AN NUAL REPO RT 2019
CLEANAWAY WASTE MANAGEMENT LIMITED
ABN: 74 101 155 220
CONTENTS
1 Overview /
FY2019 Snapshot
Chairman’s Report
CEO’s Report
Footprint 2025
2 Business Review /
Solid Waste Services
Industrial & Waste Services
Liquid Waste & Health Services
3 Sustainability /
Bringing our mission to life
A better way for people
A better approach to safety
Better community &
customer partnerships
Managing our assets to
minimise our impact
Better greenhouse gas management
for a sustainable future
4 Corporate Information /
Board of Directors
Senior Executive Team
5 Financial Report /
Financial Statements
Directors’ Report
2
6
8
12
14
16
18
20
22
24
26
28
30
32
34
37
38
6 Other Information /
Other Information
135
The Company’s 2019 Annual General Meeting will be held at 10am (Brisbane time) on Friday, 25 October
2019 at the Long Room, Customs House, 399 Queen Street, Brisbane, Queensland 4000.
2019 Corporate Governance Statement and Appendix 4G Disclosures are available on our website
at https://www.cleanaway.com.au/about-us/for-investor/corporate-governance/
/
CLEAN AWAY WASTE MANAGEMENT LIMITED
We’re energised for our mission of making
a sustainable future possible… for people,
for the planet, and for our investors through
sustainable performance.
In 2019, we began a new journey to bring all those elements
together with a focus on People, Markets, and Assets, to deliver
strong Financial returns and make a sustainable future possible.
2019 Annual Report
/
1
we care... about results
snap
shot
FY2019
Statutory results
Underlying results
$2,283.1 million revenue
s33.2%
$2,283.1 million revenue
$2,109.1 million net revenue 1
s34.8%
$2,109.1 million net revenue 1
$433.7 million EBITDA
s34.2%
$461.6 million EBITDA
$217.6 million EBIT
$123.1 million NPAT 2
s45.7%
$240.8 million EBIT
s18.9%
$139.9 million NPAT 2
3.55¢/share dividend
s42.0%
3.55¢/share dividend
6.0¢/share eps
s7.1%
6.9¢/share eps
1 Net revenue is a non-IFRS measure and excludes landfill levies.
2 Attributable to ordinary equity holders.
s33.2%
s34.8%
s35.9%
s44.7%
s42.8%
s42.0%
s30.2%
Financial highlights 3
Net Revenue ($m)
EBITDA ($m)
$2,109m
35%
s
$462m
36%
s
EPS (¢)
$6.9¢
s 30%
Dividend (¢)
3.55¢
s42%
15
16
17
18
19
15
16
17
18
19
15
16
17
18
19
15
16
17
18
19
3 Underlying results.
2
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CLEAN AWAY WASTE MANAGEMENT LIMITED
Operations at a glance
Cleanaway is Australia’s
leading waste management,
industrial and environmental
services company. With our
dedicated team, national
network of specialised
infrastructure assets,
and one of the largest
fleets of waste collection
vehicles on Australian roads,
we’re working towards
Our Mission of making
a sustainable future possible,
for all Australians.
Employees
5,900+
Community
investments
We know that change starts
at home – and that genuine
engagement and working
in partnership with the
communities in which we
operate is an important part
of our path for the future.
$805,000+
Invested in
Australian communities
Vehicles
4,950+
800
Education
programs held nationally
Sites
300+
27,780+
Students engaged in school-based
education programs nationally
Prized infrastructure
assets
115+
2019 Annual Report
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3
Overview /
we care... about results
what we
recovered
FY2019
Each year we focus on recovering more resources from
waste – returning valuable commodities to the value
chain, the first step toward making a more sustainable
future possible.
>380,000t
Paper and Cardboard
>15,500t
Plastic
>25,000t
Steel and Aluminium
Closed Loop Oil Recycling
E-waste
>115ML
Used oil
Our lubricating and engine oil collection
and recycling services close the loop
in oil usage, helping to reduce Australia’s
reliance on virgin refined oil.
~6,250t
E-waste
Protecting our environment by keeping
hazardous materials such as lead and
mercury out of the environment, we’re
also recovering valuable materials such
as copper, silver, gold and platinum.
Our BluBox technology breaks down next
generation e-waste such as LCD TVs and
laptops, extracting harmful mercury and
mercury vapour, before using an optical
sorter to separate the e-waste into
its recyclable components.
4
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CLEAN AWAY WASTE MANAGEMENT LIMITED
Container Deposit Schemes
Turning Landfill Gas into
Renewable Energy
Containers collected since inception1
2.24bn
Return and Earn, NSW
760.8m
Containers for Change, QLD
In FY2019, we were proud to continue our
partnership with Return and Earn, and the
NSW Government as Network Operator,
running the collection and sorting services
out of our Eastern Creek Container Sorting
Facility. We also commenced services
supporting logistics and processing for
Containers for Change in QLD across
Greater Brisbane, Hervey Bay and
logistics across Cairns.
~115M m3
Landfill gas captured, generating
~135m kWh
of renewable energy, enough to power
>27,400homes
We’re capturing the gas generated
from the natural breakdown of
waste in our landfills, turning it into
electricity, then returning it to the
grid, to power homes. This reduces
our Greenhouse Gas emissions
and our reliance on non-renewable
power sources such as coal.
Safe and Sustainable Healthcare
Managing Greenhouse Gas Emissions
Scope
1
+
Scope
2
~820kt CO2-e
Greenhouse gas emissions
Cleanaway’s resource recovery activities
go to reducing greenhouse gas emissions;
both Cleanaway’s direct emissions, and
emissions that would otherwise have
occurred throughout our communities.
We are continually looking at ways to
support further emission reduction, from
expanding the footprint of our recycling
operations to fuel and energy efficiency.
~1.1m
Sharpsmart collectors washed
through Daniels robotic washlines
Reusable sharps containers make sure
that only the waste inside is disposed
of and destroyed, whilst our robotic
washlines mean that the used container
is hygienically cleaned, ready for reuse,
reducing greenhouse gas emissions,
as well as plastic and cardboard waste.
1
Based on containers processed since inception of the schemes.
2019 Annual Report
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5
Overview /
we care... about the future
Chairman’s Report
“FY2019 has been another successful year for your
Company, with increased earnings and a further
increase in dividends to shareholders.”
waste management services across
the country.
A major focus of the Board and
Management is the health and safety
of our employees and contractors.
Our business, like most industrial,
logistics and infrastructure businesses,
faces daily operational and situational
hazards. We have a responsibility to
ensure that all our employees and
contractors go home safe. A great deal
of effort is expended throughout the
Company to make sure this is the case.
Our total recordable injury frequency
rate has reduced by 8.1% to 5.7
compared to the previous year. While
this is an improvement, we always
need to do better to achieve our Goal
Zero. Further details about our focus to
reach Goal Zero are set out elsewhere
in the Annual Report.
Net revenue, which represents gross
revenue less landfill levies collected
and passed through to the customer,
increased 34.8% to $2.11 billion
compared to the prior corresponding
period. This led to an increase in
It is with great pleasure that I
present to you the Cleanaway
Waste Management Limited 2019
Annual Report.
The financial performance recorded
in FY2019 across all our business
segments continued the strong
positive trends we have reported over
the past four years.
The integration of the Toxfree
business, which was acquired in
FY2018, is well on track to achieve
the $35 million synergy target by June
2020. The acquisition has proven to be
highly complementary to Cleanaway
and has strengthened our total
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CLEAN AWAY WASTE MANAGEMENT LIMITED
In closing, I would like to thank the
management team led by Vik Bansal
and all our employees for their
considerable efforts in “making
a sustainable future possible” for
Cleanaway. I would also like to thank
my fellow Board members for all
their wise counsel and support this
past year.
Mark Chellew
Chairman
EBITDA of 34.2% to $433.7 million
and EBIT which was up 45.7% to
$217.6 million.
These results were due to improved
profit performances by our three
business segments – Solid Waste
Services, Industrial & Waste Services
and Liquid Waste & Health Services.
On an underlying basis, EBITDA
increased 35.9% to $461.6 million
and EBIT increased by 44.7% to
$240.8 million.
Earnings per share increased 7.1% to
6.0 cents and on an underlying basis
increased 30.2% to 6.9 cents.
Cleanaway is in a very strong financial
position. 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 2019 is 3.8 years
and we have $318 million of headroom
under our banking facilities. To further
strengthen our debt portfolio, we are
currently assessing the use of longer
tenor debt.
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 has declared a fully franked
final dividend of 1.90 cents per share,
payable on 3 October 2019. This
represents an increase of 35.7% from
the 1.40 cents final dividend paid
last year.
Combined with the interim dividend of
1.65 cents per share paid earlier in the
year, the dividends declared in respect
of FY2019 totalled 3.55 cents per
share, an increase of 42.0% compared
to the total dividend paid last year.
As shareholders would be aware,
our mission is “to make a sustainable
future possible”. This goes to the heart
of why Cleanaway exists and how we
as a business will continue to prosper.
You can read about our sustainability
initiatives in the Annual Report. Further
enhancements to our sustainability
metrics are currently being worked on,
and I look forward to reporting this to
shareholders next year.
Consistent with the enhanced focus
on our sustainability metrics, we
have recently renamed the Health,
Safety & Environment Committee
as the Sustainability Committee. The
Committee will now be responsible
for reviewing the Company’s
strategies, systems, policies and
practices in respect of the Company’s
sustainability framework.
As part of its usual succession
planning activities, the Board is
currently undertaking a search for a
new Non-Executive Director. The new
Non-Executive Director is expected to
be female, which will improve diversity
at the Board level. I hope to be able to
update shareholders shortly in relation
to the appointment.
2019 Annual Report
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7
Overview /
we care... about the future
CEO’s Report
“Our journey from being a good company to a great
one continues, and I am again pleased to present to
our shareholders a set of results that continues to
reflect strong growth across all our operating segments.”
management company in Australia.
We have a diversified portfolio of
assets and services, we are the market
leader in every sector in which we
operate, and our network of prized
waste infrastructure assets is second
to none across the country. When you
combine this with the passion and
quality of our people, our mission of
“making a sustainable future possible”
is not just a few words on paper, but
an increasingly achievable reality.
Making sure our employees and
contractors go home in the same
condition they arrived at work remains
and always will be our number one
priority. Our business faces daily
operational and situational hazards,
as most industrial, logistics and
infrastructure businesses do, but this
is no reason why we cannot work
towards our target of Goal Zero.
While a further 8.1% decline in our
Total Recordable Injury Frequency
Rate (TRIFR) during the past twelve
months can be considered a positive,
we are not satisfied with our safety
performance. We still have work to
Over the past four years we have been
progressively implementing strategies
to take Cleanaway from just being a
good company, to becoming a great
one. Again, I am pleased to report
that we have taken further significant
steps towards the achievement of that
goal and FY2019 has been another
year of strong growth across all our
business segments.
The strategies that we have
implemented and the performance
culture that has been fostered
throughout the Company are major
drivers of our success.
Over this past year we increased
our position as the premier waste
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CLEAN AWAY WASTE MANAGEMENT LIMITED
do to reach our Goal Zero target.
Our focus is very clear.
An area of change we are seeing in
the safety risk profile is the level of
drivers’ attentiveness on the roads.
This doesn’t just relate to our drivers,
but to all drivers, as the distractions
from mobile phones and traffic
congestion can divert attention away
from the road. A key priority for us in
FY2020 is working with all our drivers
to ensure they can maintain maximum
attentiveness on our roads.
Last year, a major highlight was the
acquisition of Tox Free Solutions
Limited (Toxfree) a business that is
highly complementary to our existing
business and further enhances our
total waste management offering.
After owning Toxfree for just over
twelve months, I can state without
hesitation that the acquisition has
been good for Cleanaway, good
for all our stakeholders and good
for the industry. The integration of
the business is progressing very well
and running to plan. We remain
confident of achieving the $35 million
in synergies we identified at the time
of the acquisition by June 2020.
In November 2018 we announced
a change to our operating segments.
This was done to ensure alignment
to the new Cleanaway Operating
Model and organisational structure.
The three new operating segments
are Solid Waste Services, Industrial
& Waste Services, and Liquid Waste
& Health Services.
All three operating segments
recorded improved performance
when compared to the previous
corresponding period:
• Solid Waste Services reported
increases in net revenue, EBITDA
and EBIT of 23.0%, 23.5% and
28.1% respectively.
• Industrial & Waste Services reported
increases in net revenue, EBITDA
and EBIT of 84.0%, 146.6% and
341.2% respectively.
• Liquid Waste & Health Services
reported increases in net revenue,
EBITDA and EBIT of 53.5%, 60.3%
and 46.7% respectively.
A more detailed analysis of the
performance of our operating
segments can be found on subsequent
pages of this Annual Report.
In total, our Group underlying results
for FY2019 were strong:
• Net revenue increased 34.8% to
$2,109.1 million.
• EBITDA increased 35.9% to
$461.6 million.
• EBIT increased 44.7% to
$240.8 million.
• EBITDA to net revenue margin
expanded 20 basis points to 21.9%.
I should point out that this growth was
achieved by a combination of organic
growth and the contribution from
the acquisition of Toxfree. Taking into
consideration the results of Toxfree
for FY2018 and combining them with
the Cleanaway results for the same
period and then comparing them to
our FY2019 results, our net revenues
and EBITDA grew organically by
6.4% and 12.7% respectively.
It has always been our view 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 FY2019, with our
free cash flow increasing 76.4%
to $206.4 million during the year.
Continuing to drive growth in earnings
and cash flow will further enhance
shareholder returns.
During the year we continued to
strengthen our network of prized
infrastructure assets, a strategy we
have termed our ‘Footprint 2025’.
At the heart of this strategy is the
optimisation of the waste value chain
from collection to disposal, with a
particular focus on resource recovery.
We are committed to putting the
infrastructure in place to be able
to sustainably manage the waste
generated across Australia – now and
well into the future.
Examples of our Footprint 2025
strategy projects completed during
the year include:
• Completion of a waste transfer
station and resource recovery
facility in Sydney licensed to process
300,000 tonnes of putrescible waste
each year.
2019 Annual Report
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9
Overview /
CEO’s Report continued
Our Cleanaway Way
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CLEAN AWAY WASTE MANAGEMENT LIMITED
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• An organics treatment facility in
Melbourne that decontaminates
green and organic waste for valuable
composting and is diverting over
100,000 tonnes of waste from
landfill each year.
• Acquisition of a 50% interest in
ResourceCo’s new Resource Recovery
Facility located in western Sydney.
The facility has the capacity to
process up to 250,000 tonnes of
waste material and convert it into
a process engineered fuel to be used
in the cement industry locally and
offshore, diverting material that was
previously destined for landfill.
• The upgrade to a contaminated
soil treatment facility in
Sydney, the only facility of its
kind capable of processing
asbestos-contaminated soils.
• A transfer station in Perth which
has considerably strengthened our
post collection processing facilities
in the city.
Further developments to the
Footprint 2025 strategy are planned
for FY2020, especially around
downstream resource recovery, the
Health sector and Energy from Waste.
I look forward to reporting to you on
these developments over the course
of next year.
This expansion of our network
of prized infrastructure assets allows
us to be highly competitive when
it comes to winning new contracts.
Earlier in this report I mentioned
the performance culture that has
been fostered within Cleanaway.
One way this has been achieved
is by providing clarity to all our
employees via the implementation
of Our Cleanaway Way.
Our Cleanaway Way is our strategy
on a page. It was designed to create
a common language and narrative
across the organisation, and ensure
we are all aligned in our efforts
to take our business from good
to great. Following the acquisition
and integration of Toxfree, and
in addition to the organic growth
we’ve experienced over the past four
years, we refreshed and relaunched
Our Cleanaway Way to better
represent the business we are today.
We are working hard to deliver on
Our Mission “to make a sustainable
future possible” and make
Our Vision a reality.
I am sure that shareholders have
noticed the increased government
and media attention regarding the
challenges facing the recycling industry
in Australia. To ensure sustainability,
we need to work together towards
developing a circular economy in
Australia. This will require changing the
way products are designed, produced,
sold and used to minimise waste
and reduce environmental impact.
A circular economy is impossible
without a well-functioning waste
management industry, underpinned
by first class infrastructure, credible
and high quality operators, robust
government policies and initiatives,
and an educated community.
We have provided details regarding
these challenges further in the
annual report.
Finally, I would like to thank the Board
for the support given to me and to the
leadership team over this past year.
In closing, I need to acknowledge
the efforts of the more than 5,900
people who make Cleanaway the
company that it is and work hard
each day to make a sustainable future
possible. It is a team I am privileged
to lead, as 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
2019 Annual Report
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11
Overview /
we care... about our footprint
foot
print
2025
Parking
for
Four years ago we launched our Footprint
2025 strategy to make sure that we
have the right infrastructure in place
to sustainably manage the waste
generated by Australians well into the
future – with an ever-increasing focus
on resource recovery.
Our network of prized infrastructure assets
strategically located across Australia
provide the right solution in the right
location to increase resource recovery and
support the needs of local communities.
During FY2019, we’ve continued to
expand our network to include innovative
treatment and processing capabilities
which ensure that as little residual material
as possible is left to be disposed of.
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CLEAN AWAY WASTE MANAGEMENT LIMITED
Western Australia
• New material recycling facility
• Two new transfer stations
we care... about our footprint
Queensland
• New transfer station
• New paper recycling facility
• Upgrade to oil recycling facility
New South Wales
• New Container Deposit Scheme
sorting line
• New Western Sydney transfer station
and resource recovery centre
• Cleanaway ResourceCo refuse
derived fuel facility
• Base oil recycling facility
• New contaminated soil
treatment facility
• Additional PFAS processing capacity
Victoria
• New transfer station
• Doubling of electricity generation
capacity at Melbourne Regional Landfill
• Planning permit for Melbourne
Regional Landfill till 2046
• Upgraded material recycling facility
• New organic waste treatment facility
• New food waste de-packaging facility
• Consolidated C&I/Municipal depot
2019 Annual Report
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13
South Australia
• Three transfer stations and a resource
recovery facility acquired
• Height rise extension approval for
Inkerman landfill
Overview /
we care... about our business
Solid Waste Services
As Australia’s market leader for the collection
and processing of solid waste and recyclables,
we serve more than 140,000 commercial and
industrial businesses, and over 95 municipal councils.
Net Revenue
$1,362.3m
p23.0%
EBITDA
$352.8m
p23.5%
352.8
285.7
257.0
26.8
25.8
25.9
15.0
14.4
14.4
17
18
19
EBITDA MARGIN
EBIT MARGIN
EBITDA
Net revenue ($ million)
1,362.3
1,107.3
FY2019
FY2018
EBITDA ($ million)
EBITDA margin (%)
EBIT ($ million)
EBIT margin (%)
Represents underlying results.
352.8
25.9
204.0
15.0
FY2019
V FY2018
23.0%
23.5%
285.7
25.8
+10bps
159.2
14.4
28.1%
+60bps
We’re trusted to collect, sort and
process household and business
waste, and our investment in material
recovery facilities and transfer stations
across Australia means that we can
sort and recover more recyclable
commodities. Anything which can’t
be recycled is securely disposed of in
our highly engineered landfills. And
it doesn’t end there. We’re investing
in additional network capacity to
collect naturally produced landfill gas
across our landfills, using it to generate
electricity which we return to the grid,
reducing our reliance on fossil fuels.
Over FY2019, Net Revenue increased
by 23.0% to $1.36 billion. This growth
was driven by a number of factors,
including increases in both volume
and price, as well as the full ramp up
and operation of major contracts.
These include the NSW Central Coast
Municipal contract and the Brisbane
City Council resource recovery and post
collections contract. The addition of the
Toxfree Solids business in North-West
Western Australia, the Northern
Territory and Northern Queensland
also contributed to this growth.
EBITDA increased by 23.5% to
$352.8 million, and EBIT was up
28.1% to $204.0 million. Both profit
margins also increased over the year.
The introduction of China’s National
Sword policy in early 2018 has had
a significant impact on the waste
industry globally. Volatility in the
commodities supply chain has led
to increased sorting costs and
instability in commodity pricing.
We are currently reassessing our
customer pricing structures to
better reflect the costs incurred
in the processing of recyclables.
We are firm in our belief that the
market changes witnessed as a result
of China’s National Sword will create
opportunities for businesses like
ours. Through continued investment
in our Footprint 2025 Strategy, we
are growing our network of prized
infrastructure assets across the country
– allowing us to collect and sort more
recyclables, producing higher quality
commodity streams, and ultimately
supporting a sustainable on-shore
circular economy.
14
/
CLEAN AWAY WASTE MANAGEMENT LIMITED
City of Sydney
Municipal Contract
During FY2019, Cleanaway was
awarded a multi-year contract
with the City of Sydney to provide
general waste, recycling, garden
organics, hard waste, and electronic
waste collections. The contract
includes 26 new vehicles, all enabled
with Cleanaway’s award-winning
Cleanaview technology. The
Cleanaview platform collects data
from onboard cameras to track
collections and service events,
as well as provide insights to
reduce contamination, improve
recycling and increase truck safety
in the community.
In June 2019, Cleanaway celebrated
the opening of a new depot in
Hillsdale, which will support the
City of Sydney contract. Cleanaway
is also working closely with the
council to help residents improve
landfill diversion and recycling
rates through our education team.
2019 Annual Report
/
15
Business Review /
we care... about our business
Industrial & Waste Services
Cleanaway’s Industrial & Waste Services provides a range
of specialised services to more than 2,000 customers
in the Infrastructure and Resources markets, including
drain cleaning, non-destructive digging, vacuum loading,
high pressure cleaning, and pipeline maintenance.
Net revenue ($ million)
341.9
185.8
84.0%
FY2019
FY2018
FY2019
V FY2018
EBITDA ($ million)
EBITDA margin (%)
EBIT ($ million)
EBIT margin (%)
Represents underlying results.
46.6
13.6
22.5
6.6
18.9
10.2
5.1
2.7
146.6%
+340bps
341.2%
+390bps
In FY2019, net revenue increased 84.0% to $341.9 million with both EBITDA
and EBIT growing 146.6% and 341.2% respectively. Profit margins also showed
strong growth over the year.
This growth was in part driven by the acquisition of Toxfree, with the segment
generating modest organic growth after taking into consideration the completion
of the major Toxfree Wheatstone contract in Western Australia that was
completed in FY2018.
Following the FY2018 Toxfree acquisition, this segment has been significantly
streamlined with a new organisational structure in place which is designed to
improve customer focus and the specialisation of technical abilities and assets.
Net Revenue
$341.9m
p84.0%
EBITDA
$46.6m
p146.6%
46.6
13.6
6.6
10.2
10.3
18.9
18.2
2.7
2.4
17
18
19
EBITDA MARGIN
EBIT MARGIN
EBITDA
16
/
CLEAN AWAY WASTE MANAGEMENT LIMITED
Samantha Shaw, Head of Audit and Risk on site with Tammy O’Connor, King Kira
Group owner and Cleanaway’s Aboriginal Contracts & Engagement Manager.
King Kira Group Pty Ltd is a 100%
Aboriginal female owned business
providing environmental integrated
services. Their ethos is “our land”
which guides their environmental
management to ensure it remains
sustainable for future generations.
King Kira also endeavour to engage
local people, contractors and suppliers
to be part of their journey. Their
footprint extends throughout Western
Australia into the Pilbara Region where
they continually build relationships with
local people, suppliers and clients.
King Kira and PTK provide waste
management and recycling services,
primarily in the mining, oil and gas,
government, and infrastructure
industries. Some of their key services
include solid waste, bulk liquid
waste, landfill management, resource
recovery, and scrap metal reclamation,
along with Aboriginal professional
labour hire services.
King Kira and Cleanaway have come
together under a Joint Venture PTK
Environmental Services (PTK). King
Kira Group owner, Tammy O’Connor,
has also joined Cleanaway as our
Aboriginal Contracts & Engagement
Manager. Tammy is a Traditional
Owner from the Pilbara region
with family connection through
the Nyiyaparli and Palyku Aboriginal
groups, and links to Kariyarra and
Ngarluma people through her
Grandmother. King Kira is named for
her daughters, Kingston and Shakira.
Tammy was born in Port Hedland and
raised in Marble Bar. Having grown
up in the Pilbara region, Tammy has
a wealth of knowledge and insight
about the local community and native
title, providing education and guidance
to achieve successful outcomes for
local communities.
Tammy studied at Curtin University
and undertook a Diploma in Education
before working in local community
remote sites. We’re proud to welcome
Tammy to the team, and to continue
to grow our partnership with King Kira
through PTK Environmental Services.
Strengthening
ties in Northern
Australia through
King Kira and PTK
2019 Annual Report
/
17
Business Review /
we care... about our business
Liquid Waste & Health Services
Cleanaway’s Liquid Waste & Health Services comprises
four national, strategic business units, including: Liquid
Waste Services, Technical & Environmental Services,
Hydrocarbons, and Health Services
Net Revenue
$495.0m
p53.5%
FY2019
FY2018
FY2019
V FY2018
Net revenue ($ million)
495.0
322.4
EBITDA ($ million)
EBITDA margin (%)
EBIT ($ million)
EBIT margin (%)
Represents underlying results.
86.9
17.6
54.0
10.9
54.2
16.8
36.8
11.4
53.5%
60.3%
+80bps
46.7%
(50)bps
EBITDA
$86.9m
p60.3%
86.9
54.2
17.6
40.7
16.8
15.7
11.4
10.9
10.7
17
18
19
EBITDA MARGIN
EBIT MARGIN
EBITDA
by production efficiencies following
recent plant upgrades and improved
oil price movement.
Demand for the processing of new
hazardous waste streams such as
PFAS and solvents is increasing as
government authorities recognise
the need for the safe disposal
of these materials.
The volumes of bulk hazardous and
non-hazardous liquids decreased
during the year. The Liquid
Waste Services business has been
restructured and resized and we
remain confident that improved
performance from this business
will be achieved.
The segment generates revenue
and earnings from the collection,
treatment, processing, refining,
recycling and destruction of
hazardous and non-hazardous liquids,
Hydrocarbons (used oil recycling),
chemical waste, specialised package
and hazardous waste, and e-waste.
Services to the Health Services sector
include the safe treatment and
disposal of health-related waste,
which includes sharps management,
medical waste, pharmaceutical waste,
healthcare hazardous waste, and
quarantine waste.
Net revenue increased 53.5% to
$495.0 million with both EBITDA
and EBIT growing 60.3% and
46.7% respectively in FY2019.
The EBITDA margin also increased
during the year.
The Health Services and Technical
& Environmental Services businesses
performed well during the year
and continues to deliver improved
results. The Hydrocarbons business
also performed well, mainly driven
18
/
CLEAN AWAY WASTE MANAGEMENT LIMITED
Closing the loop on
sharps containers
manufacturing
through ASP Group
In March 2019, Cleanaway completed
a strategic acquisition of the ASP
Group, a healthcare services and
plastics manufacturing business in
Western Sydney, bringing together
two of Australia’s market leading,
but highly complementary, medical
sharps waste businesses.
Daniels Health leads the market for
reusable sharps containers, whilst
ASP leads the market in personal
sharps containers, through products
including FITPACK™ and FITTUBE™,
as well as metal community disposal
bins and vending machines.
ASP Group manufactures high quality
sharps containers onshore at St Marys
in Western Sydney. This allows us to
review the full supply chain of medical
containers supplied to the Australian
market and explore new ways to
close the loop on plastic waste.
2019 Annual Report
/
19
Business Review /
Making a sustainable future possible
Bringing our
mission
to life
In FY2020 we will formalise the alignment from
Our Mission, through our operations, to globally
recognised Environmental, Social and Corporate
Governance (ESG) standards.
Our Mission is to make a sustainable future possible
for all our stakeholders. This includes making a
sustainable future possible for people and the planet
supported by sustainable financial performance.
Alignment to ESG standards supports our refreshed
strategy, Our Cleanaway Way and is the next step
in our sustainability journey.
Aligning with
recognised standards
To formalise our commitment,
we will begin reporting against
globally recognised ESG
standards by the end of FY2020,
including the United Nation’s
Sustainable Development Goals
(SDGs) and the Sustainability
Accounting Standards Board
(SASB) Standards.
20 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Making a sustainable future possible Bringing our
Sust ain abi lit y
/
For us, it means building on strong foundations:
People
Focusing on the safety and wellbeing
of our people, our customers and the
communities in which we operate; and
a workplace which values diversity,
equality and inclusion.
Markets
Working in partnership with our
customers to improve service and help
them achieve their sustainability goals.
Assets
Minimising our environmental impact
through the responsible management
of our assets as well as exploring
and investing in new technologies.
To deliver enduring results:
Financial
Managing risks and creating value for all our stakeholders
through a focus on sustainable financial performance
to deliver financial returns for our investors, and the
strength to continue to invest in new infrastructure
and technologies to deliver on Our Mission.
Earth
By continuing to invest in our Footprint 2025, investing
in the infrastructure, technology and innovation to close
the loop and contribute to a viable circular economy
in Australia, we will help to change the landscape of
recycling and residual waste management in Australia.
2019 Annual Report
/ 21
FoundaPeopleMarketsAssetsFinancialsEarth
Making a sustainable future possible
A better way for
people
A better place to work
We’re working hard to make a sustainable future
possible for people – both for our employees and
for the communities in which we work – through
a focus on safety, wellbeing and equality.
Building strength
through diversity
Our workforce is made up of people
from all walks of life. We know
that diversity of backgrounds, skills,
and experience brings a range of
different perspectives which can
create a more robust business, better
able to embrace the challenges our
industry faces, and be open to the
new and unique opportunities that
these challenges bring. Reflecting the
communities in which we work also
helps continue to strengthen our ties
and connection with our communities.
Balancing gender – attracting
and retaining key talent to lead
from the front
We know that increased female
representation at senior levels drives
increased female participation across
all levels of our business. So, in
FY2019, we continued our focus
on increasing female representation
at senior levels, with a particular
emphasis on promoting from within.
Each year we submit an annual gender
report to the Workplace Gender
and Equality Agency (WGEA). Key
highlights and improvements from the
defined period of April 2018 to March
2019 include:
• An increase of females in
management roles from 18%
to 20% in 2019.
• An increase of female workforce
participation from 18% to 19%
in 2019.
We were also pleased to see female
promotions (as a percentage of all
promotions) increase from 40.2%
in 2018 to 47.4% in 2019:
• 21.2% of all manager promotions
were awarded to women (compared
to 18.6% in 2018 and 12.2%
in 2017).
• 64.2% of all non-manager
promotions were awarded to women
(compared with 58.8% in 2018 and
41.2% in 2017).
Female representation in our Enterprise
Leadership Team (ELT) has also
increased, with females now making
up 16% of the ELT, up from 14%
in 2018.
In FY2020 we will continue to
improve how we attract and retain
high potential female employees in
key roles and encourage women to
seek employment at all levels within
Cleanaway through our new female
talent attraction campaign which
is currently under development.
Innovate – Reconciliation
Action Plan (RAP)
2018–2020
In FY2019, we launched our second
RAP, Innovate – continuing our
commitment to embracing and
encouraging reconciliation within
and across our business. We recognise
the importance of respect for
and engagement with Aboriginal
and Torres Strait Islander peoples
and their communities, and are
committed to closing the gap.
This commitment includes a focus
on education, employment and
community health and safety.
We know that progress in one area
helps further progress in other areas.
Improving education opportunities
for Aboriginal and Torres Strait Islander
peoples helps to increase employment
rates – both within Cleanaway and
across our industry. Our commitment
to training and partnerships, including
our Aboriginal and Torres Strait
Islander Traineeship Programs provide
opportunities for education, learning
and growth, which ultimately leads
to better employment outcomes.
In FY2020, to encourage greater
participation in available traineeship
programs, both from Aboriginal and
Torres Strait Islander communities
22 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Making a sustainable future possible VALUES 2019 - 22 MARCH
Home Safe
Stronger
Together
Integrity
We Make
A Difference
VALUES 2019 - 22 MARCH
VALUES 2019 - 22 MARCH
Home Safe
Stronger
Together
Integrity
We Make
A Difference
Home Safe
Home Safe
Stronger
Stronger
Together
Together
Integrity
Integrity
We Make
We Make
A Difference
A Difference
Home Safe
Home Safe
Stronger
Together
Stronger
Together
Home Safe
Integrity
Integrity
Stronger
Together
We Make
A Difference
We Make
A Difference
Integrity
We Make
A Difference
Home Safe
Stronger Together
Integrity
We Make A Difference
A better place to work
Home Safe
Home Safe
Stronger
Together
Stronger
Together
We take responsibility for
our personal safety, as well
Integrity
as that of our team. We are
committed to Goal Zero,
because everyone deserves
to go Home Safe, every day.
Integrity
Building from a place of
strength, we are focused on
We Make
We Make
creating something stronger
A Difference
A Difference
than the sum of our parts
each and every day.
Home Safe
Home Safe
Stronger Together
Stronger Together
Integrity
Integrity
We Make A Difference
We Make A Difference
We take responsibility for
We take responsibility for
our personal safety, as well
our personal safety, as well
as that of our team. We are
as that of our team. We are
committed to Goal Zero,
committed to Goal Zero,
because everyone deserves
because everyone deserves
to go Home Safe, every day.
to go Home Safe, every day.
Building from a place of
strength, we are focused on
creating something stronger
than the sum of our parts
each and every day.
Building from a place of
strength, we are focused on
creating something stronger
than the sum of our parts
each and every day.
We do the right thing
We do the right thing
– no matter what.
– no matter what.
Holding ourselves to higher
Holding ourselves to higher
standards, we say what
standards, we say what
we mean, and we do
we mean, and we do
what we say.
what we say.
We are proud of what we do
We are proud of what we do
to make a sustainable future
to make a sustainable future
possible – for our employees,
possible – for our employees,
our customers, our investors,
our customers, our investors,
the communities in which we
the communities in which we
work, and the planet.
work, and the planet.
We do the right thing
– no matter what.
Holding ourselves to higher
standards, we say what
we mean, and we do
what we say.
We are proud of what we do
to make a sustainable future
possible – for our employees,
our customers, our investors,
the communities in which we
work, and the planet.
Our ‘new’ Values – built by
Our People
We are a diverse team – with people
performing vastly different roles across
the breadth of the country. We come
from different backgrounds, different
educational paths, and all have different
employment histories. This is where
Our Values play such an important role.
First introduced in 2015, they articulate
what we can expect from each other
– essentially, they are how we behave.
In late 2018, following the integration
of Toxfree and Daniels Health, we set
about asking our team what should
make up Our ‘new’ Values to ensure
they represent who we are today.
In line with this, Cleanaway
envisages the full participation
of Aboriginal and Torres Strait
Islander peoples in our business
and are committed to providing
a work environment that is culturally
safe, sensitive and supportive
to all employees. Our second
Reconciliation Action Plan outlines
our vision and our commitment to
Aboriginal and Torres Strait Islander
peoples’ inclusion in our operations
and partnerships, both now and
into the future.
Our Innovate RAP is available
on our website.
and from industry, we will showcase
a range of Aboriginal and Torres Strait
Islander peoples’ success stories to
demonstrate the real and positive
difference that can be made to their
communities. These will range from
inspirational stories of individuals
within communities, to highlighting
the opportunities available
for businesses.
At Cleanaway, we endorse the vision
of a nation which values Aboriginal
and Torres Strait Islander heritage,
cultures and peoples and recognises
their unique position as the original
custodians of Australia. We take
responsibility for ensuring our business
reflects the values of inclusion and
diversity throughout our workforce.
We recognise the contributions that
Aboriginal and Torres Strait Islander
peoples have made, and continue
to make, within our organisation
and local communities.
In early 2019, we introduced Our ‘new’
Values – as part of Our Cleanaway Way.
2019 Annual Report
/ 23
Sustainability /
Making a sustainable future possible
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 is at the heart
of everything we do, and every decision we make.
We remain firm advocates for visible
safety leadership across our business.
We also believe that safety is a
personal responsibility for every staff
member. Further to this, through
FY2019, we have also focused on the
quality of our lead indicators to ensure
we are working proactively to ensure
the safety of our team.
It is through this combined top-down
and bottom-up approach that we
believe we will reach Goal Zero by
choice not by chance.
FY2019 Safety
Performance
One of our key safety performance
measures continues to be our Total
Recordable Injury Frequency Rate
(TRIFR), calculated based on the
number of recordable injuries for every
million hours worked.
At the end of FY2019, Cleanaway’s
TRIFR has continued to decline, down
8.1% from 6.2 for FY2018 to 5.7,
an overall 78.6% reduction in TRIFR
since FY2012.
Whilst it’s encouraging to see a
continued reduction over time,
we firmly believe that any injury is
avoidable, and we remain focused
on our journey toward Goal Zero.
Leading the way to
embed safety across our
business
TRIFR allows us to measure the
outcome and overall effectiveness
of the safety measures put in
place across the year, producing
a quantitative result.
To help us continue to reduce TRIFR
over time as we work towards Goal
Zero, we have remained focused on
lead safety indicators – not only at
management levels, but across our
entire team.
In FY2019 we have shifted our focus
from the quantity to the quality of our
lead indicators by:
• Improving visible safety leadership
and understanding of our worksite
safety processes, by ensuring
members of the leadership team
engage in safety conversations
with their teams through our
Safety Walks.
• Ensuring our workplaces are
inspected and potential hazards
identified to proactively control
them before they can cause
an injury.
• Verification of our corrective
actions, ensuring timely closure
of actions from our activities
that verify our safety processes
and behaviours.
• Mandating HSE training completion
at all organisational levels to ensure
our drivers and operators are
licensed and authorised to complete
their role safely.
Managing material
safety risks
Each year we perform a review
of critical health and safety risks
and associated controls, to ensure
the risks remain representative of
our operations and reflect current
knowledge. This year’s review
has considered activities of the
combined enterprise comprising
heritage Cleanaway, Toxfree and
Daniels Health.
In FY2019 we focused on controls
to reduce residual risk, including:
• Developing Health & Safety work
plan to embed key controls.
• Focusing on plant and pedestrian
interactions and traffic
management at our sites.
• Standardisation of risk controls
as part of the integration activities.
This has seen the adoption of
controls from within Toxfree,
into the Cleanaway Health &
Safety Risk Control framework.
24 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Making a sustainable future possible TRIFR
5.7
s
78.6%
(since FY2012)
12
13
14
15
16
17
18
19
• Commenced standardisation of
policies and management of high-
risk activities.
Safety is in our hands
During the first half of FY2019 hand
laceration injuries represented 23%
of all recordable injuries in our TRIFR.
Cleanaway selected a preferred national
supplier for personal protective
equipment and implemented an
approved catalogue of items that
included setting a ‘glove cut 3’ minimum
standard for operational manual tasks.
Through this new glove standard and
a campaign focused on ‘gloves on’,
the frequency of recordable hand
laceration injuries in the second half
of FY2019 decreased by 40%.
2019 Annual Report
/ 25
Ongoing effectiveness of key controls
for managing critical health and
safety risks are reviewed as part of
our significant incident management
process and audit program.
Integrating safety to
reach Goal Zero
During FY2019, we commenced the
integration of the Daniels Health and
Toxfree, Health & Safety Management
System with Cleanaway’s Health
& Safety Management System.
Integration is based on adopting the
best systems and practises of Toxfree,
Daniels Health and Cleanaway.
Key highlights of the Health
& Safety integration:
• Aligning the resourcing of the
Health & Safety function to the new
Cleanaway Operating Model.
• Transition of Toxfree and Daniels
Health into the Comcare Scheme,
from its state-based safety
regulators.
• Selection of MyOSH as the new
enterprise Health & Safety platform,
to enable our journey to Goal
Zero through operational insight
of our HSEQ data at all levels of
the organisation.
Sustainability /
Making a sustainable future possible
Better
community &
customer
partnerships
$805,000+
Invested in Australian
communities
In FY2019, we continued to engage with Australian
communities to encourage better recycling
behaviours – at work, home and school.
800
Education programs held
nationally
27,780+
Students engaged in school-
based education programs
nationally
50+
Community information
sessions at various locations
around the country
Continuing to improve
our customer journey
During FY2019, we continued to invest
in our people, systems and processes
to improve our customer experience
across all touchpoints – from the
initial account set up and ensuring
the success of the first collection or
service, through ongoing customer
service and operational service delivery
to timely and accurate invoicing.
With a renewed focus on customer
service metrics across the board, we’ve
seen performance improve over the
past year. Plans are in place to continue
these improvements into FY2020.
In FY2019, we continued to
partner with our customers and
invest in new technologies and
processes to help them achieve their
sustainability goals. Our journey
continues as we work towards further
digitisation to deliver a step change
in our service performance and
customer experience in FY2020.
Customised online
learning with Greenius
Greenius is Cleanaway’s custom-built
online learning system to help our
customers reduce contamination and
increase sustainability rates. Fully
customisable modules teach users
about the waste hierarchy, which
recycling services are available to them
and how to put the right thing in the
right bin. Targeted at national and
key accounts customers, as well as
municipal councils, Greenius is a great
tool to help our customers use our
services better.
Engaging online
communities for
waste education
For National Recycling Week,
we launched a back-to-basics recycling
campaign simplifying the commingled
recycling bin to just five recyclable
items. The ‘Simply5 It’ campaign
made it easy to address contamination
in household recycling bins. The
downloadable resources, videos and
tips from Cleanaway’s sustainability
experts reached almost 500,000
residents, businesses and councils
on Facebook and LinkedIn.
26 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Making a sustainable future possible community &
customer
partnerships
Our new website – making
it easier for customers
Launched in mid-2019, our new website
brings together the combined total
waste management service offering
of our integrated business, with
a fresh, customer-led design approach.
The user experience makes it easier
for our customers to find and book
services, transact with us through
the My Account portal or find the
best solutions for their industry.
2019 Annual Report
/ 27
Sustainability /
Making a sustainable future possible
Managing our
assets
to minimise our impact
As Australia’s leading waste management, industrial
and environmental services company, we understand
our responsibilities to all our stakeholders, including the
community 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,
strategic programs and stronger
engagement with our stakeholders.
We operate within the regulatory
framework of each state’s environment
pollution laws, which requires
many of our prized assets to hold
environmental protection licences
to operate.
We aim to manage all our operations
within the limits set by site licenses
and the law, and we have appropriate
systems in place, combined with
regular monitoring and review,
to ensure that we do this. Our
environmental management system
is externally certified to ISO14001 by
an international, accredited body. In
addition, we run an internal ‘second
line of defence’ program which forms
the basis to our approach to sound
environmental governance.
Whilst we comply with our legal
obligations, Cleanaway recognises
that there are still ways that the
collection, treatment and disposal
of waste that has the potential to
interact with communities and the
environment. That is why we strive
to go above and beyond compliance,
looking to continually improve the way
we operate our prized assets that set
Cleanaway apart from other waste
management companies.
diesel fleet, whilst delivering improved
environmental outcomes. Once the trial
has been completed, these vehicles will
join our fleet as permanent fixtures, with
more electric vehicles planned for the
coming year.
With one of the largest fleets on
Australian roads, the combustion
of diesel fuels remains one of the
largest contributors to our Scope
1 greenhouse gas emissions,
contributing approximately 25%.
Over FY2019, we have further
expanded on a range of initiatives
which aim to reduce the impact of our
fleet operations on the environment
– whilst maintaining the safety,
efficiency and reliability of our fleet.
One such initiative is the introduction
of our first Electric Vehicles.
Introducing our first
Electric Vehicles
In FY2019, we were proud to introduce
our first Electric Vehicles, delivering
zero tailpipe emissions. The vehicles
were part of an initial trial, run from our
Perry Road Super Site in Dandenong
Victoria, to ensure the vehicles can
meet the same service levels as our
We are also testing Diesel-Electric
hybrid technology and are preparing to
introduce our first hybrid vehicle into the
City of Sydney in FY2020.
Company-wide standards require all
new heavy vehicles to comply with
Euro 5 emission levels at a minimum
– and in FY2019, we have lifted this
to meet Euro 6 emission levels where
contractually required.
We have also commenced reviewing
alternative fuels and assessing their
suitability across our fleet. Wherever
possible we are looking for fuel sources
which can drive a circular economy
such as compressed natural gas (CNG)
and biodiesel.
Continuing to enhance
Cleanaview
We have continued to enhance
and rollout Cleanaview across our
fleet, with more than 700 vehicles
now running with the technology.
28 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Making a sustainable future possible assets
to minimise our impact
Cleanaview provides improved visibility
and safety for our drivers and allows us
to optimise our routes by maximising
capacity and minimising wasted
kilometres. It even allows our drivers
to see the waste they’re collecting via
cameras fitted in the hoppers of our
side lift vehicles - allowing for early
identification of contamination or
problematic waste, such as controlled/
regulated waste or smoldering items.
This provides for greater contamination
reporting with images, which leads to
more effective education campaigns.
Importantly, Cleanaview’s vastly
improved reporting capabilities allows
our municipal customers to provide
better service to their customers with
near real-time data on collection status
and service.
Our fleet
Heavy vehicles
Light vehicles
Yellow vehicles
70%
15%
15%
Powered by
sustainable energy
In May 2019 the first of our Electric
Vehicles began a trial in Melbourne.
Ensuring that we can maintain service
levels is a key focus, delivering a
consistent service each day for the
households and businesses which
rely on us, as well as reducing our
tailpipe emissions.
Significant noise reduction in the
vehicles also make early morning or
late-night collections possible for some
waste streams in congested areas.
2019 Annual Report
/ 29
Sustainability /
Making a sustainable future possible
Better
greenhouse
gas management for a
sustainable future
Cleanaway continues to take action on climate
change by managing our greenhouse gas emissions.
This is done through the responsible management
of our landfill gas, increasing fuel and energy
efficiency, and in helping our customers and the
broader community manage their waste impacts.
Expanding the footprint of our
recycling assets and exploring the
many options to reduce our carbon
footprint underpins management
of greenhouse gas emissions and our
commitment to making a sustainable
future possible. Our current areas of
focus include:
• Harnessing naturally produced
gas from our landfills, to generate
renewable electricity or for use
by third parties as renewable fuel.
• Introducing zero carbon electric
vehicles into our fleet, and trialling
alternative fuel vehicles such as
Diesel-Electric hybrids.
• Producing lower-carbon fuels from
waste through our joint venture
with ResourceCo, Australia’s first
Process Engineered Fuel (PEF) plant
in Wetherill Park, NSW.
• Ensuring our fleet is maintained
in top condition, optimising fuel
efficiency and reducing greenhouse
gas emissions as well as other
tailpipe pollutants.
• Improving the energy efficiency
of our facilities.
• Expanding our recycling and
resource recovery operations
to support the circular economy.
• Educating our customers as well
as communities, schools and other
businesses on better recycling
practices to help them realise the
potential of resource recovery.
Cleanaway recognise and accept
there is still more work to be
done on reducing greenhouse gas
emissions, and importantly helping
our community reduce greenhouse
gas emissions through sustainable
management of waste.
Our total greenhouse gas emissions
in FY19 were approximately 820kt
CO2-e, of which over 95% were Scope
1 emissions with the balance
being Scope 2 emissions from the
consumption of electricity.
The majority of our Scope 1 emissions
came from the natural breakdown
of waste in our landfills, contributing
approximately 72% of our total
Scope 1 emissions. Emissions from the
use of fuels to run our vehicle fleet
contributed approximately 25% of our
total Scope 1 emissions, whilst the
consumption of natural gas contributed
approximately 3%.
Our ongoing focus in landfill gas
management excellence, investment in
new prized assets supporting increased
recycling and resource recovery
efforts, as well as improvements in
fuel and energy efficiency is core to
our management of greenhouse gas
emissions for a sustainable future.
Cleanaway has a strong track record
of carbon-related disclosure, having
participated in the CDP (formerly the
Carbon Disclosure Program) carbon
reporting for more than 5 years. Our
reporting on climate related matters
will continue to evolve.
30 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Making a sustainable future possible As part of our commitment to making
a sustainable future possible, we are
continuing to expand landfill gas
projects and collection infrastructure
across the country.
Generating renewable
energy from our landfills
As the most significant source of
greenhouse gas emissions, our focus
on the sustainable management of
landfill gas is unrelenting.
Our landfill gas extraction initiatives
go beyond legislative requirements
to reduce the impact of landfills, whilst
at the same time seeing the recovery
of a valuable resource. This year we
harnessed landfill gas to generate over
135 million kWh of renewable power
which was fed back into the electricity
grid, reducing reliance on fossil fuels
for power generation.
Waste Audits
– understanding
for sustainability
Over the course of FY2019, we’ve
undertaken more than 130 waste audits for
our customers – helping them understand
what makes up their waste, and how to
divert more from landfill.
We partner with Officeworks, working
toward zero waste to landfill, as part of
their Positive Difference Plan 2020. We
worked closely with them to learn as much
as possible about their waste profile,
which included store walk throughs,
interviews with team members, and visual
bin assessments to identify waste sources,
disposal behaviours and opportunities for
better waste management.
The next step was a deep dive into their
waste. A team from Officeworks joined
our Resource Recovery Specialist Manny
Manatakis in Perth to sort through eight
general waste bins. The team was surprised
at the amount of easily recyclable waste
being sent to landfill. By identifying those
missed diversion opportunities, the team
were able to workshop how they could
change their behaviours to achieve their
diversion targets. As a result of these
initiatives, Officeworks’ recycling rates have
increased from 76% in FY2018 to 82% in
FY2019, and they continue to work towards
a 90% recycling rate in FY2020.
2019 Annual Report
/ 31
Sustainability /
Corporate Information
Board of Directors
Mark Chellew
Vik Bansal
Ray Smith
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 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 40 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
Vik joined Cleanaway as
Chief Executive Officer
and Managing Director in
August 2015.
With over 20 years’
experience in a range of
executive roles in Australia,
Asia and the United
States, he has a proven
track record of leading
industrial organisations
through significant growth,
transition and improvement.
Vik was previously President
and Chief Operating Officer
of Valmont Industries Inc. –
a US$3.3 billion NYSE listed
global engineering and
manufacturing company
based out of Omaha,
Nebraska USA. Prior to that
he was Group President
of the Global Engineered
Infrastructure Products
segment of Valmont Inc.
and Group President
Asia Pacific.
Vik has also held senior
line leadership positions
with One Steel Limited and
Eaton Corporation. He holds
a Bachelor of Electrical
Engineering with Honours,
an MBA, and has completed
the Advanced Management
Program at INSEAD. Vik is
a Fellow of the Australian
Institute of Company
Directors and a Fellow of
Engineers Australia. He is
a founding Board member
of the National Waste &
Recycling Industry Council
(NWRIC).
Independent
Non-Executive Director
Chairman of the Audit and
Risk Committee
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) and 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
and is a Fellow of CPA
Australia and a Fellow
of the Australian Institute
of Company Directors.
32 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Mike Harding
Terry Sinclair
Emma Stein
Philippe Etienne
Independent
Non-Executive Director
Chairman of the
Remuneration and
Nomination Committee
Member of the
Sustainability Committee
Independent
Non-Executive Director
Member of the Audit and
Risk Committee
Member of the
Remuneration and
Nomination Committee
Independent Non-Executive
Director since 1 March 2013.
Independent Non-Executive
Director since 1 April 2012.
Mike is the Chairman
of Downer EDI Limited
(since November 2010),
Lynas Corporation Ltd (since
January 2015) and Horizon
Oil Limited (since November
2018). Formerly, 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.
Terry is a Non-Executive
Director of Ovato Limited
(effective October 2017)
and is also a Director
of a number of private
companies, including
Zoom2U as well as
Chairman of GMDx Group.
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 government
clients. 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).
Independent
Non-Executive Director
Member of the Audit and
Risk Committee
Member of the
Sustainability Committee
Independent
Non-Executive Director
Chairman of the
Sustainability Committee
Member of the Audit and
Risk Committee
Independent Non-Executive
Director since 1 August 2011.
Independent Non-Executive
Director since 29 May 2014.
Emma is a Non-Executive
Director of Alumina Limited
(since February 2011) and
Infigen Energy Limited
(since September 2017).
Formerly, 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).
She is an Honorary Fellow
of the University of Western
Sydney and a Fellow of
the Australian Institute
of Company Directors.
Philippe is a Non- Executive
Director of Lynas Corporation
Limited (since January 2015).
Formerly, 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 Masters
of Business Administration
(MBA). He is a Graduate of
the Australian Institute of
Company Directors and has
completed post-graduate
qualifications in marketing.
Note: The Health, Safety and Environment Committee was renamed the Sustainability Committee in August 2019
2019 Annual Report
/ 33
Corporate Information /
Corporate Information
Senior Executive Team
Brendan Gill
Chief Financial Officer
Brendan joined Cleanaway
in September 2014. Brendan
has more than 35 years
of experience as a finance
professional, mainly in the
mining, steel and energy
sectors. His career includes
26 years at BHP 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, Brendan
has held CFO roles, most
recently as CFO for Inova
Resources (previously
named Ivanhoe Australia).
Brendan has a Bachelor
of Business, is a member
of CPA Australia and is a
Graduate of the Australian
Institute of Company
Directors.
Mark Crawford
Executive General
Manager, Solid Waste
Services
Mark joined Cleanaway as
Executive General Manager,
Enterprise Services in
February 2014 and was
appointed Executive General
Manager, Solid Waste
Services in August 2017.
Mark has more than
15 years’ operational
experience gained in
senior and executive roles.
He has worked across
Australia and Asia Pacific to
integrate complex business
models and has extensive
transformation experience
across all business
disciplines.
Prior to joining Cleanaway,
Mark held a number of
general management
roles at Australia
Post, most recently as
General Manager for
the International business.
Mark holds qualifications
in Information Technology.
Vik Bansal
Chief Executive Officer and
Managing Director
Vik joined Cleanaway as
Chief Executive Officer
and Managing Director in
August 2015.
With over 20 years’
experience in a range of
executive roles in Australia,
Asia and the United
States, he has a proven
track record of leading
industrial organisations
through significant growth,
transition and improvement.
Vik was previously President
and Chief Operating Officer
of Valmont Industries Inc. –
a US$3.3 billion NYSE listed
global engineering and
manufacturing company
based out of Omaha,
Nebraska USA. Prior to that
he was Group President
of the Global Engineered
Infrastructure Products
segment of Valmont Inc.
and Group President
Asia Pacific.
Vik has also held senior
line leadership positions
with One Steel Limited and
Eaton Corporation. He holds
a Bachelor of Electrical
Engineering with Honours,
an MBA, and has completed
the Advanced Management
Program at INSEAD. Vik is
a Fellow of the Australian
Institute of Company
Directors and a Fellow of
Engineers Australia. He is
a founding Board member
of the National Waste &
Recycling Industry Council
(NWRIC).
34 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Tim Richards
Executive General
Manager, Liquid Waste &
Health Services
Tim joined Cleanaway as
Executive General Manager,
Liquid Waste & Health
Services in August 2018.
Prior to joining Cleanaway,
Tim was the CEO for
Tomra Cleanaway, the
network operator for the
NSW Container Deposit
Scheme. 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 is a
member of the Institute
of Chartered Accountants
in Australia and New
Zealand. Tim also completed
the Advanced Management
Program at Wharton.
Michael Bock
Executive General
Manager, Enterprise
Services and Integration
Michael joined Cleanaway
in March 2018 as Executive
General Manager (EGM),
Integration and appointed
as EGM, Enterprise Services
and Integration in August
2019. 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.
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 and is a Fellow
of the Governance Institute
of Australia, and a Graduate
of the Australian Institute of
Company Directors.
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.
2019 Annual Report
/ 35
Corporate Information /
“One of the most enjoyable
things about my job is meeting
the residents and their children…
Seeing their cheery faces early
in the morning would brighten up
anyone’s day! I also love seeing
all the kids waving during my runs
– those are priceless experiences
I look forward to each day.”
Sinead Nolan
Side-lift Driver, Geelong VIC
36 /
CLEAN AWAY 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
38
47
64
65
66
67
68
69
70
128
129
Notes to the Consolidated Financial Statements
Information about the Group and basis
of preparation
Statement of compliance
1. Corporate information
2.
3. Basis of preparation
4. Critical accounting estimates and judgements
Information about our financial performance
5. Segment reporting
6. Revenue
7. Other income
8. Net finance costs
9.
Income tax
10. Earnings per share
Information about working capital
11. Cash and cash equivalents
12. Trade and other receivables
13. Inventories
14. Trade and other payables
15. Assets held for sale
Other information about our financial position
21. Property, plant and equipment
22. Intangible assets
23. Equity accounted investments
24. Other assets
25. Employee entitlements
26. Provisions
27. Other liabilities
Information about our group structure
28. Business combinations
29. Subsidiaries
30. Deed of cross guarantee
31. Parent entity
Information about financial risks
and unrecognised items
32. Financial risk management
33. Contingent liabilities
34. Commitments
Information about our capital structure
Other information
16. Interest-bearing liabilities
17. Issued capital
18. Reserves
19. Dividends
20. Capital management
35. Share-based payments
36. Auditor’s remuneration
37. Events occurring after the reporting date
38. Related party transactions
Accounting policies
39. Significant accounting policies
40. New standards adopted
41. New standards and interpretations
not yet adopted
2019 Annual Report
2019 Annual Report
/ 37
/ 37
Financial Report /
Directors’ Report
The Directors present their Report (including the Remuneration Report) together with the Consolidated Financial Statements
of the Group, consisting of Cleanaway Waste Management Limited (the Company) and its controlled entities (Cleanaway
or the Group), for the financial year ended 30 June 2019 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 the company’s website.
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.
Dividends
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2019 of 3.55 cents
per share, being an interim dividend of 1.65 cents per share and final dividend of 1.90 cents per share. The record date of
the final dividend is 10 September 2019 with payment to be made 3 October 2019. The financial effect of the final dividend
has not been brought to account in the Financial Statements for the year ended 30 June 2019 and will be recognised in
a subsequent Financial Report.
Details of distributions paid in the financial year are as follows:
RECOGNISED (PAID AMOUNTS)
Fully paid ordinary shares
Final dividend for 2018: 1.40 cents per share (2017: 1.10 cents per share)
Interim dividend for 2019: 1.65 cents per share (2018: 1.10 cents per share)
Total dividends paid
2019
$’M
28.5
33.7
62.2
2018
$’M
17.5
22.4
39.9
38 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
38
Directors’ Report
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 2019 was
$123.1 million (2018: $103.5 million). The Group has incurred acquisition and integration related expenses, net of tax
of $11.5 million (2018: $16.6 million) during the year ended 30 June 2019, 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 2019
of $139.9 million was up by 42.8% on the prior year (2018: $98.0 million). A reconciliation of underlying profit to statutory
profit is set out on page 41.
Operating review
The Group comprises three operating segments being Solid Waste Services, Industrial & Waste Services and Liquid Waste
& Health Services. Unallocated balances include the Group’s share of profits from equity accounted investments and
corporate balances. A description of the operating segments and a summary of the associated segment results are set out
below:
Solid Waste Services
Core business
The Solid Waste Services segment comprises the collection, recovery and disposal of solid waste,
including putrescible waste, inert waste, household waste and recovered waste. Waste streams
are generally processed through our resource recovery and recycling facilities, transfer stations
and landfills.
Financial metrics
Total revenue for the Solid Waste Services segment increased by 22.2% to $1,536.3 million.
Underlying EBITDA 1 increased by 23.5% to $352.8 million. Underlying EBIT 2 increased
by 28.1% to $204.0 million.
Performance
Growth initiatives continue to be successfully implemented with volume and price increases
being recorded.
Growth was further enhanced by the full ramp up of major contracts.
Both revenue and earnings also increased by the addition of the Toxfree Solids businesses
located in North West WA and Qld.
The Chinese National Sword policy led to increased costs of sorting which was passed on to
Municipal and Commercial customers progressively.
1
2
EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
39
2019 Annual Report
/ 39
Directors’ Report Financial Report /
Directors’ Report
Operating review (continued)
Liquid Waste & Health Services
Core business
The Liquid Waste & Health Services segment comprises:
Liquid Waste – the collection, treatment, processing, refining and recycling and destruction
of hazardous and non-hazardous liquids, hydrocarbons and chemical waste, specialised
product destruction, hazardous waste and e-waste.
Health Services – the provision of services to the health sector for the safe treatment and
disposal of health-related waste which includes sharps management, medical waste,
pharmaceutical waste, healthcare hazardous waste and quarantine waste.
Financial metrics
Total revenue increased by 53.5% to $495.0 million and underlying EBITDA increased by 60.3%
from $54.2 million to $86.9 million. Underlying EBIT increased by 46.7% from $36.8 million
to $54.0 million.
Performance
The Health Services businesses performed well and continue to deliver revenue and earnings
growth. We continue to invest in this fast growing area of the waste industry via the recent
small acquisition of ASP Healthcare.
Hydrocarbons also had a good year and remains on track for further growth with increased
production efficiencies.
Volumes in hazardous and non-hazardous liquids were down on last year. We have restructured
the business through the Toxfree integration to improve performance and remain confident that
this will be achieved.
Packaged waste services continue to grow both revenue and earnings as new hazardous waste
streams are recognised by the market.
Industrial & Waste Services
Core business
The Industrial & Waste Services segment provides a wide variety of services to the Infrastructure,
Industrial and Resources markets. Services include drain cleaning, non-destructive digging,
vacuum loading, high pressure cleaning, pipeline maintenance and CCTV.
Financial metrics
Total revenue increased by 84.0% to $341.9 million and Underlying EBITDA increased
by 146.6% from $18.9 million to $46.6 million. Underlying EBIT increased by 341.2% from
$5.1 million to $22.5 million.
Performance
The acquisition of Toxfree has increased scale in this segment and was a major factor in the
growth achieved. As part of the integration of Toxfree, further streamlining of the organisational
structure was completed.
The segment also achieved modest organic growth during the year notwithstanding the
completion of the Toxfree Wheatstone project last year.
4 0 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
40
Directors’ Report
Directors’ Report
Operating review (continued)
Group results for the year ended 30 June 2019
UNDERLYING ADJUSTMENTS
STATUTORY 1
$’M
LOSS ON
SALE OF
INVESTMENTS 4
$’M
ACQUISITION &
INTEGRATION
COSTS 5
$’M
CHANGE IN
REMEDIATION
PROVISIONS
DISCOUNT RATE 6
$’M
REVALUATION
OF LAND AND
BUILDINGS 7
$’M
433.7
(220.8)
4.7
217.6
(47.8)
169.8
(46.6)
123.2
123.1
0.1
2.2
–
–
2.2
–
2.2
–
2.2
2.2
–
16.6
–
–
16.6
–
16.6
(5.1)
11.5
11.5
–
9.1
–
–
9.1
–
9.1
(2.7)
6.4
6.4
–
–
–
(4.7)
(4.7)
–
(4.7)
1.4
(3.3)
(3.3)
–
UNDERLYING 1
$’M
352.8
86.9
46.6
0.7
487.0
(25.4)
461.6
(220.8)
–
240.8
(47.8)
193.0
(53.0)
140.0
139.9
0.1
Solid Waste Services
Liquid Waste & Health Services
Industrial & Waste Services
Equity accounted investments
Waste management
Corporate
EBITDA 2
Depreciation and amortisation
Revaluation 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
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 the loss incurred on the sale of equity accounted investments in Total Waste Management Pty Ltd and Western Resource Recovery Pty Ltd,
effective 10 December 2018.
5 Acquisition and integration costs include the ongoing integration costs related to the acquisition of Toxfree which occurred on 11 May 2018 and
transaction costs and other costs associated with the acquisition of businesses during the period.
Remediation liabilities related to closed landfill sites and industrial properties as a result of the reduction in the discount rate. Refer note 26 to the
Financial Statements.
Relates to net impairment reversals related to revalued land and buildings.
6
7
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Directors’ Report
Operating review (continued)
Group results for the year ended 30 June 2018
Solid Waste Services
Liquid Waste & Health Services
Industrial & Waste Services
Equity accounted investments
Waste management
Corporate
EBITDA 2
Depreciation and amortisation
Revaluation 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
285.7
54.2
18.9
(0.1)
358.7
(19.0)
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.
4 2 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
42
Directors’ Report
Directors’ Report
Operating review (continued)
Principal risks
The material business risks that could adversely impact the Group’s financial prospects in future periods include 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 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 other 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 32 to the Financial Statements.
Financial position review
Operating cash flows increased by 58.6% to $350.8 million (2018: increase of 16.7% to $221.2 million) due mainly
to higher profitability of the Group.
The Group’s net assets have increased from $2,488.1 million to $2,582.8 million.
At balance date the Group had total syndicated debt facilities of $900.0 million (2018: $900.0 million), financing
arrangements with the Clean Energy Finance Corporation of $100.0 million (2018: $90.0 million) and an uncommitted bank
guarantee facility of $60.0 million (2018: $60.0 million). Further information on the Group’s financing facilities is provided
in note 16 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 2019.
Events subsequent to reporting date
There have been no matters or circumstances that have arisen since 30 June 2019 that have affected the Group’s operations
not otherwise disclosed in this report.
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.
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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 $71,568 (2018: $65,081).
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 5
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
5
5
5
5
5
5
5
5
5
4
5
5
5
5
–
–
3
3
3
–
3
–
–
2
3
3
–
3
–
–
–
4
–
4
4
–
–
–
4
–
4
4
–
–
2
–
2
2
–
–
–
2
–
2
2
–
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.
Renamed Sustainability Committee on 14 August 2019.
5
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
4 4 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
ORDINARY
SHARES
PERFORMANCE
RIGHTS
139,548
3,358,691
103,720
113,568
49,417
16,109
37,756
–
5,257,496
–
–
–
–
–
44
Directors’ Report
Directors’ Report
Shares under option and performance rights
During the financial year ended 30 June 2019 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 2019 and 2018
financial years are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2019 are
13,025,041 (2018:14,226,030). Performance rights outstanding at the date of this report are 12,520,625.
Shares issued on the exercise of performance rights
During the financial year ended 30 June 2019 and up to the date of this report, the Company issued 4,880,729 shares
as a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June 2018
and up to the date of the 2018 report, the Company issued 2,003,894 ordinary shares as a result of the exercise
of performance rights that vested on 30 June 2018.
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.
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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 2019 there were no non-audit services provided by Ernst & Young.
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
2019
$
2018
$
1,301,343
81,891
1,191,401
280,418
–
1,383,234
29,561
1,501,380
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 64.
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 47 to 63, is made in accordance with a resolution
of the Board.
M P Chellew
Chairman and Non-Executive Director
Melbourne, 14 August 2019
V Bansal
Chief Executive Officer and Managing Director
4 6 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
46
Directors’ Report
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
48
49
50
51
53
60
61
63
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 2019. 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
Cleanaway has substantially outperformed the ASX200 Industrials Index over the last three years, as set out below. For the
year ended 30 June 2019, Cleanaway shareholders have continued to experience solid performance growth across all key
financial metrics as set out in the graphs below. In particular, in FY19 underlying EPS increased 30.2% to 6.9 cents per share,
dividends increased by 42.0% to 3.55 cents per share and ROIC increased from 5.2% to 5.4%. Safety remains at the heart
of everything we do and whilst there was continued improvement in our TRIFR safety performance during the year, this was
not to the expected level and this is reflected in STI remuneration outcomes.
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 the year ended 30 June 2019.
The Directors consider that there is appropriate alignment between Cleanaway shareholders’ experience over the year ended
30 June 2019 and the outcomes for KMP set out in this Report.
Total Shareholder Return: CWY vs ASX 200 Industrials Sector Index (XNJ)
220%
180%
140%
100%
60%
20%
-20%
CWY
ASX 200 Industrial Sector Index
30 June
2016
31 December
2016
30 June
2017
31 December
2017
30 June
2018
31 December
2018
30 June
2019
EPS 1 (cents)
6.9
4.7
5.3
Dividends Per Share (cents)
3.55
2.10
2.50
ROIC 2 (%)
5.2%
5.4%
4.8%
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
1 Underlying results.
2
Return on Invested Capital calculated as tax effected EBIT divided by average net assets plus net debt. FY18 excludes impact of Toxfree acquisition.
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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.
The acquisition and ongoing integration of Toxfree during the year was a major focus for our Executive team. With the
broadening of the Group and increased number of business units, the following roles became KMP:
Executive General Manager – Solid Waste Services
Executive General Manager – Liquid Waste & Health Services.
The KMP disclosed in this Report for the year ended 30 June 2019 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
M Crawford
T Richards
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)
Executive General Manager – Solid Waste Services
Executive General Manager – Liquid Waste & Health Services
1 Mr Richards was appointed as EGM Liquid Waste & Health Services on 15 August 2018.
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Remuneration Report (Audited)
Remuneration Report (Audited)
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 following
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 2019.
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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 2019 and 30 June 2018 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
Total
FINANCIAL YEAR
SALARY AND FEES
$
SUPERANNUATION BENEFITS
$
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
309,469
287,451
168,950
154,492
149,772
133,897
149,772
133,881
159,361
145,339
159,361
145,339
1,096,685
1,000,399
20,531
20,049
16,050
14,677
14,228
12,719
14,228
12,719
15,139
13,807
15,139
13,807
95,315
87,778
TOTAL
$
330,000
307,500
185,000
169,169
164,000
146,616
164,000
146,600
174,500
159,146
174,500
159,146
1,192,000
1,088,177
3B. Aggregate fee limit
The current aggregate amount of remuneration that can be paid to Non-Executive Directors of $1,500,000 was approved
by shareholders at the Company’s 2018 Annual General Meeting.
For the year ended 30 June 2019, the aggregate remuneration paid to all Non-Executive Directors was $1,192,000. This represents
an increase of 9.5% compared with the year ended 30 June 2018.
Fee structure
3C.
The fee structure (inclusive of superannuation) for the year ended 30 June 2019 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
The Board has conducted a review of Non-Executive Director fees and has approved, with effect from 1 July 2019 increases to the
Non-Executive Director and Chairman base fees and Committee membership fees for each Committee membership as set out below.
The Board took into consideration several factors in the review of Non-Executive Director fees, in particular the need to ensure
Non-Executive Director fees remain competitive with peer companies. Following the review of Non-Executive Director fees undertaken
during the year, the Board has determined that it will continue to review Non-Executive Director fees going forward to ensure they
remain competitive and at a level that will attract and retain Directors in the future.
The fee structure (inclusive of superannuation) from 1 July 2019 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
370,000
154,000
AUDIT AND
RISK COMMITTEE
$
34,000
13,500
SUSTAINABILITY
COMMITTEE 1
$
25,000
13,500
REMUNERATION AND
NOMINATION COMMITTEE
$
25,000
13,500
1
The Health, Safety and Environment Committee was renamed Sustainability Committee on 14 August 2019.
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Remuneration Report (Audited)
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. In an environment of heightened community
expectations around executive remuneration, the Board continues to review the remuneration framework annually to ensure
it is fit for purpose. This ensures remuneration is competitive and fair, aligned with the achievements of Cleanaway and
aligned to the creation of long-term shareholder value.
The remuneration structure is driven by these principles and 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. For the year ended 30 June 2019, the target remuneration mix for Executive KMP remained
unchanged from the previous year and is illustrated below.
CEO
40.0%
24.0%
6.0%
30.0%
REMUNERATION MIX AT TARGET
Other KMP
55.5%
22.2%
5.6%
16.7%
TFR
STI Cash
STI Deferred (equity)
LTI (equity)
4C. Shareholding guideline
The CEO and Executive Committee are encouraged to build and maintain a shareholding in the Company equivalent to:
CEO – 100% of TFR; and
Executive Committee – 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 CEO and KMP that have served since 1 July 2015 have all accumulated shareholdings in line with this guideline. 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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Remuneration Report (Audited)
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 2019 and 30 June 2018 is set out
in the following table:
FINANCIAL
YEAR
2019
2018
2019
2018
2019
2019
2019
2018
SALARY
AND FEES
$
1,331,031
1,253,389
671,750
632,296
585,015
401,446
2,989,242
1,885,685
STI
CASH
$
803,099
1,270,571
294,222
433,918
238,078
184,001
1,519,400
1,704,489
NON-
MONETARY
BENEFITS
$
93,086
100,519
–
–
–
–
93,086
100,519
SHARE-BASED
PAYMENTS 1
$
2,126,627
1,697,888
511,732
388,849
442,462
159,299
3,240,120
2,086,737
POST
EMPLOYMENT
BENEFITS
$
20,531
20,049
20,531
20,049
20,531
18,820
80,413
40,098
TOTAL
$
4,374,374
4,342,416
1,498,235
1,475,112
1,286,086
763,566
7,922,261
5,817,528
V Bansal 2
B J Gill
M Crawford
T Richards
Total
PERFOR-
MANCE
RELATED
67.0%
68.4%
53.8%
55.8%
52.9%
45.0%
1
Share-based payments consist of performance rights. The fair value of the performance rights is measured at the date of grant using Monte Carlo simulation
and the Black Scholes model and is allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the
portion of the fair value of the performance rights recognised as an expense in each reporting period, net of any reversals for forfeited performance rights
or changes in the probability of performance rights vesting. Performance rights include the expense relating to the deferred share component of STI.
2 Non-monetary benefits comprise costs associated with Mr Bansal’s accommodation in Melbourne and travel between Sydney and Melbourne.
An explanation of the key remuneration elements (TFR, STI and LTI), as well as outcomes for the year ended 30 June 2019,
is provided in the following sections.
5B. Total fixed remuneration
TFR consists of base salary plus statutory superannuation contributions. Senior executives receive a fixed remuneration
package which is reviewed annually by the Committee and the Board with reference to Company and individual
performance, size and complexity of the role and benchmark market data. There are no guaranteed base pay increases
included in any Executive KMP contract.
FY2019 total fixed remuneration outcomes
Executive KMP TFR was reviewed during the annual remuneration review with the following increases effective 1 October 2018:
Mr Bansal’s TFR was increased from $1,281,250 to $1,375,000;
Mr Gill’s TFR was increased from $656,347 to $704,260;
Mr Crawford’s TFR was increased from $587,910 to $611,426; and
Mr Richards’ TFR was not adjusted as he was appointed to the role on 15 August 2018.
FY2019 short-term incentive
5C.
For the year ended 30 June 2019, 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 2019:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
M Crawford
T Richards
FY2019
TARGET
FY2019
MAXIMUM
75%
50%
50%
50%
150%
100%
100%
100%
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5C.
FY2019 short-term incentive (continued)
Key features of the FY2019 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 2018 to 30 June 2019.
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 related to their area of control.
Business Unit heads and other management roles also have gateways based on financial
Key Performance
Metrics
or key strategic non-financial objectives.
Financial metrics: 70%–80% weighting.
HSE metrics: 20% weighting.
Individual role specific strategic objectives: 0%–10%.
Financial metrics
Financial metrics and their respective weightings are:
Health, Safety &
Environment (HSE)
metrics and Gateways
Group EBITDA: 30% weighting.
Group Net Revenue: 10%–30% weighting. Included as it reflects growth
in our business.
Group Net Profit After Tax Return on Invested Capital (NPAT ROIC): 10%–30%
weighting. Included as it aligns with Cleanaway’s focus on improving the returns
from the net assets employed in our business.
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.
TRIFR metric has a threshold, target and stretch level of performance with
a corresponding STI outcome set out below.
Group Environment Incident metric has a target level performance and outcome only.
Each individual HSE metric has its own gateway condition:
TRIFR: That there are no work-related fatalities; and
Group Environmental Incidents: That there are no significant and major rated
environmental incidents.
Performance outcomes
Once gateways are achieved, performance against financial and HSE metrics (excluding
environmental incident metric) 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 certain senior executives is deferred for
12 months in the form of deferred performance rights.
Performance rights are granted at face value determined by the 5-day volume
weighted average price of Cleanaway’s shares on the ASX during the period 24 June
to 28 June 2019.
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.
FY2019 short-term incentive (continued)
FY2019 short-term incentive outcomes
The following table details 2019 STI scorecard measures and assessment applied to Executive KMP.
ELEMENT
Gateway to STI
Scorecard KPIs
MEASURE
Group EBITDA – Threshold of on-target budgeted
Group Net Revenue
Group ROIC
Group TRIFR
Group Environmental Incidents
2019 PERFORMANCE ASSESSMENT
Above Target
At Target
Above Target
Not Achieved 1
At Target
1 Whilst there was an overall reduction in TRIFR during FY19, given overall safety performance did not meet expectations, the Board determined that the
health & safety gateway was not achieved.
The STI payments received or receivable by Executive KMP for the year ended 30 June 2019 are summarised in the
following table:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
M Crawford
T Richards
TOTAL STI
$
CASH
COMPONENT 1
$
DEFERRED
SHARE
COMPONENT 1
$
PERCENTAGE OF
TARGET STI
OPPORTUNITY 2
PERCENTAGE OF
MAXIMUM STI
OPPORTUNITY 2
2019
2018
2019
2018
2019
2019
1,003,873
1,588,214
367,775
542,397
297,597
230,000
803,099
1,270,571
294,222
433,918
238,078
184,001
200,774
317,643
73,553
108,479
59,519
45,999
97%
165%
104%
165%
97%
97%
50%
85%
54%
85%
50%
50%
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 FY2018 STI, Executives considered KMP during the year ended 30 June 2018 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 FY2018 STI deferred component performance rights vested on 30 June 2019 (186,137);
Mr Gill’s FY2018 STI deferred component performance rights vested on 30 June 2019 (63,568); and
Mr Crawford’s FY2018 STI deferred component performance rights vested on 30 June 2019 (56,940).
FY2019 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 2019,
an LTI offer was made to Mr Bansal following shareholder approval at the Company’s 2018 Annual General Meeting as well
as to other Executive KMP including Mr Gill, Mr Crawford and Mr Richards.
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
M Crawford
T Richards
FY2019
TARGET
FY2019
MAXIMUM
75%
30%
30%
30%
150%
60%
60%
60%
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
FY2019 long-term incentive (continued)
5E.
The details of the FY2019 LTI offer are summarised in the table below. The number of performance rights granted to each
Executive KMP for the year ended 30 June 2019 is outlined in section 7A. The number of performance rights each Executive
KMP had on issue as at 30 June 2019 is outlined in section 7B.
Key features of the FY2019 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 2018 to 30 June 2021.
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 25 June to 29 June 2018.
Performance hurdles
Performance rights issued under the FY2019 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 comparator group of companies. The comparator group is the
constituent companies that remain listed in the S&P/ASX 200 Index (excluding companies
classified as mining, financial services and overseas domiciled companies) for the duration
of the performance period;
25% of the performance rights will be subject to Return On Invested Capital (ROIC)
for the year ending 30 June 2021. 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 2021.
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.
Forfeiture and Lapsing
Conditions
Where a participant resigns or is terminated by the Company 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 2019
3,178,764
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5. Executive key management personnel – reward outcomes (continued)
5. Executive key management personnel – reward outcomes (c)
5E.
FY2019 long-term incentive (continued)
FY2019 LTI performance hurdle vesting conditions
Performance rights issued under the FY2019 plan are subject to three performance measures with the following performance
vesting schedules:
Relative TSR performance
measured over 3 years from
1 July 2018 to 30 June
2021
NPAT ROIC performance as
measured for the year
ending 30 June 2021
EPS CAGR performance
measured over 3 years from
1 July 2018 to 30 June
2021
Cleanaway’s relative TSR rank compared
with the TSR comparator group
Percentage of TSR performance rights
that vest
Less than 50th percentile
Equal to 50th percentile
Greater than 50th percentile and up to
(and including) 75th percentile
Above 75th percentile
Cleanaway NPAT ROIC
Less than 6.25%
6.25%
Greater than 6.25% and up to
(and including) 6.75%
Greater than 6.75% and up to
(and including) 7.25%
Above 7.25%
Cleanaway EPS CAGR
Less than 13%
At 13%
Greater than 13% and up to
(and including) 15%
Greater than 15% and up to
(and including) 18%
Above 18%
Nil
50%
Straight line pro rata vesting between 50%
and 100%
100%
Percentage of NPAT ROIC performance
rights that vest
Nil
20%
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
Nil
20%
Straight line pro rata vesting between 20%
and 50%
Straight line pro rata vesting between 50%
and 100%
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 prior LTI offers outstanding:
Performance period
3 years: 1 July 2016 to 30 June 2019
3 years: 1 July 2017 to 30 June 2020
FY2017 LTI 1
FY2018 LTI 1
Overview
Relative TSR
performance hurdles
ROIC performance
hurdles
EPS CAGR
performance hurdles
Number of
performance rights
remaining on issue
at 30 June 2019
Performance rights vesting subject to:
Relative TSR (50%)
ROIC (25%)
EPS CAGR (25%)
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
50th to 75th percentile – straight line vesting between 50% and 100%
Above 75th percentile – 100% vesting
– 0% vesting
– 50% vesting
ROIC:
Below 4.5%–0% vesting
4.5%–20% vesting
4.5%–5.5% – straight line vesting
between 20% and 50%
ROIC:
Below 5.25%–0% vesting
5.25%–20% vesting
5.25%–5.75% – straight line vesting
between 20% and 50%
5.5%–6.5% – straight line vesting
5.75%–6.5% – straight line vesting between
between 50% and 100%
6.5%–100% vesting
50% and 100%
6.5%–100% vesting
EPS CAGR:
Below 7.5%–0% vesting
At 7.5%–20% vesting
7.5%–10% – straight line vesting
between 20% and 50%
EPS CAGR:
Below 7.5%–0% vesting
At 7.5%–20% vesting
7.5%–10% – straight line vesting between
20% and 50%
10%–12.5% – straight line vesting
10%–12.5% – straight line vesting between
between 50% and 100%
50% and 100%
At or above 12.5%–100% vesting
At or above 12.5%–100% vesting
4,463,902
3,191,302
1 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 simulation method and the portion relating to EPS or ROIC using the Black Scholes Model. Grant dates and fair values are contained in note 35 to the
Consolidated Financial Statements.
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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
FY2017 LTI
The FY2017 LTI was tested as at 30 June 2019. Based on Cleanaway’s relative TSR, ROIC and EPS performance over the
performance period from 1 July 2016 to 30 June 2019, the offer will partially vest – with the relative TSR tranche vesting
at 100%, the ROIC tranche vesting at 47.6% and the EPS CAGR tranche vesting at 100%.
Executive KMP
Mr Bansal, Mr Gill and Mr Crawford all participated in the FY2017 LTI. Therefore, the following performance rights will vest:
Mr Bansal: 2,060,153 of his FY17 LTI rights will vest;
Mr Gill: 422,143 of his FY17 LTI rights will vest; and
Mr Crawford: 377,840 of his FY17 LTI rights will vest.
FY2019-2020 Toxfree Integration Incentive
5G.
After the Company completed the acquisition of Cleanaway Industries Pty Ltd (formerly Tox Free Solutions Limited) on 11
May 2018 a one-off Toxfree Integration Incentive (TII) offer was approved at the Company’s 2018 Annual General Meeting
and made to approximately forty executives. This offer was to ensure focus on the key benefits of the acquisition of Toxfree,
in particular the $35.0 million of initially identified synergies, targeted to be realised by 30 June 2020.
The one-off TII offer was offered to executives 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 TII is an offer of performance rights that
was made to certain executives (including Executive KMP) which is equivalent to 50% of their STI opportunity. The key
performance condition for the TII plan relates to the achievement of Cleanaway EBITDA in the year ending 30 June 2020 that
exceeds our internal targets which includes the initial $35.0 million of synergies identified from the Toxfree acquisition. The
performance period under the plan is from 1 July 2018 to 30 June 2020. 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.
The number of performance rights remaining on issue under the TII offer at 30 June 2019 is 1,686,657 rights.
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6. Executive key management personnel – contract terms
6. Executive key management personnel – contract terms
6A. Current Executive KMP
All Executive KMP are employed on the basis of an Executive Service Agreement (Agreement) that contains a range of terms
and conditions including remuneration and other benefits, notice periods and termination benefits. Notice periods for
Executive KMP are as follows:
EXECUTIVE SERVICE AGREEMENTS
TERM OF AGREEMENT
NOTICE PERIOD BY EXECUTIVE
NOTICE PERIOD BY CLEANAWAY
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
M Crawford
T Richards
Open
Open
Open
Open
12 months
12 months
12 months
6 months
12 months
12 months
12 months
6 months
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 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 2019 is provided in section 5A.
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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 2019 is set out in the following table:
YEAR ENDED
30 JUNE 2019
BALANCE AT
1 JULY 2018
NUMBER
EXECUTIVE KEY MANAGEMENT PERSONNEL
6,760,848
V Bansal
1,653,512
B J Gill
1,465,652
M Crawford
–
T Richards
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
$
1,696,906
414,358
361,490
236,596
2,495,091
627,073
547,457
348,449
(2,368,426)
(438,701)
(386,208)
–
4,460,701
823,256
663,795
–
LAPSED/
CANCELLED
DURING THE
YEAR
NUMBER
(645,695)
(447,075)
(392,090)
–
BALANCE AT
30 JUNE 2019
NUMBER
5,443,633
1,182,094
1,048,844
236,596
1
2
3
Performance rights were granted under the FY2019 LTI Offer on 2 November 2018 and TII Offer and FY2018 STI deferral on 26 October 2018.
The fair value of performance rights granted to Executive KMP was calculated using Monte Carlo simulation and the Black Scholes Model and is $1.09
to $1.64 per Performance Right under the FY2019 LTI Offer.
Calculated as the market value of Cleanaway shares on the date of exercise.
7B. Performance rights as at 30 June 2019
The number of performance rights as at 30 June 2019 by plan for the Executive KMP is set out in the following table:
ISSUED
2017
LTI
2018
STI
2018
LTI
2019
LTI
2019
TIIP
BALANCE AT
30 JUNE 2019
EXECUTIVE KEY MANAGEMENT PERSONNEL
2,370,716
V Bansal
485,780
B J Gill
434,798
M Crawford
–
T Richards
186,137
63,568
56,940
–
1,376,011
281,956
252,556
–
1,208,615
247,616
214,976
167,009
302,154
103,174
89,574
69,587
5,443,633
1,182,094
1,048,844
236,596
VESTED &
EXERCISABLE
AT THE END
OF THE YEAR
186,137
63,568
56,940
–
No terms of performance rights 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.
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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 five years. For further explanation of details
on Cleanaway performance see the Operating review section of Director’s Report.
Net Revenue – $’M 1
Profit/(loss) attributable to ordinary
equity holders – $’M 2
EPS – cents 3
Underlying EPS – cents 3
Dividends per share – cents
Shares on issue – number
Market capitalisation – $’M
Share price at 30 June – $
Change in share price – $
FY2015
1,301.1
FY2016
1,320.7
FY2017
1,350.7
FY2018
1,564.9
FY2019
2,109.1
44.8
2.8
3.9
1.70
(23.6)
(1.4)
2.8
1.50
123.1
6.0
6.9
3.55
1,579,914,690 1,586,344,605 1,592,889,317 2,036,684,232 2,044,507,391
4,763.7
2.33
0.64
103.5
5.6
5.3
2.50
2,198.2
1.38
0.58
1,269.1
0.80
0.03
3,442.0
1.69
0.31
1,216.5
0.77
(0.24)
72.5
4.4
4.7
2.10
1 Net Revenue is Revenue excluding landfill levies (FY2015: $83.8 million; FY2016: $134.4 million; FY2017: $103.7 million; FY2018: $149.4 million;
2
3
and FY2019: $174.0 million).
Includes underlying adjustments after tax (FY2015: $69.3 million; FY2016: $18.5 million; FY2017: $5.0 million; FY2018: $(5.5) million;
and FY2019: $16.8 million).
The calculation of EPS for comparative periods have been adjusted to reflect the bonus element in the non-renounceable entitlement offer which occurred
during December 2017 and January 2018.
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8. Shareholdings and other related party transactions
8. Shareholdings and other related party transactions
8A. Shareholdings
The movement for the year ended 30 June 2019 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
M Crawford
T Richards
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
95,548
83,720
103,179
49,417
16,109
37,756
804,128
218,515
336,092
–
–
–
–
–
–
–
2,368,426
438,701
386,208
–
44,000
20,000
10,389
–
–
–
–
(100,000)
(336,092)
–
139,548
103,720
113,568
49,417
16,109
37,756
3,172,554
557,216
386,208
–
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.
63
2019 Annual Report
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Remuneration Report (Audited) Financial Report /
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 2019, 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
14 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
64 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
64
Auditor’s Independence Declaration
Consolidated Income Statement
For the year ended 30 June 2019
Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Loss on sale of investments
Share of profits/(losses) from equity accounted investments
Profit from operations before depreciation and amortisation
Depreciation and amortisation expense
Revaluation 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
23
21
8
9
2019
$’M
2,283.1
7.0
(846.9)
(622.8)
(233.0)
(71.6)
(80.6)
(2.2)
0.7
433.7
(220.8)
4.7
217.6
(47.8)
169.8
(46.6)
123.2
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
123.1
0.1
123.2
103.5
(0.2)
103.3
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
65
2019 Annual Report
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Consolidated Income Statement For the year ended 30 June 2019 Financial Report /
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2019
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 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
2019
$’M
123.2
18.4
18.4
141.6
141.5
0.1
141.6
2018
$’M
103.3
6.3
6.3
109.6
109.8
(0.2)
109.6
Earnings per share attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
10
10
6.0
6.0
5.6
5.6
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
66 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
66
Consolidated Statement of Comprehensive Income For the year ended 30 June 2019
Consolidated Balance Sheet
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
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 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
Non-controlling interest
Total equity
NOTES
2019
$’M
2018
$’M
11
12
13
15
24
21
22
23
9
24
14
16
25
26
27
16
25
26
27
17
18
56.2
382.0
19.9
–
8.8
21.6
488.5
1,296.3
2,341.8
3.8
45.5
17.3
3,704.7
4,193.2
257.5
17.7
17.1
66.9
86.1
32.2
477.5
697.6
5.1
295.8
134.4
1,132.9
1,610.4
2,582.8
2,678.2
77.9
(175.6)
2,580.5
2.3
2,582.8
52.0
369.5
21.0
8.2
8.8
15.4
474.9
1,184.0
2,310.1
13.8
56.2
8.1
3,572.2
4,047.1
235.8
–
13.5
75.7
75.9
30.7
431.6
711.7
4.5
280.0
131.2
1,127.4
1,559.0
2,488.1
2,671.0
51.9
(234.8)
2,488.1
–
2,488.1
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
67
2019 Annual Report
/ 67
Consolidated Balance SheetAs at 30 June 2019 Financial Report /
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
At 1 July 2018
Adjustment on adoption of AASB 9
Restated balance at 1 July 2018
Profit for period
Other comprehensive income
Total comprehensive income for the year
Acquisition of non-controlling interest
Share-based payment expense
Dividends reinvested/(paid)
Balance at 30 June 2019
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
ORDINARY
SHARES
$’M
2,671.0
–
2,671.0
–
–
–
–
–
7.2
2,678.2
2,083.0
–
–
–
–
581.0
–
7.0
2,671.0
PARENT ENTITY INTEREST
RESERVES
$’M
51.9
–
51.9
–
18.4
18.4
–
7.6
–
77.9
40.4
–
6.3
6.3
–
–
5.2
–
51.9
RETAINED
EARNINGS
$’M
(234.8)
(1.7)
(236.5)
123.1
–
123.1
–
–
(62.2)
(175.6)
(298.4)
103.5
–
103.5
–
–
–
(39.9)
(234.8)
NON-
CONTROLLING
INTEREST
$’M
–
–
–
0.1
–
0.1
2.2
–
–
2.3
–
(0.2)
–
(0.2)
0.3
–
–
(0.1)
–
TOTAL
$’M
2,488.1
(1.7)
2,486.4
123.1
18.4
141.5
–
7.6
(55.0)
2,580.5
1,825.0
103.5
6.3
109.8
–
581.0
5.2
(32.9)
2,488.1
TOTAL
EQUITY
$’M
2,488.1
(1.7)
2,486.4
123.2
18.4
141.6
2.2
7.6
(55.0)
2,582.8
1,825.0
103.3
6.3
109.6
0.3
581.0
5.2
(33.0)
2,488.1
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
68 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
68
Consolidated Statement of Changes in EquityFor the year ended 30 June 2019
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortisation expense
Net finance costs
Share-based payment expense
Revaluation of non-landfill land and buildings
Remediation and rectification expense
Share of (profits)/losses from equity accounted investments
Net gain on disposal of property, plant and equipment
Net loss on disposal of investments
Other non-cash items
Net cash from operating activities before changes in assets and liabilities
Changes in assets and liabilities:
Increase in receivables
(Increase)/decrease in other assets
Decrease/(increase) in inventories
Increase in payables
(Decrease)/increase in employee benefits
Increase/(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 (net of cash acquired)
Payment of special dividend to Toxfree shareholders
Proceeds from disposal of property, plant and equipment
Investment in equity accounted investments
Proceeds on divestment of equity accounted investments
Dividends received from equity accounted investments
Loans to customers repaid/(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
Net cash (used in)/from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
NOTES
2019
$’M
2018
$’M
169.8
117.8
220.8
47.8
5.5
(4.7)
9.1
(0.7)
(3.2)
2.2
(0.5)
446.1
(10.4)
(16.1)
4.2
18.6
(8.9)
0.8
(35.4)
398.9
(29.5)
(18.6)
350.8
(186.6)
(5.9)
(44.2)
–
11.2
(1.5)
6.1
4.0
0.4
(216.5)
95.3
(154.0)
(15.2)
–
(1.2)
–
(55.0)
–
(130.1)
4.2
52.0
56.2
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)
(555.5)
(113.5)
7.3
(7.8)
–
1.6
(0.4)
(811.8)
885.0
(824.4)
(4.0)
8.7
(23.3)
590.4
(32.9)
(0.1)
599.4
8.8
43.2
52.0
28
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
69
2019 Annual Report
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Consolidated Statement of Cash FlowsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
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 2019 were authorised for issue in accordance
with a resolution of the Directors on 14 August 2019.
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 39 for a summary of the Group’s significant accounting policies.
70 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
70
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
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, commodity prices 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 22 and note 39(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 39(j).
71
2019 Annual Report
/
71
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
4. Critical accounting estimates and judgements (continued)
4. Critical accounting estimates and judgements (c)
Provision for remediation and rectification
(c)
The Group’s remediation and rectification provisions related to landfills 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.
Remediation and makegood provisions in relation to the Group’s owned and leased industrial properties are reviewed
periodically and updated based on facts and circumstances known at the time, applying certain assumptions about the risk
rating related to the relevant site and the timeframe of when the site may require remediation. Changes in estimates related
to removing structures on leased sites and remediating those sites are recognised in the Consolidated Balance Sheet
by adjusting the leasehold improvement asset and the remediation provision. For closed industrial sites or where subsurface
remediation is identified, changes to the estimated costs are recognised in the Consolidated Income Statement.
Further details on the Group’s remediation accounting policy are disclosed in note 39(n).
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 39(d).
72 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
72
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
5. Segment reporting
5. Segment reporting
Following the acquisition of Cleanaway Industries Pty Ltd (formerly Tox Free Solutions Limited) on 11 May 2018 and the
continued integration of the Toxfree businesses into the new operating model, the Group has changed its operating
segments. The revised operating segments are identified 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
Comprises the collection, recovery and disposal of all types of solid waste, including putrescible waste, inert waste,
household waste and recovered waste. Waste streams are generally processed through our resource recovery and
recycling facilities, transfer stations and landfills.
Liquid Waste & Health Services
Liquid Waste comprises the collection, treatment, processing, refining and recycling and destruction of hazardous and
non-hazardous liquids, hydrocarbons and chemical waste, specialised product destruction, hazardous waste and e-waste.
Health Services comprises the provision of services to the health sector for the safe treatment and disposal of
health-related waste which includes sharps management, medical waste, pharmaceutical waste, healthcare hazardous
waste and quarantine waste.
Industrial & Waste Services
Comprises a wide variety of services provided to the Infrastructure, Industrial and Resources markets. Services include
drain cleaning, non-destructive digging, vacuum loading, high pressure cleaning, pipeline maintenance and CCTV.
Unallocated balances include the Group’s share of profits from equity accounted investments and corporate balances.
Corporate balances relate to shared services functions that are not directly attributable to an identifiable segment.
These functions include management, finance, legal, information technology, marketing, and human resources that
provide support to the other segments identified above.
No operating segments have been aggregated to form the reportable segments. Comparative information has been restated
to reflect the revised operating 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.
73
2019 Annual Report
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
5. Segment reporting (continued)
5. Segment reporting (c)
2019
Revenue
Revenue from customers
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Depreciation and amortisation
Underlying EBIT
Loss on sale of investments
Acquisition and integration costs
Revaluation of non-landfill land
and buildings
Change in discount rate on
remediation provisions
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
SOLID
WASTE
SERVICES
$’M
1,490.6
12.7
33.0
1,536.3
352.8
(148.8)
204.0
OPERATING SEGMENTS
LIQUID
WASTE &
HEALTH
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
UNALLOCATED
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
ELIMINATIONS
$’M
CORPORATE
$’M
GROUP
$’M
434.2
20.8
40.0
495.0
86.9
(32.9)
54.0
324.6
0.2
17.1
341.9
46.6
(24.1)
22.5
– 2,249.4
33.7
–
(90.1)
–
(90.1) 2,283.1
486.3
(205.8)
280.5
–
–
–
–
–
–
–
0.7
–
0.7
– 2,249.4
33.7
–
–
–
– 2,283.1
461.6
(220.8)
240.8
(2.2)
(16.6)
(25.4)
(15.0)
(40.4)
4.7
(9.1)
217.6
(47.8)
169.8
(46.6)
123.2
151.3
1.0
21.8
0.1
10.1
0.1
–
–
183.2
1.2
–
–
3.4
4.7
186.6
5.9
74 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
74
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
5. Segment reporting (continued)
5. Segment reporting (c)
2018
Revenue
Revenue from customers
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
SOLID
WASTE
SERVICES
$’M
1,225.0
14.7
17.0
1,256.7
285.7
(126.5)
159.2
OPERATING SEGMENTS
UNALLOCATED
LIQUID
WASTE &
HEALTH
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVESTMENTS
$’M
ELIMINATIONS
$’M
CORPORATE
$’M
GROUP
$’M
287.2
20.7
14.5
322.4
54.2
(17.4)
36.8
166.6
0.1
19.1
185.8
18.9
(13.8)
5.1
–
–
(50.6)
(50.6)
–
–
–
1,678.8
35.5
–
1,714.3
358.8
(157.7)
201.1
–
–
–
–
(0.1)
–
(0.1)
– 1,678.8
35.5
–
–
–
– 1,714.3
339.7
(173.3)
166.4
(2.5)
(16.6)
2.2
(19.0)
(15.6)
(34.6)
(0.2)
149.3
(31.5)
117.8
(14.5)
103.3
124.3
1.2
7.8
–
3.2
–
–
–
135.3
1.2
–
–
0.5
6.5
135.8
7.7
75
2019 Annual Report
/ 75
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
6. Revenue
6. Revenue
Revenue from customers 1
Other revenue
1
Refer to note 5 for disaggregation of revenue.
2019
$’M
2,249.4
33.7
2,283.1
2018
$’M
1,678.8
35.5
1,714.3
The Group has a right to invoice all revenue to date, except those amounts disclosed as contract assets in note 12. The Group
has chosen not to disclose the amount of remaining performance obligations under contracts, where it has a right to invoice
as services are performed. Remaining performance obligations for work which is priced on a fixed basis where the right to
invoice is conditional on the work being completed are set out in note 12.
7. Other income
7. Other income
Gain on disposal of property, plant and equipment 1
Other
2019
$’M
3.2
3.8
7.0
2018
$’M
4.6
0.5
5.1
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. Refer to note 26.
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 on USPP borrowings
Change in fair value of derivative instruments related to USPP borrowings
Finance income
Interest revenue
Net finance costs
Refer to note 39(c) for the Group’s accounting policy on finance costs.
76 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
2019
$’M
(24.6)
(5.8)
(2.9)
(15.2)
–
–
(48.5)
0.7
0.7
(47.8)
2018
$’M
(15.4)
(1.5)
(2.4)
(15.1)
(0.5)
0.4
(34.5)
3.0
3.0
(31.5)
76
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
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
2019
$’M
2018
$’M
45.4
(1.1)
44.3
2.3
–
2.3
46.6
32.3
(28.7)
3.6
0.6
10.3
10.9
14.5
(b) Amounts recognised directly in other comprehensive income or equity
Deferred income tax expense recognised directly in other comprehensive income of $8.0 million (2018: $2.7 million expense)
relates to the tax effect of items recognised in the asset revaluation reserve.
Deferred income tax benefit recognised directly in equity for the year of $2.1 million (2018: $5.3 million benefit) relates to
the tax effect of items recognised in the employee equity benefits reserve of $2.1 million (2018: $1.4 million), and the tax
effect of capital raising costs recognised directly in equity of nil (2018: $3.9 million).
(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% (2018: 30%)
Decrease in income tax expense due to:
Share of losses 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
Non-assessable gain on sale of properties
Non-deductible CGT loss on sale of properties
Non-deductible loss on sale of equity accounted investments 2
Employee share plan expenses
New Zealand tax review 3
Other
Income tax expense
2019
$’M
2018
$’M
169.8
117.8
50.9
35.3
0.4
0.3
(0.1)
–
(1.1)
(3.1)
(0.5)
–
0.7
(0.5)
–
(0.4)
46.6
0.1
0.3
3.8
(17.9)
(0.5)
(2.4)
–
1.0
–
(0.2)
(5.0)
–
14.5
1 During the period ended 30 June 2018, the Australian Taxation Office (ATO) 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.
The Group divested its interest in Total Waste Management Pty Ltd and Western Resource Recovery Pty Ltd on 10 December 2018.
2
3 During the period ended 30 June 2018, 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
released a tax provision of $5.0 million in this regard.
77
2019 Annual Report
/ 77
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
9.
Income tax (continued)
9.
Income tax (c)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2019
Deferred tax assets
PP&E
Employee benefits
Provisions
Tax losses
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
OPENING
BALANCE
$’M
34.7
24.5
105.5
–
14.9
(111.8)
(11.6)
56.2
RECOGNISED
IN PROFIT OR
LOSS
$’M
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
$’M
RECOGNISED
DIRECTLY IN
EQUITY
$’M
ACQUIRED IN
BUSINESS
COMBINATION
$’M
OTHER 1
$’M
CLOSING
BALANCE
$’M
(15.5)
(1.5)
7.3
0.2
0.1
7.9
(0.8)
(2.3)
(8.0)
–
–
–
–
–
–
(8.0)
–
–
–
–
2.1
–
–
2.1
–
0.2
–
–
–
(2.1)
(1.4)
(3.3)
–
–
0.8
–
–
–
–
0.8
11.2
23.2
113.6
0.2
17.1
(106.0)
(13.8)
45.5
1
Includes tax effect of the initial application of AASB 9 of $0.7 million. Refer to note 40.
2018
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
0.3
5.1
13.0
4.5
(47.4)
(0.4)
(24.9)
OTHER
$’M
CLOSING
BALANCE
$’M
–
–
–
(0.1)
–
–
(0.1)
34.7
24.5
105.5
14.9
(111.8)
(11.6)
56.2
78 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
78
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
10. Earnings per share
10. Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
(i)
Basic earnings per share
2019
6.0
6.0
2018
5.6
5.6
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 (profit)/loss attributable to non-controlling interests
Profit after tax attributable to ordinary equity holders
Reconciliation of weighted average number of ordinary shares:
2019
$’M
123.2
(0.1)
123.1
2018
$’M
103.3
0.2
103.5
2019
2018
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
2,041,572,028 1,843,122,437
14,307,587
2,054,223,097 1,857,430,024
12,651,069
(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 to note 35 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
2019
$’M
56.2
56.2
2018
$’M
52.0
52.0
The Group has pledged $0.3 million (2018: $1.6 million) of its short-term deposits to fulfil collateral requirements in relation
to contingent liabilities and corporate credit card facilities.
Refer to note 39(g) for the Group’s accounting policy on cash and cash equivalents.
79
2019 Annual Report
/ 79
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
12. Trade and other receivables
12. Trade and other receivables
Trade receivables
Contract assets 1
Other receivables
Provision for expected credit losses
2019
$’M
380.0
1.4
6.4
(5.8)
382.0
2018
$’M
363.8
0.4
7.9
(2.6)
369.5
1 Contract assets arise when the Group has performed work but does not yet have the right to invoice. This is the case in the Industrial & Waste Services
operating segment when work is performed on a fixed price quote.
Refer to note 39(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 expected credit losses during the year was as follows:
Opening balance
Adjustment on adoption of AASB 9 1
Provisions acquired
Provisions recognised
Reversal of provisions
Utilisation of provisions
Closing balance
1
Refer to note 40 for description of new standards adopted.
2019
$’M
271.8
65.3
29.8
13.1
380.0
2019
$’M
2.6
2.4
–
5.8
(1.8)
(3.2)
5.8
2018
$’M
257.1
63.7
33.8
9.2
363.8
2018
$’M
3.1
–
0.6
8.4
(3.0)
(6.5)
2.6
No single customer’s annual revenue is greater than 1.9% (2018: 2.1%) of the Group’s total revenue. Trade and other
receivables that are neither past due or impaired are considered to be of a high credit quality.
13.
Inventories
13. Inventories
Raw materials and consumables – at cost
Work in progress – at cost
Finished goods – at cost
Refer to note 39(i) for the Group’s accounting policy on inventories.
80 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
2019
$’M
7.5
2.2
10.2
19.9
2018
$’M
6.0
4.5
10.5
21.0
80
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
14. Trade and other payables
14. Trade and other payables
Trade payables
Other payables and accruals
2019
$’M
123.1
134.4
257.5
2018
$’M
112.9
122.9
235.8
Refer to note 39(l) for the Group’s accounting policy on trade and other payables.
15. Assets held for sale
15. Assets held for sale
On 27 June 2019, the Group entered into an agreement to sell the buffer land surrounding the old Tullamarine landfill site
in Victoria. As title of the land does not pass until April 2020, the sale has not been recognised during the year ended
30 June 2019. A profit on sale of approximately $8.0 million will be recognised during the year ended 30 June 2020.
16.
16. Interest-bearing liabilities
Interest-bearing liabilities
Opening balance at 1 July 2018
Proceeds/(repayment) of borrowings
Borrowing costs paid
Cash flows
Lease drawdowns
Non-cash drawdowns
Interest-bearing liabilities acquired
Borrowing costs reversed/(accrued)
Amortisation of borrowing costs
Closing balance at 30 June 2019
Opening balance at 1 July 2017
Proceeds/(repayment) of borrowings
Borrowing costs paid
Cash flows
Lease drawdowns
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
BANK LOANS
$’M
534.2
(59.0)
(0.8)
(59.8)
–
2.6
–
0.3
2.8
480.1
CLEAN ENERGY
FINANCE
CORPORATION
$’M
89.3
–
–
–
–
–
10.0
–
0.1
99.4
OTHER
$’M
–
0.3
–
0.3
–
–
0.5
–
–
0.8
LEASE
LIABILITIES
$’M
101.7
(15.2)
–
(15.2)
47.9
–
–
–
–
134.4
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
725.2
(73.9)
(0.8)
(74.7)
47.9
2.6
10.5
0.3
2.9
714.7
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
Refer to note 39(m) for the Group’s accounting policy on borrowings.
81
2019 Annual Report
/ 81
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
16.
Interest-bearing liabilities (continued)
16. Interest-bearing liabilities (c)
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
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
8 year term loan
MATURITY
AMOUNT
31 July 2021
$135 million
31 July 2023
$200 million
31 July 2024
$315 million
31 July 2021
$250 million
17 August 2025
$90 million
$10 million
30 April 2025
$60 million 31 December 2019
The headroom available in the Group’s facilities at 30 June 2019 is summarised below:
Syndicated Facility Agreement
Clean Energy Finance Corporation 4
Bank guarantee facilities 1
Facility A 1,2,3
Facility B 3
Facility C 3
Facility D 3
AVAILABLE
$’M
135.0
200.0
315.0
250.0
100.0
60.0
1,060.0
UTILISED
$’M
(106.4)
(200.0)
(30.0)
(250.0)
(100.0)
(55.7)
(742.1)
NOT UTILISED
$’M
28.6
–
285.0
–
–
4.3
317.9
1
2
These facilities include $141.5 million (2018: $122.8 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 (2018: $6.5 million) of corporate credit card limit utilisation and $7.3 million (2018: $8.6 million) of outstanding finance
lease commitments.
3 Amounts utilised exclude capitalised transaction costs of $7.4 million (2018: $9.7 million) and $0.7 million (2018: nil) of bank loans advanced under
uncommitted facilities.
4 Amount utilised excludes capitalised transaction costs of $0.6 million (2018: $0.7 million).
The headroom available in the Group’s facilities at 30 June 2018 is summarised below:
Syndicated Facility Agreement
Clean Energy Finance Corporation
Bank guarantee facilities
Facility A
Facility B
Facility C
Facility D
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
82 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
82
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
17.
Issued capital
17. Issued capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction
costs incurred by the Company arising on the issue of capital are recognised directly in equity as a reduction of the share
capital received.
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number
of shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Ordinary shares have no par value and all issued shares are fully paid.
2019
2018
Opening balance
Issue of shares under dividend reinvestment plan
Issue of shares under employee incentive plans
Issue of shares under entitlement offer 1
Costs related to share issue, net of tax 2
Closing balance
NUMBER
OF SHARES
2,036,684,232
3,446,846
4,376,313
–
–
2,044,507,391
$’M
NUMBER
OF SHARES
2,671.0 1,592,889,317
4,835,298
1,635,712
437,323,905
–
2,678.2 2,036,684,232
7.2
–
–
–
$’M
2,083.0
7.0
–
590.4
(9.4)
2,671.0
1
Relates to shares issued in December 2017 and January 2018 under the non-renounceable entitlement offer 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 $0.4 million was paid during 30 June 2019 (2018: $12.8 million).
18. Reserves
18. Reserves
Asset revaluation reserve
Employee equity benefits reserve
2019
$’M
53.9
24.0
77.9
2018
$’M
35.5
16.4
51.9
(a) Asset revaluation reserve
The asset revaluation reserve is used to record revaluations of non-landfill land and buildings. Refer to note 39(j) 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
2019
$’M
35.5
18.4
53.9
2018
$’M
29.2
6.3
35.5
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 35 for further details on these share-based payment plans.
Opening balance
Share-based payment expense (net of tax)
Closing balance
2019
$’M
16.4
7.6
24.0
2018
$’M
11.2
5.2
16.4
83
2019 Annual Report
/ 83
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
19. Dividends
19. Dividends
The Company declared a fully franked dividend on ordinary shares for the financial year ended 30 June 2019 of 3.55 cents
per share, being an interim dividend of 1.65 cents per share and final dividend of 1.90 cents per share. The record date of
the final dividend is 10 September 2019 with payment to be made on 3 October 2019.
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
2019
CENTS PER
SHARE
2018
CENTS PER
SHARE
1.40
1.65
3.05
1.65
1.90
3.55
1.10
1.10
2.20
1.10
1.40
2.50
2019
$’M
28.5
33.7
62.2
33.7
38.9
72.6
2018
$’M
17.5
22.4
39.9
22.4
28.5
50.9
Franking credit balance
The available amounts are based on the balance of the franking account at year-end, adjusted for:
(a) Franking credits or debits that will arise from the payment of current tax liabilities or receipt of current tax assets;
(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 2019 dividend determined after 30 June 2019 will reduce the franking account by $16.7 million.
2019
$’M
21.4
2018
$’M
1.4
The unadjusted balance of the franking account at 30 June 2019 was $4.1 million (2018: $10.5 million).
84 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
84
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
20. Capital management
20. 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 16.
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.
2019
$’M
17.1
697.6
(56.2)
658.5
2,580.5
20.3%
2018
$’M
13.5
711.7
(52.0)
673.2
2,488.1
21.3%
85
2019 Annual Report
/ 85
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
21. Property, plant and equipment
21. Property, plant and equipment
2019
Opening net book value
Additions
Acquisitions of businesses
Net movement in remediation 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
160.4
–
–
–
(4.8)
32.8
31.1
(2.3)
217.2
224.6
(7.4)
217.2
LANDFILL
ASSETS
$’M
208.6
–
–
43.2
–
33.7
–
(48.3)
237.2
651.5
(414.3)
237.2
LEASEHOLD
IMPROVEMENTS
$’M
62.0
–
0.9
1.2
(0.1)
4.5
–
(4.2)
64.3
79.8
(15.5)
64.3
PLANT AND
EQUIPMENT 1
$’M
682.5
–
3.3
–
(3.3)
163.0
–
(134.0)
711.5
1,846.7
(1,135.2)
711.5
CAPITAL WORK
IN PROGRESS
$’M
70.5
220.0
11.6
–
–
(236.0)
–
–
66.1
66.1
–
66.1
TOTAL
$’M
1,184.0
220.0
15.8
44.4
(8.2)
(2.0)
31.1
(188.8)
1,296.3
2,868.7
(1,572.4)
1,296.3
The carrying value of plant and equipment held under finance leases at 30 June 2019 was $132.3 million (2018: $98.8 million).
1
2 Net movement in remediation assets reflects adjustments to the remediation provision for open landfill sites and leasehold improvements. Refer to
accounting policy note 39(j).
2018
Opening net book value
Additions
Acquisitions of businesses
Net movement in remediation assets
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
–
3.8
–
–
6.6
8.8
(2.1)
160.4
166.9
(6.5)
160.4
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
–
13.1
–
–
8.9
–
(3.7)
62.0
73.2
(11.2)
62.0
PLANT AND
EQUIPMENT
$’M
447.3
–
165.4
–
(2.6)
179.0
–
(106.6)
682.5
1,725.3
(1,042.8)
682.5
CAPITAL WORK
IN PROGRESS
$’M
60.5
231.1
1.6
–
–
(222.7)
–
–
70.5
70.5
–
70.5
TOTAL
$’M
936.5
231.1
183.9
(10.1)
(8.4)
(1.3)
8.8
(156.5)
1,184.0
2,611.4
(1,427.4)
1,184.0
86 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
86
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
21. Property, plant and equipment (continued)
21. Property, plant and equipment (c)
Accounting for landfill assets
The Group is responsible for a total of 14 landfills (2018: 14 landfills). Of the 14 landfills, eight are closed. Those that are
open are expected to close between 2020 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 39(j) 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 2019.
Land and buildings are combined for the purposes of determining fair value as this is how management view its property
portfolio. 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 income statement, to the extent that it reverses a revaluation
decrease for the same asset previously recognised as an expense, and any balance is then 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:
2019
Residential
Regional industrial
Metropolitan industrial
Total
2018
Residential
Regional industrial
Metropolitan industrial
Total
LEVEL 1
$’M
–
–
–
–
–
–
–
–
LEVEL 2
$’M
0.2
–
–
0.2
0.2
–
–
0.2
LEVEL 3
$’M
–
76.4
140.6
217.0
–
50.4
109.8
160.2
PROFIT AND
LOSS
INCREMENT/
(DECREMENT)
$’M
–
–
4.7
4.7
–
–
(0.2)
(0.2)
TOTAL 1
$’M
0.2
76.4
140.6
217.2
0.2
50.4
109.8
160.4
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 revaluation 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).
87
2019 Annual Report
/ 87
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
21. Property, plant and equipment (continued)
21. Property, plant and equipment (c)
Valuations of non-landfill land and buildings (continued)
The following table presents the details of the valuation approaches used under Level 3:
Regional industrial
Metropolitan industrial
VALUATION
TECHNIQUE
Summation
Capitalisation
Direct comparison
Summation
Capitalisation
Direct comparison
KEY UNOBSERVABLE
INPUTS
Price per square metre
Depreciation replacement cost
Capitalisation rate
Leased income per square metre
Price per square metre
Price per square metre
Depreciation replacement cost
Capitalisation rate
Leased income per square metre
Price per square metre
RANGE
2019
$2–260
$172–791
8%–10%
$113–116
$100–1509
$14–575
$35–974
5%–10%
$40–153
$70–3157
RANGE
2018
$2–260
$172–1019
9.75%
$125
$100–1401
$15–575
$35–974
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
2019
$’M
2018
$’M
76.2
77.8
99.1
(24.2)
74.9
151.1
70.9
(23.4)
47.5
125.3
88 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
88
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
22. Intangible assets
22. Intangible assets
2019
Opening net book value
Additions
Acquisitions of businesses
Transfers from PP&E
Amortisation
Closing net book value
Cost or fair value
Accumulated amortisation
Net book value
2018
Opening net book value
Additions
Acquisitions of businesses
Transfers from PP&E
Amortisation
Closing net book value
Cost or fair value
Accumulated amortisation
Net book value
GOODWILL
$’M
1,796.6
–
47.6
–
–
1,844.2
1,844.2
–
1,844.2
GOODWILL
$’M
1,229.4
–
567.2
–
–
1,796.6
1,796.6
–
1,796.6
LANDFILL
AIRSPACE
$’M
239.9
1.0
–
–
(7.4)
233.5
256.1
(22.6)
233.5
LANDFILL
AIRSPACE
$’M
245.3
0.9
–
–
(6.3)
239.9
255.1
(15.2)
239.9
BRAND
NAMES
$’M
78.6
–
–
–
–
78.6
78.6
–
78.6
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
165.6
–
7.0
–
(16.0)
156.6
209.8
(53.2)
156.6
BRAND
NAMES
$’M
78.6
–
–
–
–
78.6
78.6
–
78.6
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
11.2
–
158.7
–
(4.3)
165.6
202.8
(37.2)
165.6
OTHER
INTANGIBLES
$’M
29.4
4.7
–
3.4
(8.6)
28.9
74.5
(45.6)
28.9
OTHER
INTANGIBLES
$’M
20.8
5.7
7.2
2.2
(6.5)
29.4
66.4
(37.0)
29.4
TOTAL
$’M
2,310.1
5.7
54.6
3.4
(32.0)
2,341.8
2,463.2
(121.4)
2,341.8
TOTAL
$’M
1,585.3
6.6
733.1
2.2
(17.1)
2,310.1
2,399.5
(89.4)
2,310.1
Following the acquisition of Toxfree, goodwill and brand name are monitored at an operating segment level. In 2018,
goodwill and brand name were monitored at an operating segment level for the Solids and Toxfree operating segments,
and at a cash-generating unit (CGU) level for the Liquids and Industrial Services operating segment. CGUs for the Liquids
and Industrial Services operating segment in 2018 consisted of:
Liquids & Hazardous Waste, excluding Hydrocarbons;
Hydrocarbons; and
Industrial Services.
89
2019 Annual Report
/ 89
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
22. Intangible assets (continued)
22. Intangible assets (c)
The carrying amount of goodwill and non-amortising intangible assets (brand name) are allocated to operating segments or
CGUs as follows:
2019
Goodwill
Brand names
Total
2018
Goodwill
Brand names
Total
SOLID WASTE
SERVICES
$’M
1,303.6
78.6
1,382.2
LIQUID WASTE
& HEALTH
SERVICES
$’M
372.4
–
372.4
INDUSTRIAL
& WASTE
SERVICES
$’M
168.2
–
168.2
TOTAL
$’M
1,844.2
78.6
1,922.8
LIQUIDS &
HAZARDOUS
WASTE
$’M
68.1
–
68.1
INDUSTRIAL
SERVICES
$’M
38.2
–
38.2
SOLIDS
$’M
1,132.3
78.6
1,210.9
TOXFREE
$’M
558.0
–
558.0
CORPORATE
$’M
–
–
–
TOTAL
$’M
1,796.6
78.6
1,875.2
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 2019.
Key assumptions used for annual impairment testing
The recoverable amount of each operating segment or CGU 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 2020 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 value growth rate has been based on published long-term growth rates. The terminal growth rate for Solid
Waste Services was reduced to 2.5% (2018: 3.0%). The terminal growth rate for Industrial & Waste Services and Liquid
Waste & Health Services remains at 2.0% (2018: 2.0%). 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 30 June 2019 impairment testing have been adjusted for
known and anticipated future operational changes and additional potential risk identified since 30 June 2018. These changes
are reflected in the following summary of key assumptions table. Based on these key assumptions the recoverable amount of
each CGU exceeded the carrying amounts at 30 June 2019.
90 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
90
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
22. Intangible assets (continued)
22. Intangible assets (c)
The table below provides a summary of the key assumptions used in the impairment testing at 30 June 2019.
ASSUMPTIONS
EBITDA growth 1
Capital spend rate 2
Terminal value growth rate
Post-tax discount rate
Pre-tax discount rate
SOLID WASTE
SERVICES
JUNE
2019
5.1%
10.3%
2.5%
7.3%
10.4%
LIQUID WASTE &
HEALTH SERVICES
JUNE
2019
8.4%
7.5%
2.0%
7.3%
10.4%
INDUSTRIAL
& WASTE
SERVICES
JUNE
2019
8.6%
6.4%
2.0%
7.3%
10.4%
1 Growth rates have been calculated with 30 June 2019 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
The table below provides a summary of the key assumptions used in the impairment testing at 30 June 2018, as they related
to the CGUs and Operating Segments to which goodwill had been allocated at that date.
ASSUMPTIONS
EBITDA growth 1
Capital spend rate 2
Terminal value growth rate
Post-tax discount rate
Pre-tax discount rate
LIQUIDS
& HAZARDOUS
WASTE HYDROCARBONS
JUNE
JUNE
2018
2018
4.1%
8.8%
7.5%
6.2%
2.0%
2.0%
7.7%
7.7%
11.0%
11.0%
INDUSTRIAL
SERVICES
JUNE
2018
10.2%
5.5%
2.0%
7.7%
11.0%
SOLIDS
JUNE
2018
7.7%
10.3%
3.0%
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
EBITDA growth assumptions
Solid Waste Services EBITDA growth is primarily the result of changes in the revenue growth assumptions outlined above
and improved operating leverage.
Liquid Waste & Health Services EBITDA growth is largely driven by revenue growth and integration synergies from the Toxfree
acquisition and right sizing of the combined businesses.
Industrial & Waste Services EBITDA growth of 8.6% is mainly a result of revenue growth and integration synergies from the
acquisition of Toxfree.
Capital spend assumptions
Capital spend incorporates consideration of industry benchmarks but also reflects continued capital discipline together with
specific business requirements. The Solid Waste Services segment is the most capital intensive part of the business and the
Industrial & Waste Services CGU is the least as its primary source of revenue is technical labour services.
91
2019 Annual Report
/ 91
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
22. Intangible assets (continued)
22. 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 2019:
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%
0.5% to 1%
1%
0.3% to 1%
SOLID WASTE
SERVICES
$’M
Nil
Nil
Nil
Nil
LIQUID WASTE &
HEALTH SERVICES
$’M
Nil
Nil
Nil
Nil
INDUSTRIAL &
WASTE SERVICES
$’M
Nil
Nil
Nil
Nil
Whilst the table above outlines management’s best estimates of key assumptions and reasonably possible changes in key
value drivers, 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% – EBITDA 1
Increase in capital spend rate 1
Decrease in terminal value growth rate 1,2
Increase in post-tax discount rate 1
SOLID WASTE
SERVICES
468.6
2.6%
2.0%
1.7%
1.3%
LIQUID WASTE &
HEALTH SERVICES
202.2
3.0%
1.8%
2.1%
1.5%
INDUSTRIAL &
WASTE SERVICES
197.2
5.6%
2.6%
4.7%
3.2%
1
2
Percentage changes presented above represent the absolute change in the assumption value (for example post-tax discount rate increasing by 1.3%
from 7.3% to 8.6%).
Terminal value for Liquid Waste & Health Services and Industrial & Waste Services would reflect negative value as it is currently modelled at 2%.
Refer to note 39(k) for further details on the Group’s intangible assets accounting policy.
92 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
92
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
23. Equity accounted investments
23. 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
CARRYING VALUE
OF INVESTMENT
NAME OF ENTITY
Joint ventures:
Wonthaggi Recyclers Pty Ltd
Earthpower Technologies Sydney Pty Ltd
Tomra Cleanaway Pty Ltd
COUNTRY
Australia
Australia
Australia
REPORTING
DATE
30 June
30 June
30 June
Associates:
Total Waste Management Pty Ltd 1
Western Resource Recovery Pty Ltd 1
Australia 31 December
Australia 31 December
2019
%
50
50
50
–
–
2018
%
50
50
50
50
50
2019
$’M
0.9
–
2.9
–
–
3.8
1
The Group divested its interest in Total Waste Management Pty Ltd and Western Resource Recovery Pty Ltd on 10 December 2018.
(a)
Share of profit/(loss) from joint ventures
Revenues
Expenses
Profit/(loss) before income tax (100%)
Share of profit/(loss) before income tax
Income tax benefit
Share of profit/(loss) after tax
Dividend received in excess of carrying value
Share of net profit/(loss) 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
2019
$’M
161.9
(161.7)
0.2
0.1
0.5
0.6
–
0.6
2019
$’M
5.1
(4.7)
0.4
0.2
(0.1)
0.1
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
93
2019 Annual Report
/ 93
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
23. Equity accounted investments (continued)
23. 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 2019.
Joint ventures
Associates
Joint ventures
Associates
SERVICES TO EQUITY
ACCOUNTED
INVESTMENTS
PURCHASES FROM
EQUITY ACCOUNTED
INVESTMENTS
INTEREST REVENUE FROM
EQUITY ACCOUNTED
INVESTMENTS
2019
$’M
61.7
0.6
62.3
2018
$’M
18.0
2.2
20.2
2019
$’M
2.2
2.0
4.2
2018
$’M
1.9
3.4
5.3
2019
$’M
0.2
–
0.2
TRADE AMOUNTS OWED
BY EQUITY ACCOUNTED
INVESTMENTS
TRADE AMOUNTS OWED
TO EQUITY ACCOUNTED
INVESTMENTS
LOANS TO EQUITY
ACCOUNTED
INVESTMENTS 1
2019
$’M
0.1
–
0.1
2018
$’M
0.1
0.3
0.4
2019
$’M
1.2
–
1.2
2018
$’M
–
–
–
2019
$’M
3.8
–
3.8
2018
$’M
0.1
–
0.1
2018
$’M
3.8
–
3.8
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
2019
$’M
39.9
(32.4)
7.5
3.8
2018
$’M
63.7
(36.1)
27.6
13.8
Impairment losses and commitments
(e)
During the year the equity accounted investments were tested for impairment and no adjustments were made as a result
(2018: nil). As at the reporting date the Group had no contractual obligation to provide funding for capital commitments
of equity accounted investments (2018: nil).
94 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
94
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
24. Other assets
24. Other assets
Current
Finance lease receivable 1
Prepayments
Total current other assets
Non-current
Finance lease receivable 1
Costs to fulfil contracts 2
Prepayments
Loan to joint venture
Other financial assets
Total non-current other assets
2019
$’M
4.3
17.3
21.6
8.4
4.2
0.9
3.8
–
17.3
1
2
The Group has constructed a dedicated landfill cell for a customer. The cell will be paid for at an agreed fixed amount. The lease receivable has been
recognised at an implicit rate of 3.28%.
The Group incurs costs to mobilise and set up significant new contracts. These costs are amortised over the life of the contract.
25. Employee entitlements
25. Employee entitlements
Current
Annual leave
Long service leave
Other
Total current employee entitlements
Non-current
Long service leave
Total non-current employee entitlements
2019
$’M
34.5
23.6
8.8
66.9
5.1
5.1
2018
$’M
–
15.4
15.4
–
3.0
0.9
3.8
0.4
8.1
2018
$’M
33.8
22.6
19.3
75.7
4.5
4.5
Refer to note 39(p) for the Group’s accounting policy on employee entitlements.
During the year the Group contributed $41.5 million (2018: $29.4 million) to defined contribution plans. These contributions
are expensed as incurred.
95
2019 Annual Report
/ 95
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
26. Provisions
26. Provisions
Current
Rectification provisions
Remediation provisions
Other
Total current provisions
Non-current
Rectification provisions
Remediation provisions
Other
Total non-current provisions
2019
$’M
14.5
43.5
28.1
86.1
13.8
264.6
17.4
295.8
2018
$’M
14.7
37.4
23.8
75.9
17.5
248.5
14.0
280.0
Included in other provisions is an amount of $16.2 million (2018: $14.3 million) in relation to workers compensation
self-insurance of the Group under the Comcare scheme. This amount is comprised of $6.0 million (2018: $4.0 million)
classified as current and $10.2 million (2018: $10.3 million) classified as 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 2019. The provision has been calculated using a claim inflation rate of 2.50% (2018: 3.01%) and a discount
rate of 1.53% (2018: 2.73%). The workers compensation self-insurance provision is reassessed annually based
on actuarial advice.
The table below provides a roll forward of provisions:
Opening balance
Provisions acquired
Provisions made
Provisions used or reversed
Provisions disposed
Unwinding of discount
Change in discount rate
Change in assumptions 1
Rectification and remediation spend
Closing balance
RECTIFICATION
REMEDIATION
OTHER
TOTAL
2019
$’M
32.2
–
–
–
–
0.5
0.7
(0.2)
(4.9)
28.3
2018
$’M
39.3
–
–
–
(0.1)
0.7
–
(3.2)
(4.5)
32.2
2019
$’M
285.9
–
8.1
–
–
6.8
43.2
(4.8)
(31.1)
308.1
2018
$’M
293.5
27.2
4.2
–
(5.3)
7.0
–
(8.2)
(32.5)
285.9
2019
$’M
37.8
0.3
48.7
(41.3)
–
–
–
–
–
45.5
2018
$’M
32.4
10.4
40.6
(45.6)
–
–
–
–
–
37.8
2019
$’M
355.9
0.3
56.8
(41.3)
–
7.3
43.9
(5.0)
(36.0)
381.9
2018
$’M
365.2
37.6
44.8
(45.6)
(5.4)
7.7
–
(11.4)
(37.0)
355.9
1
The change in assumptions represents changes in environmental guidelines and cost estimates.
The provision for remediation has been estimated using current expected costs. 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 1.47% (2018: 2.81%) for landfill remediation and rectification of landfills and 1.31%
(2018: 2.04%) for industrial property remediation. Refer to note 39(n) for a summary of the accounting policy for provisions
for remediation and rectification.
96 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
96
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
27. Other liabilities
27. Other liabilities
Current
Deferred settlement liabilities 1
Landfill creation liability 3
Contract liabilities 4
Other liabilities
Total current other liabilities
Non-current
Deferred settlement liabilities 1
Contingent consideration 2
Landfill creation liability 3
Other liabilities
Total non-current other liabilities
2019
$’M
5.3
19.6
7.2
0.1
32.2
76.6
17.8
37.9
2.1
134.4
2018
$’M
5.2
17.3
8.1
0.1
30.7
76.4
–
54.5
0.3
131.2
1
Includes $81.9 million (2018: $81.0 million) relating 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 7.0%.
2 Contingent consideration of $17.8 million relates to the acquisition of Cleanaway ResourceCo RRF Pty Ltd. The contingent consideration is measured
utilising Level 3 inputs and assumes a discount rate of 8.0%. The undiscounted range of potential payments is $8.0 million to $25.0 million and comprises
two separate payments based on potential earnings targets. The first payment of $8.0 million will be made when earnings reach a certain level. The second
payment will be made based on the earnings of the newly built resource recovery facility in the year ended 30 June 2021. The Group expects a payment of
$12.1 million to be paid based on current expected earnings. A 5% increase/(decrease) in the earnings target would increase/(decrease) this expected
payment by $2.5 million.
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.
3
4 A contract liability is the obligation to provide services to a customer for which the Group has received consideration from the customer. These liabilities
generally arise when a customer is invoiced upon delivery of a container or bin, but Cleanaway still has the obligation to pick up the container or bin and
dispose of the waste collected. Revenue for the period included $8.1 million which was included in contract liabilities at the beginning of the year.
28. Business combinations
28. Business combinations
Year ended 30 June 2019
Business combinations
During the year ended 30 June 2019, the Group completed two business combinations. The Group acquired a 50% interest
in Cleanaway ResourceCo RRF Pty Ltd (formerly ResourceCo RRF Pty Ltd) and 100% interest in ASP Consolidated Group
which comprises ASP Plastics Pty Limited and ASP Healthcare Pty Limited. The Group has control over the relevant activities
of the two businesses and accordingly will consolidate its interests in the entities. Details of the business combinations are
provided below:
BUSINESS ACQUIRED
ResourceCo RRF Pty Ltd
DATE OF ACQUISITION
30 October 2018
ASP Consolidated Group
28 February 2019
DESCRIPTION OF THE BUSINESS
Resource Recovery Facility based in
Wetherill Park in New South Wales
ASP is a plastics manufacturing business,
with a focus on the medical waste sector
OPERATING SEGMENTS
Solid Waste Services
Liquid Waste & Health
Services
97
2019 Annual Report
/ 97
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
28. Business combinations (continued)
28. Business combinations (c)
Year ended 30 June 2019 (continued)
The provisional fair value of the identifiable assets and liabilities of the two business combinations at their dates
of acquisition were:
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Prepayments
Intangible assets
Liabilities
Trade and other payables
Employee entitlements
Provisions
Interest-bearing liabilities
Deferred tax liabilities
Total identifiable net assets at fair value
Non-controlling interest
Goodwill arising on acquisition
Purchase consideration
2019
$’M
2.0
4.5
2.6
15.8
0.8
7.0
32.7
5.2
0.7
0.3
10.5
3.3
20.0
12.7
(2.2)
47.6
58.1
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 in Cleanaway ResourceCo RRF Pty Ltd was $39.7 million and in the ASP
Consolidated Group was $7.9 million and 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
2019
$’M
41.2
16.9
58.1
Contingent consideration will be paid if certain earnings targets are met by a certain date, by the acquired entity. The
contingent consideration has been determined based on the expected amount and timing of these targets being met.
Net cash acquired (included in cash flows from investing activities)
Cash consideration paid (included in cash flows from investing activities)
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
2019
$’M
2.0
(41.2)
(0.3)
(39.5)
From the dates of acquisition to 30 June 2019, the Cleanaway ResourceCo RRF Pty Ltd and ASP Consolidated Group
acquisitions contributed $19.1 million of revenue and $0.7 million loss 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 $33.2 million and loss before tax of $1.4 million, after amortisation of customer intangibles of $1.2 million, would have
been contributed to the Group. The losses relate to the ResourceCo acquisition and have arisen during the commissioning
phase of the newly built resource recovery facility.
98
98 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
28. Business combinations (continued)
28. Business combinations (c)
Year ended 30 June 2018
Toxfree
The Group completed the acquisition of 100% of the shares on issue in Cleanaway Industries Pty Ltd (formerly Tox Free
Solutions Limited), a major waste management company with a national footprint in Australia on 11 May 2018.
At 30 June 2018 provisionally determined fair values were reported. Subsequent to 30 June 2018, final fair values for the
business combination were determined. Comparative amounts for 30 June 2018 have been restated in this financial report
for final determined fair values.
The restated aggregated fair value 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 1
Inventories
Other current assets
Property, plant and equipment 2
Intangible assets 3
Liabilities
Trade and other payables
Interest-bearing liabilities
Employee entitlements
Provisions 4
Other liabilities 5
Net deferred tax liabilities 6
Total identifiable net assets at fair value
Non-controlling interest
Goodwill arising on acquisition
Purchase consideration 7
PROVISIONAL FAIR
VALUE REPORTED
AT 30 JUNE 2018
$’M
ADJUSTMENTS
TO PROVISIONAL
FAIR VALUE
$’M
FINAL
FAIR VALUE
$’M
26.8
86.2
3.0
3.4
6.4
191.5
152.9
470.2
165.2
211.2
20.5
24.4
–
26.3
447.6
22.6
(0.3)
534.5
556.8
–
–
0.8
–
–
(16.2)
7.6
(7.8)
–
–
–
12.6
5.7
(2.6)
15.7
(23.5)
–
23.5
–
26.8
86.2
3.8
3.4
6.4
175.3
160.5
462.4
165.2
211.2
20.5
37.0
5.7
23.7
463.3
(0.9)
(0.3)
558.0
556.8
Following completion of the tax return for the year ended 30 June 2018, an additional tax receivable of $0.8 million was recognised.
1
2 A detailed review of the values placed on property, plant and equipment in the preliminary valuation has resulted in a net reduction in their fair values
by $16.2 million.
3 Given the methodology for valuing customer assets and licenses, described below, the change in fair value of property plant and equipment has affected
4
the valuation of these intangibles as the property plant and equipment values are inputs into the intangible valuation models.
The increase in the fair value of provisions of $12.6 million comprises; $8.9 million, related to remediation of industrial properties, mainly related to future
costs of removing structures from leased properties, and $3.7 million of identified unfavourable contracts and waste disposal provisions.
5 Other liabilities relate to contract liabilities whereby Toxfree had invoiced a customer for services but the service was not yet completed.
6 Net deferred tax liabilities were reduced by $2.6 million following the finalisation of the allocable cost amount (ACA) tax calculation required in a business
combination when shares, as opposed to assets are acquired.
7 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.
99
2019 Annual Report
/ 99
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
28. Business combinations (continued)
28. Business combinations (c)
Year ended 30 June 2018 (continued)
Toxfree contributed the following to the Group:
Revenue
Profit from operations before depreciation and amortisation
Depreciation and amortisation expense
Profit from operations
Net finance costs
Profit before tax
FROM ACQUISITION DATE
TO
30 JUNE 2018
$’M
70.7
IF TOXFREE HAD BEEN
ACQUIRED AT THE
BEGINNING OF THE
REPORTING PERIOD
$’M
495.5
12.7
(6.6)
6.1
(1.0)
5.1
56.6
(47.8)
8.8
(8.6)
0.2
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 revenue growth and site consolidation. Goodwill
is non-deductible for income tax purposes.
Net cash acquired (included in cash flows from investing activities)
Cash consideration paid (included in cash flows from investing activities)
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
10 0 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
2018
$’M
26.8
(556.8)
(10.3)
(540.3)
100
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
28. Business combinations (continued)
28. Business combinations (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
DESCRIPTION OF THE BUSINESS
Waste collection and resource recovery business based
in Adelaide, South Australia.
Waste management business based in Beresfield,
New South Wales.
Tip Top ‘n’ Tidy
1 February 2018
The aggregated 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
Liabilities
Trade and other payables
Employee entitlements
Provisions
Net deferred tax liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
2018
$’M
0.1
8.6
5.4
14.1
0.3
0.6
0.6
1.2
2.7
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.
Cash consideration paid (included in cash flows from investing activities)
Transaction costs of the acquisitions (included in cash flows from operating activities)
Net cash flow on acquisition
2018
$’M
(20.6)
(0.1)
(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 customers intangibles of $0.8 million, would have been contributed to the Group.
101
2019 Annual Report
/
101
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
29. Subsidiaries
29. Subsidiaries
The Group’s principal subsidiaries at 30 June 2019 are set out below.
EFFECTIVE INTEREST 3
Active Industrial Solutions Pty Ltd 2
AJ Baxter Pty Ltd 2
ASP Plastics Pty Limited
ASP Healthcare Pty Limited
Baxter Business Pty Ltd 2
Baxter Recyclers Pty Ltd 2
Cleanaway Co Pty Ltd (formerly Tox Free Australia Pty Ltd) 2
Cleanaway Equipment Services Pty Ltd 2
Cleanaway Hygiene Pty Ltd 2
Cleanaway Industrial Solutions Pty Ltd 2
Cleanaway Industries Pty Ltd (formerly Tox Free Solutions Limited) 2
Cleanaway Landfill Holdings Pty Ltd 2
Cleanaway (No. 1) Pty Ltd 2
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 ResourceCo RRF Pty Ltd (formerly ResourceCo RRF Pty Ltd) 1
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
Daniels Health Australia Pty Ltd 2
Daniels Health Laboratory Products Pty Ltd 2
Daniels Health NSW Pty Ltd 2
Daniels Health Pty Ltd 2
Daniels Health Services Pty Ltd 2
Daniels Health VIC Pty Ltd 2
Daniels Health Wollongong Pty Ltd 2
Daniels Manufacturing Australia Pty Ltd 2
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
Oil & Fuel Salvaging Queensland Pty Ltd 2
Pilbara Logistics Pty Ltd 2
PT Environmental Services Pty Ltd 2
PTK Environmental Services Pty Ltd
PTW Environmental Pty Ltd 1
PTW Environmental Services Pty Ltd
QORS Pty Ltd
Redlam Waste Services Pty Ltd 2
10 2 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
2019
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
50
75
100
100
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
100
100
100
100
100
70
50
75
100
100
102
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
29 Subsidiaries (continued)
29. Subsidiaries (c)
Rubus Holdings Pty Ltd 2
Rubus Intermediate One Pty Ltd 2
Rubus Intermediate Two Pty Ltd 2
RWS Admin Pty Ltd 2
Sterihealth Sharpsmart Pty Ltd 2
T Environmental Services Pty Ltd 2
Transpacific Baxter Pty Ltd 2
Transpacific Cleanaway Holdings Pty Ltd 2
Transpacific Co Pty Ltd 2
Transpacific Environmental Services Pty Ltd 2
Transpacific Paramount Service Pty Ltd
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 3
2019
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. As subsidiaries, the Group has power over the investees through management control and the casting vote.
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 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 30 for Consolidated Statement
of Profit or Loss and Other Comprehensive Income and Consolidated Balance Sheet of the entities who are a party to the Deed of Cross Guarantee.
2
3 All entities were incorporated in Australia.
103
2019 Annual Report
/ 103
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
30. Deed of cross guarantee
30. 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
Loss on sale of investments
Share of profits/(losses) from equity accounted investments
Profit from operations before depreciation and amortisation
Depreciation and amortisation expense
Revaluation 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 non-landfill land and buildings
Net comprehensive income recognised directly in equity
Total comprehensive income for the year
Refer to note 29 for details of subsidiaries who are a party to the Deed of Cross Guarantee.
2019
$’M
2,247.9
7.0
(840.3)
(601.3)
(231.7)
(71.6)
(78.0)
(2.2)
0.7
430.5
(219.7)
4.7
215.5
(47.3)
168.2
(46.3)
121.9
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
18.4
18.4
140.3
6.3
6.3
110.3
10 4 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
104
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
30. Deed of cross guarantee (continued)
30. 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
Net deferred tax 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
2019
$’M
2018
$’M
51.0
374.3
17.2
–
30.0
472.5
1,280.7
2,287.1
3.8
46.8
78.9
3,697.3
4,169.8
248.6
17.3
17.1
66.5
86.0
33.7
469.2
686.8
4.8
295.8
132.9
1,120.3
1,589.5
2,580.3
2,678.2
77.5
(175.4)
2,580.3
50.9
368.7
21.0
8.5
24.2
473.3
1,184.0
2,309.9
13.8
54.5
15.4
3,577.6
4,050.9
234.5
–
13.5
75.7
75.9
30.7
430.3
711.7
4.5
280.0
135.2
1,131.4
1,561.7
2,489.2
2,671.0
51.5
(233.3)
2,489.2
The effect of the deed is that all subsidiaries that are parties to the deed have guaranteed to pay any deficiency in the event
of winding up of any subsidiary that is a party to the deed or if they do not meet their obligations under the terms of
overdrafts, loans, leases or other liabilities subject to the guarantee.
105
2019 Annual Report
/ 105
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
31. Parent entity
31. Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total equity
Profit/(loss) for the period
Total comprehensive income/(loss) for the period
2019
$’M
0.1
3,596.1
19.9
589.4
2,678.2
304.1
24.4
3,006.7
249.3
249.3
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)
The parent entity guarantees the contractual commitments of its subsidiaries as requested.
32. Financial risk management
32. 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.
Interest rate risk
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 2019, there were no interest rate swaps in place.
10 6 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
106
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
32. Financial risk management (continued)
32. Financial risk management (c)
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
Fixed rate instruments
CEFC facilities
Lease liabilities
Variable rate instruments
Bank and other loans
30 JUNE 2019
30 JUNE 2018
WEIGHTED
AVERAGE
INTEREST RATE
%
4.8
4.7
2.7
WEIGHTED
AVERAGE
INTEREST RATE
%
4.5
4.9
3.5
BALANCE
$’M
(99.4)
(134.4)
(233.8)
(480.9)
(480.9)
BALANCE
$’M
(89.3)
(101.7)
(191.0)
(534.2)
(534.2)
The Group’s fixed rate borrowings are carried at amortised cost and therefore not subject to interest rate risk since neither
the carrying amount nor the future cash flows will fluctuate due to a change in market interest rates.
An analysis of the interest rates over the 12-month period was performed to determine a reasonable possible change
in interest rates on the variable rate borrowings. A change of 100 basis points in interest rates, based on borrowings at the
reporting date would have increased/(decreased) net finance costs by $4.8 million (2018: $5.3 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.
The Group’s maximum exposure to credit risk at the reporting date was:
CARRYING AMOUNT
Cash and cash equivalents
Trade and other receivables
Other financial assets
NOTES
11
12
2019
$’M
56.2
382.0
16.5
454.7
2018
$’M
52.0
369.5
4.2
425.7
Refer to note 12 for an analysis of credit risk and impairment associated with the Group’s trade receivables balance.
Liquidity risk
(c)
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s objective
is that the Group has access to sufficient cash resources to meet its financial obligations as they fall due, including taxes
and dividends, and to provide funds for capital expenditure and investment opportunities as they arise.
The Group regularly reviews existing funding arrangements and assesses future funding requirements based upon known
and forecast information. The Group’s liquidity position is reported to the Board on a monthly basis.
The headroom in the Group’s syndicated facilities at 30 June 2019 is $317.9 million (2018: $279.8 million). The current portion
of the Group’s borrowings at 30 June 2019 is nil (2018: nil). 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.
107
2019 Annual Report
/ 107
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
32. Financial risk management (continued)
32. Financial risk management (c)
The following table discloses the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements:
2019
Unsecured borrowings
Lease liabilities
Trade and other payables
Other financial liabilities
Total
2018
Unsecured borrowings
Lease liabilities
Trade and other payables
Other financial liabilities
Total
< 1
YEAR
$’M
20.6
23.0
257.5
24.9
326.0
26.0
17.6
235.8
22.5
301.9
1 – 2
YEARS
$’M
20.6
21.9
–
46.4
88.9
26.0
16.4
–
25.4
67.8
2 – 5
YEARS
$’M
584.0
64.4
–
34.9
683.3
580.4
58.2
–
55.0
693.6
> 5
YEARS
$’M
130.4
49.2
–
192.6
372.2
CONTRACTUAL
CASH FLOWS
$’M
755.6
158.5
257.5
298.8
1,470.4
CARRYING
AMOUNT
$’M
580.3
134.4
257.5
157.2
1,129.4
187.7
29.4
–
198.4
415.5
820.1
121.6
235.8
301.3
1,478.8
623.5
101.7
235.8
153.4
1,114.4
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 $173.3 million (2018: $153.4 million) in relation to these bank guarantees and insurance bonds.
Refer to note 34(d) for details of the Group’s guarantees.
Financial assets and liabilities measured at fair value
(d)
All assets and liabilities for which fair value is measured or disclosed in the financial statements are classified within the fair
value hierarchy on the basis of nature, characteristics and risks and described as follows based on the lower level of input
that is significant to the fair value measurement as a whole.
Level 1 – the fair value is calculated using prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset 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 carrying value of all financial assets and liabilities other than lease liabilities and CEFC facilities approximate fair value.
The fair value of the CEFC facilities using the Level 2 fair value measurement hierarchy was $109.9 million (2018:
$90.9 million).
33. Contingent liabilities
33. Contingent liabilities
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.
10 8 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
108
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
34. Commitments
34. 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
2019
$’M
41.6
104.9
113.1
259.6
2018
$’M
38.1
96.3
85.1
219.5
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:
Within one year
Between one and five years
More than five years
Total
Amounts representing future finance charges
MINIMUM LEASE PAYMENTS
PRESENT VALUE OF PAYMENTS
2019
$’M
23.0
86.4
49.2
158.6
(24.2)
134.4
2018
$’M
17.6
74.5
29.4
121.5
(19.8)
101.7
2019
$’M
17.1
71.0
46.3
134.4
–
134.4
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
2019
$’M
35.8
0.8
36.6
2018
$’M
28.4
0.5
28.9
(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
2019
$’M
141.5
31.8
173.3
2018
$’M
122.8
30.6
153.4
109
2019 Annual Report
/ 109
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
35. Share-based payments
35. Share-based payments
Total share-based payment expense included in the Consolidated Income Statement is set out in note 18(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 2018
GRANTED
DURING THE
PERIOD
VESTED DURING
THE PERIOD
FORFEITED/
EXPIRED
DURING THE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2019
LONG-TERM INCENTIVE PLAN
2015 LTI
2016 LTI (A)
2016 LTI (B)
2017 LTI (A)
2017 LTI (B)
2018 LTI
2019 LTI
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
2 Nov 2018 30 Jun 2021
SHORT-TERM INCENTIVE PLAN
2017 STI
2018 STI
9 Oct 2017 30 Jun 2018
26 Oct 2018 30 Jun 2019
909,964
2,838,220
2,280,690
2,093,186
2,370,716
3,311,304
–
–
–
–
–
–
–
3,228,141
–
(2,192,525)
(1,761,838)
–
–
–
–
(909,964)
(645,695)
(518,852)
–
–
(120,002)
(49,377)
–
–
–
2,093,186
2,370,716
3,191,302
3,178,764
421,950
–
–
504,416
(421,950)
–
–
–
–
504,416
OTHER GRANTS
2019 TII
Total
Vested and exercisable at 30 June 2019
26 Oct 2018 30 Jun 2020
–
14,226,030
1,740,971
5,473,528
–
(4,376,313)
(54,314)
1,686,657
(2,298,204) 13,025,041
504,416
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.
110 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
110
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
35. Share-based payments (continued)
35. 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
2017 LTI AWARD
UP TO 3 YEARS: 1 JULY 2016
TO 30 JUNE 2019
2018 LTI AWARD
UP TO 3 YEARS: 1 JULY 2017
TO 30 JUNE 2020
Performance rights, of which:
Performance rights, of which:
Measured over three years to 30 June 2019
Measured over three years to 30 June 2020
Up to 50% vest if a certain relative TSR
Up to 50% vest if a certain relative TSR
ranking is achieved against the constituents
of the S&P/ASX 200 Industrial Sector Index
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 Return on
Invested Capital target is achieved
Up to 25% vest if a certain Earnings per
share Compound Annual Growth Rate
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 – 2019 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.
111
2019 Annual Report
/
111
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
35. Share-based payments (continued)
35. 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
2019 LTI
3,228,141
2 November 2018
1 July 2018–30 June 2021
2.06%
30.0%
$1.09
$1.64
$1.64
1
Expected volatility is based on the historic volatility of Cleanaway shares over a range of periods.
The performance targets of the 2019 LTI award are set out in the table below.
Relative TSR performance
measured over three years
from 1 July 2018 to
30 June 2021
Relative Total Shareholder Return (TSR) Ranking against the constituents of the S&P/ASX200
Industrial Sector Index:
Below 50th percentile – 0% vesting
At 50th percentile – 50% vesting
50th to 75th percentile – straight line vesting between 50% and 100%
Above 75th percentile – 100% vesting
ROIC performance as
measured for the year
ending 30 June 2021
Return On Invested Capital (ROIC) to be achieved:
< 6.25% – 0% vesting
6.25% – 20% vesting
> 6.25% – ≤ 6.75% – straight line vesting between 20% and 50%
> 6.75% – ≤ 7.25% – straight line vesting between 50% and 100%
> 7.25% – 100% vesting
EPS CAGR performance
measured over three years
from 1 July 2018 to
30 June 2021
Earnings per Share Compound Annual Growth Rate (EPS CAGR) to be achieved:
< 13.0% – 0% vesting
13.0% – 20% vesting
> 13.0% – ≤ 15.0% – straight line vesting between 20% and 50%
> 15.0% – ≤ 18.0% – straight line vesting between 50% and 100%
> 18.0% – 100% vesting
112 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
112
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
35. Share-based payments (continued)
35. Share-based payments (c)
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.
Toxfree Integration Incentive (TII) plan
(c)
The Company completed the acquisition of Cleanaway Industries Pty Ltd (formerly Tox Free Solutions Limited), 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 30 June 2020.
The one-off TII offer was offered to executives 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 TII is an offer of performance rights that
was made to certain executives (including Executive KMP) which is equivalent to 50% of their STI opportunity. The key
performance condition for the TII plan relates to the achievement of Cleanaway EBITDA in the year ending 30 June 2020 that
exceeds our internal targets which includes the initial $35.0 million of synergies identified from the Toxfree acquisition. The
performance period under the plan is from 1 July 2018 to 30 June 2020. 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.
113
2019 Annual Report
/
113
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
36. Auditor’s remuneration
36. 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
2019
$
2018
$
1,301,343
1,191,401
81,891
280,418
–
1,383,234
29,561
1,501,380
37. Events occurring after the reporting date
37. Events occurring after the reporting date
There have been no matters or circumstances that have arisen since 30 June 2019 that have significantly affected the
Group’s operations not otherwise disclosed in this report.
114 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
114
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
38. Related party transactions
38. Related party transactions
(a) Key management personnel
Disclosures relating to Key Management Personnel (KMP) are set out in the Remuneration Report on pages 47 to 63.
The KMP compensation included in employee expenses are as follows:
Short-term employee benefits
Post-employment benefits
Equity compensation benefits
2019
$
5,698,413
175,728
3,240,120
9,114,261
2018
$
4,691,092
127,876
2,086,737
6,905,705
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 29.
Transactions between Cleanaway Waste Management Limited and other entities in the wholly-owned Group during
the years ended 30 June 2019 and 30 June 2018 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 2019 and 30 June 2018, except as presented in note 23.
115
2019 Annual Report
/
115
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial Report /
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies
39. 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)
Revenue from sale of commodities
Sale of commodities produced from recycling waste and processing used mineral oils, and the sale of electricity and gas
produced from landfills, generally include one performance obligation. Revenue from the sale of commodities is recognised
at the point in time when the product is transferred to the customer.
Rendering of services
Solid Waste Services
Revenue from collection and disposal of waste is recognised when the performance obligation to the customer has been
fulfilled, which is generally when the waste has been collected from the customer. Costs to dispose of the waste are
generally incurred at, or close to the time of collection.
Variable consideration
Some contracts for the collection of waste or acceptance of waste into the Group’s landfills provide the customer with
volume rebates. For the majority of contracts, the variability in the contract price is resolved at each reporting date.
Where the variability is not resolved at a reporting date the variable consideration is estimated and where applicable,
revenue will be deferred and reflected in contract liabilities.
Non-cash consideration
In some of the Group’s contracts, rebates are provided to customers or collection is provided at a reduced rate where
waste is collected that has a value as a commodity to the Group. In these circumstances the Group allocates a fair value
to the commodity collected, generally equal to the rebate paid and the value of the collection service and recognises this
as revenue.
Liquid Waste & Health Services
Revenue from collection and treatment of liquid and health waste is recognised when the performance obligation to the
customer has been performed, which is generally when the waste has been collected from the customer and Cleanaway
takes title to the waste.
In some circumstances the Group will charge the customer on delivery of a waste container. Under these circumstances
the Group assigns a value to the separate performance obligations, being the provision of a container and the
subsequent collection of the full container. Revenue received for the collection of the container where the service has not
yet been performed, will be deferred and is reflected in contract liabilities.
Industrial & Waste Services
Contract revenue is recognised over time and is measured using the input method by reference to labour hours and
actual costs incurred, relative to the total expected inputs required to satisfy the individual performance obligations.
Costs to fulfil a contract
For some larger long-term contracts the Group incurs costs up front to mobilise equipment and organise the workforce
in order to commence performing under the contract. This is often the case when larger municipal council contracts,
or industrial & waste services contracts in remote areas, are entered into. In these circumstances the upfront costs associated
with the contract are capitalised as contract costs and amortised over the term of the contract.
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.
116 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
116
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
(b) Repairs and maintenance
Plant and equipment of the Group is required to be overhauled on a regular basis. This is managed as part of an ongoing
major cyclical maintenance program. The cost of this maintenance is recognised as an expense as incurred, except where
it relates to the replacement of a component of an asset, or where it extends the useful life of the asset, in which case the
costs are capitalised and depreciated in accordance with the Group’s policy. Other routine operating maintenance, repair
and minor renewal costs are also recognised as expenses as incurred.
Finance costs
(c)
Finance costs are recognised as expenses in the period in which they are incurred.
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.
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Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
(f)
Foreign currency
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.
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.
The Group accounts for impairment losses relating to financial assets by applying a forward-looking expected credit loss (ECL)
approach. The Group has applied a simplified approach to determining ECLs and has calculated ECLs based on lifetime ECLs.
The Group has established a provision matrix that is based on the Group’s historical credit losses against the debtors
ageing profile.
The Group’s exposure to credit risk related to trade and other receivables is disclosed in note 32(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.
(j)
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
39(n)) are recognised upon commencement of cell development. The depreciation, for cell development costs and the
remediation asset, is calculated by the tonnes of airspace consumed during the reporting period divided into the total
airspace available at the beginning of the reporting period, such that all costs are fully depreciated upon receiving last
waste into the landfill. A landfill is deemed full when its permitted airspace is consumed and it cannot legally accept any
more waste. Alternatively, a landfill may be deemed full earlier should other factors exist, for example, if it is not
economically viable to continue accepting waste.
Site infrastructure and landfill site improvement costs include capital works such as site access roads and other capital costs
relating to multiple cells on the landfill site. These costs are capitalised as incurred and depreciated using the useful life of the
asset or the life of the landfill up until receiving last waste.
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118
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
(j)
Property, plant and equipment (continued)
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
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Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
(k)
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.
Trade and other payables
(l)
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.
(m) Borrowings
Borrowings are initially recognised at fair value of the consideration received net of issue costs incurred. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the Consolidated Income Statement over the period of the borrowings on an effective interest basis.
Foreign exchange gains and losses arising on borrowings are reflected in finance costs in the Consolidated Income Statement.
Borrowings are derecognised when the obligation specified in the contract is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income
or other expenses.
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120
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
Provision for remediation and rectification
(n)
Landfill remediation and rectification
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 net 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.
Industrial property remediation
The Group leases and owns industrial properties and operates these sites under license and in accordance with the
requirements of the EPA or other government authorities. In addition, under lease agreements, the Group is required
to remove infrastructure placed on a site, during the tenancy, and in most cases, return the leased site to its original
condition upon entering into the lease, taking into consideration usual wear and tear on the property.
The constructive obligation to remediate industrial properties is triggered upon erecting leasehold improvements to leased
sites, or upon any event occurring which has given rise to contamination requiring remediation.
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 net finance costs.
Changes in estimates can occur over time as industrial properties are operated over a long period. Any change in the
provision related to site restoration will be adjusted against any related assets on the site. If there is no related asset,
changes to the remediation provision are recognised through the Consolidated Income Statement.
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Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
Provisions
(o)
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.
The costs of treating and disposing of waste collected, in accordance with government regulation, are provided for if they
have not yet been incurred. These liabilities were previously classified as accruals, however given the uncertainty regarding
the timing and amount of the liability $14.5 million has been presented in current provisions on the Consolidated Balance
Sheet. As at 30 June 2018 $10.4 million was presented in trade payables and accruals. This amount has been reclassified
from current trade and other payables to current provisions to align the presentation of these liabilities with the
current period.
(p)
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.
Fair value measurement
(q)
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.
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122
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
Fair value measurement (continued)
(q)
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; and
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
(r)
(i)
Basis of consolidation
Subsidiaries
The Consolidated Financial Report comprises the financial statements of the Group and its subsidiaries as at 30 June 2019.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee;
Rights arising from the contractual arrangements; and
The Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
Consolidated Income Statement from the date the Group gains control until the date when the Group ceases to control
the subsidiary.
All intra-group balances, transactions and unrealised gains and losses resulting from intra-group transactions are eliminated
in full.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented
separately in the Consolidated Income Statement and within equity in the Consolidated Balance Sheet, separately from
parent shareholders’ equity.
If the Group loses control over a subsidiary it derecognises the related assets (including goodwill), liabilities, non-controlling
interest and other components of equity, while any resultant gain or loss is recognised in the Consolidated Income
Statement. Any investment retained is recognised at fair value.
(ii) Equity accounted investments
Equity accounted investments are those entities over which the Group has either significant influence (associate entities)
or joint control and has rights to the net assets of the entity (joint venture entities). The Group does not have power over
these entities either through management control or voting rights. Investments in associates and joint ventures are accounted
for using the equity method of accounting and are collectively referred to as “equity accounted investments” in this report.
Under the equity method of accounting, the investments in associates and joint ventures are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the associate or joint venture
in the Consolidated Income Statement. Dividends received from associates and joint ventures are recognised as a reduction
in the carrying amount of the investment.
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Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
39. Significant accounting policies (continued)
39. Significant accounting policies (c)
(ii) Equity accounted investments (continued)
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
(s)
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.
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CLEAN AWAY WASTE MANAGEMENT LIMITED
124
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
40. New standards adopted
40. New standards adopted
The Group has adopted all 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 which became effective during the year and relevant
to the Group include:
AASB 15 Revenue from Contracts with Customers
AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies
to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards.
The new standard establishes a five-step model to account for revenue arising from contracts with customers (referred
to as ‘revenue from customers’). Under AASB 15, revenue is recognised when control of the goods or services are
transferred to the customer at an amount that reflects the consideration to which an entity expects to be entitled in
exchange for the goods or services to a customer.
The Group adopted AASB 15 using the full retrospective method of adoption. The adoption of AASB 15 has not had
a material impact on the Group.
i.
Sale of goods
Sale of commodities produced from recycling waste and processing used mineral oils and the sale of electricity and gas
produced from landfills generally includes one performance obligation. Revenue from sales of commodities is recognised
at the point in time when the product is transferred to the customer. The adoption of AASB 15 did not have an impact
on the timing of revenue recognition.
ii.
Rendering of services
Solid Waste Services
Revenue from collection and disposal of waste is recognised when the performance obligation to the customer has been
fulfilled, which is generally when the waste has been collected from the customer. Costs to dispose of the waste are
generally incurred at, or close to the time of collection. The adoption of AASB 15 did not have a material impact on the
timing of revenue recognition.
Variable consideration
Some contracts for the collection of waste or acceptance of waste into the Group’s landfills provide the customer with
volume rebates. For the majority of contracts, the variability in the contract price is resolved at each reporting date
therefore the adoption of AASB 15 does not have an impact on these arrangements. Where the variability is not resolved
at a reporting date the variable consideration is estimated and where applicable, revenue will be deferred and reflected in
other liabilities.
Non-cash consideration
In some of the Group’s contracts, rebates are provided to customers or collection is provided at a reduced rate where
waste is collected that has a value as a commodity to the Group. In these circumstances the Group allocates a fair value
to the commodity collected, generally equal to the rebate paid and the value of the collection service and recognises this
as revenue. The adoption of AASB 15 did not have an impact on the recognition of revenue.
Liquid Waste & Health Services
Revenue from collection and treatment of liquid and health waste is recognised when the performance obligation to the
customer has been performed, which is generally when the waste has been collected from the customer and Cleanaway
takes title to the waste.
In some circumstances the Group will charge the customer on delivery of a waste container. Under these circumstances
the Group assigns value to the separate performance obligations, being the provision of a container and the subsequent
collection of the full container. Revenue received for the collection of the container where the service has not yet been
performed, is deferred and is reflected in other liabilities on the balance sheet. This accounting aligns with the
requirements of AASB 15.
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Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
40. New standards adopted (continued)
40. New standards adopted (continued)
40. New standards adopted (c)
Industrial & Waste Services
Contract revenue is recognised over time and is measured using the input method by reference to labour hours incurred
and actual costs incurred, relative to the total expected inputs to the satisfaction of the individual performance
obligations. This accounting aligns with the requirements of AASB 15.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement bringing together all three aspects
of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.
The Group has applied AASB 9 retrospectively, effective 1 July 2018 by adjusting opening retained earnings
at 1 July 2018.
Impact on the Consolidated Balance Sheet as at:
Increase/(decrease) of previously reported balances
Trade and other receivables
Net deferred tax assets
Retained earnings
1 JULY
2018
$’M
(2.4)
0.7
(1.7)
Adoption of AASB 9 has had no impact on the existing classification and measurement of the Group’s financial assets and
liabilities. The adoption of AASB 9 has however changed the Group’s accounting for impairment losses relating to financial
assets by replacing the incurred loss approach of AASB 139 with a forward-looking expected credit loss (ECL) approach.
For trade receivables the Group has applied the standard’s simplified approach and has calculated ECLs based on lifetime
expected credit losses. The Group has established a provision matrix that is based on the Group’s historical credit losses
against the debtors ageing profile. The adoption of the ECL requirements of AASB 9 resulted in increases in doubtful debt
provisions related to the Group’s trade debtors and an adjustment to retained earnings.
126 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
126
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
41. New standards and interpretations not yet adopted
41. 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 2019 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.
New standards
STANDARD/INTERPRETATION
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; and
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 is well progressed in determining the transition impacts of the new
standard on the following arrangements:
Property leases;
Yellow gear and equipment leases; and
Owner driver arrangements.
Applying the modified retrospective transition approach, whereby all lease
liabilities are measured using an incremental borrowing rate on the date of
transition, results in recognition of lease liabilities of approximately $300 million
and right of use assets of approximately $285 million being brought onto the
Consolidated Balance Sheet at 1 July 2019, with the difference to be
recognised in retained earnings.
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.
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2019
30 June 2020
1 January 2020
30 June 2021
127
2019 Annual Report
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2019 Financial 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 2019 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 2019; 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 29 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, 14 August 2019
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CLEAN AWAY WASTE MANAGEMENT LIMITED
128
Directors’ Declaration
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 2019, 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 Directors’ 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 2019 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
129
2019 Annual Report
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Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited Financial 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 Toxfree
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
On 11 May 2018, Cleanaway completed the acquisition of
Cleanaway Industries Pty Ltd (formerly Toxfree 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).
The purchase price accounting for the acquisition was
finalised during the current financial year. This resulted in
an overall increase to the goodwill of $23.5 million
reported in the prior period on a preliminary basis.
This acquisition is significant to the entity and given the
judgements involved in the finalisation of the purchase
price accounting exercise, this was considered to be a key
audit matter.
Refer to Note 28 of the financial report for all relevant
disclosures in relation to the acquisition.
Our audit procedures included the following:
Our valuations specialists assessed the reasonableness
of the valuation approach and methodology applied to
property, plant and equipment;
Our environmental specialists assessed the
reasonableness of the assumptions used in determining
estimated cost to remediate and make good each
acquired site;
Assessed rates used to discount the remediation and
make good provision with reference to observable
market inputs;
Assessed the reasonableness of the deferred revenue
and unfavourable contract provisions recognised;
Assessed the competence, qualifications and objectivity
of the external valuation experts engaged by the
Group;
Our tax specialists assessed the Tax Allocable Cost
Amount (ACA) applied; and
Assessed the adequacy of the disclosures made in the
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
130 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
130
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited
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 2019, the Group held $1,922.8 million in
intangible assets with indefinite useful lives. These
intangible assets comprise goodwill and brand names and
are monitored by the Group at an operating segment level.
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 growth
rates and inflation rates as well as expected outcomes from
the execution of operational efficiencies. Given these
judgements, this was a key audit matter.
Note 22 of the financial report provides disclosure related
to the Group’s impairment testing and highlights the
impact of reasonably possible changes to key assumptions.
Our audit procedures 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
available independent economic and industry forecasts;
Assessed the assumptions for terminal growth rates;
Considered whether cost savings were reasonable;
Considered the capital expenditure forecasts;
Assessed the discount rates through comparison with
the weighted average cost of capital of comparable
businesses;
Considered comparable businesses valuation multiples
as a cross-check of the Group’s cash flow model
outcomes; and
Performed a 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 had 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
131
2019 Annual Report
/
131
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited Financial 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.
At 30 June 2019, the Group held $336.4 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. 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.
Because of the subjective nature of the estimates involved
in accounting for remediation obligations, this is a key audit
matter.
Note 26 of the financial report provides further detail on
the rectification and remediation provisions.
Our audit procedures 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, qualifications and objectivity
of both the Group’s internal and external experts used in
the determination of the provisions;
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; 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 rectification and
remediation obligations.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
132
132 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited
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 2019 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 Company’s
or 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 Company’s or 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 Company or 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
133
2019 Annual Report
/ 133
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited Financial 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
Auditor's Responsibilities for the Audit of the Financial Report (continued)
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 47 to 63 of the Directors' Report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Cleanaway Waste Management Limited for the year ended 30 June 2019
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
14 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
134
134 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited
Other Information
Top 20 Shareholders as at 14 August 2019
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WARBONT NOMINEES PTY LTD
PETER & LYNDY WHITE FOUNDATION PTY LTD
JJ RICHARDS & SONS PTY LTD
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
CUSTODIAL SERVICES LIMITED
PELMAVIGEL PTY LTD
BNP PARIBAS NOMS (NZ) LTD
AMP LIFE 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 MILTON CORPORATION LIMITED
19
20
Top 20 Holders of Fully Paid Ordinary Shares
Total Remaining Holders Balance
Total Fully Paid Ordinary Shares on Issue
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
UNITS
718,002,997
401,061,511
292,410,616
183,300,322
59,763,710
46,806,647
34,128,058
32,375,285
18,031,927
13,685,519
11,327,813
11,276,163
9,355,866
8,584,837
8,576,744
6,149,953
6,035,032
5,500,000
3,812,974
3,751,828
1,873,937,802
171,074,005
2,045,011,807
% OF
UNITS
35.11
19.61
14.30
8.96
2.92
2.29
1.67
1.58
0.88
0.67
0.55
0.55
0.46
0.42
0.42
0.30
0.30
0.27
0.19
0.18
91.63
8.37
100.00
Substantial Shareholders
Substantial shareholders as shown in shareholding notices received by the Company as at 14 August 2019 are:
FIL Limited
Marathon Asset Management LLP
Cooper Investors Pty Ltd
Paradice Investment Management Pty Ltd
CBA
Dimensional Fund Advisors
161,420,983
122,508,936
118,624,322
104,656,253
104,373,470
94,987,449
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 14 August 2019 was 2,045,011,807 ordinary fully paid shares.
As at 14 August 2019, the total number of shareholders owning these shares was 11,566 on the register of members
maintained by Computershare Investor Services Pty Ltd.
91.63% of total issued capital is held by or on behalf of the 20 largest shareholders.
135
2019 Annual Report
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Other Information Other Information /
Other Information
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 14 August 2019, there were 12,520,625 performance rights on issue to 40 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
2,471
1,001-5,000
4,008
5,001-10,000
1,962
10,001-100,000
2,912
100,001 AND OVER
213
TOTAL
11,566
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 $2.38 on 14 August 2019 was 295.
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.
136 /
CLEAN AWAY WASTE MANAGEMENT LIMITED
136
Other Information
This Annual Report is printed on ecoStar. ecoStar is an environmentally responsible paper made Carbon Neutral.
The greenhouse gas emissions of the manufacturing process including transportation of the finished product to BJ Ball
Papers Warehouses has been measured by the Edinburgh Centre for Carbon Neutral Company and the fibre source has
been independently certified by the Forest Stewardship Council (FSC®). ecoStar is manufactured from 100% Post Consumer
Recycled paper in a Process Chlorine Free environment under the ISO 14001 environmental management system.
www.cleanaway.com.au