Our journey...
M A K ING A
SUSTA IN A BLE
F U T UR E
POSSIBL E ™
Cleanaway Waste Management Limited | ABN: 74 101 155 220ANNUAL REPORT 2020 ...towards a
circular economy
1
Footprint 2025 reaches
the halfway mark
Through a combination of
acquisitions and greenfield
investment we have built
a strong foundation for
the future growth of the
business. We will continue
to identify the right
infrastructure and technology
in the right locations to
sustainably meet Australia’s
waste needs.
OVERVIEW
FY2020 snapshot
Chairman’s Report
CEO’s Report
BUSINESS REVIEW
Solid Waste Services
Industrial & Waste Services
Liquid Waste & Health Services
SUSTAINABILIT Y
CORPOR ATE INFORMATION
Resourcing the
circular economy
People
Earth
Markets
Assets
Financials
4
6
8
12
14
16
Board of Directors
Senior Executive Team
FINANCIAL REPORT
Financial Statements
Directors’ Report
18
20
22
24
26
27
28
30
33
34
OTHER INFORMATION
Other Information
135
The Company’s 2020 Annual General Meeting will be held at 11am (Australian Eastern Standard Time) on Wednesday 14 October 2020.
The meeting will be held as a virtual meeting. There will be no physical venue for shareholders to attend. To give shareholders a reasonable
opportunity to participate, shareholders may attend the meeting virtually, using either the Lumi online platform or the Lumi AGM app.
The 2020 Corporate Governance Statement and Appendix 4G Disclosures are available on our website at
https://www.cleanaway.com.au/about-us/for-investor/corporate-governance/
b
2
Strategic acquisitions
strengthen total waste offering
Over the past year we strengthened our
position as Australia’s leading integrated
waste management business through our
acquisition of the former SKM Recycling
Group’s resource recovery assets, and
the successful integration of those assets
and the Toxfree business. We remain the
market leader in every sector in which
we operate, and our network of prized
waste infrastructure assets across the
country continues to grow.
3
Value creation through value chain extension
Our support for a circular economy was further illustrated
this year by our joint venture partnership to build a
PET plastic pelletising facility. We have also proposed
an Energy-from-Waste facility in Western Sydney that
provides an alternative to landfill in that market.
Cleanaway is investigating opportunities to recover
more from resources across the waste value chain.
Plastic
pelletising
Cardboard
pulping
Glass
beneficiation
Energy
from waste
1
CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT How we create value
STR ATEGIC PILL ARS
OUR BUSINESS MODEL
People
Our people comprise purpose
driven teams, technical experts
and a large workforce that share
a strong operating culture
Earth
We utilise natural resources
including energy, materials and
water in our daily operations
Markets
We collaborate with joint
venture partners and regulators
to serve millions of customers
across all market sectors
Assets
We have a network of prized
infrastructure, a large fleet of
specialised mobile assets and
strong stakeholder relationships
Financials
We are disciplined in our
capital allocation and
reinvest profits wisely
We see all waste as a resource
C O L L E CTION
L
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E-MANUFAC T U R E /
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OUR MISSION
To make a sustainable future possible
OUR VALUES
Home safe
Stronger together
2
Our Value Creation Story takes our strategic pillars of PeMAF and shows how
the inputs we draw on are transformed through our business activities, applying
Our Cleanaway Way, to create outcomes for our stakeholders. It also shows
how these outcomes align to the UN Sustainable Development Goals (SDGs).
CREATING LONG -TERM SUSTAINABLE VALUE
RELEVANT SDGs
We provide secure and meaningful employment for our people.
We develop our people’s skills and strive to provide a safe
working environment.
Our recycled commodities reduce demand for primary raw
materials and the associated impacts. We strive to minimise
the environmental impacts of waste management, including
greenhouse gas emissions, toxic and hazardous waste, water
and air pollution. We reduce the waste going to landfill by
recovering resources from waste streams. The low carbon
electricity we generate displaces carbon intensive alternatives.
We help our customers and partners achieve their sustainability
goals. We contribute to policy evolution. As a sector leader,
we are advancing waste management in Australia.
Our Footprint 2025 strategy, to invest in an integrated value chain
with prized infrastructure assets, creates a strategic moat for our
business and ensures we keep pace with growing sustainability
demand and expectations. We contribute to a cleaner and safer
environment, while seeking to minimise the impacts of our
operations on local communities. We enable better regulatory
outcomes through education.
We deliver strong and predictable financial performances.
We contribute to the Australian economy through dividends
and interest to our capital providers, salaries to employees
and taxes to governments.
We see waste as a
resource and leverage our
strategic pillars.
We extract the maximum
value from every tonne of
waste to create long‑term
sustainable value for our
stakeholders and the
environment.
We work with our partners
to advance resource
recovery in Australia,
through education,
supporting markets for
recycled commodities and
regulatory advocacy.
Integrity
We make a difference
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234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT FY2020 snapshot
FINANCIAL HIGHLIGHTS 1, 2
Our customers, regulators and society at large are
looking for better and more sustainable solutions.
$2,332 million revenue
2.1%
Net Revenue ($m)
EbITDA ($m)
$2,100m
(0.4)%
Net Revenue
358.1
$515.7m
11.7%
EBITDA
$2,100 million net revenue 3
(0.4)%
16
17
18
19
20
16
17
18
19
20
$515.7 million EBITDA
$256.6 million EBIT
$150.3 million NPAT 4
4.1¢ dividends per share
7.3¢ earnings per share
11.7%
6.6%
7.0%
15.5%
5.8%
Dividend (¢)
4.1¢
15.5%
EPS
358.1
EPS (¢)
7.3¢
5.8%
Dividend
Represents underlying results.
1
2 Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019, as such comparatives have not been restated.
3 Net revenue is a non-IFRS measure and excludes landfill levies.
4 Attributable to ordinary equity holders.
16
17
18
19
20
16
17
18
19
20
OPER ATIONS AT A GL ANCE
COMMUNIT Y INVESTMENTS
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 fleet of waste collection vehicles on
Australian roads, we’re working towards Our Mission of
making a sustainable future possible, for all Australians.
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.
6,000+
Employees
5,300+
Vehicles
~250
Sites
4
125+
Prized infrastructure assets
$1.0m+
Invested in Australian
communities
657
Education programs
held nationally
23,000+
Students engaged in
school-based education
programs nationally
WHAT WE RECOVERED
Each year we focus on
recovering more resources from
waste and returning valuable
commodities to the value chain.
>435 kt
>19 kt
>25 kt
Paper and cardboard
Plastic
Steel and aluminium
Closed loop in oil recycling
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.
>114 ML
Used oil
Landfill gas captured
We’re capturing the gas generated from the natural breakdown of
waste in our landfills, turning it into electricity, then sending it to the
grid, thus contributing to a reduction in our reliance on fossil fuels.
~106 Mm3
Landfill gas captured
Managing 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.
Scope
1
+
Scope
2
~792 ktCO2-e
Greenhouse gas emissions
Renewable energy generated
By using the gas that we capture from our landfills to generate
electricity we have produced enough renewable energy to power
~27,000 average homes.
~134 GWh
of renewable energy
generated
5
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT CHAIRMAN’S REPORT
We care about
the future
We continue to strive to achieve our
mission to make a sustainable future
possible by leveraging our strategic
pillars to create long-term value for
our stakeholders.
“In a year where we have
experienced drought,
unprecedented bushfires, flooding
and the challenges created by the
COVID-19 pandemic, sustainability
has never been more relevant.”
6
6
I am pleased to present to you Cleanaway Waste
Management Limited’s 2020 Annual Report.
In line with our prior commitment, this year
we have significantly expanded and enhanced
our sustainability reporting, which we have
centered around our value creation statement.
We have more to do in this area and we will
continue to work with our stakeholders to
further enhance and continuously improve
our sustainability reporting as we strive to
reflect our mission to make a sustainable
future possible.
In a year where we have experienced drought,
unprecedented bushfires, flooding and the
challenges created by the COVID-19 pandemic,
sustainability has never been more relevant.
Safety remains a key priority for Cleanaway.
Driver distraction has been identified as
a critical risk for road accidents involving
our vehicles. In response to this, we have
conducted a trial of the Mobileye system, a
driver interface with advanced driver-assistance
systems. It provides early warnings to drivers
to prevent or mitigate front and side collisions.
Following a successful trial in Victoria during
FY20, we now plan to roll out Mobileye across
Australia in FY21. During the year, our total
recordable injury frequency rate reduced to 4.5,
a 21% improvement on the prior year but we
still have work to do to get to zero harm.
Cleanaway delivered another strong financial
performance during the year notwithstanding
the headwinds caused by COVID-19, which
reflects the strength and defensive nature
of the business. We reported a pre AASB
16 Underlying net profit after tax of $152.9
million, $12.3 million or 8.7% higher than the
prior year, reflecting strong organic growth
and the full year benefit of the synergies from
the Toxfree acquisition. This translated into
8.7% earnings per share growth to 7.5 cents
per share (pre AASB 16). On a statutory basis
net profit after tax of $112.6 million was 6.6%
lower than the prior year, largely reflecting
higher acquisition and integration costs.
Our Solid Waste Services and Liquid Waste
& Health Services business segments grew
revenue, EBITDA and EBIT while all three
segments continued to improve EBITDA
and EBIT margins.
We continued to execute our Footprint
2025 Strategy during the year.
In October 2019 we announced plans to
develop an energy from waste project in
Western Sydney that will utilise safe, proven
and the latest technology that will convert
waste from households and local businesses
into electricity for as many as 79,000 Western
Sydney homes.
In November 2019 we completed the
acquisition of most of the assets of the SKM
Recycling Group (SKM). The acquisition
provides Cleanaway with a strong recycling
platform in Victoria and Tasmania. We will
see the earnings from that acquisition come
through in the FY21 financial year.
We have also outlined plans to develop
a PET plastic pelletising facility in Albury,
New South Wales with our JV partners Pact
and Asahi Beverages and a glass beneficiation
facility in Melbourne, Victoria.
These projects are underpinned by our
support for a circular economy.
The business remains in very strong financial
health. During the year we raised US$270
million of US Private Placement Notes funding
in three equal tranches with tenors of eight,
10 and 12 years. We have $421 million of
undrawn debt facilities and an average debt
maturity of 5.4 years as at 30 June 2020.
Our net debt to EBITDA ratio of 1.46x as
at 30 June 2020 is well inside our covenant
and our internal target range of 1.5x to 2.0x.
We will continue to monitor the market for
accretive acquisition opportunities and remain
disciplined in our capital allocation.
Our strong financial performance and financial
position enable us to continue increasing our
dividend, and the Board was pleased to declare
a final fully franked dividend of 2.1 cents per
share, payable on 6 October 2020, taking the
total dividend for the year to 4.1 cents per
share. This was a 15.5% increase on the prior
year and represented a 54.9% payout ratio.
We remain committed to paying out 50–75%
of underlying profits.
In November 2019, Samantha Hogg was
appointed to the Board as an Independent
Non-Executive Director of the Company.
Samantha is an executive with international
experience across the transport, infrastructure,
energy and resources sectors. I am delighted to
welcome Samantha to the Board of Cleanaway.
Her extensive skills and experience will be a
valuable addition to the Cleanaway Board as
we prepare for the next phase of the growth
of the Company. I congratulate Samantha
on her appointment and look forward to
her contribution at Cleanaway.
I would like to take this opportunity to thank
Vik Bansal, the executive management team
and all Cleanaway employees for responding
efficiently and effectively to the unusual
challenges the business faced during the
year, while delivering another strong financial
and operational performance. I would also
like to thank my fellow Board members for
their continued support during the year.
Finally, I would like to thank you, our
shareholders, for the continuing support you have
given the Board and Management of Cleanaway.
I look forward to speaking to you at our Annual
General Meeting on 14 October 2020.
Mark Chellew
Chairman
7
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT CEO’S REPORT
Continuing
to advance
a circular
economy
A hallmark of a truly sustainable
business is delivering on the
promises that it makes to
its stakeholders. Cleanaway
continued to deliver on both
short and medium-term
commitments in FY20.
8
8
Delivering on commitments
I am pleased to report that Cleanaway has:
• continued to drive steady improvements in
Health and Safety, with our Total Recordable
Injury Frequency Rate (TRIFR) 58% lower than
five years ago;
• completed the integration of the Toxfree
business on time and is benefiting from over
$35 million of annual synergies;
• completed the majority of the legacy landfill
remediation and rectification program, which
will free up over $20 million of cash per annum
through to FY25 and over $35 million per
annum thereafter;
• completed the acquisition, integration and
rehabilitation of the SKM Recycling Group’s
assets, secured contracts and expect to process
over 200,000 tonnes of recyclable materials
this year, with opportunities to increase that
volume as we fine tune operations; and
• delivered an improved Sustainability Report,
aligned to the United Nations Sustainable
Development Goals (SDGs) and the
Sustainability Accounting Standards Board
(SASB) Standard. This report will provide us
with a strong foundation to build on in future
sustainability reporting.
COVID‑19
FY20 presented challenges and I am immensely
proud of the way Cleanaway responded by
adapting our lives and work practices to provide
safe, reliable and efficient service to our customers
despite the disruption caused by the COVID-19
pandemic. The safety, health and wellbeing of
all Cleanaway’s staff, contractors, customers,
and members of the public remains paramount.
In response to the situation, we quickly set up a
COVID-19 Response Committee that continues
to meet regularly to discuss the evolving
situation and take decisive actions.
Early on, we established three absolute priorities:
• keep our people safe;
• keep our company sustainable, so we can
keep our people employed during and
post COVID-19; and
• maintain our essential service to our customers.
Those priorities remain as relevant and I am
pleased to report positive outcomes to date across
all three dimensions. While COVID-19 continues to
challenge how we run our lives, our business and
our economy, the people that make up Cleanaway
have pulled together to help one another through
these challenging times. This ensured that none
of our employees lost employment because
of COVID-19, and resulted in us identifying
and implementing opportunities to improve
the efficiency of our disrupted operations.
We knew that our customers needed our support
during these challenging times and we remained
at full capacity to service their needs, while also
transitioning our office-based employees to
working from home arrangements in line with
government directions and health advice. We
worked with our most affected customers to
provide them with appropriate solutions to help
them navigate their situation, including foregoing
certain fees and charges to help those businesses
to remain viable through enforced shutdowns.
Importantly, this pandemic has made it clear that
our strategy is robust. Nothing that has happened
to the business because of COVID-19 has
changed our view of our strategy.
Health and Safety
FY20 has been another year of strong operational
and financial performance for Cleanaway.
Safety remains a priority as we face daily
operational and situational hazards in our business.
In FY20 we began a refresh of our Life Saving
Rules, which are non-negotiable compliance
requirements tied to our most critical risks.
We must always be vigilant. Our employees
and contractors are entitled to go home safe.
Our TRIFR decreased by 21.1% during the past
12 months to 4.5. While it is pleasing to see
continuous improvement over the last five years
– a 58% decline – we know we still have more
work to do.
Every one of our employees understands that health
and safety is a shared responsibility. As we continue
to work towards our target of Zero Harm, we will
continue to raise awareness, enhance our training,
and identify and respond to health and safety risks.
58%
$473m
4.3%
Recordable Injury Frequency
lower than five years ago
FY20 Underlying EBITDA
(pre AASB 16)
Increase in cash flow from
operations (pre AASB 16)
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234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT CEO’S REPORT
Strategy
Our Cleanaway Way, which has been refined
over the years, is our strategy on a page and was
relaunched in July 2019 to represent the business
that we are today. The framework and associated
toolkit are designed to create a common language
and narrative across the organisation.
We have four strategic pillars – People, Market,
Assets and Finance, or PeMAF for short – which
provide the structure and focus for the way we
run our business every day.
We know that if we keep our People safe and
engaged; provide best-in-class service to our
Markets while ensuring we are growing our
share; and manage our fixed and mobile Assets
for safety, reliability, compliance and optimised
performance – sustained financial performance
becomes a natural outcome.
Our strategy is most successful when it is
complemented by a strong customer service
culture. We have been working hard to deliver
service levels that meet and exceed our customers’
expectations. As the business has and continues
to grow organically and through acquisitions, we
have been dynamic and adaptive in our response
to maintain customer service levels. We have
implemented a number of changes to simplify our
systems and processes. Over the coming years we
will be pursuing a digitisation strategy that is fit
for purpose and will meet the evolving needs of
our business and customers.
Footprint 2025
Our Footprint 2025 strategy, which we developed
in 2016, is about ensuring we have the right
infrastructure and technology across the waste
value chain to sustainably meet Australia’s waste
needs. Through that strategy, we continue to
strengthen our network of prized infrastructure
assets in key locations, optimising performance to
extract maximum value from the evolving tonne
and providing a strategic moat to our business.
We have reached the halfway mark in our Footprint
2025 journey and I believe we have created strong
foundations for the future growth of the business.
Over the past year we strengthened our position as
Australia’s leading integrated waste management
business through our acquisition of the SKM
Recycling Group’s resource recovery assets, and
the successful integration of both those assets and
the Toxfree business. These acquisitions largely
completed our Victorian and Tasmanian resource
recovery footprints. We remain the market leader
in every sector in which we operate, and our
network of prized waste infrastructure assets
across the country continues to grow.
1 0
Growth from prized infrastructure
Our objective to drive a circular economy continues
and in the coming years we will pursue several
key projects that are strategically important for
our business. Our Energy from Waste facility in
Western Sydney will provide a more environmentally
beneficial alternative solution to Sydney’s growing
waste disposal needs. It also supports our
preference for internalisation of waste and enhances
our service offering to our customers in that region.
Subject to approvals and final investment decision
– which will require that a significant portion of the
processing capacity be underpinned by long-term
contracts – it will be one of Cleanaway’s largest
single asset investments to date.
We also announced the development of a plastic
pelletising plant in Albury NSW in a joint venture
with Pact Group Holdings Ltd and Asahi Beverages.
This facility will create a genuine closed loop
recycling solution for the plastics we currently
recover through our collections network. The
location of the plant will give us access to both the
New South Wales and Victorian markets to deliver
optionality and redundancy around feedstock.
While that project will produce PET plastic pellets
from close to one billion plastic PET bottles, we will
also investigate the commercial viability of recycling
other plastics that we recover.
With both our Energy-from-Waste and plastic
pelletising projects, we have partnered with
organisations that bring complementary skills and
experience to build and develop internal capability
and de-risk the investments.
Financial performance
Cleanaway has delivered its fifth year of revenue,
margin and profit growth. In a year that posed
many challenges, your business delivered record
margins again.
Each of the operating segments – Solid Waste
Services, Industrial & Waste Services and Liquid
Waste & Health Services – performed well during
the year despite the effect of COVID-19, which
highlights the diversification benefit of our
operating segments and resilience of our business.
On a pre AASB 16 basis:
•
• Solid Waste Services reported increases in net
revenue, EBITDA and EBIT of 0.8%, 1.5% and
2.5% respectively;
Industrial & Waste Services reported decreases
in net revenue, EBITDA and EBIT of 8.3%,
3.6% and 4.9% respectively. Improvements in
EBITDA and EBIT margins of 70 basis points and
20 basis points respectively reflected our focus
on improving the quality of earnings of this
segment as we exited low value contracts; and
• Liquid Waste & Health Services reported
increases in net revenue, EBITDA and EBIT
of 3.8%, 12.7% and 16.9% 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, pre AASB
16, for FY20 were strong:
• net revenue was steady at $2.1 billion;
• EBITDA increased 2.5% to $473.0 million
at all time high of 22.5% to net revenue;
• EBIT increased 4.6% to $251.9 million
at all time high of 12% to net revenue; and
• NPAT increased 8.7% to $152.9 million
at all time high of 7.3% to net revenue.
Our five-year history of sustainably growing
earnings and margin expansion proves the
power of operating leverage and running
our business efficiently.
“Importantly, this pandemic has made
it clear that our strategy is robust.
Nothing that has happened to the
business because of COVID-19 has
changed our view of our strategy.”
From a cash flow perspective, this year we
benefited from early payments by government
and non-government customers as they sought
to support the economy in response to the
COVID-19 pandemic. This resulted in a 108.2%
cash conversion ratio and a 4.3% increase in cash
flow from operations to $366.0 million (pre AASB
16). We maintained our consistent and continuous
disciplined approach to capital allocation.
Our cash capital expenditure of $209.8 million
was in line with our previous guidance of 10% of
net revenue. This was used to sustain our existing
assets and operations, and enhance our network
of prized infrastructure assets.
We continued to win new contracts during the
year – including Randwick, Wyndham, South
Australia Council Solutions and the City of Casey –
as we leveraged the competitive advantage of our
network of prized infrastructure assets and worked
collaboratively with customers to deliver solutions
that meet their sustainability objectives.
accretive acquisition opportunities that align with
our strategy. Our strong financial position delivers
flexibility and allows us to respond quickly and
decisively to emerging opportunities.
Furthermore, through leveraging tools that help
us understand our customers’ needs and improve
customer satisfaction, internalising waste streams,
delivering synergies through acquisitions and
continuous improvement in our operations, we will
strive to improve the quality of our earnings and
the long-term profitability of the business.
While the decisions we are making today are
underpinned by existing market economics,
momentum is building amongst policy makers in
relation to Australia’s waste management. As the
targets and actions in the National Waste Policy
Action Plan 2019 are implemented, we expect
further investment opportunities to emerge.
These will complement the opportunities we
continue to investigate with our customers in
helping them achieve their sustainability goals.
I look forward to reporting to you on each of
these developments over the course of next year.
Maintaining a social licence to operate is key
to our sustainability, and while we don’t get
everything right all the time, we do strive to
continually improve our systems and processes,
our engagement with the community, our
interactions with our stakeholders and our
service to our customers.
In closing my report, I would like to thank the
Board for the support given to me and to the
leadership team over this past year. Making a
sustainable future possible is a mission that unites
the more than 6,000 people who make Cleanaway
the company that it is. We are, and always will be,
stronger together.
It is my privilege to lead a team of committed
people and thank them for their commitment
during these challenging times. I look forward to
celebrating our future successes with you and them
as we continue to build a thriving organisation.
We believe the waste industry will continue to
consolidate. As the leading integrated waste
management company in Australia we will assess
Vik Bansal
Chief Executive Officer and
Managing Director
1 1
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT BUSINESS REVIEW
Solid Waste
Services
Cleanaway’s Solid Waste Services is
Australia’s market leader for the collection,
resource recovery and disposal of solid
waste. The waste streams processed
generally include putrescible, inert,
household and recovered waste.
Following collection from over
100,000 Commercial & Industrial
customers and over 95 Municipal
Council customers, these waste
streams are generally processed
though our prized infrastructure
assets such as resource recovery
and recycling facilities, waste
transfer stations and highly
engineered landfills.
Solids Waste Services
reported increased net
revenue and earnings.
Compared to FY19, net revenue
increased 0.8% to $1,372.8
million. Excluding commodities,
FY20 net revenue increased
2.4% from $1,267.9 million
to $1,298.3 million.
EBITDA increased 10.1% to
$388.3 million ($358.1 million
pre AASB 16) and EBIT was
up 4.3% to $212.7 million
($209.2 million pre AASB 16).
EBITDA margins improved 240
basis points to 28.3% (26.1%
pre AASB 16).
The result was impacted by
COVID-19 and lower commodity
prices, partially offset by
reduced rebates to customers.
The introduction of a landfill
levy in Queensland on 1 July
2019 resulted in reduced
landfill volumes in Queensland,
which were partially offset
by higher collections and
resource recovery volumes.
Upgrading of the SKM assets
has been completed enabling
Cleanaway to produce higher
quality commodities that will
ultimately be reused in new
products as we move further
towards a circular economy.
We expect a full contribution
in FY21.
Following a fire at our Perth
Material Recovery Facility in
November 2019, the clean up
was completed in the second
half of FY20. We are continuing
to work with our customers to
develop alternative solutions
while our new facility is being
constructed. Completion is
targeted for the Q3 FY21.
Once complete, it will deliver
better and high-quality recycling
service to the Perth market.
During the period Cleanaway
was awarded several new
municipal contracts, supported
by our strong service reputation
and Cleanaview, our online
council portal.
The WA regional CDS scheme
“Containers for Change”
is expected to commence
on 1 October 2020 with
Cleanaway providing logistics
and processing services.
1 2
EbITDA ($m)
$388.3m
10.1%
388.3
352.8
285.7
257.0
26.8
28.3
25.8
25.9
14.4
14.4
15.0
15.5
17
18
19
20
EBITDA margin
EBIT margin
Four years EBITDA
Net revenue ($m)
$1,372.8m
0.8%
Net revenue ($ million)
EbITDA ($ million)
EbITDA margin (%)
EbIT ($ million)
EbIT margin (%)
FY20
FY19
1,372.8
388.3
28.3
212.7
15.5
1,362.3
0.8%
352.8
10.1%
25.9
+240bps
204.0
4.3%
15.0
+50bps
Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019,
as such comparatives have not been restated.
Setting the standard for municipal services
In FY20 Cleanaway secured our place as
the market leader in kerbside collections
in Victoria when we were awarded the
contract for the state’s largest council,
City of Casey in south east Melbourne.
Cardinia Shire Council also increased
their services with Cleanaway, adding
FOGO collections and booked hard waste
collections to their existing general waste
and recycling service.
In South Australia, the state’s largest
ever municipal contract was awarded to
Cleanaway servicing 160,000 properties
in the four metropolitan councils of
Adelaide. Cleanaway will invest in
more than 40 fleet assets and employ
around 30 new staff. Cleanaway’s online
portal, Cleanaview, will give councils
near real-time collection and scheduled
pickup information.
1 3
3456SUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT BUSINESS REVIEW
Industrial &
Waste Services
Cleanaway’s Industrial & Waste Services
provides a wide variety of specialised
services to the Infrastructure and
Resources markets. These services
include drain cleaning, non-destructive
digging, vacuum loading, high pressure
cleaning and pipeline maintenance.
EBITDA decreased 1.5% to
$45.9 million ($44.9 million
pre AASB 16), and EBIT
decreased 4.9% to $21.4 million
($21.4 million pre AASB 16).
Higher margin contracts and an
emphasis on strict cost discipline
across the segment resulted
in EBITDA margins increasing
100 basis points to 14.6%
(14.3% pre AASB 16).
We continue to see improvement
and the right focus on increased
labour and asset utilisation
across the country and region.
This segment services over
2,000 customers with a
fleet of specialised vehicles
and equipment.
Industrial & Waste Services
reported lower net revenue
and earnings but expanded
its margins as we exited most
contracts with sub-optimal
commercial returns.
The capital that was previously
consumed in those contracts
will be deployed at higher
returns within the business.
The integration of Toxfee is
complete and we are realising
synergies from significant
integration related activities.
Compared to FY19, net revenue
decreased 8.3% to $313.4
million as the business reduced
its exposure to lower margin
less specialised services.
1 4
EbITDA ($m)
$45.9m
1.5%
46.6
45.9
14.6
13.6
6.6
6.8
10.2
10.3
18.2
18.9
2.7
2.4
17
18
19
20
EBITDA margin
EBIT margin
Four years EBITDA
Net revenue ($m)
$313.4m
8.3%
Net revenue ($ million)
EbITDA ($ million)
EbITDA margin (%)
EbIT ($ million)
EbIT margin (%)
FY20
313.4
45.9
14.6
21.4
6.8
FY19
341.9
8.3%
46.6
13.6
22.5
1.5%
+100bps
4.9%
6.6
+20bps
Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019,
as such comparatives have not been restated.
COVID‑19 inspires innovative response
In response to COVID-19 Cleanaway
launched a safe and effective
decontamination service. Working with
industry partners, we developed nozzle
technology that provided wide range misting
application for large open spaces including
warehouses, factories and public spaces.
response model was developed to enable
sites to stay operational, or reopen
quickly, following a COVID-19 case.
Beyond the misting application method,
Cleanaway provided targeted application
for handrails, equipment, and other
high-touch areas. The feedback from
sites was that the service gave employees
peace of mind that they could return
to work safely.
The service was designed for scheduled
preventative decontamination of high-risk
facilities. As the pandemic evolved a rapid
1 5
3456SUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT BUSINESS REVIEW
Liquid Waste &
Health Services
Cleanaway’s Liquid Waste &
Health Services comprises of four
national strategic business units:
Liquid Waste Services, Technical
& Environmental Services,
Hydrocarbons and Health Services.
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 sector
includes the safe treatment
and disposal of health-
related waste which includes
sharps management, medical
waste, pharmaceutical waste,
healthcare hazardous waste and
quarantine waste.
Liquid Waste & Health Services
reported increased net revenue
and earnings.
Compared to FY19, net
revenue increased 3.8%
to $513.6 million. EBITDA
increased 22.3% to $106.3
million ($97.9 million pre AASB
16) and EBIT increased 19.1%
to $64.3 million ($63.1 million
pre AASB 16).
EBITDA margins increased
310 basis points to 20.7%
(19.1% pre AASB 16).
Hydrocarbons performed well
on the back of improved volume
and production efficiencies
following recent plant upgrades.
This was partially offset by
lower global oil prices in the
last quarter.
Health Services continued its
good performance with the
re-signing of some of its major
customers for a further three to
five years. This business remains
on track to deliver on our
strategic expectations.
Packaged and bulk hazardous
waste streams continue to grow
both revenue and earnings
because of the integration.
The Liquid Waste & Health
Services business is now a
strong integrated business
with good growth prospects.
1 6
EbITDA ($m)
$106.3m
22.3%
106.3
86.9
54.2
40.7
15.7
10.7
16.8
11.4
17.6
10.9
20.7
12.5
17
18
19
20
EBITDA margin
EBIT margin
Four years EBITDA
Net revenue ($m)
$513.6m
3.8%
Net revenue ($ million)
EbITDA ($ million)
EbITDA margin (%)
EbIT ($ million)
EbIT margin (%)
FY20
513.6
106.3
20.7
64.3
12.5
FY19
495.0
3.8%
86.9
22.3%
17.6
+310bps
54.0
10.9
19.1%
+160bps
Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019,
as such comparatives have not been restated.
Australian‑made reusable collectors
From February 2020 all Cleanaway Daniels
reusable sharps collectors and related
spare parts were 100% Australian-made
following the onshoring of manufacturing
capabilities to the facility at St Marys.
With operations occurring closer to end
users, the supply chain was better able to
meet rapid production requirements and
respond to changes in customer demand.
Local control over the supply chain
significantly advanced our ability to deliver
a more agile service to our customers,
which became even more critical when
imports were impacted by COVID-19.
The facility had been acquired with ASP
Healthcare (ASP) in March 2019 and
enabled in-house plastic pelletising and
manufacturing – an exciting opportunity
for Cleanaway to increase the use of
recycled material in our operations.
1 7
3456SUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT SUSTAINABILIT Y
Resourcing the
circular economy
We made a commitment last year to deliver an
improved Sustainability Report, aligned to the United
Nations Sustainable Development Goals (SDGs) and
the Sustainability Accounting Standards Board (SASB)
Waste Management Standard.
aligns to Cleanaway reporting
principles and upholds our
values and commitment to
achieving our Mission of
‘Making a sustainable future
possible’ – for all Australians.
to minimise the impact of
our operations. We work to
improve our engagement with
the community, our interactions
with our stakeholders and our
service to our customers.
Our objective to drive a circular
economy in Australia continues
and we will look to pursue key
projects to extend the waste
value chain and recover more
resources for reuse.
As Australia’s leading integrated
waste management company,
which owns and operates a
substantial portfolio of prized
infrastructure, we want to make
a positive impact.
Maintaining a social licence
to operate is key to the
sustainability of our business.
We are constantly improving
our systems and processes
We intend to continue building
on our sustainability disclosures
in future reports, through
a focus on material topics,
comparative data and targets.
Our FY20 Sustainability Report
provides us with a strong
foundation to build on in
future sustainability reporting.
We have also commenced
reporting our climate change
risk disclosures in accordance
with the Taskforce on
Climate‑related Financial
Disclosures (TCFD) framework.
The following pages provide
a brief overview of our
sustainability performance and
introduces some of the material
topics affecting our business.
Our FY20 Sustainability Report
elaborates on all our material
topics, as well as introducing
our Value Creation Story (VCS),
which you can find on page 2
of this document. It takes our
strategic pillars and shows
how the inputs we draw on
are transformed through our
business activities, applying
Our Cleanaway Way, to create
outcomes for our stakeholders.
Our sustainability reporting
framework established
key elements to deliver a
Sustainability Report that meets
stakeholder expectations,
1 8
Aligning with recognised standards
We undertook a mapping exercise to identify the SDGs that were
most aligned to our business and that we could have the greatest
impact on. Through engagement with internal stakeholders we
selected nine SDGs on which to focus our efforts:
For us, it means leveraging our strategic pillars
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.
C L E A N AWAY WA S T E M A N A G E M E N T L I M I T E D 2 0 2 0 A N N U A L R E P O R T
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456CORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT
SUSTAINABILIT Y
People
We’re proud of our purpose‑driven
teams. We continue to focus on safety
and wellbeing, and value diversity,
equality and inclusion in our workforce.
Workforce health,
safety, and wellbeing
We use a range of lead and lag indicators to
measure our health and safety performance.
Lag indicators include TRIFR, fire incidents
and overdue corrective actions. Lead
indicators include percentage completion
of mandatory training, and the number
of ‘safety interactions’. These are context‑
specific safety conversations between
employees and their supervisors, where
managers join our drivers and operators
for a shift to observe safety in practice and
discuss roles, responsibilities and controls.
Total recordable incident frequency rate
(TRIFR) is the key performance indicator
that we use to measure health and safety
performance. We achieved a reduction
in TRIFR of 21% in FY20, with TRIFR
reducing from 5.7 to 4.5. Whilst it is
pleasing to see continued year‑on‑year
improvement in our TRIFR, we also
acknowledge that there are opportunities
for improvement that we will seek to
implement over the coming year.
Developing our people
Leadership training
In late 2019, in partnership with the
Lighthouse Group, Cleanaway developed
and launched our Commercial Acumen
& Financial Skills (CAFS) Program for our
operational leaders across the enterprise.
The two‑day workshop was successfully
delivered to over 110 Branch Managers.
Development of an online and virtual
version of the CAFS Program is underway.
It is planned for delivery in October 2020
and will be delivered to relevant new
employees going forward.
Our continued partnership with
LeadershipSuccess for frontline leadership
coaching programs saw over 100 enrolments
and over 70 completions in FY20.
Graduate program
To attract and nurture our next
generation of leaders, in FY20 we
launched the Cleanaway Graduate
Program. The program provides graduates
from key disciplines such as engineering,
chemistry and environmental science with
vital hands‑on experience and insight into
the waste management industry through
experiences, training and mentorship.
Across 24 months, graduates will rotate
through placement blocks, lasting up to
six months each, allowing them to gain
a strong understanding of the various
operations and functions of Cleanaway.
Graduates’ learning journey includes time
spent with their hosting manager before
and after their placement to discuss
learning outcomes.
Progress in partnership
Pilbara Environmental Services (PES),
Cleanaway’s joint venture with the
KingKira Group, rebranded to better
represent the partnership. The KingKira
Group is a 100% female Aboriginal‑owned
business connected to the Nyiyaparli
and Palyku Aboriginal groups, and the
Kariyarra and Ngarluma peoples.
2 0
TRIFR
Total Recordable
Incident Frequency Rate
4.5
in FY20
5.7
in FY19
6.2
in FY18
Priority SDGs
Employees connected to
digital wellbeing support
Cleanaway partnered with our
Employee Assistance Provider,
Lifeworks, to give employees
access to the LifeWorks
wellbeing platform.
Available on smart phone or via
website, the platform features
online resources and tools
supporting mental, physical,
social and financial wellbeing.
Access is extended to five close
family or friends to ensure our
employees’ wider network can
benefit from the online support.
Diversity and inclusion
Valuing and supporting diversity and inclusion
(D&I) is a critical part of our ‘Stronger Together’ value
2017–2020 D&I Engagement Plan
Some achievements of our 2017–2020 Plan include:
•
reporting on remuneration and gender pay parity as
part of our annual review of Total Fixed Remuneration,
to track the impact of our actions to closing the gap;
• updated Parental Leave Policy and Guidelines, including
increasing the make‑up pay from 14 weeks to 18 weeks
and aligning it with the pay cycle;
• development and implementation of our unconscious
bias e‑Learning induction module;
• updated Respectful Workplace Policy, and development
of related e‑Learning induction module and face‑to‑face
training program; and
in FY20 we increased the number of females in operational
roles to 5.7%, up from 5.0% in FY19. We also saw an
increase in female branch manager and regional managers.
•
2020–2022
D&I Engagement Plan
Engagement
Stronger together
Workforce Profile
Workforce demographics
and female participation
Awareness
Learn and do
2 1
456CORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT SUSTAINABILIT Y
Earth
We invest in infrastructure, technology
and innovation to close the loop and
contribute to a viable circular economy
in Australia.
Environmental impact
and compliance
Upholding the highest standards
in environmental performance
is crucial to the success and
sustainability of our business.
All employees, contractors and joint
venturers engaged in activities under
Cleanaway’s operational control are
responsible for complying with and
implementing our Environmental Policy.
Ultimately, the CEO is accountable to
the Board of Directors for ensuring
that the policy is implemented.
Climate change
Climate change presents urgent and
complex challenges for businesses,
governments and society. Developing
capability and better understanding
of risks and opportunities associated
with climate change has been a key
focus of Cleanaway.
We have committed to align with the
Taskforce on Climate‑related Financial
Disclosures (TCFD) reporting framework.
Please refer to our Sustainability Report
where we have made substantive
disclosures relating to key climate
change risks facing the company.
2 2
Cleanaway recovers biogas from some of our highly
engineered landfills that can be sent to the power grid.
Priority SDGs
Greenhouse gas
emissions and low
carbon energy
Our landfills
1.9m GJ
from captured
landfill gas
18%
flared to
reduce
greenhouse
impact
82%
converted
into energy
Metrics
Gross global Scope 1 emissions, percentage
covered under emissions-limiting regulations,
and emissions-reporting regulations
• Scope 1 emissions = ~749 ktCO2-e
• Scope 2 emissions = ~43 ktCO2-e
• 0% of Scope 1 GHGs are covered under
emissions limiting programs, as no facility
has breached the 100 kt threshold for
covered emissions
• 100% of Scope 1 emissions are subject to
emissions reporting programs (NGER scheme)
2 3
>114 ML
used oil recovered
83 ML
of recycled hydrocarbon
fuel produced
>479 kt
of recyclables sold
456CORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT SUSTAINABILIT Y
Markets
We work with our customers to improve
our service to them and to help them
achieve their sustainability goals..
Customer experience
Without our customers we have no business,
so customer satisfaction and retention are
integral to the sustainability and success of
Cleanaway. We are committed to offering
our customers flexibility, reliability and value.
We endeavour to align with our
customers to help deliver their
sustainability goals and view them
as partners in achieving our mission.
Whether they are big or small businesses,
from the commercial or industrial sectors,
or our municipal customers representing
millions of households around Australia
– we recognise that our relationships
with customers, and our reputation
as a company, depends on trust and
the value we bring to that partnership.
In FY20, we implemented a series
of initiatives focused on improving
the customer experience journey.
At Cleanaway, we believe that if you
aren’t serving a customer, you are
serving someone in our business who is.
Contamination in recycling continues
to be a challenge for our customers and
the industry. Contamination reduces the
quality of recycling for reuse and increases
the cost to separate and process. When
our customers have the right information
and support to use recycling services
correctly, we increase the quantity and
value of material that can be recovered.
We provide waste audit services
to capture baseline data, identify
improvement opportunities, and track
progress. This is supported by resource
recovery specialists who help identify
opportunities to reduce and/or better
manage waste and achieve landfill
diversion targets.
We also provide training for customers
and households, including events, signage
and online education around waste
reduction and management.
Customers by
segment
Commercial and
industrial services
Municipal
waste services
Total
services
Organics/composting
Recycling
Other
19,590
31,380
84,304
48
64
67
19,638
31,444
84,371
2 4
Priority SDGs
Initial contact
We have revamped our customer contact line, 13 13 39,
with a focus on accessibility. We refreshed the menu with
customer‑focused language and clear options to minimise
time being redirected. Through ‘grade of service’ KPIs,
we measure how quickly we answer calls.
Customer onboarding
Our customer onboarding program will ensure that customers
receive a high level and consistent service from day one,
including faster activation times, data input accuracy and
ensuring that new customers are supported to use our
services correctly.
Trade experience
We offer reliable, flexible and sustainable service offerings
tailored to customer needs. Our ambition is to meet our
customers’ expectations with ‘service in full on time’. Some
of our divisions have more to do to achieve this, but we are
working to standardise this across the business.
Fairer contracts
We were one of the first waste management companies to
update our terms and conditions to give customers increased
transparency and flexibility. This is supported by training
for all relevant teams.
Community engagement
Cleanaway takes pride in supporting communities
to use our services better. We are committed
to building strong community relationships
through education and engagement. Community
education plays an important role in increasing
resource recovery.
Cleanaway is actively involved in supporting the
220 Australian communities we service. Cleanaway
supports various local community organisations and
has been the leading national partner of Clean Up
Australia, an environmental charity, since 2016. We
provide financial support to these programs, but
also provide opportunities to expand their reach and
create value for the broader community.
Community engagement is often driven by our
own people who identify opportunities to support
local causes that they are connected to, or proudly
participate in community and sustainability events.
Community support
throughout the bushfires
In FY20, bushfires had a devastating impact across
Australia. We supported affected customers
during this time by waiving late payment fees and
unsuccessful service fees. We also matched employee
donations towards bushfire‑related charities with a
donation to two charities nominated by Cleanaway:
World Wildlife Fund and Firesticks. We also extended
our paid volunteer leave to 10 working days for our
employees involved in firefighting or bushfire relief.
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456CORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT SUSTAINABILIT Y
Priority SDGs
Assets
We minimise our environmental impact
through the responsible management
of our assets as well as exploring and
investing in new technologies.
Strategic assets
Engaging with customers and broader
stakeholders assists in identifying
emerging needs and expansion.
In FY20, the acquisition of former SKM
Recycling Group assets added five
resource recovery sites to Cleanaway’s
portfolio . The site in Laverton North,
Victoria hosts an advanced plastic sorting
facility that separates plastics into clean
individual polymer grades for sale or input
into a pelletising facility.
Since acquiring these assets, Cleanaway
has continued its investment to
significantly improve product quality,
sortation throughput and operational
reliability. This includes specific measures
to upgrade safety protection and to meet
our environmental obligations.
Technology advancement
By staying at the forefront of technology
adoption, Cleanaway can ensure our
infrastructure, assets and services
respond to and even drive these changes.
This helps deliver customer solutions,
realise the full potential of resources
and support Australia’s transition
to a circular economy.
Cleanaway keeps at the forefront of
waste technology by:
• employing people with deep technical
•
expertise and a passion for our mission;
identifying and adopting leading
waste management technologies
from around the world; and
• partnering with organisations
with complementary capabilities.
Identifying
emerging needs
Greenfield sites
Technology upgrades
to existing facilities
Acquisitions
2 6
Financials
We create value for all our stakeholders
through a focus on sustainable
financial performance.
Over the past five years, organic business growth, strategic acquisitions and
joint ventures have been core to our business strategy. Managing this growth
sustainably is important to securing long‑term returns for our shareholders,
and allows Cleanaway to contribute to the economy through job creation,
procurement and transparent tax and other payments to governments.
Metrics
Net revenue
Net debt
Net equity
Economic value generated
Economic value distributed
Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to government
Community investment
Total economic value distributed
Economic value retained
FY20
($m)
2,100.1
955.6
2,570.0
2,366.7
742.2
666.6
113.1
622.5
1.0
2,145.4
221.3
FY19
($m)
2,109.1
658.5
2,534.3
2,290.1
788.2
666.9
91.7
516.1
0.8
2,063.7
226.4
Priority SDGs
2 7
456CORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT CORPOR ATE INFORMATION
Board of Directors
Mark Chellew
Vik Bansal
Mike Harding
Philippe Etienne
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 Caltex Australia
Limited (since April 2018).
Formerly the Executive
Chairman of Manufacturing
Australia Limited (retired
September 2017), the
Managing Director and
Chief Executive Officer of
Adelaide Brighton Limited
(retired May 2014) and
Non‑Executive Director of
Virgin Australia Holdings
Limited (resigned January
2020) and Infigen Energy
(retired August 2020).
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 25 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).
2 8
Independent
Non-Executive Director,
Chairman of the
Remuneration and
Nomination Committee and
Member of the Health, Safety
and Environment Committee
Independent Non‑Executive
Director since 1 March 2013
Mike is the Chairman
of Downer EDI Limited
(since November 2010),
Lynas Corporation Ltd
(since January 2015) and
Horizon Oil Limited (since
November 2018). Mike
was formerly Chairman of
Roc Oil Company Limited
(resigned December
2014) and Non‑Executive
Director of Santos
Limited (resigned May
2014). Mike also recently
announced his retirement
from Lynas Corporation
with effect from the end
of September this year.
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.
Independent Non-Executive
Director, Chairman of
the Health, Safety and
Environment Committee and
Member of the Audit and Risk
Committee
Independent Non‑Executive
Director since 29 May 2014.
Philippe is a Non‑Executive
Director of Lynas
Corporation Limited (since
January 2015) and Aristocrat
Technologies Australia Ltd
(since November 2019).
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 Master
of Business Administration
(MBA). A Graduate of
the Australian Institute of
Company Directors and has
completed post‑graduate
qualifications in marketing.
Ray Smith
Emma Stein
Samantha Hogg
Terry Sinclair
Independent Non-Executive
Director, Chairman
of the Audit and Risk
Committee and Member
of the Remuneration and
Nomination Committee
Independent Non‑Executive
Director since 1 April 2011.
Formerly he was
Non‑Executive Director
of K&S Corporation Ltd
(resigned 26 November
2019), 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.
He is a Fellow of CPA
Australia and a Fellow of
the Australian Institute of
Company Directors.
Independent Non-Executive
Director, Member of the Audit
and Risk Committee and
Member of the Health, Safety
and Environment Committee
Independent Non‑Executive
Director since 1 August 2011.
Emma is a Non‑Executive
Director of Alumina Limited
(since February 2011),
Infigen Energy Limited
(since September 2017)
and Adelaide Brighton Ltd
(since October 2019).
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 Fellow of the
Australian Institute of
Company Directors.
Independent Non-Executive
Director, Member of the Audit
and Risk Committee and
Member of the Remuneration
and Nomination Committee
Independent
Non‑Executive Director
since 1 November 2019.
Samantha is a
Non‑Executive Director
of MaxiTRANS Industries
Limited (since April 2016)
and Infrastructure
Australia (since April
2019). She was formerly
a Non‑Executive Director
of Australian Renewable
Energy Agency (retired
July 2020). Samantha is
also a Commissioner on
the National COVID‑19
Coordination Commission
(since July 2020).
Samantha is an experienced
executive with international
experience across the
transport, infrastructure,
energy and resources
sectors. She has held
senior executive positions
at Transurban Group and
Western Mining Company
across a broad range of
portfolios including finance,
strategic projects, marketing
and corporate services. Her
most recent executive role
was as the Chief Financial
Officer of Transurban Group.
Samantha holds a
Bachelor of Commerce
and is a member of the
Australian Institute of
Company Directors.
Independent Non-Executive
Director, Member of the Audit
and Risk Committee, and
Member of the Remuneration
and Nomination Committee
Independent Non‑Executive
Director since 1 April 2012.
He currently serves as
an Industry Advisor to
Australian Super (effective
October 2019), Chairman
Marrakech Road Pty Ltd
(effective July 2020), and
a Non‑Executive Director
of Locate Technologies
(effective May 2017)
and Faethm.ai Pty Ltd.
(effective February 2020).
Formerly, he was a
Non‑Executive Director of
Ovato Limited, Managing
Director of Service Stream
Limited, Chairman of AUX
Investments (jointly owned
by Qantas and Australia
Post), Chairman of Star
Track Express, 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
operational and corporate
development experience
across Industrial, Resources
and Consumer Services
sectors including 20 years
in senior management roles
in BHP (Minerals, Steel and
Transport/Logistics).
2 9
56FINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW4CORPORATE INFORMATION3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT CORPOR ATE INFORMATION
Senior Executive Team
Vik Bansal
Chief Executive Officer and Managing Director
With over 25 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).
Brendan Gill
Chief Financial Officer
Brendan joined Cleanaway in September
2014. Brendan has more than 30 years of
experience as a finance professional, mainly
in the mining, steel and energy sectors. His
career included 26 years at BHP Billiton in
finance, including as Vice President Finance
Carbon Steel, CFO for both the Stainless
Steel Materials and Nickel businesses and
Global Lead Risk Management & Audit.
Since leaving BHP Billiton, Brendan has
held CFO roles, most recently as CFO for
Inova Resources (previously named Ivanhoe
Australia). Brendan has a Bachelor of
Business, is a Fellow of CPA 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 15 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.
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.
3 0
Frank Lintvelt
Executive General Manager, Strategy, Mergers
& Acquisitions
Frank first joined Cleanaway in 2013 and
was appointed Executive General Manager,
Strategy, Mergers & Acquisitions in
November 2019. His current responsibilities
also include oversight of Cleanaway’s
investor relations and corporate affairs.
Frank has more than 20 years’ experience
in senior corporate development, strategy
and investment banking roles. Prior to
joining Cleanaway, he spent 13 years in
investment banking in London and Sydney,
most recently with Morgan Stanley. Frank
holds a Bachelor of Business Administration,
a Masters of Business Administration from
York University in Toronto (Canada) and is
CPA qualified.
Mark Crawford
Executive General Manager,
Solid Waste Services
Mark joined Cleanaway as Executive General
Manager, Enterprise Services in February
2014 and became Executive General
Manager, Operations, Solid Waste Services
in August 2017. Mark has more than 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.
Michael Bock
Executive General Manager, Enterprise
Services and Integration
Michael joined Cleanaway in March 2018 as
Executive General Manager, Integration and
appointed as Executive General Manager,
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.
Tim Richards
Executive General Manager, Liquid Waste &
Health Services, and Industrial & Waste 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.
Chris Avramopoulos
Executive General Manager,
Growth and Customer
Chris joined Cleanaway in February
2020 as Executive General Manager,
Growth & Customer. Prior to joining
Cleanaway, Chris held several senior
positions at Orica, including General
Manager – Mining Chemicals,
Vice President – Asia and Chief
Transformation Officer. Chris has over
20 years’ experience in the mining,
industrial chemical trading and chemical
manufacturing industries. Chris has
a Bachelor of Science, majoring
in Mathematics and Computer Science,
having graduated with distinction at
Swinburne University.
3 1
56FINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW4CORPORATE INFORMATION3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT Extending the value chain
for plastic
In FY20 Cleanaway announced we
were establishing a joint venture with
Pact Group and Asahi Beverages
to build a plastic pelletising facility
in Albury, NSW. Trading as Circular
Plastics Australia, the facility will
produce plastic resin from recycled
bottles to be manufactured into new
plastic containers.
Cleanaway will source and provide
the feedstock plastics, the JV facility
will process the PET plastic into
food-grade recycled pellets, Pact
with manufacture the new bottles
and Asahi will use the new recycled
PET bottles for their products.
A significant proportion of the
plastic feedstock will come from
the NSW container deposit scheme
via Cleanaway’s Eastern Creek
Container Sorting Facility. This is the
circular economy in action, with full
visibility of the journey recovered
materials take to be turned into
new products. It is anticipated that
the facility will be operational by
December 2021.
We’ve teamed up to
We’ve teamed up to
build a better system
build a better system
Australians recycle
Australians recycle
Just like they do now
Just like they do now
Cleanaway
Cleanaway
collects
collects
Circular Plastics
Circular Plastics
Australia processes
Australia processes
Turning PET into pellets
Turning PET into pellets
that can be used again
that can be used again
Asahi Beverages and
Asahi Beverages and
PACT together recreate
PACT together recreate
Making new bottles
Making new bottles
from recycled materials
from recycled materials
It’s big
It’s big
One huge new recycling facility
One huge new recycling facility
Helping us to process up to 28,000 t
Helping us to process up to 28,000 t
of plastic bottles into new packaging
of plastic bottles into new packaging
– making our beverages even better.
– making our beverages even better.
3 2
Contents of Financial Statements
For the financial year ended 30 June 2020
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
34
46
63
64
65
66
67
68
69
129
130
Notes to the Consolidated Financial Statements
Information about the Group and basis
of preparation
1. Corporate information
2. Statement of compliance
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
Information about our capital structure
16. Interest-bearing liabilities
17. Issued capital
18. Reserves
19. Dividends
20. Capital management
Other information about our financial position
21. Property, plant and equipment
22. Right-of-use assets
23. Intangible assets
24. Equity accounted investments
25. Other assets
26. Employee entitlements
27. Provisions
28. Other liabilities
Information about our group structure
29. Business combinations and loss of control
of subsidiary
30. Subsidiaries
31. Deed of cross guarantee
32. Parent entity
Information about financial risks and
unrecognised items
33. Financial risk management
34. Contingent liabilities
35. Commitments
Other information
36. Share-based payments
37. Auditor’s remuneration
38. Events occurring after the reporting date
39. Related party transactions
Accounting policies
40. Significant accounting policies
41. New standards adopted
42. New standards and interpretations not yet adopted
C L E A N AWAY WA S T E M A N A G E M E N T L I M I T E D 2 0 2 0 A N N U A L R E P O R T
3 3
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION
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 2020 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
S L Hogg
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
Non-Executive Director (appointed Non-Executive Director on 1 November 2019)
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 page 28.
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 fully franked dividends on ordinary shares for the financial year ended 30 June 2020 of 4.1 cents
per share, being an interim dividend of 2.0 cents per share and final dividend of 2.1 cents per share. The record date of the
final dividend is 14 September 2020 with payment to be made 6 October 2020. The financial effect of the final dividend has
not been brought to account in the Financial Statements for the financial year ended 30 June 2020 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 2019: 1.90 cents per share (2018: 1.40 cents per share)
Interim dividend for 2020: 2.00 cents per share (2019: 1.65 cents per share)
Total dividends paid
2020
$’M
2019
$’M
38.9
41.0
79.9
28.5
33.7
62.2
3 4
Directors’ Report Operating and financial review
Review of financial results
The Group’s statutory profit after income tax (attributable to ordinary equity holders) for the financial year ended
30 June 2020 was $112.9 million (2019: $120.4 million). The Group has incurred acquisition and integration related expenses,
(net of tax) of $27.9 million (2019: $11.5 million) during the year ended 30 June 2020, principally related to the acquisitions
of Toxfree and the SKM recycling business.
Revenue from ordinary activities increased by 2.1% to $2,332.1 million (2019: $2,283.1 million). Excluding the collection
of levies, net revenue decreased by 0.4% to $2,100.1 million (2019: $2,109.1 million), primarily attributed to the impact
of COVID-19 in the last quarter of the financial period.
Total expenses increased by 1.2% to $1,879.6 million (2019: $1,856.4 million). Excluding levies collected and paid,
total expenses decreased by 2.1% to $1,647.6 million (2019: $1,682.4 million) primarily the result of property expenses
decreasing by $25.9 million following the adoption of AASB 16 Leases. Depreciation and amortisation expense increased
by $41.8 million to $262.6 million (2019: $220.8 million), mainly attributable to depreciation charges of $38.0 million on
right-of-use assets not previously carried on the balance sheet following the adoption of AASB 16. The Group’s underlying
profit after income tax (attributable to ordinary equity holders) for the year ended 30 June 2020 of $150.3 million was
up by 7.0% on the prior year (2019: $140.5 million). A reconciliation of underlying profit to statutory profit is set out below.
Group results for the financial year ended 30 June 2020
UNDERLYING ADJUSTMENTS
STATUTORY 1
$’M
MRF FIRE 4
$’M
ACQUISITION
& INTEGRA
TION COSTS 5
$’M
GAIN ON
SALE OF
PROPERTIES 6
$’M
OTHER 7
$’M
UNDER
LYING 1
$’M
IMPACT OF
AASB 16
$’M
UNDERLYING
EXCLUDING
IMPACT OF
AASB 16 1
$’M
Solid Waste Services
Industrial & Waste Services
Liquid Waste & Health Services
Equity accounted investments
Waste management
Corporate
EBITDA 2
Depreciation and amortisation
Write-off of plant and equipment
EBIT 3
Net finance costs 8
Profit/(loss) before income tax
Income tax expense
Profit/(loss) after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
388.3
45.9
106.3
(2.1)
538.4
(22.7)
515.7
(259.1)
–
256.6
(47.4)
209.2
(59.2)
150.0
(30.2)
(1.0)
(8.4)
–
(39.6)
(3.1)
(42.7)
38.0
–
(4.7)
8.8
4.1
(1.2)
2.9
358.1
44.9
97.9
(2.1)
498.8
(25.8)
473.0
(221.1)
–
251.9
(38.6)
213.3
(60.4)
152.9
8.9
–
–
8.9
1.9
10.8
(3.6)
7.2
7.2
–
150.3
(0.3)
2.9
–
153.2
(0.3)
487.1
(262.6)
(19.6)
204.9
(49.7)
155.2
(42.6)
112.6
112.9
(0.3)
(5.0)
–
19.6
14.6
0.3
14.9
(4.5)
10.4
10.4
–
32.8
3.5
–
36.3
0.1
36.4
(8.5)
27.9
27.9
–
(8.1)
–
–
(8.1)
–
(8.1)
–
(8.1)
(8.1)
–
1
The use of the term ‘Statutory’ refers to IFRS financial information and ‘Underlying’ refers to non-IFRS financial information. Underlying earnings are
categorised as non-IFRS financial information and therefore have been presented in compliance with ASIC Regulatory Guide 230 – Disclosing non-IFRS
information. The exclusion of underlying adjustments provides a result which, in the Directors’ view, more closely reflects the ongoing operations of the
Group. The non-IFRS financial information is unaudited.
EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
2
3
4 On 25 November 2019 a fire occurred at the Materials Recycling Facility in Guildford, Western Australia. Insurance recovery income of $20.8 million has
been recognised. This income is offset by business interruption and clean-up costs of $15.8 million expensed to date. In addition, $19.6 million of plant
and equipment has been written off.
5 Acquisition and integration costs include transaction costs and other costs associated with the acquisition of businesses during the period of $8.5 million,
the ongoing integration costs related to the acquisition of Toxfree which occurred on 11 May 2018 of $18.8 million and integration costs of other
acquisitions of $5.5 million. The depreciation of $3.5 million relates to the depreciation of right-of-use assets on property leases which were vacated early
as part of the integration activities.
6 On 15 April 2020 the buffer land surrounding the old Tullamarine landfill site was sold for consideration of $17.0 million.
7 Other adjustments of $8.9 million comprise $8.0 million following the reassessment of employee entitlements as result of a May 2020 court decision,
$2.0 million of increase in remediation provisions related to closed landfill sites and industrial properties as a result of the reduction in the discount rate
(refer note 27 to the Financial Statements), offset by a gain on loss of control of Cleanaway ResourceCo RRF Pty Ltd of $1.1 million, which occurred
effective 1 January 2020 (refer note 29 of the Financial Statements).
8 Underlying adjustments to net finance costs of $2.3 million relate to the fair value loss on USPP borrowings of $34.0 million offset by the change in the
fair value of cross currency interest rate swaps of $33.4 million, the write-off of costs related to financing facilities closed out early of $1.3 million and
interest costs of $0.4 million related to lease liabilities on vacated properties.
3 5
Directors’ ReportCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Operating and financial review (continued)
Review of financial results (continued)
Group results for the financial year ended 30 June 2019
Solid Waste Services
Industrial & Waste Services
Liquid Waste & Health Services
Equity accounted investments
Waste management
Corporate
EBITDA 2
Depreciation and amortisation
EBIT 3
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
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
UNDERLYING 1
$’M
352.8
46.6
86.9
0.7
487.0
(25.4)
461.6
(220.8)
240.8
(46.9)
193.9
(53.3)
140.6
140.5
0.1
433.7
(220.8)
212.9
(46.9)
166.0
(45.5)
120.5
120.4
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
–
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
6
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 27 to the
Financial Statements).
Review of financial position
Operating cash flows increased by 14.5% to $401.5 million (2019: increase of 58.6% to $350.8 million). During the financial
year ended 30 June 2019 the Group received a one-off tax refund of $25.0 million. In the current period, operating cash
flows are higher by $35.5 million as a result of the implementation of AASB 16 Leases. Operating lease costs of $44.7 million
have been classified in the cash flow statement as interest payments of $9.2 million in operating cash flows and repayment
of lease liabilities of $35.5 million in financing cash flows.
The Group’s net assets have increased from $2,536.6 million to $2,571.0 million. At 30 June 2020 the Group had a net
current asset deficiency of $49.6 million (30 June 2019: net current asset surplus of $11.0 million). The net current asset
deficiency arises mainly from the implementation of AASB 16. Current lease liabilities of $46.8 million related to operating
leases not previously recognised on balance sheet are now included on balance sheet in current interest-bearing liabilities,
however the related right-of-use asset is classified as a non-current asset. The Group has sufficient unutilised committed
debt facilities at 30 June 2020 and therefore the Directors are satisfied that the Group can meet its financial obligations
as and when they fall due.
At balance date the Group had total syndicated debt facilities of $650.0 million (2019: $900.0 million), US Private Placement
Notes of $426.9 million (2019: nil), financing arrangements with the Clean Energy Finance Corporation of $90.0 million
(2019: $100.0 million) and an uncommitted bank guarantee facility of $60.0 million (2019: $60.0 million). The headroom
available in the Group’s facilities at 30 June 2020 was $421.1 million (2019: $317.9 million) and cash on hand was
$79.8 million (2019: $56.2 million). Further information on the Group’s financing facilities is provided in note 16 to the
Financial Statements.
3 6
Directors’ Report Operating and financial review (continued)
Review of financial position (continued)
The Group’s gearing ratio at period end, defined as net debt over net debt plus equity, was 27.1% (2019: 20.6% on a pre
AASB 16 basis). During the financial year Cleanaway completed a US Private Placement Notes issue. The currency exposure
has been hedged resulting in three equal tranches of $132.5 million Australian dollars with maturities of 8, 10 and 12
years. The weighted average margin is 1.61% above Australian bank bill swap rates. As a result of the notes issue and the
cancellation of a shorter term $250.0 million facility, the weighted average debt maturity has been extended to 5.4 years
(2019: 3.8 years).
Review of Operations
The Group comprises three operating segments, being Solid Waste Services, Industrial & Waste Services and Liquid Waste
& Health Services. Unallocated items 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
Underlying EBITDA 1
Underlying EBIT 2
Core business
INCLUDING
IMPACT OF
AASB 16
30 JUNE 2020
$’M
IMPACT OF
AASB 16
30 JUNE 2020
$’M
EXCLUDING
IMPACT OF
AASB 16
30 JUNE 2020
$’M
388.3
212.7
(30.2)
(3.5)
358.1
209.2
30 JUNE 2019
$’M
352.8
204.0
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 4.5% to $1,604.8 million.
Underlying EBITDA increased by 1.5% to $358.1 million. Underlying EBIT increased by 2.5% to
$209.2 million.
Performance
The result was impacted by COVID-19 and lower commodity prices, partially offset by reduced
rebates to customers. The introduction of a landfill levy in Queensland on 1 July 2019 resulted
in reduced landfill volumes in Queensland, which were partially offset by higher collections
and resource recovery volumes. We remained disciplined in relation to our gate fees at the
Queensland landfill to ensure we did not give up valuable air space for poor quality volume.
The acquisition of the SKM business was completed during the period. Upgrading of the SKM
assets has been completed enabling Cleanaway to produce higher quality commodities that will
ultimately be reused in new products as we move further towards a circular economy.
A fire occurred at the Perth Material Recycling Facility on 25 November 2019. The clean-up of
the Perth Material Recycling Facility was completed in the second half of the year ended 30 June
2020 and we are continuing to work with our customers to develop alternative solutions while
our new facility is being constructed. Completion is targeted for the second half of the year
ending 30 June 2021 assuming no COVID-19 related disruptions. Once complete, it will deliver a
better and high-quality recycling service to the Perth market.
During the period, Cleanaway successfully tendered for both the City of Casey (Melbourne’s
largest municipality) and the South Australian Council Solutions contracts.
The WA regional CDS scheme “Containers for Change” is expected to commence on 1 October
2020 with Cleanaway providing logistics and processing services.
1
2
EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
3 7
Directors’ ReportCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Operating and financial review (continued)
Review of Operations (continued)
Industrial & Waste Services
Underlying EBITDA
Underlying EBIT
Core business
INCLUDING
IMPACT OF
AASB 16
30 JUNE 2020
$’M
IMPACT OF
AASB 16
30 JUNE 2020
$’M
EXCLUDING
IMPACT OF
AASB 16
30 JUNE 2020
$’M
45.9
21.4
(1.0)
–
44.9
21.4
30 JUNE 2019
$’M
46.6
22.5
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 decreased by 8.3% to $313.4 million and Underlying EBITDA decreased by 3.6%
from $46.6 million to $44.9 million. Underlying EBIT decreased by 4.9% from $22.5 million
to $21.4 million.
Performance
Whilst revenues decreased in the Industrial & Waste Services segment, margins improved at
both the EBITDA and EBIT levels as a result of a focus on higher margin contracts and exiting
low margin contracts. This segment also benefited from the acceleration of the final phase of
the Toxfree integration and improved performance in the parts of the segment exposed to the
resources sector.
Liquid Waste & Health Services
Underlying EBITDA
Underlying EBIT
INCLUDING
IMPACT OF
AASB 16
30 JUNE 2020
$’M
IMPACT OF
AASB 16
30 JUNE 2020
$’M
EXCLUDING
IMPACT OF
AASB 16
30 JUNE 2020
$’M
106.3
64.3
(8.4)
(1.2)
97.9
63.1
30 JUNE 2019
$’M
86.9
54.0
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 3.8% to $513.6 million and underlying EBITDA increased by 12.7%
from $86.9 million to $97.9 million. Underlying EBIT increased by 16.9% from $54.0 million
to $63.1 million.
Performance
Hydrocarbons performed strongly on the back of improved volume and production efficiencies
following recent plant upgrades, offset by lower global oil prices in the last quarter.
Health Services continues to grow with the re-signing of some of its major customers
for a further three to five years. This business remains on track to deliver on our strategic
expectations.
Packaged and bulk hazardous waste streams continue to grow both revenue and earnings
following the integration of Toxfree.
3 8
Directors’ Report Operating and financial review (continued)
Key business strategies and prospects
Our Cleanaway Way, which has been refined over the years, is the Group’s strategy on a page and it represents the business
that Cleanaway is today. It was designed to create a common language and narrative across the organisation and ensure all
employees are aligned in their efforts to execute the following strategic business objectives:
Delivering Footprint 2025
Cleanaway’s Footprint 2025 strategy, which was developed in 2016, is a plan to optimise the waste value chain from
collection to disposal, with a particular focus on resource recovery. Through that strategy, Cleanaway continues to
strengthen its network of prized infrastructure assets that are key parts of the infrastructure necessary to sustainably manage
the waste generated across Australia. These infrastructure assets also provide a strategic moat to the business. During
the financial year the Group completed the integration of the Toxfree business and the acquisition of the SKM Recycling
business. While the decisions being made today are underpinned by existing market economics, momentum is building
amongst policy makers in relation to Australia’s waste management. As the targets and actions in the National Waste Policy
Action Plan 2019 are implemented, Cleanaway expects further investment opportunities to emerge. These will complement
the opportunities the Group continues to investigate with its customers in helping them achieve their sustainability goals.
The pursuit of a circular economy
The Group’s journey in pursuit of a circular economy continues and in the coming years Cleanaway is pursuing a number
of key projects that are strategically important for its business. The Group’s energy-from-waste project in western Sydney
provides a more environmentally friendly solution to Sydney’s growing waste disposal needs. It also supports Cleanaway’s
preference for internalisation of waste and enhances the service offering to our customers in that region. Subject to final
investment decision, which will require a significant portion of the processing capacity to be underpinned by long-term
contracts, it will be one of Cleanaway’s largest single asset investments to date. The Group has also entered into a joint
venture to develop a plastic pelletising plant in Albury, NSW. This facility will provide an opportunity to extract greater value
from the plastics Cleanaway currently recover. The location of the plant will provide access to both the New South Wales and
Victorian markets for feedstock and customers. While the project will initially produce PET plastic pellets, Cleanaway will also
investigate the commercial viability of recycling other plastics. With each of these projects Cleanaway has partnered with
organisations that bring complementary skills and experience in order to build and develop internal capability and de-risk the
investments.
A strong customer service culture
Cleanaway’s strategy is most successful when it is complemented by a strong customer service culture. The Group has been
working hard to deliver service levels that meet and exceed our customers' expectations. As the business has, and continues
to grow organically and through acquisition, Cleanaway has been dynamic and adaptive in its response to improve customer
service levels. The Group continues to work on simplifying our systems and processes. Over the coming years Cleanaway will
be pursuing a digitisation strategy that is fit for purpose and will meet the evolving needs of our business and customers.
Maintain our strong balance sheet
The Group’s balance sheet remains strong and Cleanaway will continue to maintain its culture of financial discipline. The
Group’s debt and gearing levels are within target levels, with a net debt to underlying EBITDA ratio of 1.46 times (measured
on a pre AASB 16 basis in line with our banking covenants). This is a level that provides the Group the flexibility needed
in the future to fund selected earnings accretive projects and acquisitions.
Identifying accretive investment opportunities
Cleanaway believes the industry will continue to consolidate and as the leading integrated waste management company
in Australia, it will assess opportunities that align with its strategy. Cleanaway is in a strong financial position that creates
flexibility and allows a quick and decisive response to emerging opportunities.
Optimisation of margins across the business
The Group's ability to understand its customers’ needs and improve customer satisfaction, internalisation of waste, synergies
through acquisitions and continuous improvement in the Group’s operations should be an improvement in the quality of our
earnings and the long-term profitability of the business.
3 9
Directors’ ReportCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Operating and financial review (continued)
Principal risks
The Board has adopted a Risk Management, Compliance and Assurance Policy that sets out Cleanaway’s commitment
to proactive enterprise risk management and compliance. The policy is supplemented by an Enterprise Risk Management
Framework that seeks to embed risk management processes into Cleanaway’s business activities. The material business
risks that could adversely impact the Group’s financial prospects in future periods and the broad approach Cleanaway
takes to manage these risks are outlined below. These risks are not to be taken to be a complete or exhaustive list of the
risks Cleanway is exposed to nor are they listed in order of significance.
RISK
DESCRIPTION
MITIGATION
Economic
growth
Regulatory
environment
Integration of
acquisitions
Cleanaway provides its services and products to
individuals, companies and government across
a range of economic sectors in Australia. Changes
in the state of the economy and the sectors of the
economy to which the Group is exposed may have
an adverse impact on the demand and pricing for
Cleanaway’s services and products and the Group's
operating and financial performance. 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.
Cleanaway’s operations are subject to a variety
of federal, state and local laws and regulations
in Australia. These laws and regulations establish
various standards about the types of operations
that can be undertaken and the manner in which
they are undertaken. Regulatory requirements
which have impacted historical results include
state-based waste levies, carbon tax, environmental
regulation and planning regulations. Changes in
regulatory requirements or failure to comply with
conditions of permits and licences could adversely
affect Cleanaway’s ability to continue operations on
a site and in turn the Group's financial performance.
There are potential integration risks associated
with any acquisition, including due diligence risks,
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 acquisitions
are lower than anticipated. Any failure to fully
integrate the operations of an acquired business,
or failure to achieve anticipated synergies, could
adversely impact the operational performance and
profitability of the Group.
To the extent possible, the Group manages
these risks by incorporating a consideration
of economic conditions and future
expectations into its corporate and financial
plans.
Cleanaway manages these risks by
developing and implementing appropriate
systems, policies and procedures to ensure
compliance with applicable regulatory
requirements. Furthermore, to the
extent possible, the Group incorporates
consideration of changes in regulatory
requirements into its corporate and financial
plans and forecasts.
Cleanaway manages these risks by putting
in place dedicated resources to manage and
monitor the integration process and closely
monitors the timing, quantum and cost to
achieve synergies from acquisitions.
4 0
Directors’ Report Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Sustainability
risks
Environment
risks
Financial risks
Health and
Safety
Attract and
retain key
management
Cleanaway faces a variety of risks that could
impact on its sustainability. How risk is managed is
integral to ensuring the Group achieves its vision of
making a sustainable future possible. Sustainability
encompasses building a resilient business
focussed on sustainable performance, investing in
people and relationships with customers and the
communities in which Cleanaway work, and leading
industry to leave the planet in better shape for
future generations. One such risk that Cleanaway
managed is its response to the COVID-19 pandemic.
Managing these risks effectively is critical to
ensuring that Cleanaway maintains its social licence
to operate in the communities in which it has
significant operations.
There is potential for damage to the environment
arising from Cleanaway’s operations. If mishandled,
waste can pose hazards to the environment, such
as contaminating waterways, harmful air emissions,
and fires. Failing to operate in accordance with
environmental standards not only has the potential
to result in environmental harm but also increases
compliance costs, jeopardises our social license to
operate, and causes reputational damage with our
stakeholders and investors.
Cleanaway is exposed to a variety of financial
risks, including credit risk, adverse movements in
interest rates and foreign currency exchange rates,
as well as liquidity risk. These risks may have an
adverse effect on the Company’s operating and
financial performance.
Cleanaway manages these risks in
accordance with its enterprise-wide
risk managing framework. This includes
regularly reviewing its risk tolerance, the
risks that have been identified as well as
how they are being managed. Cleanaway
has and continues to manage its operations
efficiently and effectively through the
COVID-19 pandemic to protect the safety
of our employees, continue to service our
customers and ensure the business remains
sustainable.
Upholding the highest standards in
environmental performance is crucial to the
success and sustainability of our business.
Our collection, sorting, treatment and
disposal processes are designed to mitigate
the risk of these hazards. Our Environmental
Policy sets out our aim of ‘Zero Harm’ to
the environment and our commitment to
upholding and continuing to improve our
environmental standards for the benefit
of the environment, our employees,
stakeholders and the community.
Information on how Cleanaway manages
these financial risks is included in note 33 to
the Financial Statements.
Cleanaway’s operations involve risks to both
property and personnel. A health and safety
incident may lead to serious injury or death, which
may result in reputational damage and adverse
operating impacts with consequential effects to
Cleanaway’s financial performance and position.
Cleanaway manages these risks by
developing and implementing appropriate
strategies, systems, policies and procedures
in respect of operational health and safety
matters to ensure compliance with legal and
regulatory obligations.
Cleanaway’s operations are dependent upon
the continued performance, efforts, abilities
and expertise of its senior management. The
loss of services of such personnel may have an
adverse effect on the operations of Cleanaway
as the Company may be unable to recruit suitable
replacements within a short timeframe.
Cleanaway has in place human resource
strategies and remuneration and
employment policies to attract, retain and
motivate executives and align their interests
with those of stakeholders.
4 1
Directors’ ReportCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Operational risks
A prolonged and unplanned interruption to
Cleanaway’s operations could significantly
impact the Company’s financial performance and
reputation. Cleanaway is exposed to a variety
of operational risks, including risk of site loss or
damage, environmental and climatic events, global
pandemic risks, industrial disputes, technology
failure or incompetency and systems security or
data breaches.
Operational risks also include the ability of
Cleanaway to continue to build a strong customer
service culture to ensure we service and retain our
customers.
Climate change
Climate change is an emerging risk and presents
complex challenges for companies, governments
and society. We believe that the transition to
a zero-carbon economy presents opportunities
for our business as well as risks. These risks
include decarbonisation of the economy leading
to contraction in carbon-intensive industries; the
introduction of a carbon price; and an increase
of frequency and severity of extreme weather
events. Opportunities for Cleanaway may include
increased regulation to reduce embodied carbon
emissions favouring the domestic recycling
industry, and increased incentives to invest
in energy-from-waste plants.
Cleanaway has a range of controls and
strategies in place to manage such risks,
including site business continuity and
crisis management plans, inspection and
maintenance procedures, compliance
programs, training, site and business
interruption insurance and systems security
testing and improvements.
Customer requirements and service levels
for the treatment and recycling of waste
are constantly changing. There is an
heightened expectation from customers for
waste providers to fulfil requirements for
appropriate disposal/recycling of waste once
collected. By understanding our customers
needs and executing on this, Cleanaway can
use our capability as a differentiator to drive
growth and value.
Cleanaway has committed to align with
the Taskforce on Climate-Related Financial
Disclosures (TCFD) framework. The TCFD
recommends companies assess and disclose
the financial impacts of climate-related
risks and opportunities. Our Sustainability
Report will set out our first response to the
TCFD recommendations. Cleanaway has
developed a three-year plan to improve our
management and disclosure of climate-
related risks and opportunities. A major part
of this will be to incorporate climate change
into our ongoing strategic decision making.
In the year ending 30 June 2021 we will
strengthen our governance capability and
perform a deep-dive analysis into our key
transitional risks to better understand how
to mitigate or manage these impacts.
Commodity
risks
Cleanaway is exposed to changes in the prices
of commodities, particularly paper, cardboard,
glass and plastics from recycling activities. The
demand for, and the price of, commodities is
highly dependent on a variety of factors, including
international supply and demand, the price
and availability of substitutes, actions taken by
governments such as China’s National Sword policy,
and global economic and political developments.
Cleanaway closely monitors global
commodity markets and market conditions
relating to production of commodities to
minimise potential exposures to commodity
risks.
Collection contracts are also economically
hedged via the use of rebates linked to
underlying commodity prices.
Cyber risks
Cleanaway, like any large organisation faces
an ever-changing cyber security threat, and
needs to prevent, detect and respond to cyber
security threats by maintaining a high standard of
information security control.
Cleanaway’s information technology
processes and systems are subject to regular
review, both internal and external, and
maintenance to actively prepare for, monitor
and respond to potential threats. Business
continuity plans are in place and assessed
on an ongoing basis.
4 2
Directors’ Report Significant changes in the state of affairs
Other than matters mentioned in this Report, no other significant changes in the state of affairs of the Group occurred
during the financial year ended 30 June 2020.
Events subsequent to reporting date
There have been no matters or circumstances that have arisen since 30 June 2020 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 and Financial Review section of this Report.
Environmental regulation
The Group’s operations are subject to significant environmental regulation and the Group holds environmental licences
for its sites.
The Group is committed to achieving the highest standards of environmental performance. There were no material breaches
of environmental statutory requirements and no material prosecutions during the year. Aggregate fines paid during the year
to the date of signing this Annual Report were $65,276 (2019: $71,568).
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
SUSTAINABILITY
COMMITTEE 6
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
S L Hogg 5
10
10
10
10
10
10
10
5
10
10
10
10
10
8
10
5
–
–
5
5
5
–
5
3
–
–
5
5
5
–
5
3
–
–
–
4
–
4
4
–
–
–
–
4
–
4
4
–
–
–
4
–
4
4
–
–
–
–
4
–
4
4
–
–
1 Chairman of the Board.
2 Chairman of Audit and Risk Committee.
3 Chairman of Remuneration and Nomination Committee.
4 Chairman of the Sustainability Committee.
5 Appointed Non-Executive Director on 1 November 2019.
6
Renamed Sustainability Committee on 14 August 2019, previously named the Health, Safety and Environment Committee.
4 3
Directors’ ReportCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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
S L Hogg
ORDINARY
SHARES
PERFORMANCE
RIGHTS
156,548
–
5,504,751
3,849,511
123,720
125,688
49,417
29,696
82,715
–
–
–
–
–
–
–
Shares under option and performance rights
During the financial year ended 30 June 2020 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 2020 and
2019 financial years are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2020
are 10,315,392 (2019: 13,025,041). Performance rights outstanding at the date of this report are 10,094,417.
Shares issued on the exercise of performance rights
During the financial year ended 30 June 2020 and up to the date of this report, the Company issued 4,604,526 shares
as a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June
2019 and up to the date of the 2019 report, the Company issued 4,880,729 ordinary shares as a result of the exercise
of performance rights that vested on 30 June 2019.
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.
Nonaudit 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 2020, non-audit services provided by Ernst & Young included other advisory services relating to the Group’s
Sustainability Report.
The Directors have considered the position and in accordance with written advice provided by resolution from the Audit and
Risk Committee, are satisfied that the provision of the non-audit services is compatible with, and did not compromise, the
auditor independence requirements of the Corporation Act 2001 for the following reasons:
• The value of non-audit services of $248,068 provided by Ernst & Young during the period was not significant,
representing less than 13.5% of the total services;
• All non-audit services were subject to the corporate governance procedures adopted by the Company to ensure they
do not impact the integrity and objectivity of the auditor; and
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants, as they did not involve the reviewing or auditing the auditor’s
own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the
Company or jointly sharing risks and rewards.
4 4
Directors’ Report Nonaudit services (continued)
Ernst & Young:
Audit services
Audit related services
Non-audit services:
Other advisory services
Total
2020
$
2019
$
1,315,526
1,301,343
277,585
81,891
248,068
–
1,841,179
1,383,234
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 63.
Auditor rotation
On 30 June 2020, on the recommendation of the Audit and Risk Committee, the Directors granted an approval for the
extension of the Group’s audit partner, Brett Croft, for a further one year when the initial five years as permitted under the
Corporations Act 2001 (the Corporations Act) expired in June 2020. The Audit and Risk Committee’s recommendation was
based on the following reasons:
• The Committee is satisfied that it would not give rise to a conflict of interest situation as defined in section 324CD of the
Corporations Act due to the auditor independence policies operated by Ernst & Young and the Company;
•
•
•
The Committee is satisfied with the skills and personal qualities of the audit partner which are consistent with
maintaining the quality of the audit provided to the Company;
The Committee is satisfied that the audit partner’s knowledge of the Company will assist to provide the Board with
an appropriate level of independent assurance given the significant projects and transactions that are underway; and
Given the potential impact of COVID-19 on audit activities, processes and planning, in particular that the June 2020
audit was executed remotely, the Committee considers that continuity of the existing audit partner to be prudent
and appropriate.
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 46 to 62, is made in accordance with a resolution
of the Board.
M P Chellew
Chairman and Non-Executive Director
V Bansal
Chief Executive Officer and Managing Director
Melbourne, 25 August 2020
4 5
Directors’ ReportCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Contents
The Report contains the following sections:
1.
2.
3.
4.
5.
6.
7.
8.
Key management personnel
Governance and role of the Board
Non-Executive Directors’ remuneration
Executive reward strategy and framework
Executive key management personnel – reward outcomes
Executive key management personnel – contract terms
Executive key management personnel – additional remuneration tables
Shareholdings and other related party transactions
PAGE
47
48
49
50
52
59
60
62
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 2020. 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.
Overview and context for the remuneration outcomes set out in this Report
Over the last financial year, Cleanaway has continued to perform strongly, with increases in: Underlying Net Profit after
Tax (NPAT); Earnings before Interest and Tax (EBIT); Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA);
Earnings per Share (EPS); and Dividend payments. These results continue the trend of improvements in both quality and
quantity of earnings since the year ended 30 June 2015.
The Group have also delivered on key strategic initiatives, such as completion of the Toxfree integration, the acquisition of
the SKM recycling business, remediation and rectification of legacy landfills and enhancing our resource recovery capabilities
in line with our Footprint 2025 Strategy. These financial and strategic outcomes were delivered in the context of challenging
market and operating conditions, in particular the impact of the COVID-19 pandemic.
Restrictions imposed to reduce the spread of COVID-19 disrupted the Group’s operations and reduced the demand for
services in some segments in the final quarter of the year. During that period, Cleanaway continued to provide consistent
services to customers in its capacity as an essential service provider.
In response to these challenges, Cleanaway prioritised the health and safety of employees, continuity of employment for
team members and the servicing of its customers. Cleanaway has not received any direct assistance from government
to support the profitability of its operations during the COVID-19 pandemic and does not benefit from the federal
government’s JobKeeper program. As the new financial year commences, uncertainty in relation to the impact of COVID-19
continues, but Cleanaway continue to focus on these priorities in providing services to its customers.
With this context, the Directors have carefully considered the remuneration outcomes set out in this Report and have sought
to ensure that they align with shareholders’ experience and market expectations.
Whilst Cleanaway continued to improve its performance across key financial metrics during the course of the year, the
impact of COVID-19 in the final quarter of the year resulted in below target outcomes for KMP that participate in the
Company’s STI program. Similarly, although health and safety performance improved during the course of the year, as
measured by the Group’s Total Recordable Injury Frequency Rate (TRIFR), Executives were not eligible for STI payments
related to this metric due to work-related road accidents leading to fatalities that occurred resulting from the Group’s
operations.
Notwithstanding the impact of COVID-19 in the final quarter of the year ended 30 June 2020, the Group’s outperformance
on the LTI relative TSR and EPS growth metric hurdles over the three year performance period resulted in an above target
outcome for Executive KMP that participated in the LTI Plan. The Group’s performance in relation to these metrics is set out
in the tables below and detailed elsewhere in this Report.
Given the impact of COVID-19 on the Group and the uncertainty regarding its continued impact, the Directors have also
determined that it is not appropriate to increase Non-Executive Director fees at this time.
4 6
Remuneration Report (Audited) Introduction (continued)
Given the Group’s overall performance in the year ended 30 June 2020 (FY20) and in the context of the impact of the
COVID-19 pandemic, the Directors of Cleanaway consider that there is appropriate alignment between Cleanaway
shareholders’ experience over FY20 and the remuneration outcomes for KMP as 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 Industrials Acc Index
CWY
ASX 200 Industrials Sector Index
30 June
2016
31 December
2016
30 June
2017
31 December
2017
30 June
2018
31 December
2018
30 June
2019
31 December
2019
30 June
2020
EPS 1 (cents)
6.9
7.5
5.3
4.7
3.9
Dividends Per Share (cents)
4.10
3.55
2.50
2.10
1.70
ROIC 2 (%)
5.2
4.8
5.4
5.6
4.2
FY16
FY17
FY18
FY19
FY20
FY16
FY17
FY18
FY19
FY20
FY16
FY17
FY18
FY19
FY20
1
2
Basic EPS on underlying results. FY20 excludes the impact of AASB 16 to enable consistent comparison.
Return on Invested Capital calculated is tax effected EBIT divided by average net assets plus net debt. FY20 excludes the impact of AASB 16 to enable
consistent comparison.
1 Key management personnel
For the purposes of this Report, KMP are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether Executive
or otherwise) of the Company.
KMP for the year ended 30 June 2020 includes the Non-Executive Directors, the Chief Executive Officer (CEO) and Managing
Director, the Chief Financial Officer (CFO), the Executive General Manager – Solids Waste Services and the Executive General
Manager – Liquid Waste & Health Services and Industrial & Waste Services.
The KMP disclosed in this Report for the year ended 30 June 2020 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
S L Hogg 1
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
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 and Industrial & Waste Services
1 Ms Hogg was appointed Non-Executive Director on 1 November 2019.
4 7
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 2 Governance and role of the Board
2A. Remuneration and Nomination Committee
The Remuneration and Nomination Committee (Committee) assists the Board in its oversight of the Group’s remuneration
and incentives strategy and arrangements; recruitment; retention and succession plans for the Board and executive
management team; corporate culture and engagement; and diversity and inclusion strategy.
The Committee’s charter is available online at: http://www.cleanaway.com.au/for-investors/corporate-governance/
The Committee is comprised entirely of independent Non-Executive Directors: Mike Harding (Chairman), Ray Smith,
Terry Sinclair and Samantha Hogg. 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 received and approved 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.
During the year ended 30 June 2020, remuneration consultants were engaged to provide services to the Group, including
the provision of benchmarking data for the senior executive team and Non-Executive Directors, equity incentive design and
LTI target setting. The fees paid for these services were $57,500 (2019: nil).
4 8
Remuneration Report (Audited) 3 Non-Executive Directors’ remuneration
3A. Current Non-Executive Director fees
The remuneration received by Non-Executive Directors for the years ended 30 June 2020 and 30 June 2019 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
S L Hogg
Total
FINANCIAL YEAR
SALARY AND FEES
$
SUPERANNUATION
BENEFITS
$
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2019
348,997
309,469
184,018
168,950
165,297
149,772
165,297
149,772
175,799
159,361
184,150
159,361
106,088
1,329,646
1,096,685
21,003
20,531
17,482
16,050
15,703
14,228
15,703
14,228
16,701
15,139
8,350
15,139
10,078
105,020
95,315
TOTAL
$
370,000
330,000
201,500
185,000
181,000
164,000
181,000
164,000
192,500
174,500
192,500
174,500
116,166
1,434,666
1,192,000
3B. Aggregate fee limit
The current aggregate amount of remuneration that can be paid to Non-Executive Directors is $1,500,000 was approved
by shareholders at the Company’s 2018 Annual General Meeting.
For the year ended 30 June 2020, the aggregate remuneration paid to all Non-Executive Directors was $1,434,666.
This represents an increase of 20.4% compared with the year ended 30 June 2019. This is due to a new director, Samantha
Hogg, joining the Board in November 2019 and an increase in Non-Executive Director and Chairman base fees and
Committee membership fees in the year ended 30 June 2020.
The Board has conducted a review of the maximum aggregate fee limit for Non-Executive Directors and recommended
that shareholders approve the proposed increase of the aggregate fee limit by $400,000 to $1,900,000. An increase in the
aggregate fee limit will provide the Board with greater flexibility to implement succession planning strategies and is in line
with the aggregate fee limit of comparable companies. The proposed increase in the aggregate fee limit will be presented to
shareholders for their approval at the Company’s 2020 Annual General Meeting.
3C. Fee structure
The fee structure (inclusive of superannuation) for the year ended 30 June 2020 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
370,000
154,000
AUDIT AND
RISK COMMITTEE
$
34,000
13,500
SUSTAINTABILILTY
COMMITTEE
$
25,000
13,500
REMUNERATION AND
NOMINATION COMMITTEE
$
25,000
13,500
Following the review of Non-Executive Director fees undertaken during the year and in light of the overall economic climate
as a result of the COVID-19 pandemic, the Board has determined that its fee structure will remain unchanged for the year
ended 30 June 2021. However, the Board 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.
4 9
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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 Group performance,
business unit and
individual performance
20% of STI outcome is
deferred as Performance
Rights (for certain
senior executives)
Performance Rights are
restricted for one year
LTI Performance Rights
subject to performance
conditions over three years
50% subject to TSR
50% subject to EPS CAGR
ROIC in year three acts as
gateway to EPS achievement
5 0
Remuneration Report (Audited) 4 Executive reward strategy and framework (continued)
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 2020, the target remuneration mix for Executive KMP remained
unchanged from the previous year and is illustrated below.
REMUNERATION MIX AT TARGET
CEO
40.0%
24.0%
6.0%
30.0%
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.
5 1
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 5 Executive key management personnel – reward outcomes
5A. Remuneration received
The remuneration received or receivable by Executive KMP for the years ended 30 June 2020 and 30 June 2019 is set out
in the following table:
V Bansal 2
B J Gill
M Crawford
T Richards
Total
FINANCIAL
YEAR
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
SALARY
AND FEES
$
1,447,747
1,331,031
696,463
671,750
590,139
585,015
471,810
401,446
3,206,159
339,769
803,099
145,344
294,222
126,801
238,078
100,421
184,001
712,335
2,989,242
1,519,400
STI
CASH
$
NON-
MONETARY
BENEFITS
$
POST
SHARE-BASED
PAYMENTS 1
$
EMPLOYMENT
BENEFITS
$
90,402
93,086
709,207
2,126,627
–
–
–
–
–
–
90,402
93,086
123,714
511,732
108,975
442,462
23,836
159,299
965,732
3,240,120
21,003
20,531
21,003
20,531
21,003
20,531
21,003
18,820
84,012
80,413
PERFOR-
MANCE
RELATED
40.2%
67.0%
27.3%
53.8%
27.8%
52.9%
20.1%
45.0%
TOTAL
$
2,608,128
4,374,374
986,524
1,498,235
846,918
1,286,086
617,070
763,566
5,058,640
7,922,261
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 2020,
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.
FY2020 Total Fixed Remuneration outcomes
Executive KMP TFR was reviewed during the annual remuneration review with the following increases effective 1 October 2019:
• Mr Bansal’s TFR was increased from $1,375,000 to $1,500,000;
• Mr Gill’s TFR was increased from $704,260 to $721,867;
• Mr Crawford’s TFR was increased from $611,426 to $629,769; and
• Mr Richards’ TFR was increased from $475,000 to $498,750.
5C. FY2020 Short-term Incentive
For the year ended 30 June 2020, 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 2020:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
M Crawford
T Richards
5 2
FY2020
TARGET
FY2020
MAXIMUM
75%
50%
50%
50%
150%
100%
100%
100%
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes (continued)
5C. FY2020 Short-term Incentive (continued)
Key features of the FY2020 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 2019 to 30 June 2020.
Gateway
• Achievement of a gateway based on budgeted Group EBIT for Executive KMP. The use
of EBIT 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
or key strategic non-financial objectives.
Key performance
metrics
• Financial metrics: 80% weighting.
• HSE metrics: 20% weighting.
Financial metrics
• Financial metrics and their respective weightings are:
– Group EBIT: 30% weighting.
Health, Safety &
Environment (HSE)
metrics and gateways
– Group Net Revenue: 20% weighting. Included as it reflects growth in our business.
– Group Net Profit After Tax Return on Invested Capital (NPAT ROIC): 30% weighting.
Included as it 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.
• There is a gateway condition for the TRIFR metric, which is that there are no work-
related fatalities.
• Group Environment Incident metric has a target level performance and outcome only,
which is that there are no significant or major rated environmental incidents.
Performance outcomes
• Once gateways are achieved, performance against the financial and health & safety
metrics have the following threshold, target and stretch STI outcomes:
– Below threshold – 0%.
– At threshold – 75% of on-target STI opportunity.
– At target – 100% of on-target STI opportunity.
– At stretch – 200% of on-target STI opportunity.
Deferral
• 20% of STI awarded to Executive KMP and 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 five-day volume
weighted average price of Cleanaway’s shares on the ASX during the period 24 June
to 30 June 2020.
• Performance rights do not attract dividends during the deferral period.
5 3
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 5 Executive key management personnel – reward outcomes (continued)
5C. FY2020 Short-term Incentive (continued)
FY2020 Short-term Incentive outcomes
The following table details 2020 STI scorecard measures and assessment applied to Executive KMP.
ELEMENT
MEASURE
2020 PERFORMANCE ASSESSMENT
Gateway to STI
Scorecard KPIs
Group EBIT – Threshold of on-target budget
Group Net Revenue
Group ROIC
Group TRIFR
Group Environmental Incidents
Slightly above threshold
Not achieved
Just below target
Not achieved
Not achieved
The STI payments received or receivable by Executive KMP for the year ended 30 June 2020 are summarised in the following table:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal 3
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
2020
2019
2020
2019
2020
2019
2020
2019
424,711
1,003,873
181,680
367,775
158,501
297,597
125,526
230,000
339,769
803,099
145,344
294,222
126,801
238,078
100,421
184,001
84,942
200,774
36,336
73,553
31,700
59,519
25,105
45,999
38%
97%
50%
104%
50%
97%
50%
97%
19%
50%
26%
54%
26%
50%
26%
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.
3 Due to COVID-19 related challenges faced by the Group, Mr Bansal offered to forgo his STI and the Board has agreed to reduce Mr Bansal’s FY20 STI
outcome by 25%.
5D. Prior year Short-term incentive awards
As participants in the FY2019 STI, Executives considered KMP during the year ended 30 June 2019 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 FY2019 STI deferred component performance rights vested on 30 June 2020 (85,907);
• Mr Gill’s FY2019 STI deferred component performance rights vested on 30 June 2020 (31,472);
• Mr Crawford’s FY2019 STI deferred component performance rights vested on 30 June 2020 (25,467); and
• Mr Richard’s FY2019 STI deferred component performance rights vested on 30 June 2020 (19,682).
5E. FY2020 Long-term incentive
Offers under the Cleanaway Long-Term Incentive (LTI) Plan are made on an annual basis. During the year ended
30 June 2020, an LTI offer was made to Mr Bansal following shareholder approval at the Company’s 2019 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
5 4
FY2020
TARGET
FY2020
MAXIMUM
75%
30%
30%
30%
150%
60%
60%
60%
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes (continued)
5E. FY2020 Long-term Incentive (continued)
The details of the FY2020 LTI offer are summarised in the table below. The number of performance rights granted to each
Executive KMP for the year ended 30 June 2020 is outlined in section 7A. The number of performance rights each Executive
KMP had on issue as at 30 June 2020 is outlined in section 7B.
Key features of the FY2020 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 2019 to 30 June 2022.
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 24 June to 28 June 2019.
Performance hurdles
Performance rights issued under the FY2020 plan are subject to two 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; and
• 50% 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.
• The Return On Invested Capital (ROIC) for year ending 30 June 2022 acts as a gateway
to EPS CAGR.
Vesting date
14 days after the release of the financial results for the financial year ending 30 June 2022.
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 2020
2,264,786
5 5
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 5 Executive key management personnel – reward outcomes (continued)
5E. FY2020 Long-term Incentive (continued)
FY2020 LTI performance hurdle vesting conditions
Performance rights issued under the FY2020 plan are subject to two performance measures with the following performance
vesting schedules:
Relative TSR performance
measured over three
years from 1 July 2019
to 30 June 2022
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
Nil
50%
Greater than 50th percentile and up to
(and including) 75th percentile
Straight line pro rata vesting between
50% and 100%
Above 75th percentile
100%
EPS CAGR performance
measured over three
years from 1 July 2019
to 30 June 2022
Gateway: Performance Rights under EPS CAGR will only vest if ROIC is at least
5.8% or more for the Financial Year ending 30 June 2022
Cleanaway EPS CAGR
Percentage of EPS CAGR performance
rights that vest
Less than 9%
At 9%
Nil
20%
Greater than 9% and up to
(and including) 10.5%
Straight line pro rata vesting between
20% and 50%
Greater than 10.5% and up to
(and including) 12.5%
Straight line pro rata vesting between
50% and 100%
Above 12.5%
100%
5 6
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes (continued)
5F. Prior Long-term Incentive awards
The following table outlines the terms of prior LTI offers outstanding:
Performance
period
FY2018 LTI 1
FY2019 LTI 1
Three years: 1 July 2017 to 30 June 2020
Three years: 1 July 2018 to 30 June 2021
Overview
Performance rights vesting subject to:
Performance rights vesting subject to:
Relative TSR
performance
hurdles
• Relative TSR (50%)
• ROIC (25%)
• EPS CAGR (25%)
• Relative TSR (50%)
• ROIC (25%)
• EPS CAGR (25%)
TSR Ranking against the constituents of the S&P/ASX200 Industrial Sector Index:
• Below 50th percentile – 0% vesting
• At the 50th percentile – 50% vesting
• 50th to 75th percentile – straight line vesting between 50% and 100%
• Above 75th percentile – 100% vesting
ROIC performance
hurdles
ROIC:
ROIC:
• Below 5.25% – 0% vesting
• Below 6.25% – 0% vesting
• 5.25% – 20% vesting
• 6.25% – 20% vesting
• 5.25%–5.75% – straight line vesting
• 6.25%–6.75% – straight line vesting
between 20% and 50%
between 20% and 50%
• 5.75%–6.5% – straight line vesting
• 6.75%–7.25% – straight line vesting
EPS CAGR
performance
hurdles
between 50% and 100%
• 6.5% – 100% vesting
EPS CAGR:
• Below 7.5% – 0% vesting
• At 7.5% – 20% vesting
between 50% and 100%
• 7.25% – 100% vesting
EPS CAGR:
• Below 13% – 0% vesting
• At 13% – 20% vesting
• 7.5%–10% – straight line vesting between
• 13%–15% – straight line vesting between
20% and 50%
20% and 50%
• 10%–12.5% – straight line vesting between
• 15%–18% – straight line vesting between
50% and 100%
50% and 100%
• At or above 12.5% – 100% vesting
• At or above 18% – 100% vesting
3,128,655
3,126,207
Number of
performance
rights remaining
on issue at
30 June 2020
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
36 to the Consolidated Financial Statements.
5 7
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 5 Executive key management personnel – reward outcomes (continued)
5F. Prior Long-term Incentive awards (continued)
Prior Long-term Incentive outcomes
FY2018 LTI
The FY2018 LTI was tested as at 30 June 2020. Based on Cleanaway’s relative TSR, ROIC and EPS performance over the
performance period from 1 July 2017 to 30 June 2020, the offer will partially vest – with the relative TSR tranche vesting
at 100%, the ROIC tranche vesting at 39.2% and the EPS CAGR tranche vesting at 100%.
Executive KMP
Mr Bansal, Mr Gill and Mr Crawford all participated in the FY2018 LTI. Therefore, the following performance rights will vest:
• Mr Bansal: 1,166,857 of his FY18 LTI rights will vest;
• Mr Gill: 239,099 of his FY18 LTI rights will vest; and
• Mr Crawford: 214,167 of his FY18 LTI rights will vest.
5G. FY2019-2020 Toxfree Integration Incentive
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) plan was introduced. The purpose of the plan was to reward delivery
of the benefits from the Toxfree acquisition beyond the internal business case. The plan had a threshold level of EBITDA
performance for FY20 that was required to be achieved. Whilst the synergies arising from the Toxfree acquisition have
exceeded the target of $35 million, the FY20 EBITDA performance condition for the plan was not achieved due to the
impact of COVID-19 and other factors. Accordingly, all rights issued under the plan will lapse.
The number of performance rights remaining on issue under the TII plan at 30 June 2020 was 1,574,769.
5 8
Remuneration Report (Audited) 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 2022. The cost to the Group in providing this support
to Mr Bansal for the year ended 30 June 2020 is provided in section 5A.
5 9
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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 2020 is set out in the following table:
YEAR ENDED
30 JUNE 2020
BALANCE AT
1 JULY 2019
NUMBER
EXECUTIVE KEY MANAGEMENT PERSONNEL
RIGHTS
GRANTED
DURING THE
YEAR 1
NUMBER
VALUE OF
RIGHTS
GRANTED
DURING THE
YEAR 2
$
RIGHTS
EXERCISED
DURING THE
YEAR
NUMBER
VALUE OF
RIGHTS
EXERCISED
DURING THE
YEAR 3
$
LAPSED/
CANCELLED
DURING THE
YEAR
NUMBER
BALANCE AT
30 JUNE 2020
NUMBER
V Bansal
B J Gill
M Crawford
T Richards
5,443,633
1,048,638
1,302,970
(2,246,290)
4,629,010
(310,563)
3,935,418
1,182,094
1,048,844
236,596
216,795
187,146
147,725
278,503
239,282
188,599
(485,711)
1,010,632
(434,780)
904,675
–
–
(63,637)
(56,958)
–
849,541
744,252
384,321
1
2
Performance rights were granted under the FY2020 LTI Offer and FY2019 STI deferral on 30 October 2019.
The fair value of performance rights granted to Executive KMP was calculated using Monte Carlo simulation and the Black Scholes Model and is $0.65
to $1.72 per Performance Right under the FY2020 LTI Offer.
3 Calculated as the market value of Cleanaway shares on the date of exercise.
7B. Performance rights as at 30 June 2020
The number of performance rights as at 30 June 2020 by plan for the Executive KMP is set out in the following table:
ISSUED
2019
STI
2018
LTI
2019
LTI
2020
LTI
2019
TIIP
BALANCE AT
30 JUNE 2020
VESTED &
EXERCISABLE
AT THE END
OF THE YEAR
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
M Crawford
T Richards
85,907
31,472
25,467
19,682
1,376,011
1,208,615
281,956
252,556
–
247,616
214,976
167,009
962,731
185,323
161,679
128,043
302,154
103,174
89,574
69,587
3,935,418
849,541
744,252
384,321
85,907
31,472
25,467
19,682
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.
6 0
Remuneration Report (Audited) 7 Executive key management personnel – additional remuneration tables
(continued)
7D. Company performance
The following table shows Cleanaway’s annual performance over the last five years. For further explanation of details
of Cleanaway's performance, see the Operating and Financial review section of Director’s Report.
Net Revenue – $’M 1
Profit 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 – $
FY2016
1,320.7
FY2017
1,350.7
FY2018
1,564.9
44.8
2.8
3.9
1.70
72.5
4.4
4.7
2.10
103.5
5.6
5.3
2.50
FY2019
2,109.1
120.4
5.9
6.9
3.55
FY2020
2,100.1
112.9
5.5
7.5
4.10
1,586,344,605
1,592,889,317 2,036,684,232 2,044,507,391 2,053,944,831
1,269.1
2,198.2
3,442.0
4,763.7
4,518.7
0.80
0.03
1.38
0.58
1.69
0.31
2.33
0.64
2.20
(0.13)
1 Net Revenue is Revenue excluding landfill levies (FY2016: $134.4 million; FY2017: $103.7 million; FY2018: $149.4 million; FY2019: $174.0 million;
2
3
and FY2020: $232.0 million).
Includes underlying adjustments after tax (FY2016: $18.5 million; FY2017: $5.0 million; FY2018: $(5.5) million; FY2019: $20.1 million;
and FY2020: $37.4 million).
The calculation of EPS for comparative periods prior to FY2018 were adjusted to reflect the bonus element in the non-renounceable entitlement offer
which occurred during December 2017 and January 2018 and Underlying EPS excludes the impact of AASB 16 in FY2020.
6 1
Remuneration Report (Audited)CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 8 Shareholdings and other related party transactions
8A. Shareholdings
The movement for the year ended 30 June 2020 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
S L Hogg
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
139,548
103,720
113,568
49,417
16,109
37,756
–
–
–
–
–
–
–
–
3,172,554
2,246,290
17,000
20,000
12,120
–
13,587
44,959
–
–
557,216
386,208
–
485,711
434,780
–
(200,000)
(320,988)
–
156,548
123,720
125,688
49,417
29,696
82,715
–
5,418,844
842,927
500,000
–
8B. Loans to Executive key management personnel
There were no loans to Executive KMP made during the period and no outstanding balances at reporting date.
8C. Other transactions and balances with Executive key management personnel and their
related parties
Some of the Directors hold, or have previously held, positions in companies with which Cleanaway has commercial
relationships which are based on normal terms and conditions on an arm’s length basis. 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.
6 2
Remuneration Report (Audited) 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 2020, 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
25 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
6 3
Auditor’s Independence DeclarationCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Loss on sale of investments
Gain on loss of control of subsidiary
Share of (losses)/profits from equity accounted investments
Depreciation and amortisation expense
Write-off of plant and equipment
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
24
8
9
2020
$’M
2019 1
$’M
2,332.1
2,283.1
34.6
(861.1)
(649.8)
(228.0)
(45.7)
(94.0)
–
1.1
(2.1)
(262.6)
(19.6)
204.9
(49.7)
155.2
(42.6)
112.6
112.9
(0.3)
112.6
7.0
(846.9)
(622.8)
(233.0)
(71.6)
(80.6)
(2.2)
–
0.7
(220.8)
–
212.9
(46.9)
166.0
(45.5)
120.5
120.4
0.1
120.5
1 Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019, as such comparatives have not been restated.
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
6 4
Consolidated Income Statement For the year ended 30 June 2020
Profit after income tax
Other comprehensive income (to be reclassified to profit or loss
in subsequent periods)
Net loss on cross-currency interest rate swaps (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
18
2020
$’M
112.6
2019
$’M
120.5
(0.1)
(0.1)
–
–
112.5
120.5
112.8
(0.3)
112.5
120.4
0.1
120.5
Earnings per share attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
10
10
5.5
5.5
5.9
5.9
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
6 5
Consolidated Statement of Comprehensive Income For the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Equity accounted investments
Net deferred tax assets
Derivative financial instruments
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
2020
$’M
2019 1
$’M
11
12
13
15
25
21
22
23
24
9
33
25
14
9
16
26
27
28
16
26
27
28
17
18
79.8
348.1
19.4
–
23.0
470.3
1,176.1
416.7
2,294.6
34.5
64.2
30.0
23.9
56.2
382.0
19.9
8.8
21.6
488.5
1,232.0
–
2,324.9
3.8
62.7
–
17.3
4,040.0
4,510.3
3,640.7
4,129.2
271.0
257.5
6.5
69.6
71.2
66.7
34.9
17.7
17.1
66.9
86.1
32.2
519.9
477.5
995.8
7.2
287.7
128.7
1,419.4
1,939.3
2,571.0
697.6
5.1
295.8
116.6
1,115.1
1,592.6
2,536.6
2,688.7
2,678.2
23.9
(142.6)
24.0
(167.9)
2,570.0
2,534.3
1.0
2.3
2,571.0
2,536.6
1 Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019, as such comparatives have not been restated.
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
6 6
Consolidated Balance SheetAs at 30 June 2020 PARENT ENTITY INTEREST
RESERVES
$’M
RETAINED
EARNINGS
$’M
NON-
CONTROLLING
INTEREST
$’M
TOTAL
$’M
At 1 July 2019
Adjustment on adoption of AASB 16
Adjusted balance at 1 July 2019
Profit for period
Other comprehensive income
Total comprehensive income for the year
Loss of control of subsidiary
Acquisition of non-controlling interests
Dividends reinvested/(paid)
Balance at 30 June 2020
At 1 July 2018
Adjustment for change in accounting policy
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
ORDINARY
SHARES
$’M
2,678.2
–
2,678.2
–
–
–
–
–
10.5
2,688.7
2,671.0
–
2,671.0
–
–
–
–
–
7.2
2,678.2
24.0
–
24.0
–
(0.1)
(0.1)
–
–
–
(167.9)
2,534.3
(7.6)
(7.6)
(175.5)
2,526.7
112.9
–
112.9
–
(0.1)
(79.9)
112.9
(0.1)
112.8
–
(0.1)
(69.4)
23.9
(142.6)
2,570.0
51.9
(35.5)
16.4
–
–
–
–
7.6
–
24.0
(236.5)
2,486.4
10.4
(25.1)
(226.1)
2,461.3
120.4
120.4
–
–
120.4
120.4
–
–
–
7.6
(62.2)
(55.0)
TOTAL
EQUITY
$’M
2,536.6
(7.6)
2,529.0
112.6
(0.1)
112.5
(0.6)
(0.3)
(69.6)
2,571.0
2,486.4
(25.1)
2,461.3
120.5
–
120.5
2.2
7.6
(55.0)
2.3
–
2.3
(0.3)
–
(0.3)
(0.6)
(0.2)
(0.2)
1.0
–
–
–
0.1
–
0.1
2.2
–
–
(167.9)
2,534.3
2.3
2,536.6
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
6 7
Consolidated Statement of Changes in EquityFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortisation expense
Write-off of plant and equipment
Net finance costs
Share-based payment expense
Remediation and rectification (benefit)/expense
Share of losses/(profits) from equity accounted investments
Net gain on disposal of property, plant and equipment
Net gain on disposal of assets held for sale
Net loss on disposal of investments
Gain on loss of control of subsidiary
Other non-cash items
Net cash from operating activities before changes in assets and liabilities
Changes in assets and liabilities:
Decrease/(increase) in receivables
Increase in other assets
(Increase)/decrease in inventories
Increase in payables
Increase/(decrease) in employee entitlements
(Decrease)/increase 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)
Proceeds from disposal of property, plant and equipment
Investment in equity accounted investments
Proceeds on divestment of equity accounted investments
Proceeds on disposal of non-controlling interests
Proceeds on loss of control of subsidiary (net of cash derecognised)
Dividends received from equity accounted investments
Loans to equity accounted investments
Loans to customers repaid
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Payment of debt and equity raising costs
Payment of dividends to ordinary equity holders
Payment of dividends to non-controlling interests
Net cash used in 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
2020
$’M
2019 1
$’M
155.2
166.0
262.6
19.6
49.7
–
(0.2)
2.1
(4.6)
(8.1)
–
(1.1)
0.3
475.5
28.5
(1.7)
(0.2)
20.7
5.4
(0.4)
(43.6)
484.2
(33.2)
(49.5)
401.5
(200.2)
(9.6)
(84.8)
24.3
(12.0)
–
0.1
2.0
1.2
(3.2)
–
(282.2)
397.6
(365.8)
(55.2)
(2.7)
(69.4)
(0.2)
(95.7)
23.6
56.2
79.8
220.8
–
46.9
5.5
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
11
1 Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019, as such comparatives have not been restated.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
6 8
Consolidated Statement of Cash FlowsFor the year ended 30 June 2020 1 Corporate information
Cleanaway Waste Management Limited and its subsidiaries (Cleanaway or the Group) is domiciled and incorporated in
Australia. The 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 2020 were authorised for issue
in accordance with a resolution of the Directors on 25 August 2020.
2 Statement of compliance
The 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
The Financial Report has been prepared on the basis of historical cost, except for the revaluation of derivative financial
instruments. Cost is based on the fair value of the consideration given in exchange for assets.
The accounting policies and methods of computation adopted in the preparation of the Financial Report are consistent with
those adopted and applied in the corresponding period, except for the change in accounting policy set out in note 41 and
the impact of new and revised standards set out in note 40(u).
At 30 June 2020 the Group had a net current asset deficiency of $49.6 million (30 June 2019: net current asset surplus of
$11.0 million). The net current asset deficiency arises mainly from the implementation of AASB 16 Leases. Current lease
liabilities of $46.8 million related to operating leases not previously recognised on balance sheet are now included on
balance sheet in current interest-bearing liabilities, however the related right-of-use asset is classified as a non-current asset.
The Group has sufficient unutilised committed debt facilities at 30 June 2020 and therefore the Directors are satisfied that
the Group can meet its financial obligations as and when they fall due.
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 40 for a summary of the Group’s significant accounting policies.
6 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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 Financial
Report are:
(a) Recoverable amount of property, plant and equipment, right-of-use assets and intangible assets
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 23 and note 40(e).
(b) Landfill asset depreciation
Landfill assets comprise the acquisition of landfill land, airspace, cell development costs, site infrastructure and landfill site
improvement costs, and remediation assets. Landfill airspace, cell development costs and remediation assets are depreciated
on a usage basis. This depreciation method requires significant estimation of compaction rates, airspace and future costs.
Therefore, changes in these estimates will cause changes in depreciation rates. The depreciation rates are calculated based
on the most up to date accounting estimates and applied prospectively.
Further details on the Group’s landfill asset accounting policy are disclosed in note 40(j).
7 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 4 Critical accounting estimates and judgements (continued)
(c) Lease terms for right-of-use assets and lease liabilities
Extension and termination options are included in lease arrangements across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. In determining the lease term, all facts and circumstances are
considered that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be
extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances
occurs which affects this assessment and that is within the control of Cleanaway.
In determining the lease term, the Group has applied judgement over the facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. All property leases on which a prized asset is
situated are considered reasonably certain to exercise an extension option. Further details on the Group’s lease accounting
policy are disclosed in note 40(n).
(d) Provision for remediation and rectification
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 40(o).
(e) Taxation
Deferred tax assets, including those arising from tax losses not recouped, capital losses and temporary differences, are
recognised in the Consolidated Balance Sheet, only where it is considered more likely than not that they will be recovered,
which is dependent on the generation of sufficient future taxable profits. Management considers that it is probable that
future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits.
These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes
in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities
recognised on the Consolidated Balance Sheet and the amount of other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding credit or charge to the Consolidated Income Statement.
Further details on the Group’s taxation accounting policy are disclosed in note 40(d).
7 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 5 Segment reporting
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.
•
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.
• 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.
Unallocated items include the Group’s share of profits from equity accounted investments and corporate balances. Corporate
balances relate to shared services functions that are not directly attributable to an identifiable segment. These functions
include management, finance, legal, information technology, marketing, and human resources that provide support to the
other segments identified above.
No operating segments have been aggregated to form the reportable segments.
Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable
basis. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected
to be used for more than one period.
The Group has the following allocation policies:
• Sales between segments are on normal commercial terms; and
• Corporate charges are allocated where possible based on estimated usage of corporate resources.
Segment assets and liabilities have not been disclosed as these are not provided to the Chief Operating Decision Maker.
This information is provided at a Group level only.
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.
During the year ended 30 June 2020 the Chief Operating Decision Maker has reviewed internal reports about the Group and
operating segments which included information prepared applying the previous accounting standard AASB 117 Leases. This
information was considered relevant when comparing current year results to the comparative information. For this reason
this information has also been provided in the segment information and is described as “Excluding the impact of AASB 16”.
7 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 5 Segment reporting (continued)
2020
Revenue
Revenue from customers
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Depreciation and amortisation
Underlying EBIT
Material recycling facility fire
Acquisition and integration costs
Gain on sale of property
Employee entitlements
Change in discount rate on provisions
Gain on loss of control of subsidiary
Profit from operations (EBIT)
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
Property, plant and equipment
Intangible assets
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID
WASTE &
HEALTH
SERVICES
$’M
ELIMINA-
TIONS
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVEST-
MENTS
$’M
CORPORATE
$’M
GROUP
$’M
1,549.0
11.8
44.0
1,604.8
388.3
(175.6)
212.7
300.7
–
12.7
313.4
45.9
(24.5)
21.4
450.1
20.5
43.0
513.6
106.3
(42.0)
64.3
–
–
(99.7)
(99.7)
–
–
–
2,299.8
32.3
–
2,332.1
540.5
(242.1)
298.4
–
–
–
–
(2.1)
–
(2.1)
(22.7)
(17.0)
(39.7)
– 2,299.8
32.3
–
–
–
– 2,332.1
515.7
(259.1)
256.6
(14.6)
(36.3)
8.1
(8.0)
(2.0)
1.1
204.9
(49.7)
155.2
(42.6)
112.6
143.8
2.6
20.0
0.1
34.6
–
–
–
198.4
2.7
–
–
1.8
6.9
200.2
9.6
Excluding the impact of AASB 16
2020
Revenue
Revenue from customers
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA
Depreciation and amortisation
Underlying EBIT
Material recycling facility fire
Acquisition and integration costs
Gain on sale of property
Employee entitlements
Change in discount rate on provisions
Gain on loss of control of subsidiary
Profit from operations (EBIT)
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID
WASTE &
HEALTH
SERVICES
$’M
ELIMINA-
TIONS
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVEST-
MENTS
$’M
CORPORATE
$’M
GROUP
$’M
1,549.0
11.8
44.0
1,604.8
358.1
(148.9)
209.2
300.7
–
12.7
313.4
44.9
(23.5)
21.4
450.1
20.5
43.0
513.6
97.9
(34.8)
63.1
–
–
(99.7)
(99.7)
–
–
–
2,299.8
32.3
–
2,332.1
500.9
(207.2)
293.7
–
–
–
–
(2.1)
–
(2.1)
(25.8)
(13.9)
(39.7)
– 2,299.8
32.3
–
–
–
– 2,332.1
473.0
(221.1)
251.9
(14.6)
(36.3)
8.1
(8.0)
(2.0)
1.1
200.2
(40.9)
159.3
(43.8)
115.5
7 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 5 Segment reporting (continued)
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID
WASTE &
HEALTH
SERVICES
$’M
ELIMINA-
TIONS
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVEST-
MENTS
$’M
CORPORATE
$’M
GROUP
$’M
1,490.6
12.7
33.0
1,536.3
352.8
(148.8)
204.0
324.6
0.2
17.1
341.9
46.6
(24.1)
22.5
434.2
20.8
40.0
495.0
86.9
(32.9)
54.0
–
–
(90.1)
(90.1)
–
–
–
2,249.4
33.7
–
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)
(9.1)
212.9
(46.9)
166.0
(45.5)
120.5
151.3
1.0
10.1
0.1
21.8
0.1
–
–
183.2
1.2
–
–
3.4
4.7
186.6
5.9
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
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
6 Revenue
Revenue from customers 1
Other revenue
1
Refer to note 5 for disaggregation of revenue.
2020
$’M
2019
$’M
2,299.8
2,249.4
32.3
33.7
2,332.1
2,283.1
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.
74
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 7 Other income
Insurance recoveries
Gain on disposal of property, plant and equipment
Other
8 Net finance costs
Finance costs
Interest on borrowings
Interest on leases 1
Amortisation of capitalised borrowing costs
Unwind of discount on provisions and other liabilities
Fair value loss on USPP Notes
Fair value gain on cross currency interest rate swaps (CCIRS) 2
Finance income
Interest revenue
Net finance costs
2020
$’M
20.8
12.7
1.1
34.6
2020
$’M
(19.7)
(15.7)
(4.6)
(10.5)
(34.0)
33.4
(51.1)
1.4
1.4
2019
$’M
–
3.2
3.8
7.0
2019
$’M
(24.6)
(5.8)
(2.9)
(14.3)
–
–
(47.6)
0.7
0.7
(49.7)
(46.9)
1
2
Interest on leases in the year ended 30 June 2019 relates to finance leases as defined in AASB 117 Leases. In the year ended 30 June 2020 interest on
lease liabilities also includes leases which were previously classified as operating leases as defined in AASB 117 Leases which have been brought on
balance sheet on 1 July 2019 on adoption of AASB 16 Leases. Refer to note 41 for further transition details.
Fair value gain on CCIRS includes $33.4 million (2019: nil) of net gains relating to fair value and cash flow hedges (including net hedge ineffectiveness
$0.5 million (2019: nil)) and other fair value changes during the period. Refer to note 18(a) for fair value amounts reclassified from the hedge reserve and
33(d) for all fair value movements on the CCIRS and USPP Notes.
Refer to note 40(c) for the Group’s accounting policy on finance costs.
7 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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
2020
$’M
42.9
(4.8)
38.1
0.1
4.4
4.5
42.6
2019
$’M
45.4
(1.1)
44.3
1.2
–
1.2
45.5
(b) Amounts recognised directly in other comprehensive income or equity
Deferred income tax benefit recognised directly in other comprehensive income of $0.1 million (2019: nil) relates to the tax
effect of items recognised in the hedge reserve.
Deferred income tax benefit recognised directly in equity for the year of nil (2019: $2.1 million benefit) relates to the tax
effect of items recognised in the employee equity benefits reserve.
(c) Reconciliation between tax expense and pre-tax net profit at the statutory rate
Profit before tax
2020
$’M
155.2
2019
$’M
166.0
Income tax using the corporation tax rate of 30% (2019: 30%)
46.6
49.8
Increase/(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
Research and development tax credits
Non-assessable gain on sale of properties
Non-deductible loss on loans
Non-deductible loss on sale of equity accounted investments
Non-deductible gain on loss of control of subsidiary
Employee share plan expenses
Other
Income tax expense
0.9
0.1
1.0
(0.4)
(3.1)
(3.4)
1.1
–
(0.3)
0.1
–
42.6
0.4
0.3
(0.1)
(1.1)
(3.1)
(0.5)
–
0.7
–
(0.5)
(0.4)
45.5
7 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 9 Income tax (continued)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2020
Deferred tax assets
PP&E
Leases
Employee benefits
Provisions
Tax losses
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
OPENING
BALANCE
$’M
RECOGNISED
IN PROFIT
OR LOSS
$’M
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
$’M
RECOGNISED
DIRECTLY
IN EQUITY
$’M
ACQUIRED
IN BUSINESS
COMBINATION
$’M
OTHER 1,2
$’M
CLOSING
BALANCE
$’M
49.8
0.6
23.2
92.0
0.2
41.4
(130.7)
(13.8)
62.7
(4.1)
3.1
2.5
(10.5)
1.0
1.1
5.1
(2.7)
(4.5)
–
–
–
–
–
–
–
0.1
0.1
–
–
–
–
–
–
–
–
–
0.3
–
0.3
2.7
–
–
(1.3)
–
2.0
–
3.3
–
–
(1.2)
–
0.4
1.4
3.9
46.0
7.0
26.0
84.2
–
42.5
(126.5)
(15.0)
64.2
1 Other leases includes tax effect of initial application of AASB 16 of $3.3 million. Refer to note 41.
2
Includes $0.6 million related to the derecognition of subsidiary on loss of control. Refer to note 29.
2019
Deferred tax assets
PP&E
Leases
Employee benefits
Provisions
Tax losses
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
OPENING
BALANCE
$’M
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
52.6
0.4
24.5
95.3
–
39.4
(136.3)
(11.6)
64.3
(2.8)
0.2
(1.5)
(4.1)
0.2
(0.1)
7.7
(0.8)
(1.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.1
–
–
2.1
–
–
0.2
–
–
–
(2.1)
(1.4)
(3.3)
–
–
–
0.8
–
–
–
–
0.8
49.8
0.6
23.2
92.0
0.2
41.4
(130.7)
(13.8)
62.7
1
Includes tax effect of the initial application of AASB 9 of $0.7 million.
7 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 10 Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
2020
5.5
5.5
2019
5.9
5.9
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit after income tax attributable to ordinary equity holders
of the Group by the weighted average number of ordinary shares outstanding during the financial year.
Reconciliation of earnings used as the numerator in calculating basic earnings per share:
Profit after income tax
Net loss/(profit) attributable to non-controlling interests
Profit after tax attributable to ordinary equity holders
Reconciliation of weighted average number of ordinary shares:
2020
$’M
112.6
0.3
112.9
2019
$’M
120.5
(0.1)
120.4
2020
2019
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
2,050,673,797
2,041,572,028
10,379,638
12,651,069
2,061,053,435
2,054,223,097
(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 36 for details. The dilutive effect of the performance rights on basic earnings per share
reported above is not material.
11 Cash and cash equivalents
Composition of cash and cash equivalents
Cash at bank and on hand
2020
$’M
79.8
79.8
2019
$’M
56.2
56.2
The Group has pledged nil (2019: $0.3 million) of its short-term deposits to fulfil collateral requirements in relation
to contingent liabilities and corporate credit card facilities.
Refer to note 40(g) for the Group’s accounting policy on cash and cash equivalents.
7 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 12 Trade and other receivables
Trade receivables
Contract assets 1
Other receivables
Provision for expected credit losses
2020
$’M
347.6
1.5
4.8
(5.8)
2019
$’M
380.0
1.4
6.4
(5.8)
348.1
382.0
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 40(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
Provisions recognised 1
Reversal of provisions
Utilisation of provisions
Closing balance
2020
$’M
268.8
41.9
21.9
15.0
347.6
2020
$’M
5.8
–
6.0
(2.5)
(3.5)
5.8
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
1
Expected credit losses related to COVID-19 have been considered in determining the provision for the current year.
No single customer’s annual revenue is greater than 1.7% (2019: 1.9%) 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
Raw materials and consumables – at cost
Work in progress – at cost
Finished goods – at cost
Refer to note 40(i) for the Group’s accounting policy on inventories.
2020
$’M
7.2
0.2
12.0
19.4
2019
$’M
7.5
2.2
10.2
19.9
7 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 14 Trade and other payables
Trade payables
Other payables and accruals
2020
$’M
116.2
154.8
271.0
2019
$’M
123.1
134.4
257.5
Refer to note 40(l) for the Group’s accounting policy on trade and other payables.
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. Title of the land passed to the purchaser on 14 April 2020 and a gain on sale of $8.1 million has been recognised
during the year ended 30 June 2020.
16 Interest-bearing liabilities
UNSECURED
SECURED
US PRIVATE
PLACEMENT
NOTES
$M
CLEAN ENERGY
FINANCE
CORPORATION
$’M
OTHER
$’M
LEASE
LIABILITIES 2
$’M
Opening balance at 1 July 2019
Transfers on adoption of AASB 16 1
(Repayment)/proceeds of
borrowings
Borrowing costs paid
Cash flows
Lease drawdowns
Remeasurement of lease liabilities
Non-cash settlements
Derecognition on loss of control
of subsidiary
Acquisition of businesses
Fair value changes
Non-cash transaction costs
Amortisation of borrowing costs
Closing balance at 30 June 2020
BANK
LOANS
$’M
480.1
–
(365.1)
(0.9)
(366.0)
–
–
(7.5)
–
–
–
0.3
4.2
111.1
–
–
397.6
(1.8)
395.8
–
–
–
–
–
34.0
(3.1)
0.2
426.9
99.4
–
–
–
–
–
–
–
(9.9)
–
–
–
0.2
89.7
TOTAL
INTEREST-
BEARING
LIABILITIES
$’M
714.7
297.0
(23.4)
(2.7)
(26.1)
64.1
16.3
(7.5)
(29.8)
0.9
34.0
(2.8)
4.6
0.8
–
(0.7)
–
(0.7)
–
–
–
(0.5)
0.8
–
–
–
134.4
297.0
(55.2)
–
(55.2)
64.1
16.3
–
(19.4)
0.1
–
–
–
0.4
437.3
1,065.4
1
2
Lease liabilities at 30 June 2019 relate to finance leases as defined in AASB 117 Leases. Upon adoption of AASB 16 Leases on 1 July 2019, leases
which were previously classed as operating leases have been brought on balance sheet as lease liabilities. Refer to note 22 and 41 for further details.
Lease liabilities at 30 June 2020 consist of current lease liabilities of $69.2 million and non-current lease liabilities of $368.1 million.
The following lease expenses are included in the Consolidated Income Statement and do not form part of lease liabilities:
Expenses relating to short-term leases (included in property expenses and other expenses)
Expenses relating to low-value assets that are not short-term leases (included in other expenses)
Expenses relating to variable lease payments (included in labour related expenses)
2020
$’M
23.9
1.7
49.3
74.9
8 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 16 Interest-bearing liabilities (continued)
UNSECURED
SECURED
Opening balance at 1 July 2018
Proceeds/(repayment) of borrowings
Borrowing costs paid
Cash flows
Lease drawdowns
Non-cash settlements
Acquisition of businesses
Borrowing costs reversed/(accrued)
Amortisation of borrowing costs
Closing balance at 30 June 2019
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
–
0.3
–
0.3
–
–
0.5
–
–
0.8
OTHER
$’M
LEASE
LIABILITIES
$’M
TOTAL
INTEREST-
BEARING
LIABILITIES
$’M
725.2
(73.9)
(0.8)
(74.7)
47.9
2.6
10.5
0.3
2.9
101.7
(15.2)
–
(15.2)
47.9
–
–
–
–
134.4
714.7
Refer to note 40(m) for the Group’s accounting policy on borrowings.
Financing facilities
The facility limits and maturity profile of the Group’s main financing facilities are as follows:
FACILITY
Syndicated Facility Agreement
Facility A
Facility B
Facility C
working capital tranche
4 year revolver
5 year revolver
AMOUNT
MATURITY
$135 million
$200 million
$315 million
31 July 2022
31 July 2023
31 July 2024
US Private Placement (USPP) Notes
8 year debt notes
US$90 million
11 February 2028
Clean Energy Finance Corporation
Uncommitted bank guarantee facility
10 year debt notes
US$90 million
11 February 2030
12 year debt notes
US$90 million
11 February 2032
8 year term loan
$90 million
17 August 2025
$60 million
31 December 2020
8 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION
16 Interest-bearing liabilities (continued)
The headroom available in the Group’s facilities at 30 June 2020 is summarised below:
Syndicated Facility Agreement
US Private Placement (USPP) Notes
Clean Energy Finance Corporation 4
Bank guarantee facilities 1
Facility A 1,2,3
Facility B 3
Facility C 3
AVAILABLE
$’M
135.0
200.0
315.0
426.9
90.0
60.0
1,226.9
UTILISED
$’M
(118.2)
(115.0)
–
(426.9)
(90.0)
(55.7)
(805.8)
NOT UTILISED
$’M
16.8
85.0
315.0
–
–
4.3
421.1
1
2
These facilities include $145.7 million (2019: $141.5 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 (2019: $6.5 million) of corporate credit card limit utilisation and $15.0 million (2019: nil) of overdraft utilisation and
$6.6 million (2019: $7.3 million) of outstanding finance lease commitments.
3 Amounts utilised exclude capitalised transaction costs of $3.9 million (2019: $7.4 million) and nil (2019: $0.7 million) of bank loans advanced under
uncommitted facilities.
4 Amount utilised excludes capitalised transaction costs of $0.4 million (2019: $0.6 million).
The headroom available in the Group’s facilities at 30 June 2019 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
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
8 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 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.
2020
2019
NUMBER
OF SHARES
$’M
NUMBER
OF SHARES
Opening balance
2,044,507,391
2,678.2
2,036,684,232
Issue of shares under dividend reinvestment plan
Issue of shares under employee incentive plans
5,053,889
4,383,551
10.5
–
3,446,846
4,376,313
$’M
2,671.0
7.2
–
Closing balance
2,053,944,831
2,688.7
2,044,507,391
2,678.2
18 Reserves
(a) Hedge reserve
The Group’s hedge reserve includes net gains/(losses) relating to changes in AUD/USD currency basis included in the fair
value of cross-currency interest rates swaps (CCIRS). Currency basis is excluded from the Group’s hedge relationships and
accounted for as a cost of hedging recognised in other comprehensive income. The reserve also includes effective gains/
(losses) included in the fair value of CCIRS that are part of cash flow hedges, net of amounts reclassified to net finance
costs. Amounts in the hedge reserve will be reclassified to net finance costs in subsequent periods when the hedged item
is recognised in the income statement. Refer to note 33(d).
Opening balance
Net loss on currency basis (net of tax)
Closing balance
2020
$’M
–
(0.1)
(0.1)
2019
$’M
–
–
–
The effective portion of cash flow hedges was $6.5 million (2019: nil) and was reclassified to net finance costs during the
period to offset the net gain/(loss) on the hedged items.
(b) Employee equity benefits reserve
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 36 for further details on these share-based payment plans.
Opening balance
Share-based payment expense (net of tax)
Closing balance
2020
$’M
24.0
–
24.0
2019
$’M
16.4
7.6
24.0
8 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 19 Dividends
The Company declared fully franked dividends on ordinary shares for the financial year ended 30 June 2020 of 4.1 cents per
share, being an interim dividend of 2.0 cents per share and final dividend of 2.1 cents per share. The record date of the final
dividend is 14 September 2020 with payment to be made on 6 October 2020.
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
2020
CENTS PER
SHARE
2019
CENTS PER
SHARE
1.90
2.00
3.90
2.00
2.10
4.10
1.40
1.65
3.05
1.65
1.90
3.55
2020
$’M
38.9
41.0
79.9
41.0
43.1
84.1
2019
$’M
28.5
33.7
62.2
33.7
38.9
72.6
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 2020 dividend determined after 30 June 2020 will reduce the franking account by $18.5 million.
The unadjusted balance of the franking account at 30 June 2020 was $19.0 million (2019: $4.1 million).
2020
$’M
24.7
2019
$’M
21.4
8 4
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020
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 lease liabilities; 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 derivative financial instruments 1
Less cash and cash equivalents
Net debt
Total equity
Gearing ratio 2
2020
$’M
69.6
995.8
(30.0)
(79.8)
955.6
2019
$’M
17.1
697.6
–
(56.2)
658.5
2,570.0
27.1%
2,534.3
20.6%
1 At 30 June 2020, the Group held cross currency interest rate swaps (CCIRS) to protect against interest rate and foreign currency movements in relation
to the USPP notes.
The gearing ratio is calculated as Net debt divided by Net debt plus Total equity attributable to the parent.
2
Following adoption of AASB 16 Leases, net debt has increased with the recognition of additional lease liabilities on 1 July
2019 and the gearing ratio increased from 20.6% to 27.4%. Refer to note 41 for further information.
8 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 21 Property, plant and equipment
2020
Opening net book value
Adjustment on adoption of AASB 16 1
Additions
Acquisitions of businesses
Net movement in remediation assets 2
Disposals
Derecognition on loss of control of subsidiary
Transfer of assets
Depreciation
Write-off of plant and equipment
Closing net book value
Cost
Accumulated depreciation
Net book value
NON-
LANDFILL
LAND AND
BUILDINGS
$’M
LANDFILL
ASSETS
$’M
LEASEHOLD
IMPROVEMENTS
$’M
PLANT AND
EQUIPMENT 1
$’M
152.9
237.2
64.3
–
–
51.2
–
(2.6)
–
8.3
(3.9)
–
205.9
215.9
(10.0)
205.9
–
–
–
4.9
–
–
56.6
(41.6)
–
257.1
713.0
(455.9)
257.1
–
–
–
(0.5)
(0.1)
(1.0)
16.0
(7.6)
(8.1)
63.0
82.0
(19.0)
63.0
711.5
(127.1)
–
21.5
–
(10.4)
(12.3)
120.0
(116.3)
(10.7)
576.2
1,738.4
(1,162.2)
576.2
CAPITAL
WORK IN
PROGRESS
$’M
66.1
(5.2)
215.3
–
–
–
(0.3)
(201.2)
–
(0.8)
73.9
73.9
–
73.9
TOTAL
$’M
1,232.0
(132.3)
215.3
72.7
4.4
(13.1)
(13.6)
(0.3)
(169.4)
(19.6)
1,176.1
2,823.2
(1,647.1)
1,176.1
1
The carrying value of plant and equipment at 30 June 2019 included finance leases as defined under AASB 117 Leases. On 1 July 2019, on adoption
of AASB 16 Leases, assets under finance lease were reclassified to right-of-use assets. Refer to note 22 and 41 for further details.
2 Net movement in remediation assets reflects adjustments to the remediation provision for open landfill sites and leasehold improvements. Refer to note
40(j) for details on the Group’s accounting policy.
2019
NON-
LANDFILL
LAND AND
BUILDINGS
$’M
LANDFILL
ASSETS
$’M
LEASEHOLD
IMPROVEMENTS
$’M
PLANT AND
EQUIPMENT
$’M
Opening net book value
127.2
208.6
Additions
Acquisitions of businesses
Net movement in remediation assets
Disposals
Transfer of assets
Depreciation
Closing net book value
Cost
Accumulated depreciation
Net book value
–
–
–
(4.8)
32.8
(2.3)
152.9
159.4
(6.5)
152.9
–
–
43.2
–
33.7
(48.3)
237.2
651.5
(414.3)
237.2
62.0
–
0.9
1.2
(0.1)
4.5
(4.2)
64.3
79.8
(15.5)
64.3
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
1,150.8
220.0
15.8
44.4
(8.2)
(2.0)
(188.8)
1,232.0
2,803.5
(1,571.5)
1,232.0
Accounting for landfill assets
The Group is responsible for a total of 14 landfills (2019: 14 landfills). Of the 14 landfills, eight are closed. Those that are
open are expected to close between 2021 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 40(j) for further details on the Group’s accounting policy on landfill assets.
8 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 22 Right-of-use assets
2020
Opening net book value
Adjustment on adoption of AASB 16 1
New leases
Remeasurement due to a variation in lease term
Remeasurement due to rental increases
Derecognition on loss of control of subsidiary
Depreciation
Closing net book value
Cost
Accumulated depreciation
Net book value
PROPERTIES
$’M
PLANT AND
EQUIPMENT
$’M
–
265.8
6.4
12.1
4.1
(19.4)
(35.9)
233.1
267.2
(34.1)
233.1
–
151.5
57.7
0.4
–
–
(26.0)
183.6
227.0
(43.4)
183.6
TOTAL
$’M
–
417.3
64.1
12.5
4.1
(19.4)
(61.9)
416.7
494.2
(77.5)
416.7
1 At 30 June 2019, the Group recognised assets under finance lease in property plant and equipment in accordance with AASB 117 Leases, refer to note 21.
On 1 July 2019, on adoption of AASB 16 Leases, assets under finance lease were reclassified to right-of-use assets. Refer to note 41 for further details.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not
included in the lease liability or right-of-use asset until they take effect. When adjustments to lease payments based
on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
23 Intangible assets
2020
Opening net book value
Additions
Acquisitions of businesses
Derecognition on loss of control
of subsidiary
Transfers from PP&E
Amortisation
Closing net book value
Cost
Accumulated amortisation
Net book value
2019
Opening net book value
Additions
Acquisitions of businesses
Transfers from PP&E
Amortisation
Closing net book value
Cost
Accumulated amortisation
Net book value
GOODWILL
$’M
1,827.3
–
11.5
(22.8)
–
–
1,816.0
1,816.0
–
1,816.0
GOODWILL
$’M
1,796.6
–
30.7
–
–
1,827.3
1,827.3
–
1,827.3
LANDFILL
AIRSPACE
$’M
233.5
0.2
–
–
–
(6.8)
226.9
256.3
(29.4)
226.9
LANDFILL
AIRSPACE
$’M
239.9
1.0
–
–
(7.4)
233.5
256.1
(22.6)
233.5
BRAND
NAMES
$’M
78.6
–
–
–
–
–
78.6
78.6
–
78.6
BRAND
NAMES
$’M
78.6
–
–
–
–
78.6
78.6
–
78.6
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
OTHER
INTANGIBLES
$’M
156.6
–
4.5
(1.2)
–
(16.7)
143.2
213.1
(69.9)
143.2
28.9
9.1
–
–
0.3
(8.4)
29.9
83.9
(54.0)
29.9
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
OTHER
INTANGIBLES
$’M
165.6
–
7.0
–
(16.0)
156.6
209.8
(53.2)
156.6
29.4
4.7
–
3.4
(8.6)
28.9
74.5
(45.6)
28.9
TOTAL
$’M
2,324.9
9.3
16.0
(24.0)
0.3
(31.9)
2,294.6
2,447.9
(153.3)
2,294.6
TOTAL
$’M
2,310.1
5.7
37.7
3.4
(32.0)
2,324.9
2,446.3
(121.4)
2,324.9
8 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 23 Intangible assets (continued)
Goodwill and brand names are monitored at an operating segment level.
The carrying amount of goodwill and non-amortising intangible assets (brand name) are allocated to operating segments
or CGUs as follows:
2020
Goodwill
Brand names
Total
2019
Goodwill
Brand names
Total
SOLID WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID WASTE
& HEALTH
SERVICES
$’M
1,275.4
78.6
1,354.0
168.2
–
168.2
372.4
–
372.4
1,894.6
TOTAL
$’M
1,816.0
78.6
SOLID WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID WASTE
& HEALTH
SERVICES
$’M
TOTAL
$’M
1,286.7
78.6
1,365.3
168.2
–
168.2
372.4
1,827.3
–
78.6
372.4
1,905.9
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 brand names 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 2020.
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 2021 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 2.5% (2019: 2.5%). The terminal growth rate for Industrial & Waste Services and Liquid Waste & Health
Services remains at 2.0% (2019: 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 2020 impairment testing have been adjusted for
known and anticipated future operational changes and additional potential risk identified since 30 June 2019. These changes
are reflected in the following summary of key assumptions table.
8 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 23 Intangible assets (continued)
The table below provides a summary of the key assumptions used in the impairment testing:
ASSUMPTIONS
EBITDA growth 1
Capital spend rate 2
Terminal value growth rate
Post-tax discount rate
Pre-tax discount rate
SOLID WASTE
SERVICES
INDUSTRIAL & WASTE
SERVICES
LIQUID WASTE & HEALTH
SERVICES
JUNE
2020
6.3%
10.7%
2.5%
7.3%
10.4%
JUNE
2019
5.1%
10.3%
2.5%
7.3%
10.4%
JUNE
2020
5.2%
6.4%
2.0%
7.3%
JUNE
2019
8.6%
6.4%
2.0%
7.3%
JUNE
2020
7.0%
7.9%
2.0%
7.3%
JUNE
2019
8.4%
7.5%
2.0%
7.3%
10.4%
10.4%
10.4%
10.4%
1 Growth rates have been calculated with 30 June 2020 revenue and underlying EBITDA as a base.
2
Reflects capital spend as a percentage of revenue, calculated as the five-year average of forecast spend.
EBITDA growth assumptions
Solid Waste Services EBITDA growth of 6.3% assumes long-term GDP of 2.75% and CPI of 2.0% across all activities.
Short-term growth also considers major new commercial and municipal contract wins.
Industrial & Waste Services EBITDA growth of 5.2% is mainly a result of GDP and CPI growth but also considers new
and expiring contracts and the completion of the final phase of integration of Toxfree.
Liquid Waste & Health Services EBITDA growth also assumes GDP and CPI but is adjusted for growth achievable in the
current economic and competitive environment.
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.
Other assumptions
Climate change is an emerging risk and presents complex challenges for companies, governments and society. Cleanaway
believes that the transition to a zero-carbon economy presents opportunities for our business as well as risks. These risks
include decarbonisation of the economy leading to contraction in carbon-intensive industries; the introduction of a carbon
price; and an increase of frequency and severity of extreme weather events. Opportunities for Cleanaway may include
increased regulation to reduce embodied carbon emissions favouring the domestic recycling industry; and increased
incentives to invest in energy-from-waste plants. Whilst the value-in-use calculations do not include specific cash inflows
or outflows associated with climate change related opportunities or risks, the calculations use a risk-adjusted discount rate
reflecting that all estimates and assumptions are subject to risk and uncertainty.
Cleanaway has considered the impact of the COVID-19 pandemic on our annual impairment testing. As the COVID-19
pandemic evolves, we expect the small and medium enterprise (SME) parts of our business to be impacted, however we also
expect other services such as health, municipal collection and related post-collections activities to remain strong. Growth
assumptions used in the Group’s five-year forecasted cash flows assume steady growth which is in contrast to forecasts
published by the RBA in May 2020 which reflect significant growth when the economy as a whole rebounds from the
pandemic. The Group has the ability to manage costs and resources under current conditions, and the flexibility to change
cost structures should conditions deteriorate.
8 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 23 Intangible assets (continued)
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 2020:
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
INDUSTRIAL &
WASTE SERVICES
$’M
nil
nil
nil
nil
LIQUID WASTE &
HEALTH 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
INDUSTRIAL &
WASTE SERVICES
LIQUID WASTE &
HEALTH SERVICES
802.4
4.4%
3.7%
3.1%
2.3%
79.5
2.7%
1.2%
1.8%
1.3%
333.2
5.1%
3.1%
3.7%
2.6%
1
2
Percentage changes presented above represent the absolute change in the assumption value (for example post-tax discount rate increasing by 2.3%
from 7.3% to 9.6%).
Terminal value for Solid Waste Services and Liquid Waste & Health Services would reflect negative value as they are currently modelled at 2.5% and 2.0%
respectively.
Refer to note 40(k) for further details on the Group’s intangible assets accounting policy.
9 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 24 Equity accounted investments
The Group holds a 50% interest or greater than a 50% interest in some of 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
COUNTRY
REPORTING
DATE
2020
%
2019
%
2020
$’M
2019
$’M
NAME OF ENTITY
Joint ventures:
A.C.N. 635 427 262 Pty Ltd 1
Cleanaway ResourceCo RRF Pty Ltd 2
Earthpower Technologies Sydney Pty Ltd
Tomra Cleanaway Pty Ltd
Wonthaggi Recyclers Pty Ltd
Australia
Australia
Australia
Australia
Australia
30 June
30 June
30 June
30 June
30 June
Associates:
Total Waste Management Pty Ltd 3
Western Resource Recovery Pty Ltd 3
Australia 31 December
Australia 31 December
51
45
50
50
50
–
–
–
50
50
50
50
–
–
10.5
20.9
–
2.5
0.6
–
–
34.5
–
–
–
2.9
0.9
–
–
3.8
1 During the period, the Group acquired a 51% interest in this entity which holds the investment in the Energy from Waste Project in Western Sydney.
2 On 1 January 2020 the Group sold down a 5% interest in Cleanaway ResourceCo RRF Pty Ltd and at the same time, due to a change in the shareholders’
agreement, no longer controlled the entity. Refer to note 29.
The group divested its interest in Total Waste Management Pty Ltd and Western Resource Recovery Pty Ltd on 10 December 2018.
3
(a) Share of profit/(loss) from joint ventures
Revenues
Expenses
(Loss)/profit before income tax (100%)
Share of (loss)/profit before income tax
Income tax benefit
Share of (loss)/profit after tax
Dividend received in excess of carrying value
Share of net (loss)/profit recognised
(b) Share of profit from associates
Revenues
Expenses
Profit before income tax (100%)
Share of profit before income tax
Income tax expense
Share of net profit recognised
2020
$’M
197.0
(202.5)
2019
$’M
161.9
(161.7)
(5.5)
(2.6)
0.5
(2.1)
–
(2.1)
2020
$’M
–
–
–
–
–
–
0.2
0.1
0.5
0.6
–
0.6
2019
$’M
5.1
(4.7)
0.4
0.2
(0.1)
0.1
9 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 24 Equity accounted investments (continued)
(c) Transactions with equity accounted investments
The following table provides the total amount of transactions with equity accounted investments during the year ended
30 June 2020.
SERVICES TO EQUITY
ACCOUNTED INVESTMENTS
PURCHASES FROM EQUITY
ACCOUNTED INVESTMENTS
INTEREST REVENUE FROM EQUITY
ACCOUNTED INVESTMENTS
Joint ventures
Associates
Joint ventures
Associates
2020
$’M
77.2
–
77.2
2019
$’M
61.7
0.6
62.3
2020
$’M
4.6
–
4.6
2019
$’M
2.2
2.0
4.2
2020
$’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
2020
$’M
0.5
–
0.5
2019
$’M
0.1
–
0.1
2020
$’M
1.2
–
1.2
2019
$’M
1.2
–
1.2
2020
$’M
10.7
–
10.7
2019
$’M
0.2
–
0.2
2019
$’M
3.8
–
3.8
1
This represents an unsecured loan to Tomra Cleanaway Pty Ltd of $3.8 million (2019: $3.8 million) repayable in full on 22 November 2022, an unsecured
loan to Cleanaway ResourceCo RRF Pty Ltd of $3.7 million (2019: nil) repayable on 30 June 2025 and an unsecured loan to A.C.N. 635 427 262 Pty Ltd of
$3.2 million, repayable when the project has progressed to the financing stage.
(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
2020
$’M
148.6
(75.4)
73.2
34.5
2019
$’M
39.9
(32.4)
7.5
3.8
Impairment losses and commitments
(e)
During the year the equity accounted investments were tested for impairment and no adjustments were made as a result
(2019: nil). As at the reporting date the Group had no contractual obligation to provide funding for capital commitments
of equity accounted investments (2019: nil).
9 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 25 Other assets
Current
Finance lease receivable 1
Prepayments
Total current other assets
Non-current
Finance lease receivable 1
Costs to fulfil contracts 2
Prepayments
Loans to joint ventures
Other financial assets
Total non-current other assets
2020
$’M
2019
$’M
4.5
18.5
23.0
3.9
5.5
0.8
10.7
3.0
23.9
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.
26 Employee entitlements
Current
Annual leave
Long service leave
Other
Total current employee entitlements
Non-current
Long service leave
Total non-current employee entitlements
2020
$’M
2019
$’M
37.9
22.2
11.1
71.2
7.2
7.2
34.5
23.6
8.8
66.9
5.1
5.1
Refer to note 40(q) for the Group’s accounting policy on employee entitlements.
During the year the Group contributed $42.2 million (2019: $41.5 million) to defined contribution plans. These contributions
are expensed as incurred.
9 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 27 Provisions
Current
Rectification provisions
Remediation provisions
Other
Total current provisions
Non-current
Rectification provisions
Remediation provisions
Other
Total non-current provisions
2020
$’M
2019
$’M
2.3
29.4
35.0
66.7
13.1
256.5
18.1
287.7
14.5
43.5
28.1
86.1
13.8
264.6
17.4
295.8
Included in other provisions is an amount of $18.7 million (2019: $16.2 million) in relation to workers compensation self-
insurance of the Group under the Comcare scheme. This amount is comprised of $6.3 million (2019: $6.0 million) classified
as current and $12.4 million (2019: $10.2 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 2020. The provision has been calculated using a claim inflation rate of 1.80% (2019: 2.50%) and
a discount rate of 0.83% (2019: 1.53%). The workers compensation self-insurance provision is reassessed annually based
on actuarial advice.
The table below provides a roll forward of provisions:
Opening balance
Acquisitions of businesses
Provisions made
Provisions used or reversed
Derecognition on loss of control of
subsidiary
Unwinding of discount
Change in discount rate
Change in assumptions 1
Rectification and remediation spend
Closing balance
RECTIFICATION
REMEDIATION
OTHER
TOTAL
2020
$’M
28.3
–
–
–
–
0.2
0.2
(1.0)
(12.3)
15.4
2019
$’M
2020
$’M
2019
$’M
2020
$’M
2019
$’M
2020
$’M
2019
$’M
32.2
308.1
285.9
–
–
–
–
0.5
0.7
(0.2)
(4.9)
7.7
7.0
–
–
3.8
12.7
(12.0)
(41.4)
–
8.1
–
–
6.8
43.2
(4.8)
(31.1)
45.5
1.1
40.9
37.8
0.3
48.7
381.9
355.9
8.8
47.9
0.3
56.8
(34.7)
(41.3)
(34.7)
(41.3)
(0.1)
–
0.1
0.3
–
–
–
–
–
–
(0.1)
4.0
13.0
(12.7)
(53.7)
–
7.3
43.9
(5.0)
(36.0)
28.3
285.9
308.1
53.1
45.5
354.4
381.9
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 1.12% (2019: 1.47%) for landfill remediation and rectification of landfills and 0.64%
(2019: 1.31%) for industrial property remediation. Refer to note 40(o) for a summary of the accounting policy for provisions
for remediation and rectification.
9 4
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 28 Other liabilities
Current
Deferred settlement liabilities 1
Landfill creation liability 2
Contract liabilities 3
Other liabilities
Total current other liabilities
Non-current
Deferred settlement liabilities 1
Landfill creation liability 2
Other liabilities
Total non-current other liabilities
2020
$’M
2019
$’M
5.4
22.9
6.5
0.1
34.9
77.2
49.7
1.8
128.7
5.3
19.6
7.2
0.1
32.2
76.6
37.9
2.1
116.6
2
1
Includes $82.6 million (2019: $81.9 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%.
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 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 $7.2 million (2019: $8.1 million) which was included in contract liabilities at the beginning
of the year.
9 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION
29 Business combinations and loss of control of subsidiary
Year ended 30 June 2020
Business combinations
During the year ended 30 June 2020, the Group acquired a business from various entities in the SKM Recycling Group
(receivers and managers appointed) (SKM). Details of the business combination are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
SKM Recycling Group
31 October 2019
Recycling business based in Victoria,
Tasmania and South Australia
Solid Waste Services
The provisional fair values of the identifiable assets and liabilities of the business combination at the date of acquisition were:
Assets
Property, plant and equipment
Prepayments
Deferred tax assets
Liabilities
Trade and other payables
Employee entitlements
Provisions
Interest-bearing liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
Cash 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
2020
$’M
68.3
0.1
3.3
71.7
0.5
0.9
8.8
0.9
11.1
60.6
5.4
66.0
2020
$’M
66.0
7.5
73.5
The acquisition of SKM followed the public sale process conducted by KordaMentha, who were appointed Receivers and
Managers of SKM by Cleanaway following the acquisition of the senior secured debt in SKM, on 21 August 2019. From the
date of acquisition to 30 June 2020, the business contributed $30.4 million of revenue and $1.1 million loss to profit before tax
to the Group.
9 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 29 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2020 (continued)
During the year ended 30 June 2020, the Group acquired a business from Statewide Recycling Services Pty Ltd (Statewide).
Details of the business combination are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Statewide
16 December 2019
Waste disposal and recycling business
based in Warrnambool, Victoria
Solid Waste Services
The provisional fair values of the identifiable assets and liabilities of the business combination at the date of acquisition were:
Assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Liabilities
Employee entitlements
Deferred tax liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
2020
$’M
4.4
0.1
4.5
9.0
0.2
1.4
1.6
7.4
6.1
13.5
The intangible assets identified as part of the acquisition included customer relationship intangibles. These intangible assets
were valued based on the expected cash flows from the customers of the acquired business, applying an expected attrition
rate of the customer base. 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 acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
2020
$’M
13.5
0.4
13.9
From the date of acquisition to 30 June 2020, the business contributed $5.0 million of revenue and $1.4 million to profit
before tax to the Group, including amortisation of customer intangibles of $0.2 million. If the business had been acquired
at the beginning of the reporting period, revenue of $9.2 million and profit before tax of $2.5 million would have been
contributed to the Group, including amortisation of customer intangibles of $0.5 million.
9 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 29 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2020 (continued)
Loss of control of subsidiary
On 1 January 2020 the Group sold down a 5% interest in Cleanaway ResourceCo RRF Pty Ltd and at the same time, due
to a change in the shareholders’ agreement, also lost control of the entity. The Group now have joint control in Cleanaway
ResourceCo RRF Pty Ltd. The assets and liabilities over which control was lost are as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Right-of-use assets
Intangible assets
Liabilities
Trade and other payables
Employee entitlements
Provisions
Interest-bearing liabilities
Deferred tax liabilities
Net assets derecognised
Fair value of consideration received
Net assets derecognised
Non-controlling interests derecognised
Fair value retained in the former subsidiary 1
Gain on loss of control of subsidiary
1
The fair value of the investment retained in Cleanaway ResourceCo RRF Pty Ltd is included in equity accounted investments, refer to note 24.
Cash consideration received (included in cash flows from investing activities)
Cash derecognised on loss of control (included in cash flows from investing activities)
Net cash flow on loss of control of subsidiary
2020
$’M
0.5
5.7
0.6
0.5
13.6
19.4
24.0
64.3
9.7
0.1
0.1
29.8
0.6
40.3
24.0
2.5
(24.0)
0.6
22.0
1.1
2020
$’M
2.5
(0.5)
2.0
9 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 29 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2019
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
DATE OF ACQUISITION DESCRIPTION OF THE BUSINESS
OPERATING SEGMENTS
Cleanaway ResourceCo
RRF Pty Ltd
ASP Consolidated Group
30 October 2018
Resource Recovery Facility based in
Wetherill Park in New South Wales
Solid Waste Services
28 February 2019 ASP is a plastics manufacturing business,
with a focus on the medical waste sector
Liquid Waste & Health Services
At 30 June 2019, provisionally determined values were reported. Subsequent to 30 June 2019, final fair values for the
business combinations were determined. Comparative amounts for 30 June 2019 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
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
PROVISIONAL
FAIR VALUE
REPORTED AT
30 JUNE 2019
$’M
ADJUSTMENTS
TO PROVISIONAL
FAIR VALUE
$’M
FINAL FAIR
VALUE
$’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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(16.9)
(16.9)
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)
30.7
41.2
The intangible assets identified as part of the acquisitions included customer relationship intangibles. These intangible assets
were valued based on the expected cash flows from the customers of the acquired business, applying an expected attrition
rate of the customer base. Goodwill acquired comprises the value of expected synergies arising from integration of the
acquired businesses and is non-deductible for income tax purposes.
Contingent consideration related to the Cleanaway ResourceCo RRF Pty Ltd would be paid if certain earnings targets were
met by a certain date. The value of contingent consideration has been revised based on further information which is available
related to conditions which existed at the time of acquisition. The interest expense related to the unwind of the discounted
contingent consideration, which was recognised in the second half of the year ended 30 June 2019 of $0.9 million ($0.6
million after tax) has been adjusted against opening retained earnings.
9 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 29 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2019 (continued)
PROVISIONAL
FAIR VALUE
REPORTED AT
30 JUNE 2019
$’M
ADJUSTMENTS
TO
PROVISIONAL
FAIR VALUE
$’M
FINAL FAIR
VALUE
$’M
Cash paid (included in cash flows from investing activities)
Contingent consideration
Total purchase consideration
41.2
16.9
58.1
–
(16.9)
(16.9)
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
41.2
–
41.2
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.
100
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 30 Subsidiaries
The Group’s principal subsidiaries at 30 June 2020 are set out below.
EFFECTIVE INTEREST 3
Active Industrial Solutions Pty Ltd 2
AJ Baxter Pty Ltd 2
ASP Plastics Pty Limited 2
ASP Healthcare Pty Limited 2
Baxter Business Pty Ltd 2
Baxter Recyclers Pty Ltd 2
Cleanaway Co Pty Ltd (formerly Tox Free Australia Pty Ltd) 2
Cleanaway Daniels Australia Pty Ltd (formerly Daniels Health Australia Pty Ltd) 2
Cleanaway Daniels FMD Pty Ltd (formerly Daniels FMD Pty Ltd) 2
Cleanaway Daniels Laboratory Products Pty Ltd (formerly Daniels Health Laboratory
Products Pty Ltd) 2
Cleanaway Daniels NSW Pty Ltd (formerly Daniels Health NSW Pty Ltd) 2
Cleanaway Daniels Pty Ltd (formerly Daniels Health Pty Ltd) 2
Cleanaway Daniels Services Pty Ltd (formerly Daniels Health Services Pty Ltd) 2
Cleanaway Daniels VIC Pty Ltd (formerly Daniels Health VIC Pty Ltd) 2
Cleanaway Daniels Waste Services Pty Ltd (formerly Redlam Waste Services Pty Ltd) 2
Cleanaway Daniels Wollongong Pty Ltd (formerly Daniels Health Wollongong 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 Resource Recycling Pty Ltd 2
Cleanaway Solid Waste Pty Ltd 2
Cleanaway Superior Pak Pty Ltd 2
Cleanaway Waste Management Limited (Parent entity)
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 and Fuel Salvaging (Queensland) Pty Ltd 2
2020
%
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
100
2019
%
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
100
1 0 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 30 Subsidiaries (continued)
Pilbara Logistics Pty Ltd 2
PT Environmental Services Pty Ltd 2
PTK Environmental Services Pty Ltd 1
PTW Environmental Services Pty Ltd
QORS Pty Ltd
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 Innovations 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
2020
%
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2019
%
100
100
70
75
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. As subsidiaries, the Group has power over the investees through management control and the casting
vote. 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 31 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.
1 02
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 31 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
Gain on loss of control of subsidiary
Share of (losses)/profits from equity accounted investments
Depreciation and amortisation expense
Write-off of plant and equipment
Profit from operations
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Net gain on currency basis on cross currency interest rate swaps (net of tax)
Net comprehensive loss recognised directly in equity
Total comprehensive income for the year
Refer to note 30 for details of subsidiaries who are a party to the Deed of Cross Guarantee.
2020
$’M
2019
$’M
2,302.1
2,247.9
34.6
(854.2)
(631.1)
(227.2)
(45.7)
(93.8)
–
1.1
(2.1)
(261.2)
(19.6)
202.9
(48.8)
154.1
(41.6)
112.5
7.0
(840.3)
(601.3)
(231.7)
(71.6)
(78.0)
(2.2)
–
0.7
(219.7)
–
210.8
(46.4)
164.4
(45.2)
119.2
(0.1)
(0.1)
–
–
112.4
119.2
1 0 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 31 Deed of cross guarantee (continued)
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
Right-of-use assets
Intangible assets
Equity accounted investments
Net deferred tax assets
Derivative financial instruments
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
2020
$’M
2019
$’M
76.6
343.2
19.4
–
23.0
462.2
1,176.1
416.7
2,294.6
34.5
62.4
30.0
23.2
51.0
374.3
17.2
–
30.0
472.5
1,216.4
–
2,270.2
3.8
64.0
–
78.9
4,037.5
4,499.7
3,633.3
4,105.8
265.6
248.6
5.7
69.6
71.2
66.7
34.9
17.3
17.1
66.5
86.0
33.7
513.7
469.2
995.7
7.2
287.7
128.9
1,419.5
1,933.2
2,566.5
686.8
4.8
295.8
115.1
1,102.5
1,571.7
2,534.1
2,688.7
2,678.2
23.5
(145.7)
23.6
(167.7)
2,566.5
2,534.1
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.
10 4
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 32 Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total equity
(Loss)/profit for the period
Total comprehensive (loss)/income for the period
2020
$’M
–
3,568.6
7.7
646.5
2,688.7
209.2
24.2
2,922.1
(14.9)
(14.9)
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
The parent entity guarantees the contractual commitments of its subsidiaries as requested.
33 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 will fluctuate because of changes in market prices. Market risk
includes foreign currency risk, interest rate risk and commodity price 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).
At 30 June 2020, the Group held cross-currency interest rate swaps (CCIRS) to protect against USD interest rate and
currency exposures in relation to USD denominated USPP Notes. The Group does not have any other material foreign
currency risk exposures.
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 exposures primarily relate to its exposure to variable interest
rates on borrowings and fair value changes relating to USD denominated borrowings.
1 0 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 33 Financial risk management (continued)
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Fixed rate instruments
CEFC facilities
Lease liabilities 1
Variable rate instruments
Bank and other loans
USPP Notes 2
30 JUNE 2020
30 JUNE 2019
WEIGHTED
AVERAGE
INTEREST RATE
%
WEIGHTED
AVERAGE
INTEREST RATE
%
BALANCE
$’M
BALANCE
$’M
4.6
3.6
1.6
1.7
89.7
437.3
527.0
111.5
426.9
538.4
4.8
4.7
2.7
–
99.4
134.4
233.8
480.9
–
480.9
1
Lease liabilities at 30 June 2019 relate to finance leases as defined in AASB 117 Leases. Upon adoption of AASB 16 Leases on 1 July 2019, leases which
were previously classed as operating leases have been brought on balance sheet as lease liabilities. Refer to note 22 and 41 for further details.
2 At 30 June 2020, the Group held CCIRS to protect against USD interest rate and currency exposures in relation to USD denominated USPP Notes.
The CCIRS economically transform the fixed rate USD denominated debt into variable rate AUD denominated debt. Under the terms of CCIRS the three
month Bank Bill Swap Rate plus a weighted average margin of 1.61% is paid quarterly to the bank counterparties in AUD and fixed semi-annual amounts
in USD are received equal to meet the interest payments due to the USPP Noteholders. The principal amounts of US$270.0 million are also exchanged
at drawdown and maturity for A$397.6 million under the terms of the CCIRS.
The Group’s AUD 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 reasonably 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 decreased/increased net finance costs by an estimated $5.4 million (2019: $4.8 million).
Commodity price risk
The Group is exposed to market prices of various commodities. The primary sources of the Group’s exposures are: paper, cardboard,
plastics and glass from its recycling and manufacturing activities; oil and oil-derived products used as inputs in its Group operations
and sold through it hydrocarbons business; and electricity used in Group operations and sold through its landfill operations.
Commodity price risk exposures are actively managed via various strategies including; a centralised commodity trading
desk focused on maintaining and developing access to domestic and international markets; contracted sale and purchase
agreements; improving the quality of commodity extracted through education, pricing structures and investment in
technology; transferring or sharing commodity price risk with customers and suppliers; moving downstream in the supply
chain; and maintaining offsetting exposures such as buying oil and oil-derived products but also selling oil products through
the hydrocarbons business. The Group does not currently use derivative products to hedge its commodity price exposures.
Following agreement in August 2019, the Council of Australian Governments (COAG) is moving to ban the export of certain
waste recyclable materials progressively from early-2021 through to mid-2024. The exports bans will increase the amount of
waste material that is recycled and processed into value added products in Australia. All levels of Government are committed
to supporting the waste industry through this transformation through various initiatives, including making available direct
grants of which Cleanaway has been a beneficiary. Cleanaway is actively working to manage the risks but also capture the
downstream opportunities these changes present.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
contractual obligations, with the maximum exposure being equal to the carrying amount of these instruments. Management
has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed
on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets.
For certain export sales the Group requires the vendor to provide a letter of credit.
The Group minimises concentrations of credit risk by undertaking transactions with a large number of customers. In addition,
receivable balances are monitored on an ongoing basis with the intention that the Group’s exposure to expected credit losses
is minimised.
106
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 33 Financial risk management (continued)
Credit risk on foreign exchange contracts including cross-currency interest rate swaps (CCIRS) is mitigated as counterparties
are large Australian and international banks with acceptable credit ratings determined by a recognised ratings agency.
Credit risk from cash balances and other financial instruments 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
2020
$’M
79.8
348.1
22.1
450.0
2019
$’M
56.2
382.0
16.5
454.7
Refer to note 12 for an analysis of credit risk and impairment associated with the Group’s trade receivables balance.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s objective
is that the Group has access to sufficient cash resources to meet its financial obligations as they fall due, including taxes and
dividends, and to provide funds for capital expenditure and investment opportunities as they arise.
The Group regularly reviews existing funding arrangements and assesses future funding requirements based upon known
and forecast information. The Group’s liquidity position is reported to the Board on a monthly basis.
The headroom in the Group’s syndicated facilities at 30 June 2020 is $421.1 million (2019: $317.9 million). The current portion
of the Group’s borrowings at 30 June 2020 is $0.4 million (2019: nil). The Group considers liquidity risk to be mitigated due
to the level of unutilised facilities available, the level of headroom in each covenant measure and the maturity profile of existing
facilities.
The following table discloses the contractual maturities of financial liabilities and derivative financial instruments, including
estimated interest payments and excluding the impact of netting agreements:
2020
Non-derivatives
Unsecured borrowings
Lease liabilities 1
Trade and other payables
Other financial liabilities
Total
Derivatives
Cross-currency interest rate swaps
inflow
(outflow)
Total
2019
Non-derivatives
Unsecured borrowings
Lease liabilities 1
Trade and other payables
Other financial liabilities
Total
< 1 YEAR
$’M
1–2 YEARS
$’M
2–5 YEARS
$’M
> 5 YEARS
$’M
CONTRACTUAL
CASH FLOWS
$’M
CARRYING
AMOUNT
$’M
19.7
72.4
271.0
28.3
391.4
11.4
(6.8)
4.6
20.6
23.0
257.5
24.9
326.0
19.3
66.8
–
31.6
117.7
11.4
(6.8)
4.6
20.6
21.9
–
26.3
68.8
282.0
175.7
–
41.4
499.1
539.2
161.8
–
186.6
887.6
860.2
476.7
271.0
287.9
628.1
437.3
271.0
155.2
1,895.8
1,491.6
34.3
(20.4)
13.9
448.9
(430.3)
18.6
506.0
(464.3)
41.7
584.0
64.4
–
34.9
683.3
130.4
49.2
–
192.6
372.2
755.6
158.5
257.5
278.7
1,450.3
1,111.6
n/a
n/a
30.0
580.3
134.4
257.5
139.4
1
Lease liabilities at 30 June 2019 relate to finance leases as defined in AASB 117 Leases. Upon adoption of AASB 16 Leases on 1 July 2019, leases which
were previously classed as operating leases have been brought on balance sheet as lease liabilities. Refer to note 22 and 41 for further details. The
contractual commitments of lease liabilities excludes extension options which are reasonably certain to occur but are not contractually committed.
If these extension options were included it would increase the future commitments by $82.0 million.
1 0 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 33 Financial risk management (continued)
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 bank guarantees and insurance bonds are
callable and the Group becomes liable to repay amounts paid by the bank or insurer. Refer to note 35(c) for details of the
Group’s bank guarantees and insurance bonds.
(d) Fair value measurement and hedges
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 following table provides the fair value measurement of the Group’s financial instruments which have been valued using
market observable inputs (level 2), including interest and foreign currency rates and models using present value and future
potential exposure calculations where applicable:
2020
Opening fair value of asset/(liability) as at 1 July 2019
Fair value on recognition/derecognition
Movement relating to changes in AUD or USD interest rates
Fair value hedges
Other
Movement relating to change in AUD/USD exchange rates
Cash flow hedges
Movement relating to change in AUD/USD currency basis
Closing fair value of asset/(liability) as at 30 June 2020
Carrying amount of asset/(liability) as at 30 June 2020
Accumulated fair value adjustments on the hedged items
2019
Opening fair value of asset/(liability) as at 1 July 2018
Fair value on recognition
Movement relating to changes in AUD interest rates
Closing fair value of asset/(liability) as at 30 June 2019
Carrying amount of asset /(liability) as at 30 June 2019
Accumulated fair value adjustments on the hedged items
FIXED RATE BORROWINGS MEASURED
AT AMORTISED COST
DERIVATIVES
MEASURED AT
FAIR VALUE
CLEAN ENERGY
FINANCE
CORPORATION
$’M
USPP NOTES
(HEDGED ITEMS)
$’M
CCIRS 1 (HEDGING
INSTRUMENTS)
$’M
(109.9)
10.5
–
(0.4)
–
–
(99.8)
(89.7)
–
(90.9)
(10.0)
(9.0)
(109.9)
(99.4)
–
–
(397.6)
(40.5)
–
6.5
–
(431.6)
(426.9)
(34.0)
–
–
–
–
–
–
–
(3.1)
39.5
(1.0)
(5.1)
(0.3)
30.0
30.0
n/a
–
–
–
–
–
n/a
1
Fair value movements in interest rates related to the hedging instruments of $39.5 million (2019: nil) includes an effective portion of $40.5 million (2019:
nil) and an ineffective portion of $(1.0) million (2019: nil). Fair value movements in exchange rate cash flow hedges includes an effective portion of $(6.5)
million (2019: nil) and an ineffective portion of $1.4 million (2019: nil). The notional amount of the derivatives are US$270.0/$397.6 million.
108
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 33 Financial risk management (continued)
(d) Fair value measurement and hedges (continued)
The cross-currency interest rates (CCIRS) are hedging instruments in designated fair value and cash flow hedging
relationships. The hedging relationships are expected to remain effective as:
• There is an economic relationship between each hedged item and hedging instrument where the fair value of the
hedged item and the hedging instrument substantially offsets each other. This economic relationship is assessed on
a qualitative basis by comparing the critical terms of the hedge items with the hedge instruments. These critical terms
are contracted and expected to remain unchanged for the term of all hedged items and matching hedging instruments;
• The effect of credit risk does not dominate the value changes that result from the economic relationship. The Group
expects counterparties, and likewise itself, to maintain high creditworthiness over the period of the economic
relationship; and
• The hedge ratio of each hedging relationship is maintained at a ratio of 1:1. The 1:1 ratio is determined by allocating all
amounts of the hedged items to notional amounts of hedging instruments with matching terms and vice versa.
The main source of ineffectiveness expected in the hedging relationships relates to debit and credit adjustments (CVA/DVA)
which reflect changes to future potential exposures and the credit risk of the counterparties and as well as the credit risk
of the Group.
The hedged items in the fair value hedges are the US$270.0 million USPP Notes and the hedged risk is movements in fair
value relating to changes in USD interest rates excluding credit margins. The fair value movements in the fair value hedges
are recorded in net finance costs in the Consolidated Income Statement.
The hedged items in the cash flow hedges are the US$270.0 million USPP Notes and the hedged risk is variability in
expected payments relating to changes in the AUD/USD exchange rates. The effective portion of the cash flow hedge fair
value movements relating to the CCIRS is recognised in the hedge reserve through other comprehensive income. Effective
amounts accumulated in the hedge reserve relating to the cash flow hedges are reclassified through other comprehensive
income to net finance costs in the same period that the cash flow hedge fair value movements relating to the USPP Notes
are recorded in net finance costs in the Consolidated Income Statement. Any ineffective portion relating to the cash flow
hedges are recorded directly in net finance costs in the Consolidated Income Statement.
The fair value movements of the CCIRS relating to changes in AUD/USD currency basis are excluded from the hedging
relationships and recognised in the hedge reserve through other comprehensive income.
Refer to note 8 for amounts recorded in net finance costs and 18(a) for amounts recognised in the hedge reserve.
34 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.
109
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 35 Commitments
(a) Lease commitments under AASB 16 Leases
The Group leases property, plant and equipment over terms generally not exceeding 10 years. Leases generally provide the
Group with a right of renewal at which time all terms are renegotiated. As at 30 June 2019, lease commitments were classified
as either non-cancellable operating lease commitments or finance lease commitments as defined under AASB 117 Leases.
From 1 July 2019, on adoption of AASB 16 Leases, those leases which were previously classified as operating leases, except for
short-term and low-value leases, were brought on balance sheet as lease liabilities. There is no longer a distinction between
a finance and operating lease commitment, but rather a single classification being ‘lease commitments’. Refer to note 33(c) for
the contractual maturities of lease liabilities and note 41 for change in accounting standards.
Year ended 30 June 2019
Operating lease commitments under AASB 117 Leases
Future minimum rentals payable under non-cancellable operating lease rentals were 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
Finance lease commitments under AASB 117 Leases
The Group held 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 were 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
2019
$’M
17.1
71.0
46.3
134.4
–
134.4
(b) Capital expenditure and other commitments
Significant capital expenditure contracted at the end of the reporting period but not recognised as liabilities is as follows:
Property, plant and equipment
Intangible assets
2020
$’M
28.9
0.2
29.1
2019
$’M
35.8
0.8
36.6
(c) 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
2020
$’M
145.7
46.2
191.9
2019
$’M
141.5
31.8
173.3
1 1 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 36 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
LONG-TERM INCENTIVE PLAN
END OF
PERFORMANCE
OR SERVICE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2019
GRANTED
DURING THE
PERIOD
VESTED
DURING THE
PERIOD
FORFEITED/
EXPIRED
DURING THE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2020
(1,818,982)
(2,060,153)
(274,204)
(310,563)
–
–
–
–
–
(62,647)
3,128,655
(52,557)
3,126,207
–
–
–
2,264,786
–
220,975
(111,888)
1,574,769
2017 LTI (A)
2017 LTI (B)
2018 LTI
2019 LTI
2020 LTI
7 Oct 2016
30 Jun 2019
2,093,186
2 Nov 2016
30 Jun 2019
2,370,716
3 Nov 2017
30 Jun 2020
3,191,302
2 Nov 2018
30 Jun 2021
3,178,764
–
–
–
–
30 Oct 2019
30 Jun 2022
–
2,264,786
SHORT-TERM INCENTIVE PLAN
2018 STI
2019 STI
OTHER GRANTS
2019 TII
Total
26 Oct 2018
30 Jun 2019
504,416
–
(504,416)
30 Oct 2019
30 Jun 2020
–
220,975
26 Oct 2018
30 Jun 2020
1,686,657
–
–
–
13,025,041
2,485,761
(4,383,551)
(811,859) 10,315,392
Vested and exercisable at 30 June 2020
220,975
The vesting date for LTI offers and the 2019 TII offer 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.
1 1 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 36 Share-based payments (continued)
(a) Long-term Incentive (LTI) plan
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 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
2018 LTI AWARD UP TO THREE YEARS:
1 JULY 2017 TO 30 JUNE 2020
2019 LTI AWARD UP TO THREE YEARS:
1 JULY 2018 TO 30 JUNE 2021
Overview
Performance rights, of which:
Performance rights, of which:
Measured over three years to 30 June 2020
Measured over three years to 30 June 2021
• 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
• Up to 25% vest if a certain Return on Invested
Capital target is achieved
Capital target is achieved
• Up to 25% vest if a certain Earnings per
• Up to 25% vest if a certain Earnings per
Share Compound Annual Growth Rate target
is achieved
Share Compound Annual Growth Rate target
is achieved
Offer made in current reporting period – 2020 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 are subject to three performance hurdles:
• 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.
• 50% of performance rights vest if a certain underlying Earnings per Share (EPS) Compound Annual Growth Rate (CAGR)
target is achieved.
• The Return On Invested Capital (ROIC) for year ending 30 June 2022 acts as a gateway to EPS CAGR.
Performance rights granted during the period were fair valued by an external party using the Monte Carlo Simulation
and Black Scholes model.
1 1 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 36 Share-based payments (continued)
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 2
Fair value – EPS CAGR tranche 2
2020 LTI
2,264,786
30 October 2019
1 July 2019 – 30 June 2022
0.78%
30.0%
$0.65
$1.72
1
2
Expected volatility is based on the historic volatility of Cleanaway shares over a range of periods.
The fair value is reduced to reflect there is no dividend entitlement during the performance period.
The performance targets of the 2020 LTI award are set out in the table below.
Relative TSR performance measured over three years
from 1 July 2019 to 30 June 2022
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
EPS CAGR performance as measured over three years
from 1 July 2019 to 30 June 2022
Earnings per Share Compound Annual Growth Rate (EPS
CAGR) to be achieved:
• < 9.0% – 0% vesting
• 9.0% – 20% vesting
• > 9.0% – ≤ 10.5% – straight line vesting between 20%
and 50%
• > 10.5% – ≤ 12.5% – straight line vesting between
50% and 100%
• > 12.5% – 100% vesting
ROIC performance for the year ending 30 June 2022
Performance rights under EPS CAGR will only vest if ROIC
is at least 5.8% or more for the year ending 30 June 2022
(b) Short-term Incentive (STI) plan
The Cleanaway STI plan is an annual plan that is used to motivate and reward senior executives across a range of
performance measures over the financial year. Under the plan, participants are granted a combination of cash and rights
to deferred shares if certain performance standards are met. The Group uses EBITDA targets as the main performance
standard for the STI plan. Vesting of the performance rights granted is deferred for one year.
1 1 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 36 Share-based payments (continued)
(c) Toxfree Integration Incentive (TII) plan
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, were 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 were 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 related 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. Whilst the synergies arising from the Toxfree acquisition have exceeded the target of $35 million, the 30
June 2020 EBITDA performance condition for the plan was not achieved, due to the impact of COVID-19 and other factors.
Accordingly, all rights issued under the plan will lapse.
37 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.
2020
$
2019
$
Fees to Ernst & Young (Australia):
Fees for auditing the statutory financial report of the parent covering the group and
auditing the statutory financial reports of any controlled entities
1,593,111
1,383,234
Fees for assurance services that are required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services under other legislation or
contractual arrangements where there is discretion as to whether the service is provided by
the auditor or another firm
Fees for other services
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms of Ernst & Young (Australia)
Total fees to other overseas member firms of Ernst & Young (Australia)
Total auditor’s remuneration
–
–
248,068
–
–
–
1,841,179
1,383,234
–
–
–
–
1,841,179
1,383,234
38 Events occurring after the reporting date
There have been no matters or circumstances that have arisen since 30 June 2020 that have significantly affected the
Group’s operations not otherwise disclosed in this report.
1 1 4
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 39 Related party transactions
(a) Key management personnel
Disclosures relating to Key Management Personnel (KMP) are set out in the Remuneration Report on pages 46 to 62.
The KMP compensation included in employee expenses are as follows:
Short-term employee benefits
Post-employment benefits
Equity compensation benefits
2020
$
2019
$
5,338,542
5,698,413
189,032
965,732
175,728
3,240,120
6,493,306
9,114,261
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 30.
Transactions between Cleanaway Waste Management Limited and other entities in the wholly-owned Group during the
years ended 30 June 2020 and 30 June 2019 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 2020 and 30 June 2019, except as presented in note 24.
1 1 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 40 Significant accounting policies
The following significant accounting policies have been adopted in the preparation and presentation of the Financial Report.
These policies have been consistently applied to all years presented unless otherwise stated.
(a) Revenue
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.
1 1 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 40 Significant accounting policies (continued)
(b) Repairs and maintenance
Plant and equipment of the Group is required to be overhauled on a regular basis. This is managed as part of an ongoing
major cyclical maintenance program. The cost of this maintenance is recognised as an expense as incurred, except where
it relates to the replacement of a component of an asset, or where it extends the useful life of the asset, in which case the
costs are capitalised and depreciated in accordance with the Group’s policy. Other routine operating maintenance, repair
and minor renewal costs are also recognised as expenses as incurred.
(c) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred.
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. With the exception of deferred
tax recognsied on initial application of IFRS 16 Leases, deferred 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)
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.
1 1 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 40 Significant accounting policies (continued)
(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.
(g) Cash and cash equivalents
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.
(h) Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
Trade receivables are generally due for settlement within 30 days and therefore are all classified as current. Collectability
of trade debtors is reviewed on an ongoing basis. Debts which are known as uncollectable are written off when identified.
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, adjusted for forward looking information.
The Group’s exposure to credit risk related to trade and other receivables is disclosed in note 33(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 comprise 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 40(o)) are
recognised upon commencement of cell development. The depreciation, for cell development costs and the remediation
asset, is calculated by the tonnes of airspace consumed during the reporting period divided into the total airspace available
at the beginning of the reporting period, such that all costs are fully depreciated upon receiving last waste into the landfill.
A landfill is deemed full when its permitted airspace is consumed and it cannot legally accept any more waste. Alternatively,
a landfill may be deemed full earlier should other factors exist, for example, if it is not economically viable to continue
accepting waste.
Site infrastructure and landfill site improvement costs include capital works such as site access roads and other capital costs
relating to multiple cells on the landfill site. These costs are capitalised as incurred and depreciated using the useful life of the
asset or the life of the landfill up until receiving last waste.
1 1 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 40 Significant accounting policies (continued)
(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 costs less accumulated depreciation. Non-landfill land is not depreciated.
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.
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
15 to 40 years
Plant and equipment
Leasehold improvements
Landfill assets
(k)
Intangible assets
2.5 to 20 years
5 to 10 years
1 to 50 years
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.
1 1 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 40 Significant accounting policies (continued)
(k)
Intangible assets (continued)
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 three to 10 years.
(l) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid within 45 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months after the reporting period.
Other payables and accruals includes tipping and disposal costs accruals as well as general accruals.
(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 currency exchange gains and losses arising on foreign currency denominated borrowings are recorded in net
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.
12 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 40 Significant accounting policies (continued)
(n) Leases
The Group leases various property, equipment and vehicles. These leases typically do not exceed 10 years but in some cases
contain further renewal rights. Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance
of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease
term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that are based on a fixed index or a rate as at the commencement date;
• Amounts expected to be payable by the lessee under residual value guarantees;
• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain
an asset of similar value, in a similar economic environment, with similar terms and conditions.
Short-term leases and those where the underlying asset is of low value are recognised as an expense on a straight-line basis
over the lease term.
The Group has elected for the plant and equipment asset class, not to separate non-lease components from lease
components, and instead accounts for all payments under the lease together as a single component.
Variable lease payments
Some leases contain lease payments that are linked to variable components such as volumes of waste collected or landfill
revenue. Lease payments which are variable in nature and do not depend on a fixed index or rate are recognised in profit
or loss in the period in which they relate.
Extension and termination options
Extension and termination options are included in several lease arrangements across the Group. These terms are used to
maximise operational flexibility in terms of managing contracts. In determining the lease term, all facts and circumstances
are considered that create an economic incentive to exercise an extension option, or not exercise a termination option.
Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain
to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances
occurs which affects this assessment and that is within the control of the lessee.
In determining the lease term, the Group has applied judgement over the facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. All property leases on which a prized asset is
situated are considered reasonably certain to exercise an extension option.
1 2 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 40 Significant accounting policies (continued)
(o) Provision for remediation and rectification
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.
12 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 40 Significant accounting policies (continued)
(p) Provisions
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.
(q) Employee entitlements
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and vesting sick leave expected to be settled
within 12 months of the reporting date are recognised in other payables and employee benefits in respect of employees’
services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in employee
benefits and is measured in accordance with the other employee benefits described above. The liability for long service leave
expected to be settled more than 12 months from the reporting date is recognised in employee benefits and measured as
the present value of expected future payments to be made in respect of services provided by employees up to the reporting
date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods
of service. Expected future payments are discounted using market yields at the reporting date on the corporate bond rate
with terms to maturity and currency that match, as closely as possible, the timing of estimated future cash outflows.
Short-term Incentive (STI) compensation plans
A liability for employee benefits in the form of STIs 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 STIs 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 Short-term
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.
(r) Fair value measurement
The Group measures certain assets and liabilities at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
•
•
In the principle market for the asset or liability, or
In the absence of a principle market, in the most advantageous market for the asset or liability.
The principle or the most advantageous market must be accessible by the Group.
The fair value of an asset or liability is measured using the assumptions that the market participants act in their economic
best interest. A fair value measurement of non-financial assets takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use.
1 2 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 40 Significant accounting policies (continued)
(r) Fair value measurement (continued)
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.
(s) Basis of consolidation
Subsidiaries
The Consolidated Financial Statements comprise the financial statements of the Group and its subsidiaries as at 30 June
2020. 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.
Equity accounted investments
Equity accounted investments are those entities over which the Group has either significant influence (associate entities)
or joint control and has rights to the net assets of the entity (joint venture entities). The Group does not have power
over these entities either through management control or voting rights. Investments in associates and joint ventures are
accounted for using the equity method of accounting and are collectively referred to as “equity accounted investments”
in this report.
Under the equity method of accounting, the investments in associates and joint ventures are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the associate or joint venture
in the Consolidated Income Statement. Dividends received from associates and joint ventures are recognised as a reduction
in the carrying amount of the investment.
Where the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate or joint venture.
12 4
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 40 Significant accounting policies (continued)
(s) Basis of consolidation (continued)
Equity accounted investments (continued)
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.
(t) Business combinations
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.
(u) Change in accounting policy – Non-landfill land and buildings
The Group re-assessed its accounting for property, plant and equipment with respect to measurement of a certain class
of property, plant and equipment after initial recognition. The Group had previously measured all property, plant and
equipment using the cost model, except for non-landfill land and buildings which were measured using the revaluation
model. The Group has elected to change the method of accounting for non-landfill land and buildings to the cost model
to align the accounting method used with the Group’s method of accounting for landfill land and to align the accounting
with practices adopted by its industry peers. In doing so the Group believes applying the cost model to non-landfill and
buildings will be more relevant and comparable to its industry peers. The Group has applied the cost model retrospectively.
After initial recognition, all non-landfill land and buildings are measured at cost less accumulated depreciation. Land is
not depreciated.
Impact of change on the Consolidated Balance Sheet at the earliest period presented and as at 30 June 2019:
Increase/(decrease) of previously reported balances:
Assets
Property, plant and equipment
Net deferred tax assets
Equity
Asset revaluation reserve
Retained earnings
30 JUNE 2019
$’M
30 JUNE 2018
$’M
(64.3)
17.5
(46.8)
(53.9)
7.1
(46.8)
(33.2)
8.1
(25.1)
(35.5)
10.4
(25.1)
Impact of change on the Consolidated Income Statement and Statement of Comprehensive Income for the year ended
30 June 2019:
Increase/(decrease) of previously reported balances:
Revaluation of non-landfill land and buildings
Income tax expense
Profit after income tax
Revaluation of non-landfill land and buildings (net of tax)
Total comprehensive income for the year
30 JUNE 2019
$’M
(4.7)
1.4
(3.3)
(18.4)
(21.7)
1 2 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 41 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 current year and
relevant to the Group include:
• AASB 16 Leases
AASB 16 supersedes AASB 117 Leases and AASB Interpretation 4 Determining whether an Arrangement contains a Lease
and sets out the principles for recognition, measurement, presentation and disclosure of leases. On adoption of AASB 16,
the group recognised lease liabilities in relation to leases which had previously been classified as ’operating leases’ under
the principles of AASB117. These liabilities were measured at the present value of the remaining lease payments, discounted
using the incremental borrowing rate as of 1 July 2019. The weighted average incremental borrowing rate applied to the
lease liabilities on 1 July 2019 was 3.3%.
Adjustments recognised on adoption
For leases previously classified as finance leases, the Group recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date
of initial application. The measurement principles of AASB 16 are only applied after that date. The below table shows
the reconciliation between operating lease commitments at 30 June 2019 and the lease liability recognised at 1 July 2019.
Operating lease commitments as at 30 June 2019
Discounted operating lease commitments using the incremental borrowing rate at 1 July 2019
Add: Finance lease liabilities recognised as at 30 June 2019
Less: Short-term leases
Less: Low-value leases
Add: Differences related to inclusion of extension and termination options
Less: Differences related to CPI increases not included in the lease liability
Lease liability recognised at 1 July 2019
Lease liabilities recognised at 1 July 2019 were classified as summarised below:
Current lease liabilities
Non-current lease liabilities
1 JULY 2019
$’M
259.6
215.5
134.4
(1.6)
(1.8)
96.7
(11.8)
431.4
1 JULY 2019
$’M
60.9
370.5
431.4
The associated right-of-use assets for significant property leases were measured as if AASB 16 had always been applied.
Other right-of-use assets were measured at the amount equal to the lease liability. Under this approach the Group does
not restate its comparative figures but recognises the cumulative effect of adopting AASB 16 as an adjustment to retained
earnings at the beginning of the current period.
The recognised right-of-use assets relate to the following types of assets:
Properties
Plant and equipment
126
1 JULY 2019
$’M
265.8
151.5
417.3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 41 New standards adopted (continued)
The change in accounting policy impacted the following balance sheet items at 1 July 2019:
Increase/(decrease) of previously reported balances:
Assets
Other current assets
Right-of-use assets
Property, plant and equipment
Net deferred tax assets
Liabilities
Provisions
Lease liabilities
Equity
Retained earnings
1 JULY 2019
$’M
(0.3)
417.3
(132.3)
3.3
288.0
(1.4)
297.0
295.6
(7.6)
(7.6)
Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
• Reliance on previous assessments on whether contracts are onerous;
• The accounting for operating leases with a remaining term of less than 12 months as at 1 July 2019 as short-term leases;
• The Group has not applied the requirements of AASB 16 to short-term leases and those where the underlying asset
is of low value;
• The Group has not separated non-lease components from lease components for the plant and equipment asset class;
• The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
• The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
1 2 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020CLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 42 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 2020 and have not been applied in preparing these Consolidated Financial Statements. Those which may be relevant
to the Group are set out below. The Group does not plan to adopt these standards early.
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2020
30 June 2021
New standards
STANDARD/INTERPRETATION
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.
128
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2020 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 2020 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 2020; 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 30 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, 25 August 2020
129
Directors’ DeclarationCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION Ernst & Young
Ernst & Young
8 Exhibition Street
8 Exhibition Street
Melbourne VIC 3000 Australia
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
Fax: +61 3 8650 7777
ey.com/au
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 2020, the 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 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 2020 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 (including Independence Standards) (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 judgment, 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
13 0
Independent Auditor’s Reportto 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.
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 2020, the Group held $1,894.6 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. The Group
also considered the potential impact of COVID-19 on their
forecast revenue and expenditure. Given these judgements,
this was a key audit matter.
Note 23 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, including any underlying cashflow
impacts from COVID-19;
• 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
1 3 1
Independent Auditor’s Reportto the Members of Cleanaway Waste Management LimitedCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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. 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.
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.
At 30 June 2020, the Group held $301.3 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.
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 and the resultant impact
on the provision balance with reference to observable
market inputs.
Because of the subjective nature of the estimates involved
in accounting for rectification and remediation obligations,
this is a key audit matter.
We also assessed the adequacy of the Group’s disclosures
in the financial report regarding rectification and
remediation obligations.
Note 27 of the financial report provides further detail
on the rectification and remediation provisions.
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 2020 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
1 3 2
Independent Auditor’s Reportto 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
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 judgment and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
1 3 3
Independent Auditor’s Reportto the Members of Cleanaway Waste Management LimitedCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION 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)
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, actions taken to eliminate threats or safeguards applied.
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 46 to 62 of the directors’ report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Cleanaway Waste Management Limited for the year ended 30 June 2020,
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
25 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
13 4
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
UNITS
628,662,206
425,623,211
250,000,712
136,986,366
125,368,634
70,319,696
51,031,180
27,546,823
25,935,028
25,515,861
% OF
UNITS
30.60
20.72
12.17
6.67
6.10
3.42
2.48
1.34
1.26
1.24
1.13
0.55
0.43
0.33
0.26
0.17
0.16
0.15
0.15
0.15
Top 20 Shareholders as at 14 August 2020
RANK
NAME
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
CUSTODIAL SERVICES LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
23,248,642
MILTON CORPORATION LIMITED
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
EQUITAS NOMINEES PTY LIMITED
MIRRABOOKA INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
AVANTEOS INVESTMENTS LIMITED
CS FOURTH NOMINEES PTY LIMITED
AMP LIFE LIMITED
11,250,000
8,821,035
6,796,691
5,418,844
3,550,000
3,332,981
3,025,781
3,022,081
3,016,792
Top 20 Holders of Fully Paid Ordinary Shares
Total Remaining Holders Balance
Total Fully Paid Ordinary Shares on Issue
1,838,472,564
215,693,242
89.50
10.50
2,054,165,806
100.00
Substantial Shareholders
Substantial shareholders as shown in shareholding notices received by the Company as at 14 August 2020 are:
Cooper Investors Pty Ltd
Marathon Asset Management LLP
108,856,695
108,510,035
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 2020 was 2,054,165,806 ordinary fully paid shares.
As at 14 August 2020, the total number of shareholders owning these shares was 17,794 on the register of members
maintained by Computershare Investor Services Pty Ltd.
89.50% of total issued capital is held by or on behalf of the 20 largest shareholders.
1 3 5
56FINANCIAL REPORTOTHER INFORMATIONOther InformationCLEANAWAY WASTE MANAGEMENT LIMITED 2020 ANNUAL REPORT234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER 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 2020, there were 10,094,417 performance rights on issue to 42 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
4,144
1,001–5,000
5,001–10,000
10,001–100,000 100,001 AND OVER
5,944
3,210
4,249
247
TOTAL
17,794
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 $2.19 on 14 August 2020 was 438.
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
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