of contamination
in recyclable materials drop from
20% to 0.5%.
We have always had a strong history
of working with customers and the
community to improve recycling
practices – including sorting at the
source and offering tailored collection
services to improve recovery rates and
3030
Cleanaway Waste Management Limited An innovative solution to Australia’s growing e‑waste problem
E-Waste is one of Australia’s fastest-growing waste streams – and includes items such as computers,
televisions, printers, fax machines and mobile phones. E-waste contains potentially toxic materials such
as mercury and lead, which pose an environmental hazard if disposed of without proper processing. It also
means that the valuable raw materials they contain – such as gold, silver and platinum – would be lost to
landfill. When disposed of at a reliable recycling plant and handled correctly, at least 90 to 95% of e-waste
components can be recycled. This greatly reduces the environmental impacts of landfill dumping, pollution
and exporting overseas, as well as the need to source new materials.
To combat this growing issue, we operate under the National Computer and Television Recycling Scheme
(NCTRS) to deliver a true end-of-life solution for e-waste. Cleanaway owns the rights to BluBox in Australia,
a Swiss-designed processing technology. With two of these units, located in St Marys in New South Wales
and Dandenong in Victoria, we can cater for most of the e-waste produced in Australia. The BluBox eliminates
the risks associated with manual dismantling, such as exposure to mercury. It is designed for next generation
e-waste, including flat panel displays, smart phones, tablets and laptops, as well as a wide variety of domestic
e-waste such as toasters and hair dryers.
The BluBox breaks the e-waste down under
negative pressure and extracts the mercury
vapour and mercury fluorescent dust, including
that from LCD backlighting tubes. An optical
sorter then separates the BluBox outputs
into the≈major recyclable components.
These can include plastics, ferrous metals,
and aluminium. An added benefit of the
BluBox technology is that it allows e-waste
recycling to take place within Australia in
a safe and secure manner.
reduce the level of contamination
entering the recycling stream.
Following this significant change to our
operating environment, we need a new
level of partnership to continue to
deliver on the level of resource recovery
Australia wants.
We are continuing to work with our
customers and the community to drive
for lower contamination rates – which
in some areas has seen us work with
our municipal customers to inspect bins
for contamination before collection. We
have also partnered with municipalities
to drive improved education to ensure
householders are aware of what can
and can’t be recycled through their
kerbside commingled recycling bins.
Sustainable landfill
management
Whilst we work toward improved
resource recovery rates, there remains
a level of residual waste which with
today’s technology we are unable to
sustainably recycle. These materials
are managed through our network of
highly engineered landfills.
Our landfills are designed to allow
for the efficient capture of renewable
energy, in the form of landfill gas.
Harnessing the naturally produced
landfill gas we were able to generate
over 140 million kWh of renewable
energy in FY2018, enough to power
more than 28,700 homes.
Driving innovation for a
brighter future
As an active member of the Australian
Packaging Covenant, we continue to
work with industry and customers on
innovative solutions to ensure that
more of the waste that Australian
businesses generate can be recycled.
Looking to the future, our Footprint
2025 strategy is focused on ensuring
that our national network of sites and
processing facilities – such as our Perth
Materials Recovery Facility (MRF) and
our Hemmant Recycling and Resource
Recovery Facility – deliver improved
sorting capabilities to ensure that we
can produce a higher quality stream of
recyclable commodities.
We are also supporting investment
into new technologies such as our
joint venture with ResourceCo to open
Australia’s first Process Engineered Fuel
(PEF) plant in Wetherill Park, NSW. PEF
is an alternative fuel source – used as
a substitute for fossil fuels in industrial
applications, and is created from dry
commercial & industrial waste along
with mixed construction & demolition
waste (after recyclable commodities
such as metal, clean timber and inert
metals are recovered).
31
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT SUSTAINABILITY REVIEW 2018
MAKING A SUSTAINABLE FUTURE POSSIBLE FOR THE PLANET
Better management
of greenhouse gas emissions
We continue to take action on climate change through the responsible
management of our landfill gas emissions, by investing in the efficiency
of our fleet and by helping our customers and the community to better
manage their waste impacts.
Fleet Profile
4,000+
Vehicles
Heavy vehicles 1
Light vehicles 2
Yellow vehicles 3
70%
15%
15%
A continued focus on
greenhouse gas emissions
With a fleet of more than 4,000
vehicles used to collect and transport
waste for treatment, processing,
recycling and disposal, combustion
of diesel fuels is one of the largest
contributors to our Scope 1 greenhouse
gas emissions which totalled
approximately 712 kt CO2-e in FY2018.
Second only to emissions from landfill
gas management, combustion of diesel
in our fleet contributes 20% of our
total Scope 1 emissions.
In FY2018 we have continued our
focus on a range of initiatives to reduce
the emissions impact of our fleet
operations, primarily driven by engine
technology, vehicle maintenance, route
planning and driver behaviour.
Engine Technology
Our company-wide fleet standards
require all new heavy vehicles to
comply with Euro 5 emission levels at a
minimum. As we replace older vehicles
in our fleet, with vehicles meeting Euro
5 emission levels, we expect to see a
reduction in fuel use and consequently
greenhouse gas emissions. Euro 5
standards are global standards which
have been developed to reduce
the emissions of carbon monoxide,
hydrocarbons, oxides of nitrogen,
and particulate matters which are
considered harmful to human health.
In addition to the Euro 5 diesel engine
technology, a number of our vehicles
also run with an additive (AdBlue), used
with the Selective Catalytic Reduction
system to reduce emissions of oxides
through nitrogen from the exhaust of
diesel vehicles.
Our maintenance practices are
designed to meet or exceed
manufacturer’s requirements which
ensure our vehicles run at the correct
state of tune, optimising fuel use.
1 All heavy vehicle cab chassis (with or without an associated heavy body asset) with a Gross Vehicle Mass (GVM) of greater than or equal to 4.5 tonnes, which
was specifically designed for on-road usage. Examples include; prime movers, solids collection vehicles.
2 Any motor vehicle less than 4.5 tonne Gross Vehicle Mass (GVM). Examples include; cars, pick-up trucks, panel vans, utes, light trucks.
3 All powered mobile equipment, which was specifically designed for off-road usage. Examples include; landfill compactors, forklifts, bulldozers, excavators,
backhoes, telehandlers, tractors.
3232
Cleanaway Waste Management Limited Cleanaview improving environmental efficiency
In February 2018 we commenced a contract for the NSW Central Coast Council’s hard waste collection. A
defining feature of the contract is the Cleanaview system, introduced at the beginning of the contract. As
well as providing additional visibility and safety for our drivers, the Cleanaview system also allows for better
optimisation and increased efficiency of our fleet, leading the way in sustainable logistics.
Cleanaview allows us to optimise our routes by maximising capacity and minimising wasted kilometres. By
allowing us to map the length of the route and volume collected, Cleanaview enables us to better utilise the
entire vehicle capacity in route planning. The smart technology also identifies alternative collection routes
which could further optimise efficiency. These changes allow us to reduce what we call “dead points” where
one vehicle passes a collection point on its route which is actually collected by another vehicle. Through a
combination of these improvements and operating efficiencies, the Central Coast fleet has minimised wasted
kilometers, and in doing so has reduced fuel usage and greenhouse gas emissions.
Cleanaview also gives our drivers new visibility of the waste they’re collecting. Side Loader vehicles are fitted
with Hopper cameras that allow the driver to view the waste as the bins are being emptied, providing them
with an option of taking photos should they detect contamination from the resident. This allows for early
identification of any contamination or problematic waste and provides for greater contamination reporting
with images, providing Councils with valuable data about how and where their waste streams are being
contaminated and enables targeted education campaigns for residents.
33
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT CORPORATE INFORMATION
BOARD OF
DIRECTORS
Mark CHELLEW
Vik BANSAL
Ray SMITH
Mike HARDING
Chairman of the
Remuneration and
Nomination Committee and a
Member of the Health, Safety
and Environment Committee
Independent Non-Executive
Director since 1 March
2013. Mike is the Chairman
of Lynas Corporation Ltd
(since January 2015) and
Downer EDI Limited (since
November 2010). Formerly,
he was Chairman of Roc
Oil Company Limited
(resigned December 2014)
and Non-Executive Director
of Santos Limited (resigned
May 2014). Mike has
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. He
holds a Masters in Science,
majoring in Mechanical
Engineering.
Chairman of the Audit
and Risk Committee
and a Member of the
Remuneration and
Nomination Committee
Independent Non-Executive
Director since 1 April 2011.
Ray is currently a Non-
Executive Director of K&S
Corporation Ltd (since
February 2008). Formerly,
he was Non Executive
Director of Crowe Horwath
Australasia Limited (resigned
January 2015), Warrnambool
Cheese and Butter Factory
Company Holdings Limited
(resigned May 2014) and
Trustee of the Melbourne
and Olympic Parks Trust
(retired November 2016).
Ray has significant corporate
and financial experience
in the areas of strategy,
acquisitions, treasury
and capital raisings,
and was Chief Financial
Officer of Smorgon Steel
Limited Group for 11
years. He holds tertiary
qualifications in Commerce.
He is a Fellow of CPA
Australia and a Fellow
of the Australian Institute
of Company Directors.
Independent
Non‑Executive Director
and Chairman of
the Board
Independent Non-Executive
Director since 1 March 2013
and was appointed Chairman
on 30 September 2016.
Mark is a Non-Executive
Director of Infigen Energy
Limited (since September
2017), Virgin Australia
Holdings Limited (since
January 2018) and Caltex
Australia Limited (since April
2018). Formerly, he was
the Executive Chairman
of Manufacturing Australia
Limited (retired September
2017) and the 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.
He holds a Bachelor
of Science (Ceramic
Engineering), Masters
of Engineering (Mechanical
Engineering) and a Graduate
Diploma in Management.
Chief Executive Officer
and Managing Director
Appointed on 3 August 2015,
and appointed to the Board on
20 August 2015. Vik has 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,
he was President and Chief
Operating Officer for Valmont
Industries Inc., a US$3.3 billion
NYSE listed global engineering
and manufacturing company
based out of Omaha, Nebraska
USA. Prior to becoming the
President and COO, he was
the Group President for Global
Engineered Infrastructure
Products segment of Valmont
Inc. and Group President Asia
Pacific. Prior to Valmont, he
held senior roles with OneSteel
Ltd and Eaton Corporation.
He holds a Bachelor of Electrical
Engineering with Honours and
an MBA. Vik is a founding
board member of NWRIC
(National Waste and Recycling
Industry Council) and a member
of Chairman’s Panel of the Great
Barrier Reef Foundation.Vik
has completed the Advanced
Management Program from
INSEAD. He is a Fellow of the
Australian Institute of Company
Directors and a Fellow of the
Institute of Engineers Australia.
3434
Cleanaway Waste Management Limited Terry SINCLAIR
Member of the Audit
and Risk Committee
and a Member of the
Remuneration and
Nomination Committee
Independent Non-Executive
Director since 1 April 2012.
Terry is a Director of PMP
Limited (effective October
2017) and NetGet Holdings
Limited. Formerly, he was
the Chairman of Marrakech
Road Pty Limited, Managing
Director of Service Stream
Limited, Chairman of AUX
Investments (jointly owned
by Qantas and Australia
Post), Director of Sai Cheng
Logistics (China), Director
of Asia Pacific Alliance (HK)
and Head of Corporate
Development at Australia
Post. He also provides M&A
advisory services to private
equity and is currently an
advisor to KPMG in Saudi
Arabia and India. 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). He
holds a Masters of Business
Administration (MBA),
a Graduate Diploma in
Management and tertiary
qualifications in Mining,
including Surveying.
Emma STEIN
Philippe ETIENNE
Member of the Audit
and Risk Committee
and a Member of the
Health, Safety and
Environment Committee
Independent Non-
Executive Director since
1 August 2011. Emma is
a Non-Executive Director
of Alumina Limited (since
February 2011) and Infigen
Energy Limited (since
September 2017). Formerly,
she was a Non-Executive
Director of DUET Group
(resigned May 2017) and
Programmed Maintenance
Services Ltd (resigned
October 2017). Emma
has significant corporate
experience within industrial
markets and was the UK
Managing Director for French
utility Gaz de France’s energy
retailing operations. She
holds tertiary qualifications
in Science and a Masters
of Business Administration
(MBA). Honorary Fellow of
the University of Western
Sydney and Fellow of
the Australian Institute
of Company Directors.
Chairman of the Health,
Safety and Environment
Committee and a Member
of the Audit and
Risk Committee
Independent Non-Executive
Director since 29 May 2014.
Philippe is a Non Executive
Director of Lynas
Corporation Limited (since
January 2015). Formerly, he
was the 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). Philippe
has 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.
He holds a Bachelor of
Science in Physiology and
Pharmacology and a Master
of Business Administration
(MBA). He is a Graduate of
the Australian Institute of
Company Directors and has
completed post-graduate
qualifications in marketing.
35
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT CORPORATE INFORMATION
SENIOR
EXECUTIVE TEAM
Vik BANSAL
Chief Executive Officer and Managing Director
Appointed on 3 August 2015, and appointed to the Board on 20 August 2015.
Vik has 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, he was President and Chief Operating Officer for Valmont
Industries Inc., a US$3.3 billion NYSE listed global engineering and manufacturing company based out of Omaha, Nebraska USA. Prior
to becoming the President and COO, he was the Group President for Global Engineered Infrastructure Products segment of Valmont Inc.
and Group President Asia Pacific. Prior to Valmont, he held senior roles with OneSteel Ltd and Eaton Corporation. He holds a Bachelor
of Electrical Engineering with Honours and an MBA. Vik is a founding board member of NWRIC (National Waste and Recycling Industry
Council) and a member of Chairman’s Panel of the Great Barrier Reef Foundation. Vik has completed the Advanced Management Program
from INSEAD. He 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 & Audit. Since leaving BHP Billiton,
Brendan has held CFO roles, including CFO for Inova Resources (previously named Ivanhoe Australia). Brendan has a Bachelor of Business,
and is a member of CPA Australia, and is a Graduate of the Australian Institute of Company Directors.
From left to right: Jeff Proctor, Michael Bock, Tim Richards, Johanna Birgersson, Brendan Gill, Vik Bansal, Mark Crawford, Dan Last, Stephen Freeman
3636
Cleanaway Waste Management Limited 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 20 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 Graduate of the Australian Institute of
Company Directors.
Mark CRAWFORD
Executive General Manager, Operations, Solid Waste Services
Mark joined Cleanaway as Executive General Manager, Enterprise Services in February 2014 and became Executive General Manager,
Operations, Solid Waste Services in August 2017. 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. His last role at Australia
Post was General Manager for the International business. Mark holds qualifications in Information Technology.
Tim RICHARDS
Executive General Manager, Operations, Liquids and Health Services
Tim joined Cleanaway as Executive General Manager, Operations, Liquids and Health Services in August 2018. Prior to joining Cleanaway,
Tim was the CEO for TOMRA Cleanaway, the network operator for the Container Deposit Scheme in NSW. He has held various senior and
executive roles including as CEO for Dexion Group and Divisional Chief Executive at Fletcher Building. Tim has over 20 years experience in
manufacturing industries across Australia and New Zealand and holds a Bachelor of Business, Accountancy and completed the Advanced
Management Program. Tim is a Fellow of the Institute of Chartered Accountants in Australia and New Zealand.
Stephen FREEMAN
Executive General Manager, Growth and Services
Stephen joined Cleanaway in November 2013 and has held various senior roles including General Manager for SA/NT and WA businesses
before becoming Executive General Manager (EGM), Enterprise Operations in August 2016 and EGM, Operations, Liquid Waste and
Industrial Services in August 2017. Recently, Stephen was appointed EGM, Growth and Services to align with Cleanaway’s new operating
model following the Tox Free acquisition. With more than 20 years experience in senior positions across the waste management,
transportation and logistics industries, he has considerable experience in establishing a high-performance team culture, demonstrating a
strong commitment to safety with an ongoing focus on sustainable business improvements deliveries. Prior to joining Cleanaway, Stephen
held a number of senior leadership roles at Toll Holdings, including as General Manager Australia – Parts Logistics (formerly AutoLogistics),
a contract business servicing the automotive and industrial industries.
Jeff PROCTOR
Executive General Manager, Commercial
Jeff joined Cleanaway in May 2017 as Executive General Manager, Commercial. Jeff has more than 25 years experience as a finance
professional working throughout Australia, Europe and Asia. Prior to joining Cleanaway, Jeff held the position of CFO with the Patrick
Group of companies, part of the Asciano Group. Along with his previous role as CFO at Chep Asia Pacific, Jeff brings substantial commercial
experience from the industrial and logistics sectors. In these roles, Jeff led significant business development and business transformation
activities. Jeff also has considerable experience in the media sector where he worked for major listed companies in Europe and Australia.
Jeff is a member of the Institute of Chartered Accountants in Australia and New Zealand.
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 & Culture of TSC Group Holdings. She has also worked across a number of industry sectors including fire & electronic
security, plumbing & HVAC and hospitality. Johanna has a Bachelor of Arts, holds Post Graduate qualifications in Employee Relations
and Human Resources Management from the University of Melbourne, and is a Graduate of the Australian Institute of Company Directors.
Michael BOCK
Executive General Manager, Integration
Michael joined Cleanaway in March 2018 as Executive General Manager, Integration. Before joining Cleanaway, Michael was a Senior Vice
President in McKinsey & Company’s transformation practice. Michael has spent more than 20 years in executive roles, including seven years
at ANZ Bank where he led the mortgages business and business improvement program; and 12 years at General Electric (GE), responsible
for the trailer and fleet leasing businesses in both Australia and Mexico. He also served as the Global Lean Six Sigma Leader across 54
countries for one of GE’s largest divisions. Michael holds a Bachelor’s Degree in Economics from Harvard University and a Masters of Business
Administration from the Kellogg School of Management.
37
3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT Ian Learmonth, CEO CEFC with Vik Bansal, CEO and Managing Director Cleanaway
Financing clean energy projects to improve waste management
The Clean Energy Finance Corporation (CEFC) has made available a $90 million funding facility to Cleanaway
during the last financial year. The corporate loan facility is designed to fast track eligible clean energy projects
that help us achieve best practice in sustainable waste management.
The CEFC’s sustainability aims have been a perfect fit with ours – to improve waste management, reduce
carbon emissions and utilise renewable energy resources. The CEFC was established in 2012 by the Australian
Government to encourage Australian-based renewable energy, energy efficient and low emissions technology.
Cleanaway’s resource recovery centre at Erskine Park Transfer Station, currently under construction, is being
financed from the CEFC facility. This new centre will be able to process 150,000 tonnes of waste a year and
divert a significant amount of waste from landfill via recycling. Additional projects that Cleanaway will use the
finance for include organics processing, resource recovery, and renewable landfill gas management.
3838
Cleanaway Waste Management Limited 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
Notes to the Consolidated Financial Statements
40
49
65
66
67
68
69
70
71
128
129
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
Information about our capital structure
15. Interest-bearing liabilities
16. Issued capital
17. Reserves
18. Dividends
19. Capital management
Other information about our financial position
20. Property, plant and equipment
21. Intangible assets
22. Equity accounted investments
23. Employee entitlements
24. Provisions
25. Other liabilities
Information about our group structure
26. Acquisition of businesses and
non-controlling interest
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
Other information
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
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2018 ANNUAL REPORT
39
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 2018 and the Independent Auditor’s Report thereon.
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 P Chellew
V Bansal
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
Chairman and Non-Executive Director
Chief Executive Officer and Managing Director
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 34 to 35.
Principal activities
During the financial year the principal 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.
On 11 May 2018 the Group acquired 100% of the shares on issue in Tox Free Solutions Limited (Toxfree). Further
information on the acquisition is included in Note 26 to the Financial Statements and in the Significant changes in the state
of affairs, on page 45 of this report. This acquisition has expanded the Group’s activities, providing waste services to the
healthcare and quarantine sectors.
Dividends
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2018 of 2.5 cents per
share, being an interim dividend of 1.1 cents per share and final dividend of 1.4 cents per share. The record date of the final
dividend is 18 September 2018 with payment to be made 4 October 2018. The financial effect of the final dividend has not
been brought to account in the Financial Statements for the year ended 30 June 2018 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 2017: 1.1 cents per share (2016: 0.9 cents per share)
Interim dividend for 2018: 1.1 cents per share (2017: 1.0 cents per share)
Total dividends paid
2018
$’M
17.5
22.4
39.9
2017
$’M
14.3
15.9
30.2
40
40
DIRECTORS’ REPORTCleanaway Waste Management Limited
Directors’ Report
Review of results
Financial Results
The Group’s statutory profit after income tax (attributable to ordinary equity holders) for the year ended 30 June 2018 was
$103.5 million (2017: $72.5 million) and includes the net benefit of $23.4 million related to a reduction in past and future tax
liabilities as a result of favourable outcomes related to tax positions taken in previous reporting periods. The Group has incurred
acquisition related expenses, net of tax of $16.6 million during the year ended 30 June 2018, principally related to the
acquisition of Toxfree.
The Group’s underlying profit after income tax (attributable to ordinary equity holders) for the year ended 30 June 2018
of $98.0 million was up by 26.5% on the prior year (2017: $77.5 million).
Operating review
The Group comprises three operating segments being Solid Waste Services, Liquid Waste and Industrial Services, and Toxfree.
Toxfree has been identified as a single segment. Due to the proximity of the acquisition to the period end, there has been
no regular reporting to the Group’s Chief Operating Decision Maker of the results of the Toxfree business at a lower level.
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:
Solid Waste Services
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 Solid Waste Services segment increased by 16.9% to $1,242.2 million.
Underlying EBITDA 1 increased by 9.8% to $282.1 million. Underlying EBIT 2 increased by 14.2%
to $157.2 million.
The Collections business reported both increased revenues and earnings for the period.
Revenue increased by 12.0% and underlying EBITDA increased by 2.9% compared to the
previous corresponding period.
The Post Collections business also reported increased revenue and earnings for the period.
Revenue increased 32.4% and underlying EBITDA increased 21.3% compared to the previous
corresponding period.
Performance
Collections
Revenue has increased compared to the previous corresponding period mainly as a result of
organic growth through both volume and pricing initiatives. Margins were impacted by ramp-up
costs associated with new contracts and the impact of lower recycling earnings.
Post Collections
Earnings increases were mainly related to increased landfill volumes, especially along the east
coast of Australia. Revenue and volumes were also assisted by the new South East Melbourne
Transfer Station.
Market conditions in the 2018 financial year have remained consistent with the prior year and for
the 2019 financial year are not expected to vary materially. Solids’ main priorities in the 2019
financial year will revolve around continued focus on revenue growth through further improvements
in customer service and operational improvements. Major new contracts are expected to underpin
continued revenue growth into the 2019 financial year. Construction of a new transfer station
at Erskine Park, Sydney is scheduled for completion in early calendar 2019.
Market review
and priorities
1
2
EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
41
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DIRECTORS’ REPORT3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Directors’ Report
Operating review (continued)
Liquid Waste and Industrial Services
Core business
Liquid Waste and Industrial Services is a leading operator in the areas of:
• Liquid and 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 increased by 3.8% to $440.2 million and Underlying EBITDA increased by 7.0%
from $58.9 million to $63.0 million.
Performance
Sustained improvement is continuing in this business, despite mixed market conditions. Revenue
and earnings increases were driven by increased volumes of liquids collections and processing,
together with higher oil sales.
Market review
and priorities
Market conditions for Liquids and Industrial Services are mixed but Cleanaway remains positive
about achieving medium to long-term growth.
Liquids and Industrial Services’ are focussing on the growth of the Industrial Services business
with the pipeline of infrastructure work improving and will continue to make further
improvements to the sales function.
Toxfree
Core business
Toxfree is a waste services provider with diversified operations across four areas:
• Waste Services – solid waste management, bulk liquid waste management, resource
recovery and recycling, and landfill management.
• Technical and Environmental Services – hazardous and chemical waste, household hazardous
waste, persistent organic pollutant management, industrial wastewater, contaminated site
remediation, e-waste recycling, gas destruction, environmental services compliance, and
waste tracking and reporting.
•
Industrial Services – high pressure cleaning, pipeline commissioning and servicing, tank
cleaning, vacuum loading, non-destructive digging, industrial coatings, chemical cleaning,
and emergency response.
• Health Services – sharps management, medical waste, pharmaceutical waste, healthcare
hazardous waste and quarantine waste.
Financial metrics
Since acquisition on 11 May 2018, Toxfree has contributed $70.7 million to revenue and
$12.7 million to underlying EBITDA.
Performance
Market review
and priorities
Results are consistent with management’s expectations of earnings for the year ended 30 June 2018,
prior to entering in the Scheme to acquire Toxfree.
Integration of the Toxfree business into Cleanaway has commenced with a view to achieving
synergies of $35.0 million over two years by: integrating corporate and enterprise services,
removing duplication in the operating structure, and optimising the footprint of Cleanaway
and Toxfree sites.
42
42
DIRECTORS’ REPORTCleanaway Waste Management Limited
Directors’ Report
Operating review (continued)
Group results for the year ended 30 June 2018
Solid Waste Services
Liquid Waste and Industrial Services
Toxfree
Equity accounted investments
Waste management
Corporate
EBITDA 2
Depreciation and amortisation
Change in fair value of non-landfill
land and buildings
EBIT 3
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
UNDERLYING ADJUSTMENTS
STATUTORY 1
$’M
REBRANDING
COSTS 4
$’M
ACQUISITION
COSTS 5
$’M
TAX
PROVISIONS 6
$’M
GAIN ON
SALE OF
PROPERTIES 7
$’M
OTHER 8
$’M
323.1
(173.6)
(0.2)
149.3
(31.5)
117.8
(14.5)
103.3
103.5
(0.2)
2.5
–
–
2.5
–
2.5
(0.8)
1.7
1.7
–
16.3
0.3
–
16.6
1.6
18.2
(1.6)
16.6
16.6
–
–
–
–
–
(0.7)
(0.7)
(22.7)
(23.4)
(23.4)
–
(2.2)
–
–
(2.2)
–
(2.2)
1.6
(0.6)
(0.6)
–
–
–
0.2
0.2
0.1
0.3
(0.1)
0.2
0.2
–
UNDERLYING 1
$’M
282.1
63.0
12.7
(0.1)
357.7
(18.0)
339.7
(173.3)
–
166.4
(30.5)
135.9
(38.1)
97.8
98.0
(0.2)
1
2
3
4
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. The exclusion of underlying adjustments provides a result which, in the Directors’ view, more closely reflects the ongoing operations of the
Group. The non-IFRS financial information is unaudited.
EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
Relates to costs incurred during the period to rebrand the Group to ‘Cleanaway’ (effective 1 February 2016) and reflects the final costs incurred
on this project.
5 Acquisition costs include transaction costs and other costs associated with the acquisition of businesses during the period. Net finance costs related
to the refinancing of the Group’s debt facility to execute the Toxfree acquisition have also been reflected as underlying adjustments.
6 During the period, the Group received notice from New Zealand Inland Revenue that their review of various matters, which related to the Group’s period
of ownership of the New Zealand business, was complete and no tax liability would arise in respect of certain matters. Accordingly, the Group has released
a tax provision of $5.0 million in this regard, reflecting the reduction in any potential tax liability payable to Inland Revenue. In addition, the Group has
lodged amended assessments with the Australian Taxation Office (ATO) for the June 2013 to June 2017 tax returns relating to depreciation deductions
in respect of previous landfill acquisitions. The amended assessments were lodged after the ATO allowed an objection to the June 2013 tax return and
have resulted in a reduction to taxation expense of $17.7 million and interest income on the amended assessment of $0.7 million.
7 On 30 June 2018, the Group sold a closed landfill site in Heatherton, Melbourne for proceeds of $3.0 million.
8 Other net finance costs relate to the foreign exchange loss on the USPP borrowings of $0.5 million offset by fair value changes on the mark-to-market
valuation of derivative financial instruments of $0.4 million.
43
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DIRECTORS’ REPORT3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Directors’ Report
Operating review (continued)
Group results for the year ended 30 June 2017
UNDERLYING
ADJUSTMENTS
RE-
STRUCTURING
COSTS 4
$’M
RE–
BRANDING
COSTS 5
$’M
ACQUISITION
COSTS 6
$’M
STATUTORY 1
$’M
REMEDIATION
AND
RECTIFICATION
COSTS 7
$’M
GAIN ON
SALE OF
PROPERTIES 8
$’M
Solid Waste Services
Liquid Waste and Industrial
Services
Equity accounted
investments
Waste management
Corporate
EBITDA 2
Depreciation and
amortisation
Impairment of assets
Change in fair value
of non-landfill land
and buildings
EBIT 3
Net finance costs
Profit/(loss) before
income tax
Income tax
(expense)/benefit
Profit/(loss) after
income tax
Attributable to:
Ordinary equity holders
OTHER 9
$’M
UNDERLYING 1
$’M
257.0
58.9
1.2
317.1
(15.8)
301.3
(158.4)
–
–
–
–
3.8
2.4
(3.5)
(22.0)
314.0
(165.9)
(4.4)
(0.6)
143.1
(34.1)
6.6
3.6
4.4
–
14.6
–
109.0
14.6
–
–
–
3.8
–
3.8
(36.5)
(4.3)
(1.2)
72.5
10.3
72.5
10.3
2.6
2.6
–
–
–
2.4
–
2.4
2.0
4.4
4.4
–
–
3.9
–
–
0.4
–
–
(22.0)
–
0.6
0.6
0.3
–
142.9
(33.8)
0.4
(22.0)
0.9
109.1
(0.1)
8.5
–
(31.6)
0.3
(13.5)
0.3
(13.5)
0.9
0.9
77.5
77.5
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. The exclusion of underlying adjustments provides a result which, in the Directors’ view, more closely reflects the ongoing operations of the
Group. The non-IFRS financial information is unaudited.
EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
Relates to costs, accelerated depreciation and impairment of assets associated with the organisational restructure activities, ceased projects and site closures.
Relates to costs incurred during the period to rebrand the Group to ‘Cleanaway’ (effective 1 February 2016) and reflects part of the spend to be incurred.
2
3
4
5
6 Acquisition costs include transaction costs and other costs associated with the acquisition of businesses during the period. Tax expense on acquisition costs
relates to the tax consequences of acquiring the 50% non-controlling interest in Cleanaway Refiners of $2.3 million less deductions available on acquisition
costs of $0.3 million.
Relates to a reduction in the remediation and rectification provision in relation to closed landfill sites and the accelerated depreciation of site infrastructure
related to closing landfill sites.
7
8 On 3 March 2017, the Group sold two closed landfill sites in Brooklyn, Melbourne for proceeds of $0.8 million.
9 Net finance costs relate to the foreign exchange gain on the USPP borrowings of $2.3 million offset by fair value changes on the mark-to-market valuation
of derivative financial instruments of $2.6 million.
44
44
DIRECTORS’ REPORTCleanaway Waste Management Limited
Directors’ Report
Operating review (continued)
Principal risks
The material business risks that could adversely impact the Group’s financial prospects in future periods include, but are not
limited to, economic growth, regulatory environment and Toxfree integration risk.
Economic growth
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,
industrial and construction industries and resource sector activity.
Regulatory
environment
Toxfree integration
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.
There are potential integration risks associated with the Toxfree acquisition, including potential
delays or unplanned costs in implementing operational changes, difficulties in integrating
operations and distracting management's attention from other activities. There is also a risk that
the synergies relating to the acquisition are lower than anticipated. Any failure to fully integrate
the operations of Toxfree, or failure to achieve anticipated synergies could adversely impact
on the operational performance and profitability of the Group.
How the Group manages these risks is set out in the Company’s Corporate Governance Statement under the section
Principle 7: Recognise and manage risk. The Corporate Governance Statement also sets out the general and specific risks
that may potentially impact the Group’s ability to execute and achieve its business strategies and the broad approach that
the Group takes to manage these risks. The Corporate Governance Statement is available on Cleanaway’s website. Details
regarding the Group’s financial risk management are included in Note 31 to the Financial Statements.
Financial position review
Operating cash flows increased by 16.7% to $221.2 million (2017: decrease of 0.6% to $189.6 million) due mainly to higher
profitability of the Group offset by increased tax payments of $25.0 million incurred in the current period compared with
$8.6 million incurred during the year ended 30 June 2017.
The Group’s net assets have increased from $1,825.0 million to $2,488.1 million.
At balance date the Group had total syndicated debt facilities of $900.0 million (2017: $600.0 million), USPP Notes of nil
(2017: US$48.0 million), a financing arrangement with the Clean Energy Finance Corporation of $90.0 million (2017: nil)
and an uncommitted bank guarantee facility of $60.0 million (2017: $60.0 million). Further information on the Group’s
financing facilities is provided in Note 15 to the Financial Statements.
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 year ended 30 June 2018, except as set out below.
On 17 August 2017, Cleanaway entered into a funding arrangement with the Clean Energy Finance Corporation.
The agreement provides the Group with an unsecured loan of up to $90.0 million, on a fixed rate 8 year term.
On 11 December 2017, Cleanaway announced it had entered into a Scheme Implementation Deed to acquire 100% of the shares
on issue in Tox Free Solutions Limited for $3.425 per share in cash, representing a value of $670.3 million (net of debt and minority
interest). The acquisition of Tox Free Solutions Limited was funded by: a fully underwritten $590.4 million 1 for 3.65 pro-rata
accelerated non-renounceable entitlement offer comprising an institutional component of $515.2 million and a retail component of
$75.2 million; and debt drawn down from a new $900.0 million multi-tranche facility which replaced Cleanaway’s $600.0 million
multi-tranche syndicated debt facilities. The acquisition was completed on 25 May 2018, however Toxfree was deemed to be
acquired by Cleanaway on 11 May 2018 following the court approval of the Scheme on 10 May 2018.
On 18 December 2017, the Group repurchased $62.9 million (US$48.0 million) of US Private Placement Notes (USPP).
On 21 December 2017, Cleanaway issued 381,623,662 shares to eligible institutional shareholders under the institutional
component of the pro-rata accelerated non-renounceable offer, raising $515.2 million.
On 31 January 2018, Cleanaway issued 55,700,243 shares under the retail component of the pro-rata accelerated
non-renounceable offer, raising $75.2 million.
45
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DIRECTORS’ REPORT3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Directors’ Report
Events subsequent to reporting date
On 12 July 2018, the Group entered into a binding agreement with Resource Co Holdings Pty Ltd (ResourceCo) to acquire
a 50% interest in ResourceCo’s new Resource Recovery facility located at Wetherill Park in Western Sydney. The purchase
price for the 50% interest comprises a $25.0 million payment at completion, plus deferred consideration of up to a further
$25.0 million, payable in two instalments over two years once the facility generates agreed earnings targets. Under the
agreement, Cleanaway has control over the acquired entity post-acquisition and will apply the acquisition method to account
for the business combination, whereby it will recognise and measure the assets and liabilities of the entity, plus the
non-controlling interest related to ResourceCo’s 50% interest in the entity, and recognise and measure any residual goodwill.
The initial accounting for the business combination was 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 7 August 2018, Cleanaway announced that it had received $25.0 million, being the outstanding tax receivable in relation
to total income tax refunds of $29.4 million related to amended tax assessments lodged in respect of the Group’s 30 June 2013
to 30 June 2017 tax returns. Further information is provided in Note 9 to the Financial Statements.
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 $65,081 (2017: $142,004).
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.
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 MEMBER
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A MEMBER
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A MEMBER
NUMBER
ATTENDED
Directors
M P Chellew 1
V Bansal
R M Smith 2
E R Stein
T A Sinclair
R M Harding 3
P G Etienne 4
13
13
13
13
13
13
13
13
13
13
12
13
11
13
–
–
4
4
4
–
4
–
–
4
4
4
–
4
–
–
–
4
–
4
4
–
–
–
4
–
4
4
–
–
3
–
3
3
–
–
–
3
–
3
3
–
1 Chairman of the Board.
2 Chairman of Audit and Risk Committee.
3 Chairman of Remuneration and Nomination Committee.
4 Chairman of the Health, Safety and Environment Committee.
46
46
DIRECTORS’ REPORTCleanaway Waste Management Limited
Directors’ Report
Directors’ interests
The relevant interests 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 the date of this report is as follows:
Directors
M P Chellew
V Bansal
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
ORDINARY
SHARES
PERFORMANCE
RIGHTS
95,548
980,029
83,720
103,179
49,417
16,109
37,756
–
6,584,947
–
–
–
–
–
Shares under option and performance rights
During the financial year ended 30 June 2018 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 2018 and 2017
financial year are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2018 are
14,226,030 (2017: 13,971,599). Performance rights outstanding at the date of this report are 13,857,848.
Shares issued on the exercise of performance rights
During the financial year ended 30 June 2018 and up to the date of this report, the Company issued 2,003,894 shares
as a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June 2017
and up to the date of the 2017 report, the Company issued 1,622,355 ordinary shares as a result of the exercise
of performance rights that vested on 30 June 2017.
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.
47
47
DIRECTORS’ REPORT3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Directors’ Report
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 relevant. During the financial year ended
30 June 2018 non-audit services included other advisory services.
The Directors have considered the position and in accordance with written advice provided by resolution from the Audit
Committee, are satisfied that the provision of the non-audit services is compatible with, and did not compromise, the auditor
independence requirements of the Corporation Act 2001 for the following reasons:
• The value of non-audit services of $29,561 provided by Ernst & Young during the period was not significant, representing
less than 2.0% of the total services;
• All non-audit services were subject to the corporate governance procedures adopted by the Company to ensure they
do not impact the integrity and objectivity of the auditor; and
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants, as they did not involve the reviewing or auditing the auditor’s
own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the
Company or jointly sharing risks and rewards.
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:
Other advisory services
Total
2018
$
2017
$
1,191,401
280,418
968,625
82,235
29,561
1,501,380
20,600
1,071,460
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 65.
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 49 to 64, is made in accordance with a resolution
of the Board.
M P Chellew
Chairman and Non-Executive Director
Melbourne, 21 August 2018
V Bansal
Chief Executive Officer and Managing Director
48
48
DIRECTORS’ REPORTCleanaway Waste Management Limited
Remuneration Report (Audited)
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
PAGE
50
51
52
53
55
62
63
64
Introduction
The Directors of Cleanaway Waste Management Limited present the Company’s Remuneration Report (the Report) which
forms part of the Directors’ Report for the financial year ended 30 June 2018. 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.
Alignment between company performance and remuneration outcomes
Over the last three years, including FY2018, Cleanaway shareholders have enjoyed improved performance across all key
financial metrics as set out in the graphs below. During FY2018 underlying EPS increased 12.8% to 5.3 cents per share,
dividends increased by 19.0% to 2.5 cents per share and ROIC increased from 4.8% to 5.2%. Consistent with the
improvements in these metrics during FY2018 and over previous periods, Cleanaway has substantially outperformed the
ASX200 Industrials Index over the last 3 years, as also set out in the chart below. In addition to the improvement in these
financial metrics, there has also been a continued improvement in safety performance during FY2018 and over the last three
years.
The Directors of Cleanaway consider that the remuneration outcomes set out in this Report should be considered in the
context of continued improved performance across the Group’s key operating metrics during FY2018. In particular, the
Directors consider that there is appropriate alignment between Cleanaway shareholders’ experience over FY2018 and the
outcomes for KMP set out in this Report.
EPS 1 (cents)
5.3
4.7
3.9
2.8
Dividends Per Share (cents)
2.5
2.1
1.5
1.7
ROIC 2 (%)
4.8%
5.2%
3.7%
4.2%
FY15
FY16
FY17
FY18
FY15
FY16
FY17
FY18
FY15
FY16
FY17
FY18
1 Underlying results adjusted for the bonus element of the entitlement offer.
2
Return on Invested Capital calculated as tax effected EBIT divided by average net assets plus net debt. FY2018 excludes impact of Toxfree acquisition.
TOTAL SHAREHOLDER RETURN: CWY VS ASX 200 INDUSTRIAL SECTOR INDEX (XNJ)
140%
100%
60%
20%
-20%
30 June
2015
CWY
ASX200 Industrial Sector Index
31 December
2015
30 June
2016
31 December
2016
30 June
2017
31 December
2017
30 June
2018
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1.
Key management personnel
1. Key management personnel
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.
KMP for the year ended 30 June 2018 includes the Non-Executive Directors, the Chief Executive Officer (CEO) and Managing
Director, and the Chief Financial Officer (CFO). There were no changes to the KMP for the year ending 30 June 2018 and
they were KMP for the full year.
The KMP disclosed in this Report for the year ended 30 June 2018 are detailed in the following table:
NAME
TITLE
NON-EXECUTIVE DIRECTORS
M P Chellew
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
EXECUTIVES
V Bansal
B J Gill
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer (CEO) and Managing Director
Chief Financial Officer (CFO)
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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 and
Terry Sinclair. 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 discussions concerning their own remuneration 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.
No remuneration recommendations were received from Remuneration Consultants as defined under the Corporations
Act 2001 during the year ended 30 June 2018.
During the year ended 30 June 2018, Remuneration Consultants were engaged to provide broad ranging services to the
Company, including the provision of benchmarking data for the senior executive team and Non-Executive Directors, equity
incentive design and employee share plans. The fees paid for these services were $141,400 (2017: $112,100).
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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 2018 and 30 June 2017 is set out in the following table:
NON-EXECUTIVE DIRECTORS
M P Chellew
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
FORMER NON-EXECUTIVE DIRECTOR
M M Hudson
Total
FINANCIAL YEAR
SALARY AND FEES
$
SUPERANNUATION BENEFITS
$
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2017
2018
2017
287,451
247,108
154,492
149,303
133,897
126,414
133,881
126,409
145,339
140,149
145,339
136,714
78,214
1,000,399
1,004,311
20,049
18,040
14,677
14,184
12,719
12,009
12,719
12,009
13,807
13,314
13,807
12,988
5,675
87,778
88,219
TOTAL
$
307,500
265,148
169,169
163,487
146,616
138,423
146,600
138,418
159,146
153,463
159,146
149,702
83,889
1,088,177
1,092,530
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 2018, the aggregate remuneration paid to all Non-Executive Directors was $1,088,177. This represents
a decrease of 0.4% compared with FY2017 due to the reduction in the number of Non-Executive Directors that were on the Board.
The Board has conducted a review of the maximum aggregate fee limit for Non-Executive Directors and recommended that
shareholders approve the proposed increase of $300,000 to $1,500,000. An increase in the aggregate fee limit will provide
the Board with greater flexibility to implement succession planning strategies or increase the size of the Board if considered
appropriate and will bring the aggregate fee limit in line with comparable companies. The increase in the aggregate fee limit
will require the approval of shareholders at the Company’s Annual General Meeting.
Fee structure
3C.
The fee structure (inclusive of superannuation) for the year ended 30 June 2018 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
307,500
131,629
AUDIT AND
RISK COMMITTEE
$
30,069
7,500
HEALTH, SAFETY AND
ENVIRONMENT COMMITTEE
$
20,046
7,500
REMUNERATION AND
NOMINATION COMMITTEE
$
20,046
7,500
The Board has conducted a review of Non-Executive Director fees and has approved, with effect from 1 July 2018, the following
increases to the Non-Executive Director and Chairman base fees and Committee membership fees for each Committee membership.
The Board took into consideration several factors including Cleanaway’s growth in market capitalisation and increased scale and
complexity through this growth and the need to ensure Non-Executive Director fees remain competitive with peer companies.
The fee structure (inclusive of superannuation) from 1 July 2018 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
330,000
142,000
AUDIT AND
RISK COMMITTEE
$
32,000
11,000
HEALTH, SAFETY AND
ENVIRONMENT COMMITTEE
$
21,500
11,000
REMUNERATION AND
NOMINATION COMMITTEE
$
21,500
11,000
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4. Executive reward strategy and framework
4. Executive reward strategy and framework
4A. Strategy and framework
The Group’s remuneration strategy is designed to attract, retain and motivate high calibre senior executives to ensure the
sustainable success of the Group for the benefit of all stakeholders. To achieve this, the Group ensures its senior executive
remuneration arrangements satisfy the following key criteria:
• Alignment 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 long-term shareholder value.
The Board, upon the recommendation of the Remuneration and Nomination Committee, has developed a structure driven
by these key criteria which comprises a mix of fixed and variable (at risk) remuneration components illustrated below.
CLEANAWAY REMUNERATION STRATEGY
Remunerate competitively
to attract, motivate
and retain talent
Align remuneration
to CWY’s business
strategy
Link outcomes to CWY’s
financial performance
and individual
strategic objectives
Align to long-term
shareholder value
CLEANAWAY REMUNERATION STRUCTURE
TFR
Total Fixed Remuneration
STI
Short-term Incentive (at risk)
LTI
Long-term Incentive (at risk)
CASH
EQUITY
Annual TFR (Base Salary
plus superannuation)
Set based on market and
internal relativities,
performance and experience
80% of STI outcome paid
in September after
financial year end
STI outcome
based on CWY’s
annual financial and
individual performance
20% of STI outcome
is deferred as
Performance Rights
Performance Rights are
restricted for one year
LTI Performance Rights
subject to performance
conditions over three years
50% subject to TSR
25% subject to ROIC
25% subject to EPS
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4. Executive reward strategy and framework (continued)
4. Executive reward strategy and framework (c)
4B. Remuneration elements and mix
Cleanaway aims to provide a competitive mix of remuneration components that reflect the Board’s commitment
to performance based reward. The target remuneration mix for Executive KMP is illustrated below. For the year ended
30 June 2018, the target remuneration mix for Executive KMP remained unchanged from the previous year.
CEO
40%
24%
6%
30%
REMUNERATION MIX AT TARGET
Other KMP
56%
22%
5%
17%
TFR
STI Cash
STI Deferred (equity)
LTI (equity)
4C. Shareholding guideline
The CEO and senior executive team are encouraged to build and maintain a shareholding in the Company equivalent to:
• CEO – 100% of TFR; and
• Senior executive team – 50% of TFR.
It is expected that this shareholding will be accumulated within five years from 1 July 2015, or the initial appointment date
to a senior 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 sections 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 2018 and 30 June 2017 is set out
in the following table:
FINANCIAL
YEAR
2018
2017
2018
2017
2018
2017
SALARY
AND FEES
$
1,253,389
1,217,884
632,296
616,061
1,885,685
1,833,945
STI
CASH
$
1,270,571
982,722
433,918
335,614
1,704,489
1,318,336
NON-
MONETARY
BENEFITS
$
100,519
96,602
–
–
100,519
96,602
SHARE-BASED
PAYMENTS 1
$
1,697,888
1,206,001
388,849
93,835
2,086,737
1,299,836
POST
EMPLOYMENT
BENEFITS
$
20,049
19,616
20,049
19,616
40,098
39,232
TOTAL
$
4,342,416
3,522,825
1,475,112
1,065,126
5,817,528
4,587,951
PERFOR-
MANCE
RELATED
68%
62%
56%
40%
V Bansal 2
B J Gill
Total
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 travel between Sydney and Melbourne.
An explanation of the key remuneration elements (TFR, STI and LTI) as well as FY2018 outcomes is provided in the
following sections.
5B. Total fixed remuneration
TFR consists of base salary plus statutory superannuation contributions and other non-monetary benefits such as car parking.
Senior 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.
FY2018 total fixed remuneration outcomes
Executive KMP fixed remuneration was reviewed during the annual remuneration review with the following outcomes:
• Mr Bansal received a total increase in TFR of 2.5% from $1,250,000 to $1,281,250 effective 1 October 2017; and
• Mr Gill received a total increase in TFR of 2.5% from $640,339 to $656,347 effective 1 October 2017.
FY2018 short-term incentive
5C.
For the year ended 30 June 2018, Executive KMP and other senior executives and eligible employees participated in the
Group STI plan.
The table below represents the target and maximum annual STI opportunity as a percentage of TFR for Executive KMP
in 2018:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
FY2018
TARGET
FY2018
MAXIMUM
75%
50%
150%
100%
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5C.
FY2018 short-term incentive (continued)
Key features of the FY2018 STI plan
Purpose of the STI plan
Reward the achievement of key financial, health, safety & environment (HSE) and
if applicable, individual KPI metrics that are key to the sustainable success of Cleanaway.
Performance period
1 July 2017 to 30 June 2018
Gateway
• Achievement of a gateway based on budgeted Group EBITDA for Executive KMP.
The use of EBITDA as a gateway performance measure aligns senior executives’ focus
on annual financial objectives.
• Business Unit heads and other management roles also have gateways based on financial
or key strategic non-financial objectives.
• Two additional critical HSE metrics also act as gateway conditions:
That there are no work-related deaths; and
That there are no significant and major rated environmental incidents.
Key Performance
Metrics
• Financial metrics – 80% weighting
• HSE metrics – 20% weighting
Financial metrics
• Three financial metrics and their respective weightings are:
Health, Safety &
Environment (HSE)
metrics
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 aligned with Cleanaway’s focus on improving the returns
from the net assets employed in our business.
• 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
a corresponding STI outcome set out below.
Performance outcomes
• Once gateways are achieved, performance against all financial and HSE metrics have
the following threshold, target and stretch STI outcomes:
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
Deferral
• 20% of STI awarded to Executive KMP and senior executives is deferred for 12 months
in the form of deferred performance rights.
• Performance rights are granted at face value determined by the volume weighted
average price of Cleanaway’s shares on the ASX during the period 25 June to
29 June 2018.
• Performance rights do not attract dividends during the deferral period.
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5C.
FY2018 short-term incentive (continued)
FY2018 short-term incentive outcomes
The following table details 2018 STI scorecard measures and assessment applied to Executive KMP and other executives.
ELEMENT
Gateway to STI 1
Scorecard KPIs
MEASURE
Group EBITDA - Threshold of on-target budgeted
Group Net Revenue
Group EBITDA
Group ROIC
Group TRIFR
Group Environmental Incidents
WEIGHTING
Gateway
20%
30%
30%
15%
5%
2018 PERFORMANCE ASSESSMENT
Achieved
Stretch
Above Target
Stretch
Above Threshold
At Target
1
Two additional HSE metrics also act as gateway conditions: That there are no work-related fatalities; and that there are no significant rated environmental
incidents.
The STI payments received or receivable by Executive KMP for the year ended 30 June 2018 are summarised in the
following table:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
TOTAL STI
$
CASH
COMPONENT 1
$
DEFERRED
SHARE
COMPONENT 1
$
PERCENTAGE OF
TARGET STI
OPPORTUNITY 2
PERCENTAGE OF
MAXIMUM STI
OPPORTUNITY 2
2018
2017
2018
2017
1,588,214
1,228,403
542,397
419,517
1,270,571
982,722
433,918
335,614
317,643
245,681
108,479
83,903
165.3%
131.0%
165.3%
131.0%
87.0%
65.5%
87.0%
65.5%
1 As summarised in section 4A and 4B, Executive KMP STI are subject to 20% deferral for one year as performance rights.
2 Calculated based on total STI as a percentage of target and maximum STI opportunities respectively.
5D. Prior year short-term incentive awards
As participants in the FY2017 STI, Mr Bansal and Mr Gill had part of their total STI award deferred as performance rights for
12 months. The vesting of these deferrals was subject to remaining employed by the Group throughout the deferral period.
Accordingly, these awards have vested as follows:
• Mr Bansal’s FY2017 STI deferred component performance rights vested on 30 June 2018 (175,901); and
• Mr Gill’s FY2017 STI deferred component performance rights vested on 30 June 2018 (60,072).
FY2018 long-term incentive
5E.
Offers under the Cleanaway Long Term Incentive (LTI) Plan are made on an annual basis. During the year ended 30 June 2018,
an LTI offer was made to Mr Bansal following shareholder approval at the Company’s 2017 AGM as well as to other senior
executives including Mr Gill.
The table below represents the target and maximum annual LTI opportunity as a percentage of TFR for Executive KMP:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
FY2018
TARGET
FY2018
MAXIMUM
75%
30%
150%
60%
The details of the FY2018 LTI offer are summarised in the table below. The number of performance rights granted to each
Executive KMP for the year ended 30 June 2018 is outlined in section 7A. The number of performance rights each Executive
KMP has on issue as at 30 June 2018 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)
5E.
FY2018 long-term incentive (continued)
Key features of the FY2018 LTI plan
Purpose of the LTI plan
• Focus Executive performance on drivers of shareholder value over a three year
performance period
• Align interests of Executive with those of shareholders
Performance period
1 July 2017 to 30 June 2020
Form of award
Performance rights
Number of Performance
Rights
• Performance rights are granted at face value as a % of participant TFR.
• The number of rights was determined by dividing a participant’s LTI opportunity by the
volume weighted average price (VWAP) of Cleanaway’s shares on the ASX during the
period 26 June to 30 June 2017.
Performance hurdles
Performance rights issued under the FY2018 plan are subject to three performance hurdles:
• 50% of the performance rights will be subject to relative Total Shareholder Return (TSR)
targets over the performance period. The Board considers relative TSR to be an
appropriate performance measure for Executive KMP reward as it focuses on the extent
to which shareholder returns (being income and capital gain) are generated relative
to the performance of a peer group of industrial companies of similar size (being the
constituents of the S&P/ASX200 Industrial Sector Index);
• 25% of the performance rights will be subject to Return On Invested Capital (ROIC)
for the year ending 30 June 2020. The Board considers ROIC to be an appropriate
performance measure for Executive KMP reward as it focuses on managing both the
financial returns and the invested capital base used to generate those returns; and
• 25% of the performance rights will be subject to Earnings per Share Compound
Annual Growth Rate (EPS CAGR). The Board considers EPS CAGR to be an appropriate
performance measure for Executive KMP reward as it represents an accurate measure
of short-term and long-term sustainable profit.
Vesting date
14 days after the release of the financial results for the financial year ending 30 June 2020.
Retesting
No retesting is available. LTI performance rights are only tested once at the end of the
relevant performance period and unvested rights lapse.
Dividends
LTI performance rights do not attract dividends.
Restriction on trading
Vested shares arising from performance rights may only be traded during trading windows
as stipulated in the Company’s Securities Trading Policy and with the approval of the
Chairman of the Board.
Forfeiture and Lapsing
Conditions
Where a participant resigns or is terminated 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.
Performance rights lapse when performance hurdles are not met.
Number of performance
rights remaining
on issue as at
30 June 2018
3,311,304
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5E.
FY2018 long-term incentive (continued)
FY2018 LTI performance hurdle vesting conditions
Performance rights issued under the FY2018 plan are subject to three performance measures with the following performance
vesting schedules:
Relative TSR performance measured
over 3 years from 1 July 2017 to
30 June 2020
Cleanaway TSR rank against the
constituents of the S&P/ASX200
Industrial Sector Index
Percentage of TSR performance
rights that vest
Less than 50th percentile
Equal to 50th percentile
Nil
50%
Greater than 50th percentile and up to
75th percentile
Straight line pro rata vesting between
50% and 100%
At or above 75th percentile
100%
NPAT ROIC performance as measured
for the year ending 30 June 2020
Cleanaway NPAT ROIC
Percentage of NPAT ROIC
performance rights that vest
EPS CAGR performance measured over
3 years from 1 July 2017 to 30 June
2020
Less than 5.25%
At 5.25%
Nil
20%
Greater than 5.25% and up to 5.75%
Greater than 5.75% and up to 6.5%
At or above 6.5%
Cleanaway EPS CAGR
Straight line pro rata vesting between
20% and 50%
Straight line pro rata vesting between
50% and 100%
100%
Percentage of EPS CAGR
performance rights that vest
Less than 7.5%
At 7.5%
Nil
20%
Greater than 7.5% and up to and
including 10%
Straight line pro rata vesting between
20% and 50%
Greater than 10% and up to and
including 12.5%
Straight line pro rata vesting between
50% and 100%
At or above 12.5%
100%
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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 FY2015 to FY2017:
FY2015 LTI AWARD 1, 2
FY2016 LTI AWARD 2
FY2017 LTI AWARD 2
Performance period
4 years: 1 July 2014
to 30 June 2018
3 years: 1 July 2015
to 30 June 2018
3 years: 1 July 2016
to 30 June 2019
Overview
Relative TSR
performance
hurdles
ROIC performance
hurdles
EPS CAGR
performance
hurdles
Number of
performance rights
remaining on issue
at 30 June 2018
Performance rights
vesting subject to:
• Relative TSR (25%)
• ROIC (25%)
• Strategic Initiatives (50%)
Performance rights.
vesting subject to:
• Relative TSR (50%)
• ROIC (50%)
Performance rights.
vesting subject to:
• Relative TSR (50%)
• ROIC (25%)
• EPS CAGR (25%)
TSR Ranking against the constituents of the S&P /ASX200 Industrial Sector Index:
• Below 50th percentile
• At the 50th percentile – 50% vesting
• 50th to 75th percentile – straight line vesting between 50% and 100%
• Above 75th percentile – 100% vesting
– 0% vesting
ROIC:
• Below 4.29% – 0% vesting
• 4.29% – 20% vesting
• 4.29% to 5.29% – straight
line vesting between 20%
and 50%
ROIC 3:
• Below 4.6% – 0% vesting
• 4.6% – 20% vesting
• 4.6% to 5.6% – straight line
vesting between 20% and
50%
ROIC:
• Below 4.5% – 0% vesting
• 4.5% – 20% vesting
• 4.5% to 5.5% – straight
line vesting between 20%
and 50%
• 5.29% to 7.29% – straight
line vesting between 50%
and 100%
• 5.6% to 7.6% – straight line
vesting between 50%
and 100%
• 5.5% to 6.5% – straight
line vesting between 50%
and 100%
• 7.29% – 100% vesting
• 7.6% – 100% vesting
• 6.5% – 100% vesting
EPS CAGR:
• Below 7.5% – 0% vesting
• At 7.5% – 20% vesting
• 7.5% to 10% – straight
line vesting between 20%
and 50%
• 10% to 12.5% – straight
line vesting between 50%
and 100%
• At or above 12.5%
– 100% vesting
909,964
5,118,910
4,463,902
1 A three-year performance period applied to the relative TSR and ROIC performance measures of the FY2015 LTI and these were tested on 30 June 2017 and partially
vested. The remaining strategic initiatives tranche was assessed over four years ending 30 June 2018. Details of the vesting outcomes are contained in Section 5F.
2 As a share-based payment, the portion of the performance rights relating to market-based conditions were valued for accounting purposes using the Monte Carlo
3
simulation method and the portion relating to EPS or ROIC using the Black Scholes Model. Grant dates and fair values are contained in Note 34 to the Consolidated
Financial Statements.
Following the commencement of the current CEO in August 2015 the Board adopted a revised calculation of ROIC for the purposes of the LTI Plan consistent with its
new Strategy Plan. For the FY2016 LTI and subsequent LTI grants, ROIC performance will be measured as (i) consolidated net profit after tax (excluding interest
expense net of tax calculated at the corporate tax rate) of the Group (adjusted for material or other items so as to be expressed on an underlying basis)
divided by (ii) Average Invested Capital, as determined by the Board in each case in its sole discretion.
60
60
REMUNERATION REPORT (AUDITED)Cleanaway Waste Management Limited
Remuneration Report (Audited)
5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5F.
Prior long-term incentive awards (continued)
Prior long-term incentive outcomes
FY2015 LTI
Two tranches of the FY2015 LTI were tested at 30 June 2017 and were partially vested as reported last year. The remaining
tranche was subject to strategic initiatives relevant at the time of the offer. Performance against these targets was assessed
after 30 June 2018 and the Board determined to lapse the tranche in full given the strategic initiatives were not
implemented.
Executive KMP
Mr Gill is the only current or former Executive KMP to participate in the FY2015 LTI. Therefore, 335,570 (100%) of his
performance rights will lapse in relation to the strategic initiative tranche.
FY2016 LTI
The FY2016 LTI was tested as at 30 June 2018. Based on Cleanaway’s relative TSR and ROIC performance over the
performance period from 1 July 2015 to 30 June 2018, the offer will partially vest – with the relative TSR tranche vesting
at 100% and the ROIC tranche vesting at 54.50%.
Executive KMP
Both Mr Bansal and Mr Gill participate in the FY2016 LTI. Therefore, 1,419,110 performance rights (100%) of Mr Bansal’s
TSR tranche and 245,067 performance rights (100%) of Mr Gill’s TSR tranche will vest and 773,415 performance rights
(54.50%) of Mr Bansal’s ROIC tranche and 133,562 performance rights (54.50%) of Mr Gill’s ROIC tranche will vest.
FY2019-2020 Toxfree Integration Incentive
5G.
The Company completed the acquisition of Tox Free Solutions Limited (Toxfree) a leading integrated waste management
company on 11 May 2018. The key benefits of the acquisition of Toxfree, in particular the $35.0 million of initially identified
synergies, are targeted to be realised by the end of FY2020.
In order to ensure that executives (including Executive KMP) involved in the acquisition and integration of Toxfree are
focussed on exceeding the synergy benefits from this acquisition beyond the synergies initially identified in our business case
for acquisition and announced to the market, the Board has approved a one-off Toxfree Integration Incentive (TII) offer to be
made after the Company’s 2018 Annual General Meeting. The TII is an offer of performance rights that will be made
to certain executives (including Executive KMP) which will be equivalent to 50% of their STI opportunity. The key
performance condition for the TII will relate to achievement of Cleanaway EBITDA in FY2020 that exceeds our internal targets
which includes the initial $35.0 million of synergies identified from the Toxfree acquisition. This plan does not reward the
achievement of the forecast synergy benefits, it is designed to reward the delivery of additional savings and outperformance
that enhances EBITDA.
Further information in relation to the TII will be included in the Company’s Notice of Meeting for the 2018 Annual
General Meeting.
61
61
REMUNERATION REPORT (AUDITED)3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Remuneration Report (Audited)
6. Executive key management personnel – contract terms
6. Executive key management personnel – contract terms
6A. Current Executive KMP
The CEO and Managing Director (Mr Bansal) and CFO (Mr Gill) 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:
• 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 was entitled to accommodation support, with the Company covering the costs associated with
Mr Bansal’s temporary accommodation in Melbourne until the end of 2019. The cost to the Group in providing this support
to Mr Bansal for the year ended 30 June 2018 is summarised in section 5A.
62
62
REMUNERATION REPORT (AUDITED)Cleanaway Waste Management Limited
Remuneration Report (Audited)
7.
Executive key management personnel – additional remuneration tables
7. 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 2018 is set out in the following table:
YEAR ENDED
30 JUNE 2017
BALANCE AT
1 JULY 2017
NUMBER
EXECUTIVE KEY MANAGEMENT PERSONNEL
5,840,133
V Bansal
1,714,951
B J Gill
RIGHTS
GRANTED
DURING THE
YEAR 1
NUMBER
VALUE OF
RIGHTS
GRANTED
DURING THE
YEAR 2
$
RIGHTS
EXERCISED
DURING THE
YEAR
NUMBER
VALUE OF
RIGHTS
EXERCISED
DURING THE
YEAR 3
$
LAPSED/
CANCELLED
DURING THE
YEAR
NUMBER
BALANCE AT
30 JUNE 2018
NUMBER
1,551,912
342,028
1,966,260
436,193
(631,197)
(171,522)
822,466
235,571
–
(231,945)
6,760,848
1,653,512
1
2
3
Performance rights were granted to Mr Bansal and Mr Gill under the FY2018 LTI Offer and FY2017 STI on 3 November 2017.
The fair value of performance rights granted to Mr Bansal calculated using Monte Carlo simulation and the Black Scholes Model, is $1.03 to $1.48
per Performance Right under the FY2018 LTI Offer. The fair value of performance rights granted to other Executive KMP calculated using Monte Carlo
simulation method and the Black Scholes Model, is $1.03 to $1.48 per Performance Right under the FY2018 LTI Offer.
Calculated as the market value of Cleanaway shares on the date of exercise.
7B. Performance rights as at 30 June 2018
The number of performance rights included in the balance at 30 June 2018 for the Executive KMP is set out in the
following table:
ISSUED
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B Gill
2015
LTI
2016
LTI
2017
STI
2017
LTI
2018
LTI
BALANCE AT
30 JUNE 2018
– 2,838,220
490,134
335,570
175,901 2,370,716 1,376,011 6,760,848
281,956 1,653,512
485,780
60,072
VESTED &
EXERCISABLE
AT THE END
OF THE YEAR
175,901
60,072
No terms of performance rights transactions have been altered by the Group 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.
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.
63
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REMUNERATION REPORT (AUDITED)3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Remuneration Report (Audited)
7.
Executive key management personnel – additional remuneration tables (continued)
7. Executive key management personnel – additional remuneration tables (c)
7D. Company performance
The following table shows Cleanaway’s annual performance over the last 5 years. For further explanation of details
on Cleanaway performance see the Operating review Section of Director’s Report.
FY2014
FY2015
FY2016
FY2017
FY2018
Profit/(Loss) attributable to ordinary
equity holders – $’M
EPS – cents 6
Underlying EPS – cents 6
Dividends per share – cents
Shares on issue – number
Market capitalisation – $’M
Share price at 30 June
Change in share price
11.51
0.7
5.7
1.5
(23.6)2
(1.4)
2.8
1.5
103.5 5
5.6
5.3
2.5
1,579,323,967 1,579,914,690 1,586,344,605 1,592,889,317 2,036,684,232
$3,442.0
$1.69
$0.31
$1,269.1
$0.80
$0.03
$2,198.2
$1.38
$0.58
$1,595.1
$1.01
$0.21
$1,216.5
$0.77
($0.24)
44.8 3
2.8
3.9
1.7
72.5 4
4.4
4.7
2.1
1
2
3
4
5
6
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.
Includes underlying adjustments of $5.0 million after tax.
Includes underlying adjustments of $(5.5) million after tax.
The calculation of EPS for the current and comparative periods has been adjusted to reflect the bonus element in the non-renounceable entitlement offer
which occurred during December 2017 and January 2018.
8. Shareholdings and other related party transactions
8. Shareholdings and other related party transactions
8A. Shareholdings
The movement for the year ended 30 June 2018 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. Directors increased
shareholdings during the course of the year:
NAME
NON-EXECUTIVE DIRECTOR
M P Chellew
R M Smith
E R Stein
T A Sinclair
R M Harding
P G Etienne
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
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
75,000
65,715
80,989
38,789
12,644
13,737
–
–
–
–
–
–
20,548
18,005
22,190
10,628
3,465
24,019
–
–
631,197
171,522
172,931
46,993
95,548
83,720
103,179
49,417
16,109
37,756
804,128
218,515
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. Transactions with entities where
the relationship is limited to a common Non-Executive Directorship, including any Chairperson roles, are not considered
related party transactions. 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.
64
64
REMUNERATION REPORT (AUDITED)Cleanaway Waste Management Limited
Auditor’s Independence 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
Auditor’s Independence Declaration to the Directors of Cleanaway Waste Management Limited
As lead auditor for the audit of Cleanaway Waste Management Limited for the financial year ended 30 June 2018, 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
21 August 2018
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
65
6565
AUDITOR’S INDEPENDENCE DECLARATION3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Consolidated Income Statement
For the year ended 30 June 2018
Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Share of profits from equity accounted investments
Profit from operations before depreciation and amortisation
Depreciation and amortisation expense
Impairment of assets
Change in fair value of non-landfill land and buildings
Profit from operations
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
Profit after income tax
NOTES
6
7
22
20
8
9
2018
$’M
1,714.3
5.1
(642.0)
(472.7)
(168.4)
(49.1)
(64.0)
(0.1)
323.1
(173.6)
–
(0.2)
149.3
(31.5)
117.8
(14.5)
103.3
103.5
(0.2)
103.3
2017
$’M
1,454.4
22.4
(589.4)
(359.0)
(131.8)
(40.1)
(43.7)
1.2
314.0
(165.9)
(4.4)
(0.6)
143.1
(34.1)
109.0
(36.5)
72.5
72.5
–
72.5
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
66
66
CONSOLIDATED INCOME STATEMENTFor the year ended 30 June 2018Cleanaway Waste Management Limited
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2018
Profit after income tax
Other comprehensive income (not to be reclassified to profit or loss in
subsequent periods)
Revaluation of non-landfill land and buildings (net of tax)
Net comprehensive income/(loss) recognised directly in equity
Total comprehensive income for the year
Attributable to:
Ordinary equity holders
Non-controlling interest
Total comprehensive income for the year
NOTES
2018
$’M
103.3
6.3
6.3
109.6
109.8
(0.2)
109.6
2017
$’M
72.5
(5.7)
(5.7)
66.8
66.8
–
66.8
Earnings per share attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
10
10
5.6
5.6
4.4
4.4
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
67
67
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Consolidated Balance Sheet
As at 30 June 2018
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
Other financial assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Interest-bearing liabilities
Employee entitlements
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Employee entitlements
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Parent entity interest
Total equity
NOTES
2018
$’M
2017
$’M
11
12
13
30
20
21
22
9
31
14
15
23
24
25
15
23
24
25
16
17
52.0
369.5
21.0
7.4
–
8.8
15.4
474.1
1,200.2
2,279.0
13.8
53.6
4.2
3.9
3,554.7
4,028.8
246.2
–
13.5
75.7
61.6
25.0
422.0
711.7
4.5
271.3
131.2
1,118.7
1,540.7
2,488.1
2,671.0
51.9
(234.8)
2,488.1
2,488.1
43.2
247.9
11.1
–
8.3
8.8
15.5
334.8
936.5
1,585.3
11.5
89.5
–
–
2,622.8
2,957.6
177.6
16.7
62.4
46.0
55.6
22.1
380.4
307.8
8.4
302.6
133.4
752.2
1,132.6
1,825.0
2,083.0
40.4
(298.4)
1,825.0
1,825.0
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
68
68
CONSOLIDATED BALANCE SHEETAs at 30 June 2018Cleanaway Waste Management Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
At 1 July 2017
Profit for period
Other comprehensive income
Total comprehensive income for the year
Acquisition of non-controlling interest
Issue of shares (net of transaction costs)
Share-based payment expense
Dividends reinvested/(paid)
Balance at 30 June 2018
At 1 July 2016
Profit for period
Other comprehensive income
Total comprehensive income for the year
Share-based payment expense
Dividends reinvested/(paid)
Acquisition of non-controlling interest
Balance at 30 June 2017
ORDINARY
SHARES
$’M
2,083.0
–
–
–
–
581.0
–
7.0
2,671.0
2,076.4
–
–
–
–
6.6
–
2,083.0
PARENT ENTITY INTEREST
RESERVES
$’M
40.4
–
6.3
6.3
–
–
5.2
–
51.9
43.3
–
(5.7)
(5.7)
2.8
–
–
40.4
RETAINED
EARNINGS
$’M
(298.4)
103.5
–
103.5
–
–
–
(39.9)
(234.8)
(344.8)
72.5
–
72.5
–
(30.2)
4.1
(298.4)
NON-
CONTROLLING
INTEREST
$’M
–
(0.2)
–
(0.2)
0.3
–
–
(0.1)
–
6.6
–
–
–
–
–
(6.6)
–
TOTAL
$’M
1,825.0
103.5
6.3
109.8
–
581.0
5.2
(32.9)
2,488.1
1,774.9
72.5
(5.7)
66.8
2.8
(23.6)
4.1
1,825.0
TOTAL
EQUITY
$’M
1,825.0
103.3
6.3
109.6
0.3
581.0
5.2
(33.0)
2,488.1
1,781.5
72.5
(5.7)
66.8
2.8
(23.6)
(2.5)
1,825.0
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
69
69
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortisation expense
Impairment of assets
Write back of remediation provision related to closed sites
Net finance costs
Share-based payment expense
Change in fair value of non-landfill land and buildings
Share of losses/(profits) from equity accounted investments
Net gain on disposal of property, plant and equipment
Other non-cash items
Net cash from operating activities before changes in assets and liabilities
Changes in assets and liabilities:
Increase in receivables
Decrease/(increase) in other assets
(Increase)/decrease in inventories
Increase/(decrease) in payables
Increase in employee entitlements
Decrease in other liabilities
Decrease in provisions
Cash generated from operating activities
Net interest paid
Income taxes 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 and non-controlling interest
Payment of special dividend to Toxfree shareholders
Proceeds from disposal of property, plant and equipment
Payments for equity accounted investments
Dividends received from equity accounted investments
Loans advanced
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of finance lease liabilities
Net proceeds from settlement of derivatives
Payment of debt and equity raising costs
Proceeds from issue of ordinary shares
Payment of dividends to ordinary equity holders
Payment of dividends to non-controlling interests
Repayment of loan to related parties
Net cash from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash acquired
Cash and cash equivalents at the end of the year
NOTES
2018
$’M
2017
$’M
117.8
109.0
173.6
–
–
31.5
3.8
0.2
0.1
(4.6)
1.1
323.5
(37.9)
2.1
(4.1)
14.9
4.4
(2.4)
(40.0)
260.5
(14.3)
(25.0)
221.2
(135.8)
(7.7)
(582.3)
(113.5)
7.3
(7.8)
1.6
(0.4)
(838.6)
885.0
(824.4)
(4.0)
8.7
(23.3)
590.4
(32.9)
(0.1)
–
599.4
(18.0)
43.2
26.8
52.0
165.9
4.4
(3.1)
34.1
1.9
0.6
(1.2)
(22.5)
(0.9)
288.2
(23.3)
(1.3)
0.7
(1.0)
5.4
(6.6)
(44.1)
218.0
(19.8)
(8.6)
189.6
(144.1)
(11.2)
(31.7)
–
2.4
–
0.8
–
(183.8)
72.0
(58.2)
–
–
(0.6)
–
(23.6)
–
(0.5)
(10.9)
(5.1)
48.3
–
43.2
26
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
70
70
CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1.
Corporate information
1. Corporate information
Cleanaway Waste Management Limited and its subsidiaries (the Group) is 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 interests in equity accounted investments.
The Consolidated Financial Statements of the Group for the year ended 30 June 2018 were authorised for issue in accordance
with a resolution of the Directors on 21 August 2018.
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.
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 derivative financial instruments. Cost is based on the fair value 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 dollars, 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.
Refer to note 38 for a summary of the Group’s significant accounting policies.
71
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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 five 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.
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).
72
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
4. Critical accounting estimates and judgements (continued)
4. Critical accounting estimates and judgements (c)
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 Consolidated Balance Sheet by adjusting both the remediation asset and provision.
For closed sites, changes to the estimated costs are recognised in the Consolidated 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).
(e) Acquisition of Toxfree
On 11 May 2018, the Group completed the acquisition of Tox Free Solutions Limited (refer note 26 of the financial statements).
The valuation of identified intangible assets acquired have been based on the preliminary assessment undertaken
by a valuation expert engaged by Cleanaway. This preliminary assessment incorporates certain judgements and estimates
in relation to number of factors to derive fair values for customer intangibles including revenue growth rates, EBITDA
margins, customer attrition rates, contributory asset charges and other key assumptions applied in the valuation process.
The valuation of the remediation liabilities identified at the acquisition date was based on a preliminary assessment
undertaken by an external valuation expert engaged by Cleanaway. This assessment involved making certain assumptions
about the risk rating related to each of the sites and the timeframe of when the sites may require remediation.
73
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
5. Segment reporting
5. Segment reporting
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:
• Solid Waste Services
Solid Waste Services operates in the areas of:
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.
• Liquid Waste and Industrial Services
Liquid Waste and Industrial Services is a leading operator in the areas of:
Liquid and Hazardous Waste – collection, treatment, processing, refining and recycling of liquid and hazardous
waste, including hydrocarbons, for disposal and 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.
• Toxfree
Toxfree has been identified as a single segment. Due to the proximity of the acquisition to the period end, there has been
no regular reporting to the Group’s Chief Executive Officer (Chief Operating Decision Maker) of the results of the Toxfree
business at a lower level.
Toxfree is a waste services provider with diversified operations across four areas:
Waste Services – solid waste management, bulk liquid waste management, resource recovery and recycling,
and landfill management.
Technical and Environmental Services – hazardous and chemical waste, household hazardous waste, persistent
organic pollutant management, industrial wastewater, contaminated site remediation, e-waste recycling,
gas destruction, environmental services compliance, and waste tracking and reporting.
Industrial Services – high pressure cleaning, pipeline commissioning and servicing, tank cleaning, vacuum
loading, non-destructive digging, industrial coatings, chemical cleaning, and emergency response.
Health Services – sharps management, medical waste, pharmaceutical waste, healthcare hazardous waste
and quarantine waste.
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.
74
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
5. Segment reporting (continued)
5. Segment reporting (c)
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.
Net finance costs 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.
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
LIQUID
WASTE AND
INDUSTRIAL
SERVICES
$’M
1,210.3
–
14.6
17.3
1,242.2
282.1
(124.9)
157.2
399.0
19.4
1.2
20.6
440.2
63.0
(27.5)
35.5
TOXFREE
$’M
ELIMINATIONS
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
CORPORATE
$’M
GROUP
$’M
69.5
–
0.3
0.9
70.7
12.7
(6.6)
6.1
–
–
–
(38.8)
(38.8)
–
–
–
1,678.8
19.4
16.1
–
1,714.3
357.8
(159.0)
198.8
–
–
–
–
–
(0.1)
–
(0.1)
–
–
–
–
–
(18.0)
(14.3)
(32.3)
1,678.8
19.4
16.1
–
1,714.3
339.7
(173.3)
166.4
(2.5)
(16.6)
2.2
(0.2)
149.3
(31.5)
117.8
(14.5)
103.3
124.2
1.2
9.3
–
1.9
–
–
–
135.4
1.2
–
–
0.4
6.5
135.8
7.7
2018
Revenue
Sales of goods and services
PSO benefits 1
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Depreciation and amortisation
Underlying EBIT
Rebranding costs
Acquisition costs
Gain on sale of properties
Revaluation of non-landfill land
and buildings
Profit from operations (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.
75
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
5. Segment reporting (continued)
5. Segment reporting (c)
2017
Revenue
Sales of goods and services
PSO benefits 1
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Depreciation and amortisation
Underlying EBIT
Restructuring costs 2
Rebranding costs
Acquisition costs
Remediation and rectification costs
Gain on sale of properties
Revaluation of non-landfill land and buildings
Profit from operations (EBIT)
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
Property, plant and equipment
Intangible assets
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
LIQUID
WASTE AND
INDUSTRIAL
SERVICES
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
ELIMINATIONS
$’M
CORPORATE
$’M
GROUP
$’M
1,034.9
–
16.0
11.6
1,062.5
257.0
(119.4)
137.6
384.2
16.6
2.5
20.7
424.0
58.9
(26.8)
32.1
– 1,419.1
16.6
–
18.5
–
(32.3)
–
(32.3) 1,454.2
315.9
(146.2)
169.7
–
–
–
–
–
–
–
–
1.2
–
1.2
(15.8)
(12.2)
(28.0)
– 1,419.1
16.6
–
18.7
0.2
–
–
0.2 1,454.4
301.3
(158.4)
142.9
(14.6)
(3.8)
(2.4)
(0.4)
22.0
(0.6)
143.1
(34.1)
109.0
(36.5)
72.5
128.1
2.1
14.1
–
–
–
142.2
2.1
–
–
1.9
9.1
144.1
11.2
1
2
Product Stewardship for Oil benefits.
Includes accelerated depreciation of $3.6 million and impairment of assets of $4.4 million.
76
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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 1
Other
2018
$’M
1,678.8
19.4
16.1
1,714.3
2017
$’M
1,419.1
16.6
18.7
1,454.4
2018
$’M
4.6
0.5
5.1
2017
$’M
22.5
(0.1)
22.4
1 Gain on disposal of property, plant and equipment in the year ended 30 June 2018 includes disposal of remediation and rectification provisions
of $5.4 million (2017: $28.0 million). Refer to note 24.
8. Net finance costs
8. Net finance costs
Finance costs
Interest on borrowings
Interest on finance leases
Amortisation of capitalised borrowing costs
Unwind of discount on provisions and other liabilities
Foreign currency exchange (loss)/gain 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.
2018
$’M
(15.4)
(1.5)
(2.4)
(15.1)
(0.5)
0.4
(34.5)
3.0
3.0
(31.5)
2017
$’M
(18.8)
–
(0.5)
(14.9)
2.3
(2.6)
(34.5)
0.4
0.4
(34.1)
77
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
9.
Income tax
9.
Income tax
(a) Amounts recognised in the Consolidated Income Statement
Current tax expense
Current year
Adjustments in respect of prior years
Deferred tax expense
Origination and reversal of temporary differences
Adjustments in respect of prior years
Income tax expense
2018
$’M
2017
$’M
32.3
(28.7)
3.6
0.6
10.3
10.9
14.5
19.0
(4.3)
14.7
16.8
5.0
21.8
36.5
(b) Amounts recognised directly in equity
Deferred income tax benefit on items charged directly to equity for the year totalled $2.6 million (2017: $3.5 million),
which relate to the tax effect of items recognised in the asset revaluation reserve of $2.7 million expense (2017: $2.6 million
benefit), the employee equity benefits reserve of $1.4 million benefit (2017: $0.9 million benefit), and ordinary shares
in relation to capital raising costs of $3.9 million benefit (2017: nil).
(c)
Reconciliation between tax expense and pre-tax net profit at the statutory rate
Profit before tax
Income tax using the corporation tax rate of 30% (2017: 30%)
Decrease in income tax expense due to:
Share of losses/(profits) from equity accounted investments
Non-deductible expenses
Business acquisition costs
Adjustments in respect of prior years – Landfill depreciation adjustment 1
Adjustments in respect of prior years
Research and development tax credits
Entry of subsidiary into the Tax Consolidated Group
Non-deductible CGT loss on sale of properties
Employee share plan expenses
New Zealand tax review 2
Other
Income tax expense
2018
$’M
2017
$’M
117.8
109.0
35.3
32.7
0.1
0.3
3.8
(17.9)
(0.5)
(2.4)
–
1.0
(0.2)
(5.0)
–
14.5
(0.5)
0.8
–
–
0.7
(2.2)
2.3
1.9
–
–
0.8
36.5
1
The Australian Taxation Office (ATO) has allowed an objection to the tax return for the year ended 30 June 2013 and the Group has lodged amended
assessments for the tax returns for the years ended 30 June 2013 to 30 June 2017 inclusive. The objection and the amended assessments relate
to depreciation deductions in respect of previous landfill acquisitions.
2 During the period, the Group received advice from New Zealand Inland Revenue that their review of various matters, which related to the Group’s
ownership of the New Zealand business, was complete and no tax liability would arise in respect of certain matters. Accordingly, the Group has released
a tax provision of $5.0 million in this regard.
78
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
9.
Income tax (continued)
9.
Income tax (c)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2018
Deferred tax assets
PP&E
Employee benefits
Provisions
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
2017
Deferred tax assets
PP&E
Employee benefits
Provisions
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
43.8
17.1
107.5
8.5
(67.9)
(19.5)
89.5
(6.7)
2.3
(15.0)
(3.3)
3.5
8.3
(10.9)
(2.7)
–
–
–
–
–
(2.7)
–
–
–
5.3
–
–
5.3
3.7
6.5
9.1
2.8
(45.3)
(4.3)
(27.5)
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
50.6
17.1
123.1
6.8
(67.9)
(19.4)
110.3
(9.4)
(0.2)
(15.6)
1.0
2.5
(0.1)
(21.8)
2.6
–
–
–
–
–
2.6
–
–
–
0.9
–
–
0.9
–
0.2
–
–
(2.5)
–
(2.3)
OTHER
$’M
–
–
–
(0.1)
–
–
(0.1)
OTHER
$’M
–
–
–
(0.2)
–
–
(0.2)
CLOSING
BALANCE
$’M
38.1
25.9
101.6
13.2
(109.7)
(15.5)
53.6
CLOSING
BALANCE
$’M
43.8
17.1
107.5
8.5
(67.9)
(19.5)
89.5
79
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
10. Earnings per share
10. Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
(i)
Basic earnings per share
2018
5.6
5.6
2017
Restated
4.4
4.4
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 after income tax
Net loss attributable to non-controlling interests
Profit after tax attributable to ordinary equity holders
2018
$’M
103.3
0.2
103.5
2017
$’M
72.5
–
72.5
The calculation of weighted average number of ordinary shares for the current and comparative periods have been adjusted
to reflect the bonus element in the non-renounceable entitlement offer which occurred during December 2017 and
January 2018.
Reconciliation of weighted average number of ordinary shares:
Weighted average number of ordinary shares used as the denominator
in calculating earnings per share
Number for basic earnings per share
Effect of potential ordinary shares
Number for diluted earnings per share
2018
2017
Restated
1,843,122,437 1,639,473,055
12,917,446
1,857,430,024 1,652,390,501
14,307,587
(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.
11. Cash and cash equivalents
11. Cash and cash equivalents
Composition of cash and cash equivalents
Cash at bank and on hand
2018
$’M
52.0
52.0
2017
$’M
43.2
43.2
The Group has pledged $1.6 million (2017: nil) of its short-term deposits to fulfil collateral requirements in relation to contingent
liabilities and corporate credit card facilities.
Refer to note 38(g) for the Group’s accounting policy on cash and cash equivalents.
80
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
12. Trade and other receivables
12. Trade and other receivables
Trade receivables
Provision for doubtful debts
Other receivables
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 1 – 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
Provisions acquired
Provisions recognised
Reversal of provisions
Utilisation of provisions
Closing balance
2018
$’M
364.2
(2.6)
361.6
7.9
369.5
2018
$’M
257.5
63.7
33.8
9.2
364.2
2018
$’M
3.1
0.6
8.4
(3.0)
(6.5)
2.6
2017
$’M
245.0
(3.1)
241.9
6.0
247.9
2017
$’M
175.0
40.2
17.1
12.7
245.0
2017
$’M
7.8
–
2.6
(2.4)
(4.9)
3.1
No single customer’s annual revenue is greater than 2.1% (2017: 2.3%) 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
Work in progress – at cost
Finished goods – at cost
Refer to note 38(i) for the Group’s accounting policy on inventories.
2018
$’M
6.0
4.5
10.5
21.0
2017
$’M
4.3
–
6.8
11.1
81
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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.
15.
15. Interest-bearing liabilities
Interest-bearing liabilities
2018
$’M
112.9
133.3
246.2
2017
$’M
91.0
86.6
177.6
Opening balance at 1 July 2017
Proceeds/(repayment) of borrowings
Borrowing costs paid
Cash flows
Lease drawdowns 1
Non-cash drawdowns
Interest-bearing liabilities acquired
Foreign currency loss
Amortisation of capitalised transaction costs
Transaction costs accrued
Closing balance at 30 June 2018
UNSECURED
SECURED
US PRIVATE
PLACEMENT
NOTES
$’M
62.4
(62.9)
–
(62.9)
–
–
–
0.5
–
–
–
BANK LOANS
$’M
307.8
33.5
(9.7)
23.8
–
4.8
196.3
–
2.3
(0.8)
534.2
CLEAN ENERGY
FINANCE
CORPORATION
$’M
–
90.0
(0.8)
89.2
–
–
–
–
0.1
–
89.3
LEASE
LIABILITIES
$’M
–
(4.0)
–
(4.0)
90.8
–
14.9
–
–
–
101.7
TOTAL
INTEREST-
BEARING
LIABILITIES
$’M
370.2
56.6
(10.5)
46.1
90.8
4.8
211.2
0.5
2.4
(0.8)
725.2
1
Finance leases have been utilised to fund the purchase of fleet for new and renewed contracts.
Bank loans and the Clean Energy Finance Corporation loan are net of capitalised transaction costs of $10.4 million
(2017: $1.2 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
Clean Energy Finance Corporation
Uncommitted bank guarantee facility
Facility A
Facility B
Facility C
Facility D
working capital tranche
4 year revolver
5 year revolver
3 year term loan
8 year term loan
MATURITY
AMOUNT
31 July 2020
$135 million
31 July 2022
$200 million
31 July 2023
$315 million
31 July 2021
$250 million
17 August 2025
$90 million
$60 million 31 December 2018
82
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
15.
Interest-bearing liabilities (continued)
15. Interest-bearing liabilities (c)
The headroom available in the Group’s facilities at 30 June 2018 is summarised below:
Syndicated Facility Agreement
Clean Energy Finance Corporation 4
Bank guarantee facilities 1
Facility A 1, 2
Facility B 3
Facility C 3
Facility D 3
AVAILABLE
$’M
135.0
200.0
315.0
250.0
90.0
61.6
1,051.6
UTILISED
$’M
(86.1)
(200.0)
(89.0)
(250.0)
(90.0)
(56.7)
(771.8)
NOT UTILISED
$’M
48.9
–
226.0
–
–
4.9
279.8
1
2
3
4
These facilities include $122.8 million (2017: $123.7 million) in guarantees and letters of credit which only give rise to a liability where the Group fails
to perform its contractual obligations.
This facility includes $6.5 million (2017: nil) of corporate credit card limit utilisation and $8.6 million (2017: nil) of outstanding finance lease commitments.
These facilities represent the amount drawn down as ‘bank loans’ excluding the capitalised transaction costs of $9.7 million (2017: $1.2 million). Capitalised
transaction costs of $0.3 million (2017: nil) were acquired during the period.
The CEFC facility was entered into on 17 August 2017. The amount utilised excludes capitalised transaction costs of $0.7 million (30 June 2017: nil).
The headroom available in the Group’s facilities at 30 June 2017 is summarised below:
Syndicated Facility Agreement
US Private Placement Notes (USPP)
Bank guarantee facilities
Facility A
Facility B
Facility C
16.
16. Issued capital
Issued capital
AVAILABLE
$’M
135.0
130.0
335.0
62.4
62.9
725.3
UTILISED
$’M
(79.1)
(130.0)
(165.0)
(62.4)
(58.6)
(495.1)
NOT UTILISED
$’M
55.9
–
170.0
–
4.3
230.2
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 and all issued shares are fully paid.
2018
2017
Opening balance
Issue of shares under dividend reinvestment plan
Issue of shares under employee incentive plan
Issue of shares under entitlement offer 1
Costs related to share issue, net of tax 2
Closing balance
NUMBER
OF SHARES
1,592,889,317
4,835,298
1,635,712
437,323,905
–
2,036,684,232
$’M
NUMBER
OF SHARES
2,083.0 1,586,344,605
5,760,784
783,928
–
–
2,671.0 1,592,889,317
7.0
–
590.4
(9.4)
$’M
2,076.4
6.6
–
–
–
2,083.0
1
Relates to shares issued in December 2017 and January 2018 under the non-renounceable entitlement offer announced as part of the acquisition of Tox
Free Solutions Limited. Under the entitlement offer, one new share was offered at the discounted price of $1.35 per share, for every 3.65 shares held.
2 Costs related to the share issue were $13.3 million (after tax $9.4 million) of which $12.8 million was paid at 30 June 2018.
83
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
17. Reserves
17. Reserves
Asset revaluation reserve
Employee equity benefits reserve
2018
$’M
35.5
16.4
51.9
2017
$’M
29.2
11.2
40.4
(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)
Closing balance
2018
$’M
29.2
6.3
35.5
2017
$’M
34.9
(5.7)
29.2
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
2018
$’M
11.2
5.2
16.4
2017
$’M
8.4
2.8
11.2
84
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
18. Dividends
18. Dividends
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2018 of 2.5 cents per
share, being an interim dividend of 1.1 cents per share and final dividend of 1.4 cents per share. The record date of the final
dividend is 18 September 2018 with payment to be made on 4 October 2018.
Details of dividends in respect of the financial year are as follows:
Dividends paid during the period
Final dividend relating to prior period
Interim dividend relating to current period
Dividends determined in respect of the period
Interim dividend relating to current period
Final dividend relating to current period
Dividends paid during the period
Final dividend relating to prior period
Interim dividend relating to current period
Dividends determined in respect of the period
Interim dividend relating to current period
Final dividend relating to current period
Franking credit balance
2018
$’M
17.5
22.4
39.9
22.4
28.5
50.9
2017
$’M
14.3
15.9
30.2
15.9
17.5
33.4
2018
CENTS PER
SHARE
2017
CENTS PER
SHARE
1.1
1.1
2.2
1.1
1.4
2.5
0.9
1.0
1.9
1.0
1.1
2.1
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 2018 dividend determined after 30 June 2018 will reduce the franking account by $12.2 million.
2018
$’M
1.4
2017
$’M
17.9
85
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
19. Capital management
19. Capital management
When managing capital, the Group’s objective is to ensure that it uses a mix of funding options, to optimise returns to equity
holders and manage risk. 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 and finance leases; 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 interest-bearing liabilities
Non-current interest-bearing liabilities
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.
2018
$’M
13.5
711.7
(52.0)
673.2
2,488.1
21.3%
2017
$’M
62.4
307.8
(43.2)
327.0
1,825.0
15.2%
86
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
20. Property, plant and equipment
20. Property, plant and equipment
2018
Opening net book value
Additions
Acquisitions of businesses
Net movement in landfill assets 2
Disposals
Transfer of assets
Revaluations
Depreciation
Closing net book value
Cost or fair value
Accumulated depreciation
Net book value
NON-LANDFILL
LAND AND
BUILDINGS
$’M
143.3
–
6.5
–
–
6.6
8.8
(2.3)
162.9
169.6
(6.7)
162.9
LANDFILL
ASSETS
$’M
241.7
–
–
(10.1)
(5.8)
26.9
–
(44.1)
208.6
575.5
(366.9)
208.6
LEASEHOLD
IMPROVEMENTS
$’M
43.7
–
2.3
–
–
8.8
–
(3.4)
51.4
62.3
(10.9)
51.4
PLANT AND
EQUIPMENT 1
$’M
447.3
–
184.3
–
(2.6)
177.5
–
(106.7)
699.8
1,742.7
(1,042.9)
699.8
CAPITAL WORK
IN PROGRESS
$’M
60.5
231.1
7.0
–
–
(221.1)
–
–
77.5
77.5
–
77.5
The carrying value of plant and equipment held under finance leases at 30 June 2018 was $98.8 million (2017: nil).
1
2 Net movement in landfill assets reflects adjustments to the remediation provision for open landfill sites. Refer to accounting policy note 38(k).
2017
Opening net book value
Additions
Acquisitions of businesses
Net movement in landfill assets
Disposals
Transfer of assets
Revaluations
Impairment of assets
Depreciation
Closing net book value
Cost or fair value
Accumulated depreciation
Net book value
NON-LANDFILL
LAND AND
BUILDINGS
$’M
160.2
–
–
–
–
(5.8)
(8.9)
–
(2.2)
143.3
150.0
(6.7)
143.3
LANDFILL
ASSETS
$’M
198.6
–
–
23.4
(5.2)
75.7
–
(1.9)
(48.9)
241.7
564.8
(323.1)
241.7
LEASEHOLD
IMPROVEMENTS
$’M
32.0
–
–
–
(0.1)
14.5
–
–
(2.7)
43.7
51.1
(7.4)
43.7
PLANT AND
EQUIPMENT
$’M
447.2
–
9.2
–
(1.2)
94.1
–
(2.5)
(99.5)
447.3
1,434.9
(987.6)
447.3
CAPITAL WORK
IN PROGRESS
$’M
59.1
175.5
–
–
–
(174.1)
–
–
–
60.5
60.5
–
60.5
TOTAL
$’M
936.5
231.1
200.1
(10.1)
(8.4)
(1.3)
8.8
(156.5)
1,200.2
2,627.6
(1,427.4)
1,200.2
TOTAL
$’M
897.1
175.5
9.2
23.4
(6.5)
4.4
(8.9)
(4.4)
(153.3)
936.5
2,261.3
(1,324.8)
936.5
87
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
20. Property, plant and equipment (continued)
20. Property, plant and equipment (c)
Accounting for landfill assets
The Group is responsible for a total of 14 landfills (2017: 15 landfills). Of the 14 landfills, eight are closed. Those that are
open are expected to close between 2019 and 2063. 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. The latest independent valuations were completed at 30 June 2018.
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:
2018
Residential
Regional industrial
Metropolitan industrial
Total
2017
Residential
Regional industrial
Metropolitan industrial
Total
LEVEL 1
$’M
–
–
–
–
–
–
–
–
LEVEL 2
$’M
0.6
–
–
0.6
0.2
–
–
0.2
LEVEL 3
$’M
–
52.0
110.3
162.3
–
40.5
102.6
143.1
TOTAL 1
$’M
0.6
52.0
110.3
162.9
0.2
40.5
102.6
143.3
AMOUNT
EXPENSED
$’M
–
–
(0.2)
(0.2)
(0.2)
(0.4)
–
(0.6)
1
The amounts in this table are based on the most recent valuation for each property and include subsequent accumulated depreciation recognised.
Amounts taken to the Consolidated Income Statement are shown in change in fair value of non-landfill 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).
88
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
20. Property, plant and equipment (continued)
20. Property, plant and equipment (c)
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
2018
$2-260
$172-1019
9.75%
$125
$100-1401
$15-575
$35-974
7%-10%
$40-153
$70-1831
RANGE
2017
$2-250
$172-1019
9.75%
$125
$60-1401
$15-360
$35-726
7%-10%
$40-153
$70-1831
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
Total net book value
2018
$’M
2017
$’M
77.8
75.2
73.6
(23.6)
50.0
127.8
72.4
(23.6)
48.8
124.0
89
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
21.
Intangible assets
21. Intangible assets
2018
Opening net book value
Additions
Acquisitions of businesses
Transfers from PPE
Amortisation
Closing net book value
Cost or fair value
Accumulated amortisation
Net book value
2017
Opening net book value
Additions
Acquisitions of businesses
Amortisation
Closing net book value
Cost or fair value
Accumulated amortisation
Net book value
GOODWILL
$’M
1,229.4
–
543.7
–
–
1,773.1
1,773.1
–
1,773.1
GOODWILL
$’M
1,219.9
–
9.5
–
1,229.4
1,229.4
–
1,229.4
LANDFILL
AIRSPACE
$’M
245.3
0.9
–
–
(6.3)
239.9
255.1
(15.2)
239.9
LANDFILL
AIRSPACE
$’M
247.3
2.1
–
(4.1)
245.3
254.2
(8.9)
245.3
BRAND
NAMES
$’M
78.6
–
–
–
–
78.6
78.6
–
78.6
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
11.2
–
151.1
–
(4.3)
158.0
195.2
(37.2)
158.0
OTHER
INTANGIBLES
$’M
20.8
5.7
7.2
2.2
(6.5)
29.4
66.4
(37.0)
29.4
BRAND
NAMES
$’M
78.6
–
–
–
78.6
78.6
–
78.6
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
7.1
–
8.3
(4.2)
11.2
44.1
(32.9)
11.2
OTHER
INTANGIBLES
$’M
15.1
10.0
–
(4.3)
20.8
51.3
(30.5)
20.8
TOTAL
$’M
1,585.3
6.6
702.0
2.2
(17.1)
2,279.0
2,368.4
(89.4)
2,279.0
TOTAL
$’M
1,568.0
12.1
17.8
(12.6)
1,585.3
1,657.6
(72.3)
1,585.3
Intangible assets are monitored at an operating segment level for the Solids and Toxfree business 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;
• Hydrocarbons; and
•
Industrial Services.
90
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
21.
Intangible assets (continued)
21. Intangible assets (c)
The carrying amount of goodwill and intangible assets allocated to the operating segment or CGUs is as follows:
2018
Goodwill
Brand names
Other intangible assets
Total
2017 Restated
Goodwill
Brand names
Other intangible assets
Total
LIQUIDS &
HAZARDOUS
WASTE
$’M
68.1
–
2.7
70.8
INDUSTRIAL
SERVICES
$’M
38.2
–
–
38.2
TOXFREE
$’M
534.5
–
151.0
685.5
CORPORATE
$’M
–
–
16.5
16.5
TOTAL
$’M
1,773.1
78.6
427.3
2,279.0
68.1
–
0.9
69.0
38.2
–
–
38.2
–
–
–
–
–
–
15.7
15.7
1,229.4
78.6
277.3
1,585.3
SOLIDS
$’M
1,132.3
78.6
257.1
1,468.0
1,123.1
78.6
260.7
1,462.4
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 2018.
Key assumptions used for annual impairment testing
As Toxfree has only recently been acquired, the recoverable value of the Toxfree group is assessed as the fair value of the
assets acquired less costs to sell. Fair value has been determined by reference to the acquisition price. There have been
no events subsequent to the acquisition that would result in an impairment.
For the remainder of the CGUs, recoverable amount is determined based on value-in-use calculations using five year
forecasted cash flows of the CGUs and a terminal value calculation, other than those associated with landfill assets. Cash
flows from the landfill assets are limited to the available airspace of the landfill. These calculations use cash flow projections
based on actual operating results, the 2019 budget approved by the Board and the latest five 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 2017 impairment testing were reviewed and have
been determined to remain valid for the 30 June 2018 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 2018 impairment testing have been adjusted
for known and anticipated future operational changes and additional potential risk identified since 30 June 2017. 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 2018.
91
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
21.
Intangible assets (continued)
21. Intangible assets (c)
The table below provides a summary of the key assumptions used in the impairment testing at 30 June 2018 and the
corresponding percentages for 30 June 2017:
ASSUMPTIONS
Revenue growth 1
EBITDA growth 1
Capital spend rate 2
Terminal value growth rate
Post-tax discount rate
Pre-tax discount rate
SOLIDS
LIQUIDS & HAZARDOUS
WASTE
JUNE
2018
5.0%
7.7%
10.3%
3.0%
7.7%
11.0%
JUNE
2017
4.8%
7.0%
10.2%
3.0%
7.7%
11.0%
JUNE
2018
4.2%
8.8%
6.2%
2.0%
7.7%
11.0%
JUNE
2017
5.5%
11.4%
6.2%
2.0%
7.7%
11.0%
HYDROCARBONS
INDUSTRIAL SERVICES
JUNE
2018
2.6%
4.1%
7.5%
2.0%
7.7%
11.0%
JUNE
2017
2.9%
3.6%
7.3%
2.0%
7.7%
11.0%
JUNE
2018
3.0%
10.2%
5.5%
2.0%
7.7%
11.0%
JUNE
2017
1.9%
7.3%
5.3%
2.0%
7.7%
11.0%
1 Growth rates have been calculated with 30 June 2018 revenue and underlying normalised EBITDA as a base.
Reflects capital spend as a percentage of revenue, calculated as the five year average of forecast spend.
2
Revenue growth assumptions
Solids’ forecast revenue growth is based on expected volume and price growth considering current business performance,
benefits from acquired businesses and growth from targeted initiatives implemented across major markets in order
to increase sales revenue. Growth rates have been determined with reference to external sources including the Reserve
Bank of Australia GDP growth and CPI forecast, and industry specific forecasts that are closely linked to waste generation.
The forecast revenue growth as at 30 June 2018 has been adjusted given an increase in forecast CPI and GDP growth.
Growth in the short term also reflects recent major new commercial and municipal contract wins.
Liquid & Hazardous Waste, Hydrocarbons and Industrial Services’ forecast revenue growth considers GDP and CPI,
adjusted for the Group’s best estimate of growth achievable in the current economic and competitive environment.
EBITDA growth assumptions
Solids’ forecast EBITDA growth is primarily based on changes in the revenue growth assumptions outlined above, together
with improved operating leverage associated with major contract wins.
The Liquid & Hazardous Waste CGU EBITDA growth of 8.8% reflects internalisation benefits, as well as the continued gains
from improved market conditions and performance experienced in the second half of the year ended 30 June 2018.
EBITDA growth in the Hydrocarbons CGU is driven by higher base oil volumes and stronger pricing. This is further supported
by expected improved production yields in the refineries.
The Industrial Services CGU reflects an increase in EBITDA growth which is driven by strategic pricing initiatives and the
expected improved sales pipeline in the infrastructure business.
Capital spend assumptions
Capital spend incorporates consideration of industry benchmarks but also reflects the continued capital discipline 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.
92
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
21.
Intangible assets (continued)
21. Intangible assets (c)
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 2018:
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 – (444.6)
Nil
Nil
Nil
Nil
LIQUIDS &
HAZARDOUS
WASTE
$’M
(19.2) – (114.4)
Nil
Nil
Nil
Nil
HYDROCARBONS
$’M
Nil
Nil
Nil
Nil
Nil
INDUSTRIAL
SERVICES
$’M
Nil – (7.0)
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
79.1
0.8%
3.6%
1.5%
3.4%
2.6%
HYDROCARBONS
$’M
34.1
3.6%
5.9%
2.4%
8.0%
5.3%
SOLIDS
$’M
626.2
1.1%
3.0%
2.0%
3.0%
1.6%
INDUSTRIAL
SERVICES
$’M
42.3
1.7%
4.0%
1.3%
2.6%
2.0%
1
2
Percentage changes presented above represents the absolute change in the assumption value (for example post-tax discount rate increasing by 1.6%
from 7.7% to 9.3%).
Terminal value for Liquids and Hazardous Waste, Hydrocarbons and Industrial Services 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.
93
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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
2018
%
2017
%
50
50
50
50
50
50
50
–
50
50
NAME OF ENTITY
Joint ventures:
Wonthaggi Recyclers Pty Ltd
Earthpower Technologies Sydney Pty Ltd
Tomra Cleanaway Pty Ltd 1
COUNTRY
Australia
Australia
Australia
30 June
30 June
30 June
Associates:
Total Waste Management Pty Ltd
Western Resource Recovery Pty Ltd
Australia 31 December
Australia 31 December
1
The Group acquired a 50% interest in Tomra Cleanaway on 17 July 2017.
(a)
Share of (loss)/profit from joint ventures
Revenues
Expenses
(Loss)/profit before income tax (100%)
Share of (loss)/profit before income tax
Income tax benefit/(expense)
Share of (loss)/profit after tax
Dividend received in excess of carrying value
Share of net (loss)/profit recognised
(b)
Share of profit from associates
Revenues
Expenses
Profit before income tax (100%)
Share of profit before income tax
Income tax expense
Share of net profit recognised
CARRYING VALUE
OF INVESTMENT
2018
$’M
–
–
2.5
5.5
5.8
13.8
2018
$’M
19.0
(22.6)
(3.6)
(1.8)
0.5
(1.3)
0.2
(1.1)
2018
$’M
27.5
(24.7)
2.8
1.4
(0.4)
1.0
2017
$’M
0.7
–
–
5.5
5.3
11.5
2017
$’M
9.0
(7.4)
1.6
0.8
(0.2)
0.6
–
0.6
2017
$’M
27.5
(25.8)
1.7
0.9
(0.3)
0.6
94
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
22. Equity accounted investments (continued)
22. Equity accounted investments (c)
Transactions with equity accounted investments
(c)
The following table provides the total amount of transactions with equity accounted investments during the year ended
30 June 2018.
Joint ventures
Associates
Joint ventures
Associates
SALES TO EQUITY
ACCOUNTED
INVESTMENTS
PURCHASES FROM
EQUITY ACCOUNTED
INVESTMENTS
INTEREST REVENUE FROM
EQUITY ACCOUNTED
INVESTMENTS
2018
$’M
18.0
2.2
20.2
2017
$’M
–
1.4
1.4
2018
$’M
1.9
3.4
5.3
2017
$’M
1.3
3.6
4.9
2018
$’M
0.1
–
0.1
2017
$’M
–
–
–
TRADE AMOUNTS OWED
BY EQUITY ACCOUNTED
INVESTMENTS
TRADE AMOUNTS OWED
TO EQUITY ACCOUNTED
INVESTMENTS
LOANS TO EQUITY
ACCOUNTED
INVESTMENTS 1
2018
$’M
0.1
0.3
0.4
2017
$’M
–
0.2
0.2
2018
$’M
–
–
–
2017
$’M
–
0.1
0.1
2018
$’M
3.8
–
3.8
2017
$’M
–
–
–
1
This represents an unsecured loan to Tomra Cleanaway Pty Ltd. The loan is repayable in full on 22 November 2022.
(d) 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
2018
$’M
63.7
(36.1)
27.6
13.8
2017
$’M
39.6
(16.7)
22.9
11.5
Impairment losses and commitments
(e)
During the year the equity accounted investments were tested for impairment and no adjustments were made as a result
(2017: nil). As at the reporting date the Group had no contractual obligation to provide funding for capital commitments
of equity accounted investments (2017: nil).
23. Employee entitlements
23. Employee entitlements
Current
Annual leave
Long service leave
Other
Total current employee entitlements
Non-current
Long service leave
Total non-current employee entitlements
2018
$’M
33.8
22.6
19.3
75.7
4.5
4.5
2017
$’M
23.2
11.5
11.3
46.0
8.4
8.4
Refer to note 38(q) for the Group’s accounting policy on employee entitlements.
During the year the Group contributed $29.4 million (2017: $28.1 million) to defined contribution plans. These contributions
are expensed as incurred.
95
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
24. Provisions
24. Provisions
Current
Rectification provisions
Remediation provisions
Other
Total current provisions
Non-current
Rectification provisions
Remediation provisions
Other
Total non-current provisions
2018
$’M
14.7
35.6
11.3
61.6
17.5
241.4
12.4
271.3
2017
$’M
13.6
29.5
12.5
55.6
25.7
264.0
12.9
302.6
Included in other provisions is an amount of $14.3 million (2017: $12.9 million) in relation to workers compensation
self-insurance of the Group under the Comcare scheme. This amount is comprised of $4.0 million (2017: $3.9 million)
classified as current and $10.3 million (2017: $9.0 million) classified and non-current. The provision for workers
compensation represents the future claim payments required under the Safety, Rehabilitation and Compensation Act 1998,
and associated expenses, in respect of claims incurred from 1 July 2006, being the commencement of the self-insurance
arrangements, up to 30 June 2018. The provision has been calculated using a claim inflation rate of 3.01% (2017: 2.90%)
and a discount rate of 2.73% (2017: 2.82%). The workers compensation self-insurance provision is reassessed annually
based on actuarial advice.
The table below provides a roll forward of the provisions:
Opening balance
Provisions acquired
Provisions made
Provisions used or reversed
Provisions disposed
Unwinding of discount
Change in assumptions 1
Rectification and remediation spend
Closing balance
RECTIFICATION
REMEDIATION
OTHER
TOTAL
2018
$’M
39.3
–
–
–
(0.1)
0.7
(3.2)
(4.5)
32.2
2017
$’M
54.5
–
–
–
(6.3)
1.1
(0.6)
(9.4)
39.3
2018
$’M
293.5
18.3
4.2
–
(5.3)
7.0
(8.2)
(32.5)
277.0
2017
$’M
319.6
–
9.3
–
(21.7)
7.9
11.5
(33.1)
293.5
2018
$’M
25.4
1.8
13.2
(16.7)
–
–
–
–
23.7
2017
$’M
27.2
–
16.5
(18.3)
–
–
–
–
25.4
2018
$’M
358.2
20.1
17.4
(16.7)
(5.4)
7.7
(11.4)
(37.0)
332.9
2017
$’M
401.3
–
25.8
(18.3)
(28.0)
9.0
10.9
(42.5)
358.2
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% (2017: 2.81%). Refer to note 38(o) for a summary of the accounting policy for provisions for landfill remediation
and rectification.
96
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
25. Other liabilities
25. Other liabilities
Current
Deferred settlement liabilities 1
Landfill creation liability 2
Deferred revenue
Other liabilities
Total current other liabilities
Non-current
Deferred settlement liabilities 1
Landfill creation liability 2
Other liabilities
Total non-current other liabilities
2018
$’M
5.2
17.3
2.4
0.1
25.0
76.4
54.5
0.3
131.2
2017
$’M
5.7
13.6
0.7
2.1
22.1
74.9
58.5
–
133.4
1
2
Of the total deferred settlement liabilities of $81.6 million (2017: $80.6 million), $81.0 million (2017: $80.1 million) relates to the acquisition of Melbourne
Regional Landfill, acquired on 28 February 2015. The deferred consideration 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 and was determined using a discount rate of 7%.
The landfill creation liability relates to Melbourne Regional Landfill and is the amount payable to Boral in relation to airspace progressively made available
by Boral. Cleanaway pay Boral for the airspace as the airspace is consumed, however the liability arises as Cleanaway takes control of the airspace.
26. Acquisition of businesses and non-controlling interest
26. Acquisition of businesses and non-controlling interest
Year ended 30 June 2018
Tox Free Solutions Limited
On 11 May 2018, the Group completed the acquisition of 100% of the shares on issue in Tox Free Solutions Limited
(Toxfree), a major waste management company with a national footprint in Australia.
Toxfree contributed the following to the Group:
Revenue
Profit from operations before depreciation and amortisation
Depreciation expense
Amortisation of intangibles
Profit from operations
Net finance costs
Profit before tax
From acquisition date to
30 June 2018
$’M
70.7
12.7
(4.7)
(1.9)
6.1
(1.0)
5.1
If Toxfree had been
acquired at the beginning
of the reporting period
$’M
495.5
56.6
(32.9)
(14.9)
8.8
(8.6)
0.2
97
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
26. Acquisition of businesses and non-controlling interest (continued)
26. Acquisition of businesses and non-controlling interest (c)
The provisional fair values of the identifiable assets and liabilities as at the date of acquisition were:
Assets
Cash and cash equivalents
Trade and other receivables
Current tax receivable
Inventories
Other current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Liabilities
Trade and other payables
Interest-bearing liabilities
Employee entitlements
Provisions
Deferred tax liabilities
Total identifiable net assets at fair value
Non-controlling interest
Goodwill arising on acquisition
Purchase consideration 1
$’M
26.8
86.2
3.0
3.4
6.4
191.5
152.9
21.7
491.9
170.1
211.2
20.5
19.5
48.0
469.3
22.6
(0.3)
534.5
556.8
1 Cleanaway entered into a Scheme Implementation Deed with Toxfree shareholders, under which Cleanaway acquired the share capital of Toxfree for a total
cash payment of $3.425 per share, totalling $670.3 million. The cash consideration comprised:
A fully franked Special Dividend of $0.58 per Toxfree share, totalling $113.5 million, which was paid on 23 May 2018, after the acquisition date. The dividend
payable was included in the net assets acquired and was subsequently settled by Toxfree. The record date of the Special Dividend was 16 May 2018.
Scheme consideration of $2.845 per Toxfree share, totalling the purchase consideration of $556.8 million.
The intangible assets identified as part of the acquisition include customer intangibles, licenses to operate and software.
Customer assets relate to the expected future revenue from existing contracts and the ongoing relationship between
Toxfree and its customers as at the date of acquisition. The multi-period excess earnings method has been adopted to value
customer assets.
Toxfree have various development approvals and licences across all operating states and territories of Australia. The cost
replication approach has been applied to value licences in the Technical and Environmental Services business of Toxfree. A
variation of the income approach, referred to as the “with and without” approach, has been applied to value licences in the
Health Services business of Toxfree.
Goodwill acquired reflects the synergies expected from the acquisition, in that Toxfree provides a highly complementary set
of business streams for the Group and provides opportunities for future site consolidation. Goodwill is non-deductible for
income tax purposes.
Net cash acquired (included in cash flows from financing activities)
Cash paid (included in cash flows from financing activities)
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
2018
$’M
26.8
(556.8)
(11.5)
(541.5)
98
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
26. Acquisition of businesses and non-controlling interest (continued)
26. Acquisition of businesses and non-controlling interest (c)
Other business combinations
In addition to the acquisition of Toxfree, the Group completed two other business combinations during the year ended
30 June 2018. Details of these business combinations are provided below:
BUSINESS ACQUIRED
SA Waste
DATE OF ACQUISITION
3 July 2017
Tip Top ‘n’ Tidy
1 February 2018
DESCRIPTION OF THE BUSINESS
Waste collection and resource recovery business based
in Adelaide, South Australia.
Waste management business based in Beresfield,
New South Wales.
The provisional fair value of the identifiable assets and liabilities of the two business combinations at their dates
of acquisition were:
Assets
Inventories
Property, plant and equipment
Intangible assets
Deferred tax assets
Liabilities
Trade and other payables
Employee entitlements
Provisions
Deferred tax liability
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
$’M
0.1
8.6
5.4
0.4
14.5
0.3
0.6
0.6
1.6
3.1
11.4
9.2
20.6
The intangible assets identified as part of the acquisitions included customer contract and customer relationship intangibles.
These intangible assets were valued based on the expected cash flows from the customers of the acquired businesses,
applying the existing contracted terms for the customer contracts and an expected attrition rate of the customer base for the
customer relationship intangible. Goodwill acquired comprises the value of expected synergies arising from integration of the
acquired businesses and is non-deductible for income tax purposes.
99
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
26. Acquisition of businesses and non-controlling interest (continued)
26. Acquisition of businesses and non-controlling interest (c)
Cash
Total purchase consideration
Transaction costs of the acquisitions (included in cash flows from operating activities)
Cash consideration paid (included in cash flows from investing activities)
Net cash flow on acquisition
2018
$’M
20.6
20.6
2018
$’M
(0.1)
(20.6)
(20.7)
From the dates of acquisition to 30 June 2018, the SA Waste and Tip Top ‘n’ Tidy acquisitions contributed $16.6 million
of revenue and $0.6 million to profit before tax to the Group, after amortisation of customer intangibles of $0.6 million.
If both businesses had been acquired at the beginning of the reporting period, revenue of $20.2 million and profit before
tax of $1.0 million, after amortisation of customer intangibles of $0.8 million, would have been contributed to the Group.
Year ended 30 June 2017
Business combinations
During the year ended 30 June 2017, the Group completed four business combinations. Details of these business
combinations are provided below:
BUSINESS ACQUIRED
Waste 2 Resources
DATE OF ACQUISITION
1 July 2016
Young Ezy Bins
1 August 2016
Matera Waste
8 September 2016
Warren Blackwood
30 September 2016
DESCRIPTION OF THE BUSINESS
Collections business based in Brisbane, Queensland which
operates in three sectors: Construction and demolition
collections; Commercial and Industrial collections; and
Resource recovery centres.
General Waste collections business based in the Young Shire
in Central New South Wales.
Construction and demolition collections business operating
in Perth, Western Australia.
Leading waste collection and transfer station business
in SouthWest Western Australia, servicing commercial and
industrial customers and 13 municipal council contracts.
The aggregated fair value of the identifiable assets and liabilities of the four business combinations at their dates
of acquisition were:
Assets
Property, plant and equipment
Intangible assets
Liabilities
Employee entitlements
Deferred tax liability
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
2017
$’M
9.2
8.3
17.5
0.7
2.3
3.0
14.5
9.5
24.0
100
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
26. Acquisition of businesses and non-controlling interest (continued)
26. Acquisition of businesses and non-controlling interest (c)
The intangible assets identified as part of the acquisitions included customer contract and customer relationship intangibles.
These intangible assets were valued based on the expected cash flows from the customers of the acquired businesses,
applying the existing contracted terms for the customer contracts and an expected attrition rate of the customer base for the
customer relationship intangible. Goodwill acquired comprises the value of expected synergies arising from integration of the
acquired businesses and is non-deductible for income tax purposes.
Cash
Contingent consideration
Total purchase consideration
Transaction costs of the acquisitions (included in cash flows from operating activities)
Cash consideration paid (included in cash flows from investing activities)
Net cash flow on acquisition
2017
$’M
23.5
0.5
24.0
2017
$’M
(1.6)
(23.5)
(25.1)
From the dates of acquisition to 30 June 2017, the businesses contributed $20.8 million of revenue and $1.2 million to profit
before tax to the Group, after amortisation of customer intangibles of $1.0 million. If the businesses had all been acquired
at the beginning of the reporting period, revenue of $24.1 million and profit before tax of $1.3 million, after amortisation
of customer intangibles of $1.2 million would have been contributed to the Group.
Acquisition of additional interest in Cleanaway Refiners Pty Ltd
On 25 July 2016 the Group acquired the non-controlling interest in Cleanaway Refiners Pty Ltd for $2.5 million. Prior to the
acquisition the Group held a 50% controlling interest in this entity.
Cash consideration paid to non-controlling shareholders
Carrying value of the additional interest in Cleanaway Refiners Pty Ltd
Gain recognised in retained earnings
2017
$’M
2.5
(6.6)
(4.1)
101
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
27. Subsidiaries
27. Subsidiaries
The Group’s principal subsidiaries at 30 June 2018 are set out below.
EFFECTIVE INTEREST 4
Active Industrial Solutions Pty Ltd 2, 3
AJ Baxter Pty Ltd 2
Baxter Business Pty Ltd 2
Baxter Recyclers Pty Ltd 2
Cleanaway Equipment Services Pty Ltd 2
Cleanaway Hygiene Pty Ltd 2
Cleanaway Industrial Solutions Pty Ltd 2
Cleanaway Landfill Holdings Pty Ltd 2
Cleanaway (No. 1) Pty Ltd 2, 3
Cleanaway Operations Pty Ltd 2
Cleanaway Organics Pty Ltd 2
Cleanaway Pty Ltd 2
Cleanaway Recycling Pty Ltd 2
Cleanaway Refiners Pty Ltd 2
Cleanaway Resource Recycling Pty Ltd 2
Cleanaway Solid Waste Pty Ltd 2
Cleanaway Superior Pak Pty Ltd 2
Cleanaway Waste Management Limited (Parent entity)
Daniels FMD Pty Ltd 2, 3
Daniels Health Australia Pty Ltd 2, 3
Daniels Health Laboratory Products Pty Ltd 2, 3
Daniels Health NSW Pty Ltd 2, 3
Daniels Health Pty Ltd 2, 3
Daniels Health Services Pty Ltd 2, 3
Daniels Health VIC Pty Ltd 2, 3
Daniels Health Wollongong Pty Ltd 2, 3
Daniels Manufacturing Australia Pty Ltd 2, 3
Enviroguard Pty Ltd 2
Environmental Recovery Services Pty Ltd 2
Landfill Land Holdings Pty Ltd 2
Landfill Operations Pty Ltd 2
Mann Waste Management Pty Ltd 2
Max T Pty Ltd 2
Nationwide Oil Pty Ltd 2
NQ Resource Recovery Pty Ltd 2
Olmway Pty Ltd 1
Oil & Fuel Salvaging Queensland Pty Ltd 2
Pilbara Logistics Pty Ltd 2, 3
PT Environmental Services Pty Ltd 2, 3
PTK Environmental Services Pty Ltd
PTW Environmental Pty Ltd 1
PTW Environmental Services Pty Ltd
Redlam Waste Services Pty Ltd 2, 3
Rubus Holdings Pty Ltd 2
Rubus Intermediate One Pty Ltd 2
Rubus Intermediate Two Pty Ltd 2
RWS Admin Pty Ltd 2, 3
Sterihealth Sharpsmart Pty Ltd 2, 3
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
70
50
75
100
100
100
100
100
100
2017
%
–
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
–
–
–
–
–
–
–
–
–
100
100
100
100
100
–
100
100
50
100
–
–
–
–
–
–
100
100
100
–
–
102
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
27. Subsidiaries (continued)
27. Subsidiaries (c)
T Environmental Services Pty Ltd 2, 3
Tox Free Australia Pty Ltd 2, 3
Tox Free Solutions Limited 2, 3
Transpacific Baxter Pty Ltd 2
Transpacific Cleanaway Holdings Pty Ltd 2
Transpacific Co Pty Ltd 2
Transpacific Environmental Services Pty Ltd 2
Transpacific Resources Pty Ltd 2
Transwaste Technologies Pty Ltd 2
Transwaste Technologies (1) Pty Ltd 2
Waste Management Pacific (SA) Pty Ltd 2
Waste Management Pacific Pty Ltd 2
EFFECTIVE INTEREST 4
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
2017
%
–
–
–
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.
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.
These subsidiaries are parties to a new Deed of Cross Guarantee with Cleanaway Waste Management Limited created on 25 June 2018 pursuant to ASIC
Class Order 2016/785 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.
These subsidiaries became party to the Deed of Cross Guarantee with Cleanaway Waste Management Limited during the period.
2
3
4 All entities were incorporated in Australia.
103
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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
Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Share of (losses)/profits from equity accounted investments
Profit from operations before depreciation and amortisation
Depreciation and amortisation expense
Impairment of assets
Change in fair value of non-landfill land and buildings
Profit from operations
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Revaluation of land and buildings
Net comprehensive income recognised directly in equity
Total comprehensive income for the year
Refer to note 27 for details of subsidiaries who are a party to the Deed of Cross Guarantee.
2018
$’M
1,711.9
5.1
(641.8)
(469.8)
(168.4)
(49.1)
(64.0)
(0.1)
323.8
(173.6)
–
(0.2)
150.0
(31.5)
118.5
(14.5)
104.0
6.3
6.3
110.3
2017
$’M
1,460.8
22.4
(589.4)
(359.0)
(131.8)
(40.1)
(70.0)
1.2
294.1
(165.9)
(4.4)
(0.6)
123.2
(34.1)
89.1
(30.4)
58.7
(5.7)
(5.7)
53.0
104
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
28. Deed of cross guarantee (continued)
28. Deed of cross guarantee (c)
BALANCE SHEET
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Other financial assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Interest-bearing liabilities
Employee entitlements
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Employee entitlements
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
2018
$’M
2017
$’M
50.9
368.7
21.0
7.7
24.2
472.5
1,200.2
2,278.8
13.8
51.9
11.5
3.9
3,560.1
4,032.6
244.9
–
13.5
75.7
61.6
25.0
420.7
711.7
4.5
271.3
135.2
1,122.7
1,543.4
2,489.2
2,671.0
51.5
(233.3)
2,489.2
43.2
247.9
11.1
–
32.6
334.8
936.5
1,585.1
11.5
87.7
2.6
–
2,623.4
2,958.2
177.6
10.7
62.4
46.0
55.6
22.1
374.4
307.8
8.4
302.6
133.6
752.4
1,126.8
1,831.4
2,083.0
40.0
(291.6)
1,831.4
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.
105
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
29. Parent entity
29. Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total equity
(Loss)/profit for the period
Total comprehensive (loss)/income 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
2018
$’M
7.4
3,433.4
5.7
629.1
2,671.0
116.9
16.4
2,804.3
(8.1)
(8.1)
2017
$’M
17.6
2,648.1
80.0
389.0
2,083.0
164.9
11.2
2,259.1
124.0
124.0
2018
$’M
–
–
2017
$’M
8.3
8.3
In December 2017, the Group settled the foreign currency swap it held 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. 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 and liabilities 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 foreign currency risk associated with the US Private Placement (USPP) Notes was economically hedged by a foreign
currency swap for the currency exposure, which was in place since inception, and converted to AUD fixed rate debt.
Although the Group’s related foreign currency risk was economically hedged, hedge accounting was not applied.
106
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
31. Financial risk management (continued)
31. Financial risk management (c)
The value of the USPP Notes at 30 June 2018 and 30 June 2017 is shown in the table below:
US PRIVATE PLACEMENT NOTES
30 June 2018
30 June 2017
Interest rate risk
USD
$’M
–
48.0
AUD
$’M
–
62.4
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 2018, 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)
CEFC Facility
Lease liabilities
Variable rate instruments
Borrowings
30 JUNE 2018
30 JUNE 2017
WEIGHTED
AVERAGE
INTEREST RATE
%
–
4.5
4.9
3.5
WEIGHTED
AVERAGE
INTEREST RATE
%
10.8
–
–
BALANCE
$’M
–
(89.3)
(101.7)
(191.0)
BALANCE
$’M
(62.4)
–
–
(62.4)
(534.2)
(534.2)
3.1
(307.8)
(307.8)
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, based on borrowings at the
reporting date would have increased/(decreased) profit by $5.3 million (2017: $3.1 million).
Credit risk
(b)
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 in accordance with the Group’s Treasury policy where it only deals with large reputable
financial institutions.
107
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
31. Financial risk management (continued)
31. Financial risk management (c)
The Group’s maximum exposure to credit risk at the reporting date was:
CARRYING AMOUNT
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Other financial assets 1
NOTES
11
12
30
2018
$’M
52.0
369.5
–
4.2
425.7
2017
$’M
43.2
247.9
8.3
–
299.4
1
Financial assets include a loan to joint ventures of $3.8 million (2017: nil). Refer to note 22.
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 2018 is $279.8 million (2017: $230.2 million). The current
portion of the Group’s borrowings at 30 June 2018 is nil (2017: $62.4 million). The Group considers liquidity risk to be low
due to the level of unutilised facilities available, the level of headroom in each covenant measure and the maturity profile
of existing facilities.
To meet the ongoing requirements for sufficient guarantor coverage under the Group’s main unsecured finance facilities,
the Group plans to have certain Toxfree legal entities become guarantors. Prior to this occurring it is a requirement of the
Corporations Act 2001 for the shareholders of Cleanaway Waste Management Limited, as the ultimate listed company,
to approve the accession of the Toxfree entities as guarantors. There is a risk that shareholders do not pass the resolution
approving the accession of the Toxfree entities which would result in a default under the terms of the Group’s finance
agreements, and subject to counterparties exercising their rights, may lead to amounts under these facilities becoming
due and payable. This approval will be sought at the October 2018 annual general meeting.
The following table discloses the contractual maturities of financial liabilities, including estimated interest payment and
excluding the impact of netting agreements:
2018
Unsecured borrowings
Lease liabilities
Trade and other payables
Other financial liabilities
Total
2017
US Private Placement Notes
Unsecured bank loans
Trade and other payables
Other financial liabilities
Total
< 1
YEAR
$’M
26.0
17.6
246.2
22.5
312.3
65.1
9.7
177.6
21.4
273.8
1 – 2
YEARS
$’M
26.0
16.4
–
25.4
67.8
–
23.2
–
22.1
45.3
2 – 5
YEARS
$’M
580.4
58.2
–
55.0
693.6
–
309.4
–
65.1
374.5
> 5
YEARS
$’M
187.7
29.4
–
198.4
415.5
CONTRACTUAL
CASH FLOWS
$’M
820.1
121.6
246.2
301.3
1,489.2
CARRYING
AMOUNT
$’M
623.5
101.7
246.2
153.4
1,124.8
–
–
–
119.3
119.3
65.1
342.3
177.6
227.9
812.9
62.4
307.8
177.6
154.8
702.6
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 $153.4 million (2017: $135.3 million) in relation to these bank guarantees and insurance bonds.
Refer to note 33(d) for details of the Group’s guarantees.
108
108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
31. Financial risk management (continued)
31. Financial risk management (c)
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 or 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.
There were no transfers between levels during the year.
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:
2018
Assets
Derivative financial instruments – USD foreign currency swap
2017
Assets
Derivative financial instruments – USD foreign currency swap
LEVEL 1
$’M
LEVEL 2
$’M
LEVEL 3
$’M
TOTAL
$’M
–
–
–
8.3
–
–
–
8.3
The carrying value of all financial assets and liabilities other than derivative financial instruments approximate fair value.
109
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
32. Contingent liabilities
32. Contingent liabilities
Taxation authority reviews
New Zealand Inland Revenue has completed its review of certain taxation matters which arose during the period of the
Group’s ownership of the New Zealand business. The review of one matter is still outstanding however the Group had
previously determined the potential amount of tax payable for this outstanding matter, and included this amount in the
tax liability provision. The Group intends to vigorously defend the remaining outstanding matter. No contingent liabilities
are outstanding following the finalisation of the New Zealand Inland Revenue review in December 2017.
Other claims
On 18 August 2014, a Cleanaway vehicle was involved in a motor vehicle accident on the South Eastern Freeway in Glen
Osmond, South Australia. The incident resulted in the death of two members of the public, and two other persons were
seriously injured. During the year ended 30 June 2017, Cleanaway was charged with work health and safety offences in
relation to the incident and there is a potential that other claims may emerge in due course. The extent of Cleanaway’s
liability and the timing for these matters to be resolved is not known at this time.
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.
110
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
33. Commitments
33. Commitments
(a) Operating lease commitments
The Group leases property, plant and equipment under operating leases expiring over terms generally not exceeding
10 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
2018
$’M
38.1
96.3
85.1
219.5
2017
$’M
24.4
61.9
54.5
140.8
Finance lease commitments
(b)
The Group has finance leases for various items of property, plant and equipment. The Group’s obligations under finance
leases are secured by the lessor’s title to the leased assets. Future minimum lease payments under finance leases, together
with the net present value of minimum lease payments are as follows:
MINIMUM LEASE PAYMENTS
Within one year
Between one and five years
More than five years
Total
Amounts representing future finance charges
2018
$’M
17.6
74.5
29.4
121.5
(19.8)
101.7
2017
$’M
PRESENT VALUE OF PAYMENTS
2017
$’M
–
–
–
–
–
–
2018
$’M
13.5
60.9
27.3
101.7
–
101.7
–
–
–
–
–
–
Capital expenditure and other commitments
(c)
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
2018
$’M
28.4
0.5
28.9
2017
$’M
70.2
5.5
75.7
(d) Guarantees
The Group is, in the normal course of business, required to provide guarantees and letters of credit on behalf of subsidiaries,
joint ventures 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 contractual performance
Insurance bonds outstanding at balance date in respect of contractual performance
2018
$’M
122.8
30.6
153.4
2017
$’M
123.7
11.6
135.3
111
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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 2017
GRANTED
DURING THE
PERIOD
VESTED DURING
THE PERIOD
FORFEITED/
EXPIRED
DURING THE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2018
LONG TERM INCENTIVE PLAN
2014 LTI
2015 LTI
2016 LTI (A)
2016 LTI (B)
2017 LTI (A)
2017 LTI (B)
2018 LTI
24 Mar 2014 30 Jun 2017
10 Mar 2015 30 Jun 2017
30 Oct 2015 30 Jun 2018
16 Mar 2016 30 Jun 2018
7 Oct 2016 30 Jun 2019
2 Nov 2016 30 Jun 2019
3 Nov 2017 30 Jun 2020
SHORT TERM INCENTIVE PLAN
2016 STI
2017 STI
7 Oct & 2 Nov 2016 30 Jun 2017
9 Oct 2017 30 Jun 2018
1,278,240
1,819,928
2,838,220
2,524,116
2,301,952
2,370,716
–
509,480
–
–
–
–
–
–
–
3,371,419
421,950
(516,286)
(280,999)
–
–
–
–
–
(509,480)
–
(761,954)
(628,965)
–
(243,426)
(208,766)
–
(60,115)
–
909,964
2,838,220
2,280,690
2,093,186
2,370,716
3,311,304
–
–
–
421,950
OTHER GRANTS
One-off (A)
Total
Vested and exercisable at 30 June 2018
20 Aug 2015
3 Aug 2017
328,947
13,971,599
–
3,793,369
(328,947)
(1,635,712)
–
–
(1,903,226) 14,226,030
421,950
The vesting date for LTI offers is on or after 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.
112
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
34. Share-based payments (continued)
34. Share-based payments (c)
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:
PERFORMANCE
PERIOD
Overview
2015 LTI AWARD
UP TO 4 YEARS: 1 JULY 2014
TO 30 JUNE 2018
2016 LTI AWARD
UP TO 3 YEARS: 1 JULY 2015
TO 30 JUNE 2018
2017 LTI AWARD
UP TO 3 YEARS: 1 JULY 2016
TO 30 JUNE 2019
Performance rights, of which:
Performance rights, of which:
Performance rights, of which:
Measured over 3 years to
30 June 2017
Measured over 3 years to
30 June 2018
Measured over 3 years to
30 June 2018
• Up to 25% vest if
• Up to 50% vest if a certain
• Up to 50% vest if a certain
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
relative TSR ranking is achieved
against the constituents of the
S&P/ASX 200 Industrial
Sector Index
• Up to 50% vest if a certain
Return on Invested Capital
target is achieved
relative TSR ranking
is achieved against the
constituents of the
S&P/ASX 200 Industrial
Sector Index
• Up to 25% vest if a certain
Return on Invested Capital
target is achieved
• Up to 25% vest if a certain
Earnings per share
Compound Annual
Growth Rate target
is achieved
Offer made in current reporting period – 2018 LTI award
During the period, the Group issued performance rights attached to the Group’s LTI plan to the CEO and other senior
executives. The performance rights will vest in three 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 25% of performance rights vest if a certain Return on Invested Capital (ROIC) target is achieved.
• Tranche 3 – Up to 25% of performance rights vest if a certain underlying earnings per share (EPS) compound annual
growth rate (CAGR) 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.
113
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
34. Share-based payments (continued)
34. Share-based payments (c)
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
Fair value – EPS CAGR tranche
2018 LTI
3,371,419
3 November 2017
1 July 2017 – 30 June 2020
1.92%
35.0%
$1.03
$1.48
$1.48
1
Expected volatility is based on the historic volatility of Cleanaway shares over a range of periods.
The performance targets of the 2018 LTI award are set out in the table below.
Relative TSR performance
measured over 3 years
from 1 July 2017 to 30
June 2020
ROIC performance as
measured for the year
ending 30 June 2020
EPS CAGR performance
measured over 3 years
from 1 July 2017 to 30
June 2020
Relative Total Shareholder Return (TSR) Ranking against the constituents of the S&P/ASX200
Industrial Sector Index:
• Below 50th percentile – 0% vesting
• At the 50th percentile – 50% vesting
• 50th to 75th percentile – straight line vesting between 50% and 100%
• Above 75th percentile – 100% vesting
Return On Invested Capital (ROIC) to be achieved:
• < 5.25% – 0% vesting
• 5.25% – 20% vesting
• > 5.25% – ≤ 5.75% – straight line vesting between 20% and 50%
• > 5.75% – ≤ 6.5% – straight line vesting between 50% and 100%
• > 6.5% – 100% vesting
Earnings per Share Compound Annual Growth Rate (EPS CAGR) to be achieved:
• < 7.5% – 0% vesting
• 7.5% – 20% vesting
• > 7.5% – ≤ 10.0% – straight line vesting between 20% and 50%
• > 10.0% – ≤ 12.5% – straight line vesting between 50% and 100%
• > 12.5% – 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
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
at the grant date with vesting subject to a two-year service condition. The service condition has been met and these
performance rights vested on 3 August 2017.
114
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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:
Other advisory services
2018
$
2017
$
1,191,401
968,625
280,418
82,235
29,561
1,501,380
20,600
1,071,460
36. Events occurring after the reporting date
36. Events occurring after the reporting date
On 12 July 2018, the Group entered into a binding agreement with Resource Co Holdings Pty Ltd (ResourceCo) to acquire
a 50% interest in ResourceCo’s new Resource Recovery facility located at Wetherill Park in Western Sydney. The purchase
price for the 50% interest comprises a $25.0 million payment at completion, plus deferred consideration of up to a further
$25.0 million, payable in two instalments over two years once the facility generates agreed earnings targets. Under the
agreement, Cleanaway has control over the acquired entity post-acquisition and will apply the acquisition method to account
for the business combination, whereby it will recognise and measure the assets and liabilities of the entity, plus the
non-controlling interest related to ResourceCo’s 50% interest in the entity, and recognise and measure any residual goodwill.
The initial accounting for the business combination was 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 7 August 2018, Cleanaway announced that it had received $25.0 million, being the outstanding tax receivable
in relation to total income tax refunds of $29.4 million related to amended tax assessments lodged in respect of the
Group’s 30 June 2013 to 30 June 2017 tax returns. Further information is provided in note 9 to the Financial Statements.
115
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
37. Related party transactions
37. Related party transactions
(a) Key management personnel
Disclosures relating to key management personnel (KMP) are set out in the Remuneration Report on pages 49 to 64.
The KMP compensation included in employee expenses are as follows:
Short-term employee benefits
Post-employment benefits
Equity compensation benefits
2018
$
4,691,092
127,876
2,086,737
6,905,705
2017
$
4,253,194
127,451
1,299,836
5,680,481
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. Transactions with entities where
the relationship is limited to a common Non-Executive Directorship, including any Chairperson roles, are not considered
related party transactions. 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.
(b) Wholly-owned Group transactions
The wholly-owned Group consists of Cleanaway Waste Management Limited and its subsidiaries listed at note 27.
Transactions between Cleanaway Waste Management Limited and other entities in the wholly-owned Group during
the years ended 30 June 2018 and 30 June 2017 consisted of:
(i) Loans advanced by Cleanaway Waste Management Limited and other subsidiaries;
(ii) Loans repaid to Cleanaway Waste Management Limited and other subsidiaries;
(iii) The payment of interest on the above loans;
(iv) The payment of dividends to Cleanaway Waste Management Limited and other subsidiaries;
(v) Management fees charged to subsidiaries; and
(vi) Sales between subsidiaries.
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 years
ended 30 June 2018 and 30 June 2017, except as presented in note 22.
116
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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.
117
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
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.
118
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
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)
During the year, the Group had 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.
119
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
Landfill sales
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:
•
•
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 is 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
120
120
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
(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.
121
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
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.
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 requirements.
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.
122
122
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
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 entitlements
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.
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.
123
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
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.
(s)
(i)
Basis of consolidation
Subsidiaries
The Consolidated Financial Report comprises the financial statements of the Group and its subsidiaries as at 30 June 2018.
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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
38. Significant accounting policies (continued)
38. Significant accounting policies (c)
(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.
39. New standards adopted
39. New standards adopted
The Group has adopted new and revised Standards and Interpretations issued by the Australian Accounting Standards Board
that are relevant to its operations and effective for the current reporting period.
New and revised Standards, amendments thereof and Interpretations issued by the Australian Accounting Standards Board
that are relevant to the Group include:
• AASB 2016-2 Amendments to Australian Accounting standards – Disclosure Initiative: amendments to AASB 107
This amendment requires the Group to provide disclosures about changes in borrowings, including both changes arising
from cash flows and non-cash changes. Note 15 to the financial statements provides this information for the year ended
30 June 2018.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
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 2018 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
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2018
30 June 2019
New standards
STANDARD/INTERPRETATION
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.
Cleanaway established a team comprising AASB 15 specialists working
together with the business units. Work was segregated into revenue streams
with activity focussing on larger revenue streams. Contracts from each large
revenue stream have been analysed against the AASB 15 five-step model.
The Group’s review of selected contracts in the Group has confirmed that the
new standard is not expected to significantly impact the quantum of revenue
recognition or the treatment of contract costs of the Group, however
implementation of the standard is expected to result in timing impacts
of revenue recognition over a financial year but not at the beginning or end
of the annual reporting period.
In some contracts, pricing elements have been identified as variable
consideration. In most cases the uncertainty that gives rise to the variability
is resolved by, or at, the reporting date. Variable consideration takes many
forms in the Group’s contracts as follows:
•
Incentives are provided to some customers based on certain volumes being
collected or disposed of over a specified period of time. Where that time
period is over an interim reporting period, any future discount expected
to be applied to future services may be required to be reflected in the
transaction price and the transaction price is to be allocated to the services
performed over the period of the contract. Cleanaway currently applies
discounts when the threshold is reached.
Penalties may be applied if certain volumes priced in a contract over
a specified period of time are not met. Cleanaway currently only recognises
additional revenue at the end of the contracted period when the volumes
are not met.
The standard permits two methods of adoption: full retrospective – by
retrospectively adjusting each prior reporting period presented and recognising
the cumulative effect of initially applying the new requirements at the start
of the earliest period presented, which would be 1 July 2017 for Cleanaway;
or modified retrospective – by recognising the cumulative effect of initially
applying the new requirements at the date of initial application, which would
be 1 July 2018 for Cleanaway. Given the recent acquisition of Toxfree Solutions
Limited the final assessment of the impact of AASB 15 has not been completed
on the newly acquired business. Work on assessing the contracts within the
Toxfree business has commenced and Cleanaway will adopt the new standard
on the required effective date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018Cleanaway Waste Management Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
40. New standards and interpretations not yet adopted (continued)
40. New standards and interpretations not yet adopted (c)
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2018
30 June 2019
1 January 2019
30 June 2020
1 January 2020
30 June 2021
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.
Based on an initial impact assessment, the new standard is not expected
to significantly impact the Group’s determination of doubtful debts or the
accounting for derivative financial instruments. Further assessment will be
undertaken to finalise the impact of the new standard.
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.
• The Group has entered into various operating leases to rent properties and
specialised equipment. Undiscounted lease commitments related to
operating leases total $219.5 million as at 30 June 2018. Under AASB 16,
to the extent that these leases are longer than 12 months, they will
be brought onto the balance sheet as right to use assets with the liability
measured at the net present value of the payments to be made under
the contract, adjusted for optional periods to extend the leases and any
inflation-linked payments. The Group is currently assessing the transition
impact of this standard.
Conceptual Framework for Financial Reporting
The Conceptual Framework sets out a comprehensive set of concepts for
financial reporting, standard setting, guidance for preparers in developing
consistent accounting policies and assistance to others in their efforts
to understand and interpret the standards.
The Conceptual Framework includes some new concepts, provides updated
definitions and recognition criteria for assets and liabilities and clarifies some
important concepts. The changes to the Conceptual Framework may affect the
application of Australian Accounting Standards in situations where no standard
applies to a particular transaction or event.
The likely impact on the Group of adopting the new Conceptual Framework
has not been determined.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20183452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
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 2018 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 2018; 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 P Chellew
Chairman and Non-Executive Director
V Bansal
Chief Executive Officer and Managing Director
Melbourne, 21 August 2018
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DIRECTORS’ DECLARATIONCleanaway Waste Management Limited
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
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
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cleanaway Waste Management Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the Consolidated Balance Sheet as at 30 June 2018, the Consolidated Income
Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and
Consolidated Statement of Cash Flows for the year then ended, notes to the consolidated financial statements including
a summary of significant accounting policies, and the Director’s declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018 and of its consolidated
financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current year. These matters were addressed in the context of our audit of the financial report as a
whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed
to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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INDEPENDENT AUDITOR’S REPORTto the Members of Cleanaway Waste Management Limited3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
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
1.
Accounting for the acquisition of Tox Free Solutions Limited
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
On 11 May 2018, Cleanaway completed the acquisition
of Tox Free Solutions Limited for a total purchase
consideration of $556.8 million (after payment of a special
dividend of $0.58 per share in accordance with schedule
5.5 of the Scheme Implementation Deed).
This acquisition is material to the entity and given the
judgements involved in the purchase accounting exercise,
this was considered to be a key audit matter.
The acquisition has been accounted for in accordance with
AASB 3 Business Combinations and has involved
consideration of the acquisition date and the recognition
and measurement of both the identifiable assets acquired
(tangible and intangible) and liabilities assumed at that date
on a preliminary basis. Goodwill arising from the acquisition
was $534.5 million.
The valuation of identified intangible assets acquired
(including the fair values of customer contracts and
licenses) was based on the preliminary assessment
undertaken by an external valuation expert engaged
by Cleanaway. This preliminary assessment incorporates
certain judgements and estimates in relation to a number
of factors including revenue growth rates, EBITDA margins,
customer attrition rates, contributory asset charges and
other key assumptions applied in the valuation process.
The valuation of the remediation liabilities identified at the
acquisition date were based on the preliminary assessment
undertaken by an external valuation expert engaged
by Cleanaway. The external valuation expert undertook
a preliminary assessment of the risk rating and timeframes
to remediate identified contamination at each selected site.
Refer to note 26 to the financial report for the disclosures
related to the acquisition.
The audit procedures we performed included assessment
of the consideration for the transaction, the acquisition
date and the preliminary recognition and measurement
of both the identifiable assets acquired (tangible and
intangible) and liabilities assumed at acquisition date.
We involved our valuation specialists to assist in the
execution of these audit procedures.
In considering the acquisition date, we assessed the
satisfaction of the conditions precedent in the Scheme
Implementation Deed.
In undertaking the audit procedures on the preliminary
recognition and measurement of identifiable assets
acquired (tangible and intangible), liabilities assumed,
and goodwill arising, we:
• Assessed the purchase consideration in accordance
with the Scheme Implementation Deed;
• Assessed the revenue growth rates used against the
board approved forecast and prior year actual results;
• Assessed the achievability of EBITDA margins
in comparison to other market participants;
• Assessed customer attrition assumptions based
on historical customer contract wins and losses;
• Assessed the reasonableness of the contributory
asset charges;
• Assessed the profitability of certain assets/licenses
in comparison to current year actual results;
• Assessed the remediation cost estimates used with
reference to available external data and relevant
Environment Protection Authority (EPA) regulations;
• Assessed the discount rates applied with reference
to observable market inputs and involvement from
our valuation specialists;
• Assessed the competence, independence and
objectivity of the external valuation experts engaged
by the Group; and
• Used the work of the client’s external valuation experts
in respect of valuation of tangible and intangible assets
and certain liabilities.
The adequacy of the Group’s disclosures in the financial
report regarding these acquisitions were also assessed.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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INDEPENDENT AUDITOR’S REPORTto the Members of Cleanaway Waste Management LimitedCleanaway Waste Management Limited
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
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
2.
Carrying value of existing non-current assets, including brand name and goodwill
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
At 30 June 2018, the Group (excluding Toxfree) held
$1,317.2 million in intangible assets with indefinite useful
lives. These intangible assets comprise goodwill and brand
names and are monitored at an operating segment or
group of cash generating units (CGU) level respectively for
the Solids and Liquids businesses. In accordance with the
requirements of Australian Accounting Standards, the
Group tests these indefinite useful life assets for
impairment at least annually using a discounted cash flow
model to determine value in use.
The assessment of the carrying value of the intangible
assets (the impairment test) incorporates judgements and
estimates relating to discount rates, forecast revenue,
EBITDA growth rates and levels of capital expenditure.
In addition, various assumptions have been made for
economic variables such as commodity prices, GDP and
inflation rates as well as expected outcomes from the
execution of operational efficiencies. As such, this is a key
audit matter.
Note 21 to the financial report provides disclosure
on the Group’s impairment tests and highlights the
impact of reasonably possible changes to key assumptions.
The audit procedures we performed included testing the
integrity of the discounted cash flow models and evaluation
of the assumptions and methodologies used by the Group.
We involved our valuation specialists to assist in the
execution of these audit procedures.
In respect of the Group’s discounted cash flow models, we:
• Assessed the assumptions in the Group’s board
approved forecasts;
• Considered the current year actual results in
comparison to prior year forecasts in order to assess
forecast accuracy;
• Assessed the key assumptions in comparison to
independent economic and industry forecasts;
• Assessed the assumptions for terminal growth rates;
• Considered the achievability of cost saving targets and
associated initiatives;
• Considered the capital expenditure forecasts;
• Assessed the discount rates through comparing the cost
of capital for the Group with comparable businesses;
• Considered comparable businesses valuation multiples
as a cross-check of the Group’s cash flow models
outcomes; and
• Performed sensitivity analysis in respect of the key
assumptions which would be required for the intangible
assets to be impaired and assessed the likelihood of
those changes arising.
We also assessed the adequacy of the disclosures made
in the financial report – in particular those that have the
most significant effect on the determination of the
recoverable amount of the intangible assets.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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INDEPENDENT AUDITOR’S REPORTto the Members of Cleanaway Waste Management Limited3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
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
3.
Valuation and completeness of the rectification and remediation provisions
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Under the National Environment Protection Council Act
1994 the Group has an obligation and responsibility to
rectify and remediate the land in which landfill activities
occur. These obligations must be accounted for
in accordance with Australian Accounting Standards
– AASB 137 Provisions, Contingent Liabilities, and
Contingent Assets.
At 30 June 2018, the Group (excluding Toxfree) held
$290.9 million in rectification and remediation provisions.
The rectification and remediation provisions were based
on discounted cash flow models and incorporated critical
estimates in relation to capping, post closure and
rectification costs and an appropriate cost escalation rate,
the timing of expected expenditure, the possibility of new
practices and methodologies being available in the future
and the determination of an appropriate discount rate.
Because of the subjective nature of the estimates involved
in accounting for remediation obligations, this is a key
audit matter.
These estimates were developed based on the specific
plans for each site, taking into consideration historical
experience and emerging practice in relation to rectification
and remediation activities.
Note 24 to the financial report provides further detail
on the rectification and remediation provisions.
The audit procedures we performed included testing the
mathematical integrity of the discounted cash flow model
and evaluation of the assumptions and methodologies
used. We involved our land remediation specialists to assist
in the execution of these procedures.
With respect to the Group’s rectification and remediation
provisions, we:
• Assessed the competence, independence and objectivity
of the external expert and used their work with respect
to our audit of the rectification and remediation models;
• Assessed the cost estimates for capping, post closure
and rectification activities with reference to available
external data and relevant Environment Protection
Authority regulations and correspondence;
• Assessed the inputs (i.e. airspace and tonnage) used
in the recognition of landfill amortization; and
• Assessed discount rates with reference to observable
market inputs.
We also assessed the adequacy of the Group’s disclosures
in the financial report regarding remediation obligations.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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INDEPENDENT AUDITOR’S REPORTto the Members of Cleanaway Waste Management LimitedCleanaway Waste Management Limited
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
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
Information other than the Financial Report and Auditor’s Report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Company’s 2018 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’
Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form
of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors 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 control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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INDEPENDENT AUDITOR’S REPORTto the Members of Cleanaway Waste Management Limited3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION2018 ANNUAL REPORT
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
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
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the Directors, we determine those matters that were of most significance in the audit
of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 49 to 64 of the Directors' Report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Cleanaway Waste Management Limited for the year ended 30 June 2018
complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
Ernst & Young
Brett Croft
Partner
Melbourne
21 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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INDEPENDENT AUDITOR’S REPORTto the Members of Cleanaway Waste Management LimitedCleanaway Waste Management Limited
Other Information
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
Top 20 Shareholders as at 21 August 2018
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
PETER & LYNDY WHITE FOUNDATION PTY LTD
JJ RICHARDS & SONS PTY LTD
PELMAVIGEL PTY LTD
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
BNP PARIBAS NOMS (NZ) LTD
AMP LIFE LIMITED
FORSYTH BARR CUSTODIANS LTD
CUSTODIAL SERVICES LIMITED
BOND STREET CUSTODIANS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
RANK NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
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
UNITS
666,979,454
511,506,077
236,861,259
220,099,745
54,786,941
39,354,561
34,982,803
17,451,404
11,447,760
11,327,813
8,584,837
7,736,357
7,410,000
7,184,337
7,176,881
6,411,612
5,387,008
4,614,295
4,609,741
4,472,418
1,868,385,303
168,667,111
2,037,052,414
% OF
UNITS
32.74
25.11
11.63
10.80
2.69
1.93
1.72
0.86
0.56
0.56
0.42
0.38
0.36
0.35
0.35
0.31
0.26
0.23
0.23
0.22
91.72
8.28
100.00
Substantial Shareholders
Substantial shareholders as shown in shareholding notices received by the Company as at 21 August 2018 are:
FIL Limited
Cooper Investors Pty Ltd
Marathon Asset Management LLP
Paradice Investment Management Pty Ltd
Dimensional Fund Advisors
177,505,753
140,380,864
120,518,413
103,656,315
94,897,449
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 21 August 2018 was 2,037,052,414 ordinary fully paid shares.
As at 21 August 2018, the total number of shareholders owning these shares was 9,968 on the register of members
maintained by Computershare Investor Services Pty Ltd.
91.72% of total issued capital is held by or on behalf of the 20 largest shareholders.
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OTHER INFORMATION2018 ANNUAL REPORT3452OVERVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTBUSINESS REVIEW16OTHER INFORMATION
Other Information
Independent Auditor’s Report
to the Members of Cleanaway Waste Management Limited
Voting Rights
Under the Company's Constitution, every member present is entitled to vote at a general meeting of the Company in person
or by proxy or by attorney or, in the case of a corporation, by representative, and 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 entitled 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, has one vote for every share held by the member.
At 21 August 2018, there were 13,857,848 performance rights on issue to 16 executives under the Company’s incentive
schemes. Voting rights are not attached to the performance rights unless they have been exercised into ordinary shares.
Distribution Schedule of Shareholders
NO. OF SHARES
1-1,000
1,940
1,001-5,000
3,531
5,001-10,000
1,607
10,001-100,000
2,672
100,001 AND OVER
218
TOTAL
9,968
The number of shareholders each holding less than a marketable parcel of the Company's ordinary shares ($500 in value)
based on the closing price of $1.875 on 21 August 2018 was 263.
Securities Exchange Listing
The shares of the Company are listed on the Australian Securities Exchange under the code CWY.
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, 452 Johnston Street, Abbotsford, VIC 3067. Telephone: 1300 850 505 (within
Australia) and +61 3 9415 4000 (outside Australia)
Please contact the Share Registry if you have any questions in relation to your shareholding or wish to update your contact
details, banking details, communication preference or DRP election. You can also update your details online by visiting
http://www.computershare.com.au/easyupdate/CWY.
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OTHER INFORMATIONCleanaway Waste Management Limited
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