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A N N U A L R EP O R T 2021
Cleanaway Waste
Management Limited
ABN 74 101 155 220
Contents
OVERVIEW
How we create value
FY21 snapshot
Executive Chairman’s Report
CEO’s Report
COO’s Report
BUSINESS REVIEW
Solid Waste Services
Industrial & Waste Services
Liquid Waste & Health Services
SUSTAINABILIT Y
Highlights
2
4
6
10
12
14
16
18
20
CORPOR ATE INFORMATION
Board of Directors
Senior Executive Team
FINANCIAL REPORT
Financial Statements
Directors’ Report
OTHER INFORMATION
Other information
Corporate directory
22
24
27
28
134
136
The Company’s 2021 Annual General Meeting will be held at 11am
(Australian Eastern Daylight Time) on Friday 22 October 2021.
The meeting will be held as a virtual meeting. There will be no physical venue
for shareholders to attend. Shareholders may attend the meeting virtually
by visiting https://web.lumiagm.com on their smartphone, tablet or computer.
The 2021 Corporate Governance Statement and Appendix 4G Disclosures
are available on our website at
https://www.cleanaway.com.au/about-us/for-investor/corporate-governance/
Our progress
continues...
We are proud to be leaders in closing the
loop for commodities such as PET, HDPE
and PP plastics, and we will do more
where opportunities present. During the
year we completed the rebuild of the high
specification Perth MRF and we will begin
commissioning the PET plastic pelletising
plant in Albury in the second quarter of
FY22. Planning is also well progressed
for the Sydney MRF and the HDPE and
PP plastic pelletising plant in Melbourne.
Dedicated bunkers at
our Perth MRF contain
and protect recyclable
commodities before
they are sold.
1
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 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
C O L L E CTION
We see all waste
as a resource
L
SA
O
P
S
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D
N
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N
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M
T
A
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R
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C
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M
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D
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T
I
E
S
OUR MISSION
To make a sustainable
future possible
R
E
S
O
U
R
C
E
R
E
C
O
V
E
R
Y
E
T
S
A
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G
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R
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M
ANUFAC T U R E /
S E
U
-
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R
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 investments in an integrated value chain with prized
infrastructure assets, creates competitive advantage 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 value
from waste
streams 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
3
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT FY21 snapshot
Financial highlights 1,2
Our financial performance enables us to continue
investing in better and more sustainable solutions.
$2,406 million revenue
3.2%
$2,199 million net revenue 3
4.7%
$535.1 million EBITDA
$258.7 million EBIT
$153.2 million NPAT 4
3.8%
0.8%
2.1%
4.6¢ dividends per share
12.2%
7.3¢ earnings per share
No change
Net Revenue ($m)
EBITDA ($m)
$2,199m
4.7%
Net Revenue
358.1
$535.1m
3.8%
EBITDA
17
18
19
20
21
17
18
19
20
21
Operating Cash Flow ($m)
Dividend (¢)
$424.4m
5.7%
Operating Cash Flow
4.6¢
12.2%
Dividend
358.1
17
18
19
20
21
17
18
19
20
21
Represents underlying results.
1
2 Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019, as such FY17, FY18 and FY19 comparatives
have not been restated.
3 Net revenue is a non-IFRS measure and excludes landfill levies.
4 Attributable to ordinary equity holders.
Operations at a glance
Community 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 fleets of
waste collection vehicles on Australian roads, we’re
working towards Our Mission of making a sustainable
future possible, for all Australians.
We work in partnership with the community to ensure our
contribution is more than just as an essential service provider.
Education, social procurement and community donations are
just some of the ways we aim to make a difference.
6,300+
Employees
5,300+
Vehicles
$10.1m+
Spent with Aboriginal
and Torres Strait
Islander and social
business enterprises
$530,000+
Community sponsorships
and donations
Community and education sessions nationally
~250
Sites
125+
Prized infrastructure assets
1,241
Events held
29,000+
People attended
4
What we recovered
Each year we focus on
recovering more resources
from waste and returning
commodities to the value chain.
~474 kt
~29 kt
~35 kt
Paper and cardboard
Plastic
Steel and aluminium
>113 ML
Used oil
~108 Mm3
Landfill gas captured
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.
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.
~906 ktCO2-e
Greenhouse gas emissions
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 operations. We are
continually looking at ways to support further
emission reduction, from expanding the footprint of
our recycling capability to fuel and energy efficiency.
~130 GWh
of renewable energy
generated
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.
Scope
1
+
Scope
2
5
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT EXECUTIVE
CHAIRMAN’S
REPORT
Great momentum
for a new and
exciting phase
in our journey
I am pleased to present to you Cleanaway Waste
Management Limited’s 2021 Annual Report.
This year I write to you as Executive Chairman, having
assumed executive responsibilities on a temporary basis as
part of our leadership transition. This process culminated
in the commencement of Mark Schubert as Chief Executive
and Managing Director on 30 August 2021 and my return
to the role of Non-Executive Chairman on 1 October 2021.
It is gratifying to be able to hand over leadership of
a business that has delivered a strong financial and
operational performance despite the ongoing challenges
of COVID-19, alongside an improved safety performance,
better environmental outcomes and a more engaged
workforce.
Safety remains a key priority for Cleanaway. During the
year, our Total Recordable Injury Frequency Rate (TRIFR)
reduced to 3.6, a 20% improvement on the prior year,
as we continue to strive for Zero Harm.
We undertook a significant safety initiative during the
year to reduce the potential for driver distraction, which
was identified as a critical risk for road accidents involving
our vehicles. We rolled out the Mobileye system across
our national fleet. The system comprises a driver interface
with advanced driver-assistance systems that provides early
warnings to drivers to prevent or mitigate front and side
collisions. We will continue to invest towards developing
and implementing new ways to protect our people, who
are our most valuable asset.
Financial performance
Cleanaway delivered another strong financial performance
this financial year, notwithstanding the ongoing challenges
presented by COVID-19. The company reported underlying
net profit after tax of $153.2 million, 2.1% higher than the
prior year, translating to earnings of 7.3 cents per share.
On a statutory basis, net profit after tax of $147.7 million
was 31.2% higher than the prior year, largely reflecting lower
acquisition and integration costs and the adjustment associated
with the Perth Material Recovery Facility fire in the prior year.
Each of our operating segments – Solid Waste Services,
Industrial & Waste Services and Liquid Waste & Health
Services – reported higher EBITDA and EBIT compared
to the prior corresponding period:
• Solid Waste Services reported increases in net revenue,
EBITDA and EBIT of 7.5%, 4.4% and 0.1% respectively;
Industrial & Waste Services reported increases in EBITDA
and EBIT of 4.6% and 5.6% respectively, with revenue
2.5% lower; and
•
• Liquid Waste & Health Services reported increases
in EBITDA and EBIT of 3.5% and 5.1% respectively,
with revenue marginally lower.
A more detailed analysis of the performance of our operating
segments can be found on subsequent pages of this Annual
Report. Our FY21 underlying Group results include:
• Net revenue increased 4.7% to $2.2 billion;
• EBITDA increased 3.8% to $535.1 million;
• EBIT increased 0.8% to $258.7 million; and
• NPAT increased 2.1% to $153.2 million.
6
6
“It is gratifying to be able to hand
over leadership of a business that
has delivered a strong financial
and operational performance
despite the ongoing challenges
of COVID-19, alongside an
improved safety performance,
better environmental outcomes
and a more engaged workforce.”
FY21 highlights
Net revenue ($b)
$2.2b
4.7%
EBITDA ($m)
$535.1m
3.8%
TRIFR
3.6
20%
Net cash from operating activities increased by $22.9 million to
$424.4 million compared to FY20. Higher EBITDA and reduced
landfill remediation costs were offset by the reversal of working
capital increases in the prior period due to government payment
deferrals. This resulted in a strong cash conversion ratio of 102.4%.
Our cash capital expenditure of $246.2 million and finance leases
of $93.6 million reflected our increased investment in growth
assets and successful tenders for municipal contracts, together
with sustaining our existing assets and operations. We will
continue to apply a disciplined approach to capital allocation
while allowing flexibility to seize on accretive growth opportunities.
Strategy
Throughout the year we continued to execute our strategy, enabling
Cleanaway to strengthen its network of prized infrastructure
assets, which are key to sustainably managing the waste generated
across Australia.
During the financial year we announced that we had entered into
an agreement with Suez to acquire two landfills and five transfer
stations in Sydney. We expect to complete that transaction in the
middle of FY22. We also acquired the Stawell landfill in regional
Victoria and the Grasshopper C&D collections business in NSW
and, we completed the rebuild of the Perth MRF, which reopened
towards the end of the financial year.
I am also pleased to report that during the year we made significant
progress on several infrastructure projects that support the
transition to a circular economy. Our PET plastic pelletising facility
that we are developing with Pact and Asahi Beverages in Albury,
NSW is well advanced, with operations expected to commence
7
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT “People and culture will always be central to the sustainability
of our business. I am pleased to report that over the course
of the year we improved our health and safety performance,
improved our overall employee engagement, continued to
address areas where there is a gender pay gap and introduced
a series of wellbeing programs for our employees as they
continue to work through the impacts of COVID-19.”
later this calendar year, ahead of schedule. The proposed
Energy-from-Waste facility that we are developing with
Macquarie Capital is being assessed by the Department
of Planning, Industry and Environment and we are hopeful
that we will receive a favourable planning decision towards
the middle of FY22. This project will provide a long-term
solution to Sydney’s putrescible waste disposal needs
and deliver a superior carbon emissions profile relative
to landfilling.
We have a strong pipeline of projects and initiatives that
will further contribute to a circular economy that we will
continue to pursue in FY22 and beyond. Importantly,
one of the key building blocks of a circular economy
is an extensive collections network and good consumer
recycling behaviours. We continue to grow and invest
in our fleet to meet the needs of the community and
our growing business. We also developed a freely accessible
educational platform, Greenius, that helps the community
to better understand how it can better contribute to
a circular economy.
The business remains in very strong financial health. During
the year we secured a three-year $500 million committed
debt facility to support the funding of the Suez’s assets.
We have $930 million of undrawn debt facilities and an
average debt maturity of 4.7 years as at 30 June 2021.
Our net debt to EBITDA ratio of 1.61x as at 30 June 2021
is well inside our limit for covenant testing purposes.
We will continue to monitor the market for accretive
acquisition opportunities and remain disciplined with
respect to 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 2.35 cents per share, taking the total
dividend for the year to 4.60 cents per share, payable
on 5 October 2021. This was a 12.2% increase on the
prior year and represented a 62.9% payout ratio, in line
with our committed target range of paying out 50–75%
of underlying profits.
Sustainability and governance
During FY21 we further expanded and enhanced our
sustainability reporting. The central theme of this year’s
report is around Cleanaway’s role in a circular economy
and how we can contribute to lowering carbon emissions.
One of our key commitments this year is to undertake the
necessary work that will allow us to set credible interim
targets that align the reductions in our carbon emissions
to the 2015 Paris Agreement goal; keeping the increase
in global temperature to “well below 2 degrees C”
above pre-industrial levels.
People and culture will always be central to the
sustainability of our business. I am pleased to report
that over the course of the year we improved our health
and safety performance, improved our overall employee
engagement, continued to address areas where there
is a gender pay gap and introduced a series of wellbeing
programs for our employees as they continue to work
through the impacts of COVID-19. Whilst we made
progress in relation to gender diversity, it is an area
where we will continue to focus as we have not met our
expectations. I am pleased to report that we have steadily
improved employee engagement, with our most recent
survey in June 2021 resulting in an all-time high level
of engagement.
During the year, the Board was advised of claims made
about overly assertive workplace behaviour involving
our former CEO Vik Bansal. We initiated a thorough
independent investigation into the issues raised. Following
this investigation, the Board implemented a range of
measures, including executive leadership mentoring,
enhanced reporting, and monitoring of the CEO’s conduct.
The Board and Mr Bansal reached a mutual agreement
in January that it was the right time for Cleanaway to move
forward under new leadership. On behalf of the Board,
I thank Vik for his significant contribution to the success
and growth of the organisation during his time as CEO
and wish him all the very best for the future.
8
Mark has a reputation for being a highly visible and
engaged leader with a keen focus on building alignment
among teams. He inherits a business in a strong financial
position, which is well positioned to further leverage our
leading market footprint and infrastructure. I know that
Mark is looking forward to working with our executive
team to build on the momentum in our business, including
our recently announced asset acquisitions from Suez.
I would like to take this opportunity to thank Brendan Gill,
who was coaxed out of pending retirement to support the
leadership transition, and who has done an outstanding
job. I would also like to thank the executive management
team and all Cleanaway employees for responding
efficiently and effectively to the various challenges the
business faced during the year, while delivering another
strong financial and operational performance.
I thank my fellow Board members for their continued
support during the year and welcome Ms Ingrid Player
as an Independent Non-Executive Director of the Company.
Her diverse background and skills, including extensive
corporate transactional, risk and governance experience
in highly regulated industries, will complement the
expertise on the Board and prove invaluable to Cleanaway.
Additionally, her appointment will further strengthen the
Board’s sustainability skill set.
Finally, I would like to thank 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 22 October 2021.
Making a sustainable future possible is a mission that
unites the more than 6,000 people who make Cleanaway
the company it is. It has been my privilege to lead a team
of committed people in an executive capacity and I look
forward to celebrating our future successes together.
Mark Chellew
Executive Chairman
9
“It’s so rewarding visiting kindergartens and seeing how passionate
and excited children are about waste, recycling and the garbage
truck. It makes me love what I do even more. Kids are the future!”
– Lauren Grimshaw, Education Officer, Solid Waste Services – QLD
Board and leadership transition
After a comprehensive search process, I was very pleased
to be able to announce the appointment of Mark Schubert
as Cleanaway’s new Chief Executive Officer and Managing
Director towards the end of the financial year. Mark brings
a wealth of senior executive experience, has proven his
ability to lead large and complex businesses, and is a strong
fit with our strategy and culture. He joins us at a time when
we have great momentum and we are entering a new and
exciting phase in our growth journey.
Mark joins Cleanaway from Origin Energy where he has
served as Executive General Manager, Integrated Gas for
the past four years. Prior to joining Origin in 2015, he held
several senior positions during an 18-year international
career with the Shell Group of companies. He has a
track record of operating and transforming major assets,
including world class LNG projects and oil refineries.
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT CEO’S REPORT
Dear Shareholder,
I am proud to write to you as Cleanaway’s new Chief
Executive Officer and Managing Director and to present
Cleanaway’s 2021 Annual Report.
Since joining Cleanaway in August, I have spent a lot of
time meeting our teams and from the outset I have been
impressed by the dedication, commitment and passion for
delivering our mission to make a sustainable future possible.
I look forward to meeting more of our team members over
the balance of the year and beyond.
Throughout my career I have been fortunate to work
in a range of diverse roles within the oil and gas industry,
spanning strategy, commercial, trading, marketing, portfolio
management and operations. I believe my deep and
varied experience gives me a balanced perspective and an
understanding of the strategic challenges and opportunities
facing large and multifaceted businesses like Cleanaway.
As a leader, I am passionate about creating inclusive and
high-performing teams that embrace individuality and
encourage people to bring their whole self to work. I look
forward to leveraging my skills and those of our 6,000
employees to help Cleanaway capture the significant
opportunities ahead of us.
It is a fascinating time to join the waste management
industry as it becomes the engine room of the transition
to a circular economy. I have observed keenly the industry’s
transformation from longstanding provider of essential
waste services to the community, to an innovative
powerhouse responsible for developing new ways to
collect, recover, reuse, reprocess and treat waste materials
for our customers.
1 0
1 0
“Producers, consumers,
governments,
regulators and industry
participants all have
important roles to
play in improving
the circularity of
our economy and
I see this as a great
opportunity for
Cleanaway.”
I look forward to
contributing to Cleanaway’s
mission to make a
sustainable future possible
The strong operational and financial performance that
Cleanaway has delivered despite the various challenges
thrown up by COVID-19 is a testament to the strength of
our teams across the business. That these outcomes were
delivered alongside an improved safety performance, better
environmental outcomes and a more engaged workforce,
is additionally impressive.
I am excited to be joining Cleanaway at such an important
time for the company. I look forward to working with our
team to continue to build on our strategy in support of
our mission to make a sustainable future possible, as well
as engaging with our key stakeholders over the coming
months, including you, our shareholders, who I hope to
meet in due course.
Mark Schubert
CEO and Managing Director
Tackling climate change and advancing a circular economy
are two essential and interrelated goals where I see an
exciting opportunity to bring to life Cleanaway’s mission
for our customers, shareholders, community and the
planet. Carbon emissions are a natural consequence of
waste ending up in landfill, so we must seek to reuse
materials where possible, and where that cannot be
achieved, to reduce and remove the emissions from waste.
Producers, consumers, governments, regulators and industry
participants all have important roles to play in improving
the circularity of our economy and I see this as a great
opportunity for Cleanaway. By continuing to invest towards
resource recovery and innovation, I look forward to being
part of the solution as Cleanaway continues to grow and
serve our customers and communities around Australia.
I am pleased to see that Cleanaway has continued to
innovate and invest towards evolving existing infrastructure
in order to meet the challenges and opportunities of a
circular economy. I have been impressed by Cleanaway’s
deep integration throughout the industry’s value chains,
and the many projects underway to extend the value chain
and further enhance our position within it.
With the impact of COVID-19 continuing to be felt, there
has never been a more important time to focus on our
people. I would like to take this opportunity to thank our
workforce, particularly our frontline workers, for their
dedication and commitment and their flexibility to safely
serve our customers and our communities through all the
challenges they continued to face this year.
1 1
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT CHIEF OPER ATING
OFFICER’S REPORT
Strong foundations
for a sustainable
future
In what has been a challenging operating environment,
I am pleased with the way our business and our people
have responded to deliver a strong set of financial results.
This once again reflects the strength of Cleanaway.
FY21 presented ongoing challenges and disruption caused
by the COVID-19 pandemic and severe weather events.
Some regions were more affected than others and we
adapted how we work and operate to ensure we could
continually service the needs of our customers and
the community.
The safety, health and wellbeing of all Cleanaway’s staff,
contractors, customers and members of the public remains
paramount. As a shared responsibility amongst our people,
we continue to work towards our target of Zero Harm.
During the year we commenced the roll out of our safe,
compliant, reliable and optimised asset management
framework, which focuses on the HS&E risks of our assets.
We continue to raise awareness, enhance our training, and
identify and respond to health and safety risks.
The defensive characteristics of our revenue streams
continue to underpin our financial performance. Each of
our three operating segments grew their earnings during
the year. The Industrial & Waste Services and Liquid Waste
& Health Services segments also delivered EBITDA and EBIT
margin improvement. The Solid Waste Services business
grew its collections market share, including new municipal
contracts and large national accounts. This, together
with winning a large long-term post collections contract
at MRL and lower volumes at Erskine Park, contributed
to the changing mix of margin in that segment.
Cleanaway continues to pursue and deliver accretive
projects and acquisitions and in FY21 we:
• Entered into an agreement to acquire two landfills and
five transfer stations in Sydney from Suez and secured
committed debt funding at attractive pricing to support
the transaction;
• Commenced construction of a PET plastic pelletising
facility, which is progressing ahead of time and
on budget;
• Progressed the Energy-from-Waste project in
Sydney, which is currently being assessed by the
New South Wales Department of Planning, Industry
and Environment;
• Progressed value chain extension development projects
in plastics and glass re-processing; and
• Completed the acquisition of Grasshopper Environmental,
Stawell Landfill, Oilwise and Pinkenba CDS businesses.
Our mission to make a sustainable future possible and our
objective to drive a circular economy in Australia continues
at pace. The recently published sixth assessment report by
the Intergovernmental Panel on Climate Change included
some sobering climate statistics and predictions. We took
another step forward this year on our sustainability reporting
journey, outlining our ambition to align reduction in our
carbon emissions to the 2015 Paris Agreement goal; keeping
the increase in global temperature to ‘well below 2 degrees
C’ above pre-industrial levels.
We will identify carbon emissions reduction opportunities
across our operations. We will set and disclose a credible
long-term emissions reduction target acknowledging the
complex nature of landfill emissions. Our interim targets
will be based on our long-term target.
1 2
Group performance overview
I am pleased to advise that we have continued to grow the business from top line, bottom line and cash flow
perspectives. Group net revenue was up 4.7% to just under $2.2 billion, reflecting new customer contracts and
recent acquisitions. Group Underlying EBITDA was up 3.8% to $535.1 million with each of the three segments
delivering higher EBITDA compared to FY20.
Underlying NPAT increased 2.1% to $153.2 million, while statutory NPAT was up 31.2% to $147.7 million.
Operating cash flow increased 5.7% to $424.4 million, reflecting higher EBITDA, lower remediation costs and
working capital movements.
Underlying results
Gross Revenue ($ million)
Net Revenue ($ million)
EBITDA ($ million)
EBITDA margin
EBIT ($ million)
EBIT margin
NPAT ($ million)
EPS (cents per share) 1
NPATA 2 ($ million)
Statutory results
Gross Revenue ($ million)
Net Revenue ($ million)
EBITDA ($ million)
EBITDA margin
EBIT ($ million)
EBIT margin
NPAT ($ million)
EPS (cents per share)
NPATA 2 ($ million)
Total dividend per share (cents)
Cash from operating activities ($ million)
Cash conversion ratio 3
Net Debt to EBITDA 4
FY21
2,406.4
2,198.9
535.1
24.3%
258.7
11.8%
153.2
7.3
164.1
FY21
2,406.4
2,198.9
528.8
24.0%
242.7
11.0%
147.7
7.1
158.6
4.60
424.4
102.4%
1.61x
FY20
CHANGE
2,332.1
2,100.1
515.7
24.6%
256.6
12.2%
150.0
7.3
161.7
3.2%
4.7%
3.8%
(30)bps
0.8%
(40)bps
2.1%
–
1.5%
FY20
CHANGE
2,332.1
2,100.1
487.1
23.2%
204.9
9.8%
112.6
5.5
124.3
4.10
401.5
107.5%
1.46x
3.2%
4.7%
8.6%
80bps
18.4%
120bps
31.2%
29.1%
27.6%
12.2%
5.7%
(510)bps
0.15x
1
2
3
4
Based on NPAT attributable to ordinary equity holders of $150.8 million (FY20: $150.3 million) and 2,057.4 million (FY20: 2,050.7 million)
weighted average ordinary shares.
Excludes tax effected amortisation of acquired customer and license intangibles.
Calculated as net cash from operating activities before remediation of landfills, underlying adjustments, net interest and tax divided by
underlying EBITDA before share of profits of equity accounted investments.
Ratios presented are for finance agreements covenant testing purposes and calculated on a pre-AASB16 basis. Certain immaterial
adjustments are made to the ratio calculations for covenant testing purposes.
1 3
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT UNDERLYING
UNDERLYING
SEGMENT
SEGMENT
PERFORMANCE
PERFORMANCE
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 (C&I) customers and over 100 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.
Solid Waste Services net revenue increased 7.5% or $103.5
million to $1,476.3 million. EBITDA increased 4.4% or
$17.2 million to $405.5 million, and EBIT increased $0.3
million to $213.0 million.
Solid Waste Services benefited from full year contributions
from Statewide Recycling and the VCRR businesses (former
SKM assets) and initial contributions from Stawell landfill,
Grasshopper Environmental (NSW C&D collections) and
the Pinkenba Recycling acquisitions.
Municipal contract wins, including the City of Casey,
Wyndham, Randwick and SA Council Solutions, together
with the WA regional CDS contract, national C&I
customer account wins and increased volumes from
the Metropolitan Waste and Resource Recovery Group
(MWRRG) contract, further benefited the segment.
Headwinds included lower post collections volumes at
the Erskine Park inert landfill in Sydney, where work being
undertaken to construct a mechanically stabilised earth
(MSE) wall was delayed and impeded its ability to accept
volumes. In addition, we experienced lower Western
Australian post collections volumes and prices at Dardanup
landfill as municipal councils seek to fill their airspace
ahead of Energy-from-Waste facilities commencing
operations in Perth. To a lesser extent there were some
impacts from weather events and COVID-19 related
restrictions.
The MSE wall at the Erskine Park landfill is expected to
be completed in Q2 FY22 and will create 400,000 cubic
metres of additional airspace. Subject to completion
of the transaction with Suez, the Kemps Creek landfill
will provide Cleanaway with a longer-term inert landfill
solution for NSW.
The Perth MRF rebuild was completed during the year and
commissioned towards the end of the financial year. At this
early-stage post commissioning it is producing high quality
outputs within customer specifications.
Whilst EBITDA was up, EBITDA margins declined 80bps
across the year, reflecting several factors including lower
post collections margins due to significantly lower volumes
at the Erskine Park and Dardanup landfills, increased
MWRRG volumes at Melbourne Regional Landfill, and a
changing mix of earnings with the full year contribution
from VCRR (including the former SKM assets), new
acquisitions and new municipal and national account
collections contract wins.
The segment reported 9.6% higher depreciation and
amortisation costs compared to FY20. The increase was
due to new acquisitions, new municipal contracts, and
increased landfill depreciation largely due to increased
1 4
405.5
388.3
352.8
285.7
25.8
25.9
28.3
27.5
14.4
15.0
15.5
14.4
2018
2019
2020
2021
EBITDA margin (%)
EBIT margin (%)
EBITDA ($m)
EBITDA ($m)
$405.5m
4.4%
EBIT ($m)
$213.0m
0.1%
FY21
FY20
CHANGE
1,476.3
1,372.8
7.5%
405.5
388.3
4.4%
27.5% 28.3%
80bps
213.0
212.7
0.1%
14.4% 15.5%
110bps
Net
revenue
($ million)
EBITDA
($ million)
EBITDA
margin
EBIT
($ million)
EBIT
margin
Cleanaway applied the modified retrospective approach
on adoption of AASB 16 Leases on 1 July 2019, as such
FY18 and FY19 comparatives have not been restated.
1 5
Perth recycling capacity
restored with $26m
redevelopment
In May Cleanaway officially opened the
Perth Material Recovery Facility (Perth
MRF) after a $26 million redevelopment
that reinstated capacity for local
governments and other customers in
Western Australia to manage recycling
and resource recovery.
Destroyed by fire in November 2019,
the new facility in South Guildford can
process 200,000 tons of recyclables
a year, which is more than half of
commingled recycling across WA, and
can deliver output purity of up to 99.5%.
We incorporated into the facility a
range of fire safety enhancements
that exceed National Construction
Code requirements, and kept the local
community informed through the Perth
MRF Community Reference Group.
With the re-opening of the facility,
Perth’s recyclables processing capacity
can continue to grow into the future.
volumes at Melbourne Regional Landfill attributable
to the MWRRG contract and a higher depreciation
rate at Erskine Park, which was fully depreciated prior
to the investment in the MSE wall.
FY22 depreciation and amortisation is expected
to be higher, reflecting full year contributions from
acquisitions and municipal contracts that partially
contributed in FY21, new municipal contracts that start
in FY22 (Logan, Hornsby), commencement of operations
at the rebuilt Perth MRF and higher landfill depreciation.
3456SUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT UNDERLYING
SEGMENT
PERFORMANCE
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.
tenor. We also secured contracts with Southern Ports
Authority and ASC Sullage Services.
IWS also undertook significant uncontracted project
activity with Beach Energy, Lochard Energy, Viva Energy,
Roy Hill, Santos and Rio Tinto through FY21, with a positive
outlook in FY22 for similar works.
As COVID-19 continues to be managed across Australia,
we are closely monitoring our asset and people
movements to ensure we can deliver safe, reliable and
efficient industrial waste services.
Industrial & Waste Services (IWS) reported EBITDA of
$48.0 million, 4.6% higher than FY20. EBITDA margin was
110 bps higher than the FY20, reflecting the successful
execution of the strategy of exiting low value workstreams.
EBIT increased by $1.2 million to $22.6 million and EBIT
margin increased 60bps to 7.4%.
The IWS segment performed strongly and consolidated
the quality of earnings delivered in previous years. It was
particularly strong in the mining sector in the Western
Australia market despite the challenges of COVID-19
and the labour shortages resulting from border closures.
Building on its leading market position in the mining sector
in WA, the segment is also expanding its platform for
growth across the oil and gas and infrastructure markets.
The segment experienced challenging business conditions
in Queensland during the year, but it has developed a
strong pipeline of activity in the region.
IWS remains extremely competitive across all markets, and
particularly in infrastructure where our focus is on major
road and rail infrastructure projects, along with a targeted
market plan for the oil and gas segment.
During the year IWS renewed several key contracts
including South32, Eurobodalla Shire Council and BHP
Olympic Dam, and commenced its contract with Fortescue
Metals Group, with most contracts having a three-year
1 6
48.0
15.7
46.6
45.9
14.6
13.6
6.6
6.8
7.4
10.2
18.9
2.7
2018
2019
2020
2021
EBITDA margin (%)
EBIT margin (%)
EBITDA ($m)
EBITDA ($m)
$48.0m
4.6%
EBIT ($m)
$22.6m
5.6%
FY21
FY20
CHANGE
305.6
313.4
2.5%
48.0
45.9
4.6%
15.7% 14.6%
110bps
22.6
21.4
5.6%
7.4% 6.8%
60bps
Net
revenue
($ million)
EBITDA
($ million)
EBITDA
margin
EBIT
($ million)
EBIT
margin
Cleanaway applied the modified retrospective approach
on adoption of AASB 16 Leases on 1 July 2019, as such
FY18 and FY19 comparatives have not been restated.
1 7
Emergency pump out services
at Booragoon fire site
Cleanaway’s IWS team received a call
from a key client to provide an emergency
pump out service at the site of a large
fire in Booragoon. Led by Operations
Supervisor Joshua Gard, and Operators
Richard Woods and Travis Rhodes, the
team quickly mobilised within ninety
minutes and worked alongside the fire
department to prevent contaminated
water from entering storm water drains.
Over the next two days the team worked
tirelessly to remove over 130 kilolitres of
water from pits in the area surrounding
276 Leach Highway. Key Account
Manager Joanna Laughton thanked the
crew for their work and said, “Our client
was very happy with the progress we
made and that our pump out operations
went smoothly and according to plan.
We’re pleased to have moved quickly
to minimise any potential environmental
impacts to the surrounding area and
the local community.” The Department
of Water and Environmental Regulation
tested the air quality and smoke fumes
and the area was deemed safe later
in the day.
3456SUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT UNDERLYING
SEGMENT
PERFORMANCE
Liquid Waste &
Health Services
Cleanaway’s Liquid Waste & Health Services comprises three
national strategic business units: Liquid Waste and 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.
of customers and transport challenges that the business
effectively managed. Lower elective surgeries resulted
in lower sharps and related medical waste and the
international border closures has resulted in substantially
lower quarantine work from airlines and cruise ships.
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.
During the year, the Health Services business upgraded
its incinerator at Laverton, commenced the redevelopment
of its Queensland site and commissioned a shredder
to handle product destruction at its Sydney site.
Liquid Waste & Health Services reported steady revenue
and increased EBITDA by 3.5% to $110.0 million. EBITDA
margins increased 80 basis points to 21.5%.
EBIT increased 5.1% to $67.6 million and EBIT margins
increased 70 basis points to 13.2%.
In the Hydrocarbons business the lingering effects of
COVID-19 lockdowns resulted in lower east coast oil
collections volumes, particularly in Victoria and south-east
Queensland. A temporary increase in product stewardship
receipts for high quality recycled base oil offset the lower
first half benchmark oil commodity prices.
Pricing, service improvements and business efficiency
initiatives helped to improve margins in the equipment
services (industrial cleaning) part of the business.
The Liquids and Technical Services (LTS) business realised
higher earnings than the prior year notwithstanding lower
volumes from tourist heavy states, hospitality (grease
trap), cruise ships and automotive sectors resulting from
COVID-19. Competition remained stable throughout the
year. Increased regulatory pressures impacted interstate
waste movements across the market.
New technology was developed at our Dandenong site
to handle asbestos contaminated soils and to deal with
residual waste from the Tottenham chemical storage plant
fire. The segment also benefitted from the treatment of
contaminated soils from the Parramatta Light Rail project
and other clean-up projects. Seasonally high rain events
in NSW and QLD resulted in an increase in leachate
volumes across the network.
The Health Services business realised higher earnings from
COVID-19 related activity at aged care facilities (in Victoria
in particular), hotel quarantine, and mass testing and
vaccination centres. This waste was predominantly light
and bulky and introduced increased service requirements
The Victorian EPA implemented a waste tracking system
for hazardous waste that went live in July 2021, which has
resulted in an increase in resources (Health Services and
LTS) required for both Cleanaway and its customers to
remain compliant.
1 8
110.0
106.3
86.9
54.2
16.8
17.6
11.4
10.9
20.7
21.5
12.5
13.2
2018
2019
2020
2021
EBITDA margin (%)
EBIT margin (%)
EBITDA ($m)
EBITDA ($m)
$110.0m
3.5%
EBIT ($m)
$67.6m
5.1%
FY21
FY20
CHANGE
512.7
513.6
0.2%
110.0
106.3
3.5%
21.5% 20.7%
80bps
67.6
64.3
5.1%
13.2% 12.5%
70bps
Net
revenue
($ million)
EBITDA
($ million)
EBITDA
margin
EBIT
($ million)
EBIT
margin
Cleanaway applied the modified retrospective approach
on adoption of AASB 16 Leases on 1 July 2019, as such
FY18 and FY19 comparatives have not been restated.
1 9
Supporting the COVID‑19
vaccination program
When the New South Wales Health
Department decided to open a COVID-19
mass vaccination centre at a former
department store in Wollongong, NSW,
Cleanaway Daniels had to work quickly
to install collectors to hold sharp objects,
including needles.
The account management team had
already set up more than 10 such centres
across NSW, where Cleanaway Daniels
has a long-standing relationship with the
department providing reusable sharps
collectors and clinical waste bins to
hospitals and other sites.
The team worked closely with the
customer to understand the scope of the
task and visited the former David Jones
building, which had been transformed into
the Illawarra Shoalhaven Mass Vaccination
Centre in less than six weeks since it was
first announced on 2 July 2021.
In a single day, team members assembled
trolleys to hold the 75 sharps collectors
before travelling to the location and
installing them beside the vaccination
stations to ensure the centre was ready
to open to thousands of people as
scheduled on 9 August.
We expect to see increased regulatory controls
and monitoring across all elements of dangerous
goods storage and transport, composting and PFAS
management. In principle, Cleanaway supports
such initiatives and is well positioned to deliver
customer solutions.
3456SUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT SUSTAINABILIT Y
Making a sustainable
future possible
It has been a challenging time during the pandemic and our people
have stood up to those challenges and made it possible for us to
continue to provide an essential service for society. We have improved
our Total Recordable Incident Frequency Rate by 20% to 3.6, which
measures incidences per million hours worked. We are always striving
to improve our safety performance and Zero Harm remains our goal.
We conducted an employee engagement survey in
October last year, which had been delayed from the
usual timeslot due to COVID-19. We reported a record
level of engagement at 64%. We completed another
survey in June 2021, with engagement improving even
further to 66%.
Overall voluntary turnover rates were slightly higher
than last year at 15.4% largely due to increased
workforce participation rates and high demand for
experienced labour. From a leadership perspective
we have a stable and effective team in place with
no changes to the executive committee through the
recent leadership transition.
Female representation in absolute numbers continues
to increase but further work is required to meet our
percentage targets. Gender diversity targets have now
been included as a management KPI for FY22 to help
improve the rate of change.
Societal demands, policies and regulations continue
to encourage greater circularity in the economy.
We are proud to be leaders in completing the circle
for commodities such as PET, HDPE and PP plastics,
and we will do more where opportunities present.
We are equally proud of our significant role in the
other processes that make closed loop recycling
possible. This is where others purchase our high
purity recovered materials as a feedstock in their
manufacturing processes.
We continue to explore the value chain for
opportunities to create value and we have recently
invested in construction and demolition resource
recovery capability in Victoria, Queensland, and South
Australia. Our acquisition of the Grasshopper C&D
collections business during the year complements
our resource recovery processes in NSW.
Of course, there will always be residual materials that
end up in landfill. Where it does so, we seek to capture
the methane produced and beneficially reuse it as
direct fuel or to produce renewable energy.
At Cleanaway, we recognise the need to reduce our
carbon emissions and contribute to mitigating global
warming and climate change. Our ambition is to align
the reduction in our carbon emissions to the 2015 Paris
Agreement goal.
We see this as a significant challenge but one we must
face. We will be action orientated and in FY22 we will
be setting short- and long-term emission reduction
targets supported by credible actions.
Our 2021 Sustainability Report expands on each
of these topics and is available at
www.cleanaway.com.au/sustainability-report/
2 0
TRIFR
Total Recordable Incident Frequency Rate
(incidences per million hours worked)
5.7
in FY19
4.5
in FY20
3.6
in FY21
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 seven 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 the
necessary 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.
2 1
456CORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT CORPOR ATE INFORMATION
Board of Directors
Mark Chellew
Mark Schubert
Mike Harding
Philippe Etienne
Chief Executive Officer and
Managing Director
Mark joined Cleanaway as
Chief Executive Officer and
Managing Director in August
2021. Mark was formerly the
Executive General Manager,
Integrated Gas at Origin
Energy for four years. Prior to
joining Origin Energy in 2015,
Mark held a number of senior
positions during an 18-year
international career with the
Shell Group of companies.
He has a track record of
operating and transforming
major assets, including world
class LNG projects and oil
refineries.
Mark has a Bachelor of
Engineering (Chemical)
degree from the University
of Sydney and Masters
of Finance and Financial
Law from the University
of London. Mark is on the
advisory board of Women
& Leadership Australia.
Independent Non-Executive
Director, Chairman of
the Human Resources
Committee, Member of the
Sustainability Committee
Independent Non-Executive
Director, Chairman of the
Sustainability Committee,
Member of the Audit and Risk
Committee
Independent Non-Executive
Director since 1 March 2013.
Independent Non-Executive
Director since 29 May 2014.
Mike is the Chairman of
Downer EDI Limited (since
November 2010) 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), and former Chairman
and Non-Executive Director of
Lynas Corporation (resigned
30 September 2020).
Mike has significant
experience within industrial
(BP), including President
and General Manager of
BP Exploration Australia.
He holds a Masters in
Science, majoring in
Mechanical Engineering.
Philippe is a Non-Executive
Director of Lynas Corporation
Limited (since January 2015)
and Aristocrat Leisure Limited
(since 1 October 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.
He holds a Bachelor of
Science in Physiology and
Pharmacology and a Master
of Business Administration
(MBA). Philippe is a Graduate
of the Australian Institute of
Company Directors and has
completed post-graduate
qualifications in marketing.
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 Downer EDI
Limited (since September
2021) and 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.
2 2
Ray Smith
Ingrid Player
Samantha Hogg
Terry Sinclair
Independent Non-Executive
Director, Chairman of the
Audit and Risk Committee,
Member of the Human
Resources 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
Sustainability Committee
Independent Non-Executive
Director since 1 March 2021.
Ingrid Player is a
Non-Executive Director at
Cogstate Ltd (since August
2019) and HealthShare
Victoria (since January 2021).
Ingrid is an experienced
executive with international
commercial and regulatory
experience in mergers and
acquisitions, corporate
governance, capital
developments, risk and
sustainability. She has
held senior executive
roles with Healthscope
Ltd, including the former
positions of Group Executive
– Legal, Governance and
Sustainability, and General
Counsel and Company
Secretary.
Ingrid holds a Bachelor of
Economics and Bachelor of
Laws (Hons) and is a member
of the Australian Institute
of Company Directors and
Fellow of the Governance
Institute of Australia.
Independent Non-Executive
Director, Member of the Audit
and Risk Committee, Member
of the Human Resources
Committee
Independent Non-Executive
Director, Member of the Audit
and Risk Committee, Member
of the Human Resources
Committee
Independent Non-Executive
Director since 1 November
2019. Samantha is a
Non-Executive Director
of Infrastructure Australia
(since April 2019) and Chair
of Tasmanian Irrigation.
Samantha was formerly
a Non-Executive Director of
Australian Renewable Energy
Agency (retired July 2020),
TasRail (resigned December
2019), MaxiTRANS Industries
Limited (resigned March
2021) and Hydro Tasmania
(retired August 2021), and
formerly a Board member
of the National COVID-19
Commission (NCC) Advisory
Board (ceased March 2021).
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 since 1 April 2012.
He currently serves as an
Industry Advisor to Australian
Super (effective October
2019), Chairman Silk Logistics
Holdings Limited (ASX:SLH)
(formerly Marrakech Road Pty
Ltd) (effective July 2020), and
Faethm.ai Pty Ltd (effective
February 2020).
Formerly he was a
Non-Executive Director of
Ovato Limited and Zoom2U
Technologies, 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.
Terry has significant
operations 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 3
56FINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW4CORPORATE INFORMATION3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT CORPOR ATE INFORMATION
Senior Executive Team
Mark Schubert
Chief Executive Officer and Managing Director
Mark joined Cleanaway as Chief Executive
Officer and Managing Director in August 2021.
Mark was formerly the Executive General
Manager, Integrated Gas at Origin Energy for
four years. Prior to joining Origin Energy in
2015, Mark held a number of senior positions
during an 18-year international career with
the Shell Group of companies. He has a track
record of operating and transforming major
assets, including world class LNG projects and
oil refineries.
Mark has a Bachelor of Engineering (Chemical)
degree from the University of Sydney and
Masters of Finance and Financial Law from the
University of London. Mark is on the advisory
board of Women & Leadership Australia.
Paul Binfield
Chief Financial Officer
Paul joined Cleanaway as Chief Financial
Officer in February 2021. He has held the
CFO role at a number of public companies
including Nufarm, Mayne Pharma and Mayne
Group. He has broad finance experience,
having led finance functions in listed and
private companies, both in Australia and the
United Kingdom. Paul holds a Bachelor of
Mathematics and is a member of the Institute
of Chartered Accountants in Australia and
New Zealand.
Brendan Gill
Chief Operating Officer
Brendan joined Cleanaway in September 2014
as Chief Financial Officer and was promoted to
Chief Operating Officer in February 2021. Brendan
has more than 35 years’ finance experience,
mainly in the mining, steel and energy sectors.
His career included 26 years at BHP, including as
Vice President Finance Carbon Steel, CFO for both
the Stainless Steel Materials and Nickel businesses
and Global Lead Risk Management & Audit. Since
leaving BHP, Brendan has held public company
CFO roles, including 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.
2 4
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, Solid
Waste Services in August 2017.
Mark has more than 20 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 has 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 (EGM), Integration
and appointed as EGM, Enterprise Services
and Integration in August 2019. Before
joining Cleanaway, Michael was a Senior
Vice President in McKinsey & Company’s
transformation practice. Michael has spent
more than 20 years in executive roles, including
seven years at ANZ Bank where he led the
mortgages business and business improvement
program; and 12 years at General Electric (GE),
responsible for the trailer and fleet leasing
businesses in both Australia and Mexico.
He also served as the Global Lean Six Sigma
Leader across 54 countries for one of GE’s
largest divisions. Michael holds a Bachelor’s
Degree in Economics from Harvard University
and a Masters of Business Administration from
the Kellogg School of Management.
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
and 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
& Computer Science, having graduated with
distinction at Swinburne University.
2 5
56FINANCIAL REPORTOTHER INFORMATION1OVERVIEW2BUSINESS REVIEW4CORPORATE INFORMATION3SUSTAINABILITYCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT A circular economy for plastic
Our development of advanced plastics pelletising facilities
continues to ensure Australia has the right infrastructure to process
material onshore and extend the value chain for consumer plastics.
Australian plastics consumption by polymer
TOTAL OF
3.4 m t
1
11% 363kt
2
19% 654kt
PET
5
PP
15% 502kt
HDPE
4
LDPE
PVC 12%
PS 4%
Nylon 3%
Other 11%
Unknown 15%
10% 352kt
Cross value chain collaboration to develop the Albury
PET and Laverton HDPE and PP pelletising facilities
$45 million facility to process 30kt
per annum of PET, providing a
bottle-to-bottle recycling solution for the
equivalent of almost one billion bottles
each year.
$40 million facility to process 20kt per
annum of HDPE and PP, converting
locally collected kerbside materials into
high quality food grade rHDPE and
rPP. Equivalent to over 500m plastic
milk bottles.
Finalising feasibility study for a Perth
flaking facility. Signed MOU with
Pact, Asahi Beverages and Coca-Cola
Europacific Partners to form a JV and
develop a 20kt PET pelletising facility.
Source: Envisage Works - 2018–19 Australian Plastics Recycling Survey (March 2020),
prepared for the Department of Agriculture, Water and the Environment.
2 6
Contents of Financial Statements
For the financial year ended 30 June 2021
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
28
40
59
60
61
62
63
64
65
128
129
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
Information about our capital structure
15. Interest-bearing liabilities
16. Issued capital
17. Reserves
18. Dividends
19. Capital management
Other information about our financial position
20. Property, plant and equipment
21. Right-of-use assets
22. Intangible assets
23. Equity accounted investments
24. Other assets
25. Employee entitlements
26. Provisions
27. Other liabilities
Information about our group structure
28. Business combinations and loss of control
of subsidiary
29. Subsidiaries
30. Deed of cross guarantee
31. Parent entity
Information about financial risks and
unrecognised items
32. Financial risk management
33. Contingent liabilities
34. Commitments
Other information
35. Share-based payments
36. Auditor’s remuneration
37. Events occurring after the reporting date
38. Related party transactions
Accounting policies
39. Significant accounting policies
40. New standards adopted
41. New standards and interpretations not yet adopted
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 1 A N N U A L R E P O R T
2 7
234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFOR-MATION
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 2021 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
I A Player
Executive Chairman
Chief Executive Officer and Managing Director (retired on 5 March 2021)
Non-Executive Director
Non-Executive Director (retired on 31 December 2020)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed Non-Executive Director on 1 March 2021)
The office of Company Secretary is held by D J F Last, LLB (Hons), B.Com, FGIA, GAICD.
On 10 May 2021, the Group announced the appointment of Mark Schubert as Chief Executive Officer and Managing
Director. The appointment will be effective from 30 August 2021.
Particulars of Directors’ qualifications, experience and special responsibilities can be found on pages 22 to 23.
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 2021 of 4.60 cents
per share, being an interim dividend of 2.25 cents per share and final dividend of 2.35 cents per share. The record date
of the final dividend is 13 September 2021 with payment to be made 5 October 2021. The financial effect of the final
dividend has not been brought to account in the Financial Statements for the financial year ended 30 June 2021 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 2020: 2.10 cents per share (2019: 1.90 cents per share)
Interim dividend for 2021: 2.25 cents per share (2020: 2.00 cents per share)
Total dividends paid
2021
$'M
43.2
46.4
89.6
2020
$'M
38.9
41.0
79.9
2 8
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 2021 was $145.3 million (2020: $112.9 million). The Group has incurred acquisition and integration related expenses,
(net of tax) of $5.2 million (2020: $27.9 million) during the year ended 30 June 2021, principally related to; the acquisitions
of the Grasshopper Group and the Stawell landfill, the expected acquisition of the Suez Sydney assets and the integration
of acquisitions completed in the current and prior periods.
Revenue from ordinary activities increased by 3.2% to $2,406.4 million (2020: $2,332.1 million). Excluding the collection
of levies, net revenue increased by 4.7% to $2,198.9 million (2020: $2,100.1 million).
Total expenses increased marginally by 0.1% to $1,882.1 million (2020: $1,879.6 million). Excluding levies collected and
paid, total expenses increased by 1.6% to $1,674.6 million (2020: $1,647.6 million). Depreciation and amortisation expense
increased by $13.8 million to $276.4 million (2020: $262.6 million).
The Group’s underlying profit after income tax (attributable to ordinary equity holders) for the year ended 30 June 2021
of $150.8 million was up marginally by 0.3% on the prior year (2020: $150.3 million). A reconciliation of underlying profit
to statutory profit is set out below.
Group results for the financial year ended 30 June 2021
UNDERLYING ADJUSTMENTS
ACQUISITION &
INTEGRATION
COSTS 5
$'M
CEO
TRANSITION
COSTS 6
CHANGE IN
REMEDIATION
PROVISION
DISCOUNT
RATE 7
STATUTORY 1
$'M
MRF FIRE 4
$'M
OTHER 8
$'M
UNDERLYING 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
Impairment of assets
EBIT 3
Net finance costs 9
Profit/(loss) before income tax
Income tax expense
Profit/(loss) after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
528.8
(276.4)
(5.4)
(4.3)
242.7
(35.9)
206.8
(59.1)
147.7
145.3
2.4
7.0
–
–
–
7.0
–
7.0
(2.1)
4.9
4.9
–
5.2
–
2.7
–
7.9
0.1
8.0
(2.8)
5.2
5.2
–
4.3
–
–
–
4.3
–
4.3
(1.3)
3.0
3.0
–
405.5
48.0
110.0
(2.0)
561.5
(26.4)
535.1
(3.4)
(6.8)
–
–
–
(3.4)
–
(3.4)
1.0
(2.4)
(2.4)
–
–
(276.4)
2.7
4.3
0.2
(7.7)
(7.5)
2.3
(5.2)
(5.2)
–
–
–
258.7
(43.5)
215.2
(62.0)
153.2
150.8
2.4
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. Business interruption costs of $7.0 million have been
incurred in the current period.
5 Acquisition and integration costs of $5.2 million include transaction costs and other costs associated with the acquisition of businesses during the period of $2.0
million, the ongoing integration costs related to acquisitions of $2.0 million, costs of $4.3 million incurred to date on the expected acquisition of the Suez Sydney
assets, offset by $3.1 million related to the remeasurement of contingent consideration in relation to the acquisition of the Grasshopper Group (refer note 28 to the
Financial Statements). The write-off of assets of $2.7 million relates to software assets acquired which, following integration activities, no longer have any use.
6 On 21 January 2021 the Group announced that Mr Vik Bansal would be stepping down from the role as CEO and as a Director of the Company. CEO transition
7
costs of $4.3 million relate principally to expenses in relation to Mr Bansal’s resignation and costs incurred to recruit Mr Mark Schubert.
Relates to the decrease in remediation provisions related to closed landfill sites and industrial properties as a result of the increase in the discount rate (refer note
26 to the Financial Statements).
8 Other EBIT adjustments of $0.2 million comprise $7.0 million reversal of employee entitlements expense as result of amendments to the Fair Work Act 2009
passed in March 2021 which clarifies a May 2020 court decision, offset by $4.5 million in costs incurred on the West Gate Tunnel spoils contract which is no longer
considered probable of being awarded to the Group, including $4.3 million of impairment of assets, and $2.7 million write-off of plant and equipment destroyed
in a fire at the Welshpool transfer station, Western Australia.
9 Underlying adjustments to net finance costs include the gain on modification of CEFC fixed rate borrowing of $7.9 million, the fair value gain on USPP Notes
of $60.7 million, offset by the fair value loss on cross currency interest rate swaps of $60.9 million.
2 9
Directors’ Report234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Operating and financial review (continued)
Review of financial results (continued)
Group results for the financial year ended 30 June 2020
STATUTORY 1
$'M
MRF FIRE 4
$'M
UNDERLYING ADJUSTMENTS
ACQUISITION &
INTEGRATION
COSTS 5
$'M
GAIN ON SALE
OF PROPERTIES 6
$'M
OTHER 7
$'M
UNDERLYING 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 before income tax
Income tax expense
Profit after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
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)
–
8.9
–
–
8.9
1.9
10.8
(3.6)
7.2
7.2
–
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
150.3
(0.3)
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 26 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 28 to 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 fair value gain
on 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.
Review of financial position
Operating cash flows increased by 5.7% to $424.4 million (2020: increase of 14.5% to $401.5 million).
The Group’s net assets have increased from $2,571.0 million to $2,636.3 million. At 30 June 2021 the Group had a net
current asset deficiency of $71.5 million (30 June 2020: net current asset deficiency of $61.9 million). The Group has
sufficient unutilised committed debt facilities at 30 June 2021 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 $1,150.0 million (2020: $650.0 million), US Private Placement
Notes of $366.7 million (2020: $426.9 million), financing arrangements with the Clean Energy Finance Corporation of
$90.0 million (2020: $90.0 million) and an uncommitted bank guarantee facility of $95.0 million (2020: $60.0 million).
The headroom available in the Group’s facilities at 30 June 2021 was $930.3 million (2020: $421.1 million) and cash on hand
was $69.4 million (2020: $79.8 million). Further information on the Group’s financing facilities is provided in note 15 to
the Financial Statements.
3 0
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 28.2% (2020: 27.1%). During the
financial year Cleanaway entered into an agreement with the banks, which are party to its Syndicated Facility Agreement,
and one new bank, which commits the banks to providing a three-year $500.0 million term loan facility to fund the
acquisition of the Sydney Suez assets. Refer to Key business strategies and prospects below. The weighted average debt
maturity is 4.7 years (2020: 5.4 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 on pages 14 to 19.
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 announced that it had entered into an agreement with Suez to acquire two landfills and
five transfer stations in Sydney (the Sydney Assets). We expect to complete that transaction in the second quarter of the year
ending 30 June 2022. The Group also acquired the Stawell landfill in regional Victoria and the Grasshopper C&D collections
business in NSW. The construction of a PET plastic pelletising facility in Albury, NSW is well underway and expected to be
completed by the end of calendar year 2021. The location of the plant will provide access to both the New South Wales and
Victorian markets for feedstock and customers. The Group completed the rebuild of the Perth MRF, which reopened towards
the end of the financial year.
Cleanaway expects further investment opportunities to emerge as state and federal waste policies, strategies and goals are
developed and enhanced. 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 several 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. During the financial year
the project team responded to the submissions it received following the public exhibition of the project’s Environmental
Impact Statement. The project will now be assessed by the Independent Planning Commission. Subject to planning
approval and a final investment decision, it will be Cleanaway’s largest single asset investment to date. Opportunities for
energy-from-waste projects in Melbourne and Brisbane are also being explored to support the expected transition away
from putrescible landfill over time.
The Group is also pursuing several other circular economy opportunities including, the development of HDPE and PP plastic
flaking and pelletising facilities with the possibility of including LDPE plastic and the development of a glass beneficiation
facility. The plastic pellets will be used in the production of new milk bottles, household and personal care containers and
other industrial applications, while the glass facility will create furnace-ready cullets to be used in glass manufacturing as
a substitute to virgin materials. These facilities will provide an opportunity to extract greater value from the raw materials
that Cleanaway currently recovers.
Data and automation
Cleanaway’s strategy is most successful when it is complemented by a strong customer service culture. The Group has
commenced a data and automation project that seeks to improve the customer and employee experience from ‘call to cash’.
The project aims to simplify and streamline systems and processes. Over the coming years Cleanaway will also be looking
to harvest the wealth of data that it has generated over many years to develop greater insights that can support and improve
the profitability of the business.
3 1
Directors’ Report234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Operating and financial review (continued)
Key business strategies and prospects (continued)
Optimisation of margins across the business
Understanding our customers’ needs and improved customer satisfaction, internalisation of waste, synergies through
acquisitions and continuous improvement in the Group’s operations should result in an improvement in the quality of its
earnings and the long-term profitability of the business.
A 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 1.61 times (measured on a pre
AASB 16 basis in line with our banking covenants). This is a level that provides the Group the flexibility to fund selected earnings
accretive projects and acquisitions. The Group has secured additional debt facilities to support the acquisition of the Sydney
Assets, with the final funding structure of that acquisition to be determined closer to completion.
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 Cleanaway is exposed to nor are they listed in order of significance.
RISK
DESCRIPTION
MITIGATION
Economic
growth
Regulatory
environment
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.
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.
3 2
Directors’ Report Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Health and
Safety
Cleanaway’s operations involve risks to both
property and personnel. A health and safety
incident may lead to serious injury or death, which
may result in reputational damage and adverse
operating impacts with consequential effects to
Cleanaway’s financial performance and position.
Cleanaway manages these risks by
developing and implementing appropriate
strategies, systems, policies and procedures
in respect of operational health and safety
matters to ensure compliance with legal and
regulatory obligations.
Attract and
retain key
management
Operational risks
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 time frame.
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.
Industry
consolidation
Cleanaway believes the waste industry will continue
to consolidate as evidenced by recent corporate
activity. Risks of industry consolidation include
a more aggressive competitive landscape in the
medium term, potential loss of market share and
new market entrants.
Cleanaway embraces fit for purpose
technologies which enhance fleet and
equipment safety.
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.
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 a
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 mitigates these risks by
maintaining a strong understanding of the
industry, key drivers of success, improving
business performance and identifying
potential acquisitions. Maintaining a strong
balance sheet also allows Cleanaway
to respond decisively to emerging
opportunities.
3 3
Directors’ Report234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Integration of
acquisitions
Financial risks
Sustainability
risks
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.
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 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. 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.
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.
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).
Information on how Cleanaway manages
financial risks is included in note 32 to the
Financial Statements.
Cleanaway manages these risks in
accordance with its Enterprise Risk
Management Framework which is aligned
to the international Standard AS/NZS ISO
31000 and industry-leading practice. This
includes regularly reviewing risk tolerance,
the risks that have been identified and how
these risks are controlled and mitigated.
Cleanaway has bolstered its focus on
Environmental, Social and Governance (ESG)
risks and has enhanced its disclosures in
relation to ESG matters.
3 4
Directors’ Report Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Environment
risks
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.
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 de-carbonisation 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.
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 the Council of Australian
Governments’ (COAG) decision to ban waste
exports, and global economic and political
developments.
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 approach to managing environment
risk is aligned to the Cleanaway Way and
there are various internal systems, processes
and toolkits that support our approach to
compliance with environmental regulations,
standards and requirements.
Our Environmental Policy sets out our
commitment to achieving our mission, and
to continually improve our environmental
standards for the benefit of the
environment, our employees, stakeholders
and the community.
Cleanaway has committed to align with
the Task-force 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 sets out our response to the
TCFD recommendations. Cleanaway has
developed a multi-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. We will continue to
strengthen our governance capability
and perform deep-dive analysis into key
climate-related risks to better understand
how to mitigate or manage these impacts.
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.
3 5
Directors’ Report234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
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 has a range of user access
controls that restrict and contain the ability
for a user to have wide-reaching access.
We utilise extensive technology-based
controls and undertake both in-house and
independent technology controls testing,
validation and maintenance to actively
prepare for, monitor and respond to
potential threats.
Business continuity plans are in place
and assessed on an ongoing basis.
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 2021.
Events subsequent to reporting date
There have been no matters or circumstances that have arisen since 30 June 2021 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 $144,883 (2020: $65,276).
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’ 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 or the Company 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.
3 6
Directors’ Report 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
HUMAN RESOURCES
COMMITTEE
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A DIRECTOR
NUMBER
ATTENDED
Directors
M P Chellew 1
V Bansal 2
R M Smith 3
E R Stein 4
T A Sinclair
R M Harding 5
P G Etienne 6
S L Hogg
I A Player 7
28
19
28
13
28
28
28
28
9
28
10
28
12
27
23
28
27
9
–
–
4
1
4
–
4
4
–
–
–
4
1
4
–
4
4
–
–
–
–
2
–
4
4
–
1
–
–
–
2
–
4
4
–
1
–
–
4
–
4
4
–
4
–
–
–
4
–
4
4
–
4
–
Executive Chairman of the Board.
Retired as Managing Director and CEO on 5 March 2021.
1
2
3 Chairman of the Audit and Risk Committee.
Retired as Director on 31 December 2020.
4
5 Chairman of the Human Resources Committee.
6 Chairman of the Sustainability Committee.
7 Appointed Non-Executive Director on 1 March 2021.
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
R M Smith
T A Sinclair
R M Harding
P G Etienne
S L Hogg
I A Player
ORDINARY
SHARES
PERFORMANCE
RIGHTS
156,548
126,120
49,417
29,696
82,715
–
–
–
–
–
–
–
–
–
Shares under option and performance rights
During the financial year ended 30 June 2021 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 2021 and
2020 financial years are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2021
are 6,904,473 (2020: 10,315,392). Performance rights outstanding at the date of this report are 6,812,706.
Shares issued on the exercise of performance rights
During the financial year ended 30 June 2021 and up to the date of this report, the Company issued 2,469,025 shares
as a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June
2020 and up to the date of the 2020 report, the Company issued 4,604,526 ordinary shares as a result of the exercise
of performance rights that vested on 30 June 2020.
3 7
Directors’ Report234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Non-audit services
The Company may decide to employ the auditors on assignments additional to their statutory audit duties where the
auditors’ expertise and experience with the Company and/or the Group are relevant. During the financial year ended
30 June 2021, non-audit services provided by Ernst & Young included 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 $208,842 provided by Ernst & Young during the period was not significant,
representing less than 12.9% 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.
Ernst & Young:
Audit services
Audit related services
Non-audit services:
Other advisory services
Total
2021
$
2020
$
1,335,657
1,315,526
83,945
277,585
208,842
248,068
1,628,444
1,841,179
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 59.
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 was 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 was satisfied with the skills and personal qualities of the audit partner which were consistent with
maintaining the quality of the audit provided to the Company;
• The Committee was satisfied that the audit partner’s knowledge of the Company would assist to provide the Board with
an appropriate level of independent assurance given the significant projects and transactions that were 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 considered that continuity of the existing audit partner was prudent and appropriate.
3 8
Directors’ Report 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 40 to 58, is made in accordance with a resolution of the Board.
M P Chellew
Executive Chairman
Melbourne, 19 August 2021
3 9
Directors’ Report234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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
42
43
44
45
47
54
56
58
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 2021. 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 continued its growth trajectory, with increases in: Net revenue; Underlying Net Profit
after Tax (NPAT); Underlying Earnings before Interest and Tax (EBIT); Underlying Earnings before Interest, Tax, Depreciation
and Amortisation (EBITDA); and Dividend payments.
Cleanaway has continued to progress key initiatives in line with our Footprint 2025 Strategy including strengthening our
network of prized infrastructure assets. During the financial year we announced that we had entered into an agreement
with Suez to acquire two landfills and five transfer stations in Sydney. Additionally, we have made significant progress on
several infrastructure projects that support a circular economy. Our PET plastic pelletising facility that we are developing
with Pact and Asahi Beverages in Albury, NSW is well advanced as well as our proposed Energy-from-Waste facility that
we are developing with Macquarie Capital. These financial and strategic outcomes were delivered in the context of ongoing
challenging market and operating conditions, in particular the impact of the COVID-19 pandemic.
During the year Cleanaway has demonstrated resilience as the business has operated through varied restrictions and
movement orders imposed to reduce the spread of COVID-19. The pandemic has disrupted the Group’s operations and
reduced the demand for services in some segments and locations, and likewise increased demand in other segments such
as for medical waste and municipal collections. Our priority has been to ensure that we provide reliable and consistent
services to our customers in our capacity as an essential service provider.
In response to these challenges, our priority has remained the health and safety of our employees, continuity of employment
for team members and the servicing of our customers. Cleanaway did not receive any direct assistance from government and
did not benefit from the federal government’s Job Keeper program.
With this context, the Directors have sought to ensure that the remuneration outcomes set out in this Report align with
shareholders’ experience and market expectations.
Whilst Cleanaway continued to improve its performance across most financial metrics during the year, the impact of
COVID-19 resulted in slightly below target outcomes for KMP who participate in the Company’s STI program. Pleasingly
the health and safety performance was better than our minimum improvement goal, as measured by the Group’s Total
Recordable Injury Frequency Rate (TRIFR) and the Group did not have any significant or major rated environmental incidents.
For the year ended 30 June 2021, the Board included two people and culture measures in the STI program relating to
employee engagement and voluntary turnover. Cleanaway conducted two employee engagement surveys during the
financial year, both recording improved employee experience from prior years. The engagement score in the second
engagement survey resulted in an outcome that was slightly above target. Voluntary turnover performance did not meet
the Company’s target and hence Executive KMPs were not eligible for STI payments related to this metric.
4 0
Remuneration Report(Audited) Introduction (continued)
The Group’s TSR, EPS and ROIC outcomes, measured over a three-year period for the purpose of assessing LTIs, resulted
in it achieving its relative TSR metric hurdle at target however the EPS and ROIC metric hurdles were not reached. This led
to a below 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.
As announced on 21 January 2021, the Board and former CEO Vik Bansal reached a mutual agreement whereby Mr Bansal
agreed to step down from the position of CEO. Following an extensive search, on 10 May 2021, Mark Schubert was appointed
as the Chief Executive Officer and Managing Director, and will commence in the role on 30 August 2021. To support the
leadership transition, Mark Chellew assumed the role of Executive Chairman and Brendan Gill was appointed to the role
of Chief Operating Officer. Details around the arrangements with Mr Bansal, Mr Schubert, Mr Chellew and Mr Gill are
detailed in section 6B.
Special exertion fees were agreed with two Non-Executive Directors, Mr Etienne and Mr Sinclair, to recognise additional
support provided to the Executive management team during the leadership transition and in maintaining momentum
to progress strategic initiatives mentioned within this Report. Details of the special fees are outlined in section 3A.
During the year, the Board introduced shareholding guidelines for Non-Executive Directors. These guidelines are set out
in section 4C.
Given the Group’s overall performance for the year ended 30 June 2021 (FY21), as set out above, Directors of Cleanaway
consider that there is appropriate alignment between Cleanaway shareholders’ experience over FY21 and the remuneration
outcomes for KMP as set out in this Report.
Total Shareholder Return: CWY vs ASX 200 Industrials Sector Index (XNJ)
300%
260%
220%
180%
140%
100%
60%
20%
-20%
CWY
ASX 200 Industrials Sector Index
30 June
2016
30 June
2017
30 June
2018
30 June
2019
30 June
2020
30 June
2021
EPS 1 (cents)
7.5
7.4
6.9
5.3
4.7
Dividends Per Share (cents)
4.60
4.10
3.55
2.50
2.10
ROIC 2 (%)
5.2
4.8
5.4
5.6
5.2
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
1
2
Basic EPS on Underlying results. FY20 and FY21 excludes the impact of AASB 16 to enable consistent comparison.
Return on Invested Capital is calculated as tax effected EBIT divided by average net assets plus net debt. FY20 and FY21 excludes the impact of AASB 16
reflecting the way in which the FY2019 LTI plan has been assessed to enable consistent comparison.
4 1
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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 2021 are the Non-Executive Directors, the Chief Executive Officer (CEO) and Managing
Director, the Chief Operating Officer (COO), the Chief Financial Officer (CFO), the Executive General Manager – Solid 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 2021 are detailed in the following table:
NAME
TITLE
NON-EXECUTIVE DIRECTORS
M P Chellew 1
R M Smith
E R Stein 2
T A Sinclair
R M Harding
P G Etienne
S L Hogg
I A Player 3
EXECUTIVES
V Bansal 4
B J Gill 5
P A Binfield 6
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
Non-Executive Director
Chief Executive Officer (CEO) and Managing Director
Chief Operating Officer (COO)
Chief Financial Officer (CFO)
Executive General Manager – Solid Waste Services
Executive General Manager – Liquid Waste & Health Services and Industrial & Waste Services
1 Mr Chellew was appointed Executive Chairman on 21 January 2021. Further details regarding the terms of Mr Chellew’s appointment as Executive
Chairman are set out in section 6B below.
2 Ms Stein retired as Non-Executive Director on 31 December 2020.
3 Ms Player was appointed Non-Executive Director on 1 March 2021.
4 Mr Bansal stepped down from his role as CEO as part of the leadership transition announced by the Company on 21 January 2021. Details of the terms
of Mr Bansal’s separation from the Company are set out in section 6B below.
5 Mr Gill was appointed Chief Operating Officer as part of the leadership transition announced by the Company on 21 January 2021. Details of the terms
of Mr Gill’s appointment are set out in section 6B below.
6 Mr Binfield commenced with Cleanaway on 1 February 2021.
4 2
Remuneration Report (Audited) 2 Governance and role of the Board
2A. Human Resources Committee
The Human Resources 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 2021, 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 $83,472 (2020: $57,500). The services include advising in relation
to the Separation Agreement entered into with Vik Bansal, terms of appointment of Mark Schubert, terms of appointment
of Mark Chellew as Executive Chairman, base fees and special exertion fees for Non-Executive Directors, benchmarking data
for the Executive Committee and equity incentive design and target setting.
4 3
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 3 Non-Executive Directors’ remuneration
3A. Current Non-Executive Director fees
The remuneration received by Non-Executive Directors for the years ended 30 June 2021 and 30 June 2020 is set out in the
following table:
FINANCIAL YEAR
SALARY AND FEES
$
ADDITIONAL FEES
$
SUPERANNUATION
BENEFITS
$
NON-EXECUTIVE DIRECTORS
M P Chellew 1
R M Smith
E R Stein 2
T A Sinclair 3
R M Harding
P G Etienne 4
S L Hogg
I A Player 5
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2021
2020
348,306
348,997
184,018
184,018
110,198
165,297
165,297
165,297
175,799
175,799
192,500
184,150
165,297
106,088
50,989
325,000
–
–
–
–
–
15,000
–
–
–
25,000
–
–
–
–
21,694
21,003
17,482
17,482
10,469
15,703
15,703
15,703
16,701
16,701
–
8,350
15,703
10,078
4,844
TOTAL
$
695,000
370,000
201,500
201,500
120,667
181,000
196,000
181,000
192,500
192,500
217,500
192,500
181,000
116,166
55,833
1,392,404
1,329,646
365,000
–
102,596
105,020
1,860,000
1,434,666
Following his appointment as Executive Chairman on 21 January 2021, Mr Chellew receives an additional fee of $54,167 per month.
1
2 Non-Executive Director Ms Stein retired from the Cleanaway Board on 31 December 2020.
3 Mr Sinclair received a special exertion fee for additional services provided in connection with the Company’s proposed energy from waste project,
following the leadership transition of the Company announced in January 2021.
4 Mr Etienne received a special exertion fee for additional services provided in connection with the Company’s acquisition of Suez’s Sydney post-collection
assets, following the leadership transition of the Company announced in January 2021.
5 Ms Player was appointed as an Independent Non‐Executive Director of the Company from 1 March 2021.
3B. Aggregate fee limit
The current aggregate amount of remuneration that can be paid to Non-Executive Directors of $1,900,000 was approved
by shareholders at the Company’s 2020 Annual General Meeting.
For the year ended 30 June 2021, the aggregate remuneration paid to all Non-Executive Directors was $1,860,000.
This represents an increase of 29.6% compared with the year ended 30 June 2020. This is due to additional fees paid
to Directors and the Executive Chairman.
3C. Fee structure
The fee structure (inclusive of superannuation) for the year ended 30 June 2021 is detailed in the following table:
Chairman
Non-Executive Director
BOARD
$
370,000
154,000
AUDIT AND
RISK COMMITTEE
$
SUSTAINABILITY
COMMITTEE
$
HUMAN RESOURCES
COMMITTEE
$
34,000
13,500
25,000
13,500
25,000
13,500
4 4
Remuneration Report (Audited) 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
4 5
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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 2021, the target remuneration mix for Executive KMP
is illustrated below.
REMUNERATION MIX AT TARGET
CEO
40.0%
24.0%
6.0%
30.0%
CFO/COO
Operational
EGMs
52.6%
55.5%
25.3%
6.3%
15.8%
22.2%
5.6%
16.7%
TFR
STI Cash
STI Deferred (equity)
LTI (equity)
Under the terms of his appointment, the Executive Chairman does not participate in the LTI or STI Plans.
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 the date of their appointment to the
Executive Committee. The KMP that have served five years from the initial appointment date 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.
During the year, the Board introduced guidelines regarding shareholdings for Non-Executive Directors. Under the guidelines,
Non-Executive Directors will have 5 years from the later of 1 July 2021 or the date of their appointment to accumulate
a shareholding in the Company equivalent to one year of their base fee.
4 6
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes
5A. Remuneration received
The remuneration received or receivable by Executive KMP for the years ended 30 June 2021 and 30 June 2020 is set out
in the following table:
FINANCIAL
YEAR
SALARY
AND FEES
$
STI
CASH
$
NON-
MONETARY
BENEFITS
$
TERMINATION
BENEFITS
$
SHARE-BASED
PAYMENTS 1
$
POST
EMPLOYMENT
BENEFITS
$
PERFORM -
ANCE
RELATED
TOTAL$
V Bansal 2
2021 1,478,306
979,362
24,720
1,500,000
(55,272)
21,694 3,948,810
B J Gill 3
P A Binfield
M Crawford
T Richards
2020
1,447,747
339,769
90,402
2021
2020
2021
2021
2020
2021
2020
816,062
469,290
1,686
696,463
145,344
–
324,294
154,287
1,490
596,381
246,287
196
590,139
126,801
489,243
201,403
471,810
100,421
–
–
–
–
–
–
–
–
–
–
–
Total
2021 3,704,286 2,050,629
28,092
1,500,000
2020 3,206,159
712,335
90,402
–
709,207
191,577
123,714
79,069
146,698
108,975
119,805
23,836
481,877
965,732
21,003 2,608,128
21,694 1,500,309
21,003
986,524
23.4%
40.2%
44.0%
27.3%
9,039
568,179
41.1%
21,694 1,011,256
38.9%
21,003
846,918
27.8%
21,694
832,145
38.6%
21,003
617,070
20.1%
95,815 7,860,699
84,012 5,058,640
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 Mr Bansal’s remuneration and termination benefits are further detailed in section 6B. Non-monetary benefits comprise costs associated with Mr Bansal’s
accommodation in Melbourne and travel between Sydney and Melbourne. Share Based Payments expense includes the acceleration of expenses in
relation to 2020 LTI which does not vest until 14 days after the release of the financial results for the financial year ending 30 June 2022.
Remuneration received by Mr Gill in FY21 in his capacity as CFO and COO.
3
An explanation of the key remuneration elements (TFR, STI and LTI), as well as outcomes for the year ended 30 June 2021,
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.
Executive KMP TFR was reviewed during the annual remuneration review and no TFR increase was recommended for any
KMP’s except Mr Richards. Effective 1 October 2020, Mr Richards’ TFR was increased from $498,750 to $514,999.
As set out in section 6B, Mr Gill’s TFR increased to $1,000,000 following his appointment as COO to reflect his broader
operational responsibilities.
5C. FY2021 Short-term Incentive
For the year ended 30 June 2021, 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 2021:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
P A Binfield
M Crawford
T Richards
FY2021
TARGET
FY2021
MAXIMUM
75%
60%
60%
50%
50%
150%
120%
120%
100%
100%
4 7
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 5 Executive key management personnel – reward outcomes (continued)
5C. FY2021 Short-term Incentive (continued)
Key features of the FY2021 STI plan
Purpose of the
STI plan
Reward the achievement of key financial, People and Culture, Health, Safety & Environment (HSE)
and if applicable, individual KPI metrics that are key to the sustainable success of Cleanaway.
Performance period
1 July 2020 to 30 June 2021.
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: 70% weighting.
• HSE metrics: 20% weighting.
• People and Culture Metrics: 10% 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 (ROIC): 20% 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 at fault
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.
People and Culture
metrics and
gateways
• People and their respective weightings are:
– Group Engagement: 5% weighting.
– Group Voluntary Turnover: 5% weighting.
• There is a gateway condition for People metric, which is No breach of the Code of Conduct policy.
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 2021.
• Performance rights do not attract dividends during the deferral period.
4 8
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes (continued)
5C. FY2021 Short-term Incentive (continued)
FY2021 Short-term Incentive outcomes
The following table details 2021 STI scorecard measures and assessment applied to Executive KMP.
ELEMENT
MEASURE
Gateway to STI
Scorecard KPIs
Group EBIT – Threshold of on-target budget
Group Net Revenue
Group ROIC
Group TRIFR
Group Environmental Incidents
Group Engagement
Group Voluntary Turnover
2021 PERFORMANCE ASSESSMENT
Slightly Above Threshold
Between Target and Stretch
Slightly Above Threshold
Slightly Above Target
Target
Slightly Above Target
Not Met
The STI payments received or receivable by Executive KMP for the year ended 30 June 2021 are summarised in the following table:
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal 3
B J Gill
P A Binfield
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
2021
2020
2021
2020
2021
2021
2020
2021
2020
979,362
424,711
979,362
339,769
–
84,942
586,613
469,290
117,323
181,680
192,859
307,859
158,501
145,344
154,287
246,287
126,801
251,754
201,403
125,526
100,421
36,336
38,572
61,572
31,700
50,351
25,105
87%
38%
98%
50%
40%
98%
50%
98%
50%
45%
19%
50%
26%
21%
50%
26%
50%
26%
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 Mr Bansal’s FY21 STI award was assessed against the December 2020 half-year financial results and pro rated to 31 March 2021. His short term incentive
award will not be subject to any STI deferral. The deferred component of Mr Bansal’s FY20 STI was withdrawn and not granted during FY21.
5D. Prior year Short-term Incentive awards
As participants in the FY2020 STI, Executives considered KMP during the year ended 30 June 2020 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 Gill’s FY2020 STI deferred component performance rights vested on 30 June 2021 (16,818);
• Mr Crawford’s FY2020 STI deferred component performance rights vested on 30 June 2021 (14,673); and
• Mr Richard’s FY2020 STI deferred component performance rights vested on 30 June 2021 (11,620).
5E. FY2021 Long-term Incentive
Offers under the Cleanaway Long-Term Incentive (LTI) Plan are made on an annual basis. During the year ended 30 June 2021,
LTI offer was made to Executive KMP, including Mr Gill, Mr Crawford, Mr Binfield and Mr Richards.
The table below represents the target and maximum annual LTI opportunity as a percentage of TFR for Mr Gill, Mr Binfield,
Mr Crawford and Mr Richards:
EXECUTIVE KEY MANAGEMENT PERSONNEL
B J Gill
P A Binfield
M Crawford
T Richards
FY2021
TARGET
FY2021
MAXIMUM
30%
30%
30%
30%
60%
60%
60%
60%
4 9
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 5 Executive key management personnel – reward outcomes (continued)
5E. FY2021 Long-term Incentive (continued)
The details of the FY2021 LTI offer are summarised in the table below. The number of performance rights granted to each
Executive KMP for the year ended 30 June 2021 is outlined in section 7A. The number of performance rights each Executive
KMP had on issue as at 30 June 2021 is outlined in section 7B.
Key features of the FY2021 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 2020 to 30 June 2023.
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 2020 to 30 June 2020.
Performance hurdles
Performance rights issued under the FY2021 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.
• 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 2023 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 2023.
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 2021
1,991,571
5 0
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes (continued)
5E. FY2021 Long-term Incentive (continued)
FY2021 LTI performance hurdle vesting conditions
Performance rights issued under the FY2021 plan are subject to two performance measures with the following performance
vesting schedules:
Relative TSR performance
measured over three
years from 1 July 2020
to 30 June 2023
EPS CAGR performance
measured over three
years from 1 July 2020
to 30 June 2023
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%
Gateway: Performance Rights under EPS CAGR will only vest if ROIC is at least
5.5% or more for the Financial Year ending 30 June 2023
Cleanaway EPS CAGR
Less than 4%
At 4%
Greater than 4% and up to
(and including) 8%
Greater than 8% and up to
(and including) 10%
Percentage of EPS CAGR performance
rights that vest
Nil
40%
Straight line pro rata vesting between
40% and 90%
Straight line pro rata vesting between
90% and 100%
Above 10%
100%
5 1
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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:
FY2019 LTI 1
FY2020 LTI 1
Performance period
Three years: 1 July 2018 to 30 June 2021
Three years: 1 July 2019 to 30 June 2022
Overview
Performance rights vesting subject to:
Performance rights vesting subject to:
• Relative TSR (50%)
• ROIC (25%)
• EPS CAGR (25%)
• Relative TSR (50%)
• EPS CAGR (50%)
• The Return on Invested Capital (ROIC) for
year ending 30 June 2022 acts as a gateway
to EPS CAGR.
Relative TSR
performance
hurdles
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:
• Below 6.25% – 0% vesting
• 6.25% – 20% vesting
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.
• 6.25%–6.75% – straight line vesting
between 20% and 50%
• 6.75%–7.25% – straight line vesting
between 50% and 100%
• 7.25% – 100% vesting
EPS CAGR
performance
hurdles
EPS CAGR:
• Below 13% – 0% vesting
• At 13% – 20% vesting
EPS CAGR:
• Below 9% – 0% vesting
• At 9% – 20% vesting
• 13%–15% – straight line vesting between
• 9%–10.5% – straight line vesting between
20% and 50%
20% and 50%
• 15%–18% – straight line vesting between
• 10.5%– 2.5% – straight line vesting
50% and 100%
between 50% and 100%
• At or above 18% – 100% vesting
• At or above 12.5% – 100% vesting
2,597,532
2,223,603
Number of
performance rights
remaining on issue
at 30 June 2021
1 As a share-based payment, the portion of the performance rights relating to market-based conditions were valued for accounting purposes using
the Monte Carlo simulation method and the portion relating to EPS or ROIC using the Black Scholes Model. Grant dates and fair values are contained
in note 35 to the Consolidated Financial Statements.
5 2
Remuneration Report (Audited) 5 Executive key management personnel – reward outcomes (continued)
5F. Prior Long-term Incentive awards (continued)
Prior Long-term Incentive outcomes
FY2019 LTI
The FY2019 LTI was tested as at 30 June 2021. Based on Cleanaway’s relative TSR, ROIC and EPS performance over the
performance period from 1 July 2018 to 30 June 2021, the offer will partially vest – with the relative TSR tranche vesting
at 100%. The ROIC tranche and the EPS CAGR tranche did not vest.
Executive KMP
Mr Bansal, Mr Gill, Mr Crawford and Mr Richards all participated in the FY2019 LTI. Therefore, the following performance
rights will vest:
• Mr Bansal: 604,308 of his FY2019 LTI rights will vest;
• Mr Gill: 123,808 of his FY2019 LTI rights will vest;
• Mr Crawford: 107,488 of his FY2019 LTI rights will vest; and
• Mr Richards: 83,504 of his FY2019 LTI rights will vest.
5 3
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 6 Executive key management personnel – contract terms
6A. 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
P A Binfield
M Crawford
T Richards
Open
Open
Open
Open
Open
12 months
12 months
6 months
12 months
6 months
12 months
12 months
6 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.
Mr Bansal was entitled to travel and accommodation support, with the Company covering the costs associated with
Mr Bansal’s accommodation in Melbourne. The cost to the Group in providing this support to Mr Bansal for the year ended
30 June 2021 is provided in section 5A.
6B. Leadership transition – KMP remuneration arrangements
On 21 January 2021, Cleanaway announced that the Board and Mr Bansal had agreed that Mr Bansal would step down
as CEO during FY21 as part of an orderly leadership transition. As part of this transition, Mr Chellew was appointed
Executive Chairman and Mr Gill was appointed as Chief Operating Officer whilst a search for a new CEO was undertaken.
On 10 May 2021, Cleanaway announced the appointment of Mark Schubert as CEO and Managing Director to succeed
Mr Bansal. Mr Schubert is expected to commence in the role from 30 August 2021.
Further details in relation to the remuneration arrangements relating to these changes are set out below.
Terms of Appointment of Mark Schubert
As announced on 10 May 2021, Mr Schubert’s remuneration arrangements comprise:
• Fixed annual salary of $1.4 million, inclusive of superannuation.
• A short-term incentive opportunity of 100% of salary at target and 150% of salary at maximum.
• A long-term incentive opportunity of 120% of salary.
In addition, Mr Schubert will receive a sign on entitlement in recognition of the forfeiture of certain incentives upon
resigning from his prior employment. This entitlement worth $1.8 million will comprise:
• $400,000 in cash, payable three months after he commences with Cleanaway;
• $1.4 million of rights to Cleanaway shares granted on commencement of employment which will convert to shares
in three separate tranches on the 1st, 2nd and 3rd anniversary of commencement.
These sign on entitlements are each subject to Mr Schubert being employed by Cleanaway on the relevant dates and
Mr Schubert not having provided notice of resignation nor having been terminated for cause prior to the relevant dates.
5 4
Remuneration Report (Audited) 6 Executive key management personnel – contract terms (continued)
6B. Leadership transition – KMP remuneration arrangements (continued)
Terms of Separation of Mr Bansal
Mr Bansal stepped down from the role of CEO following the announcement made by the Company regarding the leadership
transition on 21 January 2021. Mr Bansal commenced a period of gardening leave in March 2021 during which he was
available to assist with project and transitional issues for the remainder of FY21.
The Board determined that Mr Bansal was eligible for a prorated FY21 STI for the period he was CEO. The Board calculated
his award based on results for 31 December 2020 and pro-rated this for the period he remained actively in the position
of CEO. The Board assessed his STI entitlement at 45% of maximum. Each of the financial targets, comprising Group EBIT,
Group Net Revenue and Group ROIC achieved at or just above target. The Group’s health and safety targets were met at
target for the period. Group engagement scores were between threshold and target and the Group’s voluntary employment
turnover target was met at stretch.
Mr Bansal also participated in the FY2019 LTI Plan which was tested at the end of FY21. As outlined in section 5F above,
50% of rights vested under the FY2019 LTI offer, which resulted in the issue of 604,308 shares to Mr Bansal.
In recognition of Mr Bansal’s more than 5 years’ service to the Group as CEO and the exceptional financial performance
of the Company over that time, the Board determined that Mr Bansal should be treated as a good leaver for the purpose
of the FY2020 LTI (the vesting is to be tested at the end of FY22). Accordingly, Mr Bansal’s FY2020 LTI has been left on foot.
Mr Bansal did not participate in the FY2021 LTI offer.
As noted above, Mr Bansal commenced a period of gardening leave in March 2021. At the end of the period of gardening
leave, Mr Bansal received his contractual entitlements including payment in lieu of his notice period and accrued leave.
In addition to this period of gardening leave and in return for payment in lieu of notice, Mr Bansal agreed to a revised post-
employment contractual restraint that was more broad reaching than that contained in his original employment agreement
entered into in 2015 and to provide ongoing support to the leadership transition, in particular in relation to the acquisition
of certain of Suez’s post-collection assets in Sydney. The Board believed these additional undertakings to be valuable given
the significant changes in the Australian waste management industry during the year, in particular the industry consolidation
that has occurred, combined with the entry of new participants and the strategic importance of the acquisition of certain
of Suez’s post-collection assets in Sydney.
Terms of Appointment of Mark Chellew as Executive Chairman
Mark Chellew was appointed as Executive Chairman on 21 January 2021. In his role as Executive Chairman, Mr Chellew
receives an additional fee of $54,167 per month to reflect his broader responsibilities. In determining this fee, the Board
had regard to the additional responsibilities and time commitment required of Mr Chellew following his appointment,
in particular that the position of CEO was vacant during this period and Mr Chellew’s involvement in the proposed
acquisition of Suez’s Australian waste management business. Under the terms of his appointment as Executive Chairman
Mr Chellew will not participate in the Company’s STI or LTI Plans. His appointment was deemed to take effect from
1 January 2021, is on a month-to-month basis and can be terminated by either party immediately upon notice. Mr Chellew
will return to the position of Non-Executive Chairman from 1 October 2021.
Terms of Appointment of Brendan Gill as Chief Operating Officer
Mr Gill was in the role of Chief Financial Officer (CFO) prior to his appointment as Chief Operating Officer (COO). Mr Gill was
appointed COO of the Company following Mr Bansal stepping down from the position of CEO. In recognition of his broader
responsibilities as COO, Mr Gill’s annual total fixed remuneration was increased to $1,000,000 with effect from 1 February
2021 and his at target STI opportunity was increased to 60%. There were no other changes to Mr Gill’s remuneration
arrangements or the terms of his employment with the Company following his appointment as COO.
5 5
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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 2021 is set out in the following table:
YEAR ENDED
30 JUNE 2021
BALANCE AT
1 JULY 2020
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 2021
NUMBER
V Bansal
B J Gill
P A Binfield
M Crawford
T Richards
3,935,418
849,541
–
744,252
384,321
–
217,290
222,171
189,568
154,642
–
(1,252,764)
3,089,938
(511,308)
2,171,346
437,634
(270,571)
662,945
(146,031)
650,229
439,898
–
–
–
222,171
381,800
(239,634)
587,967
(127,963)
566,223
311,304
(19,682)
42,276
(69,587)
449,694
1
2
Performance rights were granted under the FY2021 LTI Offer and FY2020 STI deferral on 16 December 2020, except for Mr Binfield’s FY2021 LTI Offer
which was granted on 15 February 2021.
The fair value of performance rights granted to Executive KMP was calculated using Monte Carlo simulation and the Black Scholes Model and is $1.57
to $2.30 per Performance Right under the FY2021 LTI Offer. Refer to note 35 to the Consolidated Financial Statements which sets out the fair value per
tranche of performance rights granted.
3 Calculated as the market value of Cleanaway shares on the date of exercise.
4 All performance rights have no exercise price and once vested they have no expiry date. The grant date for each tranche of performance rights is set out
in note 35 to the Consolidated Financial Statements.
7B. Performance rights as at 30 June 2021
The number of performance rights as at 30 June 2021 by plan for the Executive KMP is set out in the following table:
ISSUED
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal
B J Gill
P A Binfield
M Crawford
T Richards
2020
STI
2019
LTI
2020
LTI
2021
LTI
BALANCE AT
30 JUNE 2021
VESTED &
EXERCISABLE
AT THE END
OF THE YEAR
–
1,208,615
16,818
247,616
–
14,673
11,620
–
214,976
167,009
962,731
185,323
–
161,679
128,043
–
2,171,346
200,472
222,171
174,895
143,022
650,229
222,171
566,223
449,694
–
16,818
–
14,673
11,620
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.
5 6
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 – $
FY2017
1,350.7
FY2018
1,564.9
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
FY2021
2,198.9
112.9
5.5
7.5
4.10
145.3
7.1
7.4
4.60
1,592,889,317 2,036,684,232 2,044,507,391 2,053,944,831 2,059,434,558
2,198.2
3,442.0
4,763.7
4,518.7
5,436.9
1.38
0.58
1.69
0.31
2.33
0.64
2.20
(0.13)
2.64
0.44
1 Net Revenue is Revenue excluding landfill levies (FY2017: $103.7 million; FY2018: $149.4 million; FY2019: $174.0 million; FY2020: $232.0 million; and
2
3
FY2021: $207.5 million).
Includes underlying adjustments after tax (FY2017: $5.0 million; FY2018: $(5.5) million; FY2019: $20.1 million; FY2020: $37.4 million; and FY2021:
$5.5 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 and FY2021.
5 7
Remuneration Report (Audited)234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 8 Shareholdings and other related party transactions
8A. Shareholdings
The movement for the year ended 30 June 2021 in the number of ordinary shares in the Company held, directly
or indirectly or beneficially, by each KMP, including their related parties, is detailed in the following table.
NAME
NON-EXECUTIVE DIRECTORS:
M P Chellew
R M Smith
E R Stein 1
T A Sinclair
R M Harding
P G Etienne
S L Hogg
I A Player
EXECUTIVE KEY MANAGEMENT PERSONNEL
V Bansal 2
B J Gill
P A Binfield
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
156,548
123,720
125,688
49,417
29,696
82,715
–
–
5,418,844
842,927
–
500,000
–
–
–
–
–
–
–
–
–
–
2,400
–
–
–
–
–
–
156,548
126,120
125,688
49,417
29,696
82,715
–
–
1,252,764
(4,000,000)
2,671,608
270,571
–
239,634
19,682
(300,000)
30,000
(405,000)
–
813,498
30,000
334,634
19,682
1
2
The balance at the end of the year for Emma Stein reflects her shareholding on the date she ceased being a Director on 31 December 2020.
The balance at the end of the year for Vik Bansal reflects his shareholding on the date he ceased being KMP on 5 March 2021.
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.
5 8
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 2021, I declare
to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cleanaway Waste Management Limited and the entities it controlled during the financial year.
Ernst & Young
Brett Croft
Partner
19 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
5 9
Auditor’s Independence Declaration234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Gain on loss of control of subsidiary
Share of losses from equity accounted investments
Depreciation and amortisation expense
Write-off of assets
Impairment of assets
Profit from operations
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
Profit after income tax
NOTES
6
7
23
5
5
8
9
2021
$’M
2020
$’M
2,406.4
2,332.1
4.5
(900.7)
(630.6)
(243.7)
(44.6)
(60.5)
–
(2.0)
(276.4)
(5.4)
(4.3)
242.7
(35.9)
206.8
(59.1)
147.7
145.3
2.4
147.7
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
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
6 0
Consolidated Income Statement For the year ended 30 June 2021 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
17
2021
$’M
147.7
(0.7)
(0.7)
147.0
144.6
2.4
147.0
2020
$’M
112.6
(0.1)
(0.1)
112.5
112.8
(0.3)
112.5
Earnings per share attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
10
10
7.1
7.0
5.5
5.5
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
6 1
Consolidated Statement of Comprehensive Income For the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
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
Derivative financial instruments
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
2021
$’M
2020
$’M
11
12
13
24
20
21
22
23
9
32
24
14
15
25
26
27
15
32
25
26
27
16
17
69.4
372.2
22.1
28.8
492.5
1,241.5
479.2
2,320.4
41.6
52.2
–
24.1
79.8
348.1
19.4
23.1
470.4
1,174.0
416.7
2,306.2
34.5
66.9
30.0
23.9
4,159.0
4,651.5
4,052.2
4,522.6
297.6
271.1
6.9
76.9
78.8
68.2
35.6
6.5
69.6
71.2
79.0
34.9
564.0
532.3
996.4
31.5
9.9
306.4
107.0
1,451.2
2,015.2
2,636.3
995.8
–
7.2
287.6
128.7
1,419.3
1,951.6
2,571.0
2,695.7
2,688.7
25.1
(86.9)
23.9
(142.6)
2,633.9
2,570.0
2.4
1.0
2,636.3
2,571.0
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
6 2
Consolidated Balance SheetAs at 30 June 2021 At 1 July 2020
Profit for period
Other comprehensive income
Total comprehensive income for the year
Share-based payment expense
Dividends reinvested/(paid)
Balance at 30 June 2021
At 1 July 2019
Adjustment on adoption of AASB 16
Adjusted balance at 1 July 2020
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
PARENT ENTITY INTEREST
RESERVES
$’M
RETAINED
EARNINGS
$’M
NON-
CONTROLLING
INTEREST
$’M
TOTAL
$’M
ORDINARY
SHARES
$’M
2,688.7
–
–
–
–
7.0
2,695.7
2,678.2
–
2,678.2
–
–
–
–
–
10.5
23.9
(142.6)
2,570.0
–
(0.7)
(0.7)
1.9
–
25.1
24.0
–
24.0
–
(0.1)
(0.1)
–
–
–
145.3
–
145.3
–
(89.6)
(86.9)
145.3
(0.7)
144.6
1.9
(82.6)
2,633.9
(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)
TOTAL
EQUITY
$’M
2,571.0
147.7
(0.7)
147.0
1.9
(83.6)
2,636.3
2,536.6
(7.6)
2,529.0
112.6
(0.1)
112.5
(0.6)
(0.3)
(69.6)
2,571.0
1.0
2.4
–
2.4
–
(1.0)
2.4
2.3
–
2.3
(0.3)
–
(0.3)
(0.6)
(0.2)
(0.2)
1.0
2,688.7
23.9
(142.6)
2,570.0
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
6 3
Consolidated Statement of Changes in EquityFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortisation expense
Write-off of assets
Impairment of assets
Net finance costs
Share-based payment expense
Net gain on derecognition of right-of-use asset and lease liability
Remediation and rectification provision remeasurement
Share of losses from equity accounted investments
Net gain on disposal of property, plant and equipment
Net gain on disposal of assets held for sale
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:
(Increase)/decrease in receivables
Decrease/(increase) in other assets
Increase in inventories
Increase in payables
Increase in employee entitlements
Decrease in other liabilities
Decrease in provisions
Cash generated from operating activities
Net interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Payments for purchase of businesses (net of cash acquired)
Proceeds from disposal of property, plant and equipment
Investment in equity accounted investments
Proceeds from sale of investments
Proceeds on loss of control of subsidiary (net of cash derecognised)
Dividends received from equity accounted investments
Loans to equity accounted investments
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
2021
$’M
2020
$’M
206.8
155.2
276.4
5.4
4.3
35.9
1.1
(2.0)
(3.4)
2.0
(3.1)
–
–
0.3
523.7
(21.4)
0.6
(3.3)
20.6
10.0
(1.5)
(30.0)
498.7
(32.2)
(42.1)
424.4
(239.0)
(7.2)
(46.9)
17.7
(11.5)
–
–
1.3
(5.5)
(291.1)
290.0
(285.2)
(64.0)
(0.9)
(82.6)
(1.0)
(143.7)
(10.4)
79.8
69.4
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
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
6 4
Consolidated Statement of Cash FlowsFor the year ended 30 June 2021 1 Corporate information
Cleanaway Waste Management Limited and its subsidiaries (Cleanaway or the Group) is a for-profit entity 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 2021 were authorised for issue
in accordance with a resolution of the Directors on 19 August 2021.
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.
At 30 June 2021 the Group had a net current asset deficiency of $71.5 million (30 June 2020: net current asset deficiency
of $61.9 million). As set out in note 15 to the Financial Statements, the Group has unutilised committed debt facilities
of $930.3 million at 30 June 2021 available to repay the Group’s creditors as required 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 39 for a summary of the Group’s significant accounting policies.
6 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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. 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 the higher of fair value less costs to dispose (FVLCD) and
value-in-use. Both of these valuations utilised a discounted cash flow approachapproach which require the use of estimates and
assumptions. In determining the net present value of the discounted cash flows of the CGUs, cash flow projections are based on
forecasts determined 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 expense profile, and
costs to dispose in a FVLCD calculation.
Cash flows from the landfill assets include estimates and assumptions in relation to: waste volumes over the life of the
landfill, cell development capital expenditure, waste mix, revenue and growth, expense profile, and value and timing
of land sales.
These estimates and assumptions are subject to risk and uncertainty; such that there is a possibility that changes in
circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances
some or all of the assets may be impaired, or a previous impairment charge reversed. Any potential impact arising from
an impairment or reversal of an impairment would be recorded in the Consolidated Income Statement.
Further details on the Group’s impairment assessment and policy are disclosed in note 22 and note 39(e).
(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 39(j).
6 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 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 39(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 39(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 probable that they will be recovered, which
is dependent on the generation of sufficient future taxable profits. Management considers that it is probable that
future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits.
These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes
in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities
recognised on the Consolidated Balance Sheet and the amount of other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding credit or charge to the Consolidated Income Statement.
Further details on the Group’s taxation accounting policy are disclosed in note 39(d).
6 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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.
6 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 5 Segment reporting (continued)
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID
WASTE
& HEALTH
SERVICES
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVEST-
MENTS
$’M
ELIMINA-
TIONS
$’M
CORPORATE
$’M
GROUP
$’M
2021
Revenue
Revenue from customers
1,615.9
298.9
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA 1
Depreciation and amortisation
Underlying EBIT 1
Material recycling facility fire
Acquisition and integration costs 2
CEO transition costs
Change in discount rate on
provisions
Employee entitlements
Westgate tunnel contract costs 3
Fire at Welshpool transfer station 4
Profit from operations (EBIT)
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
12.0
55.9
0.1
6.6
1,683.8
305.6
456.3
23.2
33.2
512.7
405.5
(192.5)
213.0
48.0
110.0
(25.4)
22.6
(42.4)
67.6
–
–
(95.7)
(95.7)
–
–
–
2,371.1
35.3
–
2,406.4
563.5
(260.3)
303.2
–
–
–
–
(2.0)
–
(2.0)
–
–
2,371.1
35.3
–
–
– 2,406.4
(26.4)
535.1
(16.1)
(276.4)
(42.5)
258.7
(7.0)
(7.9)
(4.3)
3.4
7.0
(4.5)
(2.7)
242.7
(35.9)
206.8
(59.1)
147.7
Property, plant and equipment
Intangible assets
172.3
0.2
21.0
–
43.2
0.2
–
–
236.5
0.4
–
–
2.5
6.8
239.0
7.2
1 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.
Includes write-off of intangible assets of $2.7 million.
Includes impairment of assets of $4.3 million.
Includes write-off of property, plant and equipment of $2.7 million.
2
3
4
6 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 5 Segment reporting (continued)
OPERATING SEGMENTS
UNALLOCATED
SOLID
WASTE
SERVICES
$’M
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID
WASTE
& HEALTH
SERVICES
$’M
TOTAL
OPERATING
SEGMENTS
$’M
EQUITY
ACCOUNTED
INVEST-
MENTS
$’M
ELIMINA-
TIONS
$’M
CORPORATE
$’M
GROUP
$’M
2020
Revenue
Revenue from customers
1,549.0
300.7
450.1
11.8
44.0
–
12.7
20.5
43.0
–
–
(99.7)
2,299.8
32.3
–
1,604.8
313.4
513.6
(99.7)
2,332.1
388.3
(175.6)
212.7
45.9
106.3
(24.5)
21.4
(42.0)
64.3
–
–
–
540.5
(242.1)
298.4
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:
–
–
–
–
(2.1)
–
(2.1)
– 2,299.8
–
–
32.3
–
– 2,332.1
(22.7)
515.7
(17.0)
(259.1)
(39.7)
256.6
(14.6)
(36.3)
8.1
(8.0)
(2.0)
1.1
204.9
(49.7)
155.2
(42.6)
112.6
Property, plant and equipment
Intangible assets
143.8
2.6
20.0
0.1
34.6
–
–
–
198.4
2.7
–
–
1.8
6.9
200.2
9.6
6 Revenue
Revenue from customers 1
Other revenue
1
Refer to note 5 for disaggregation of revenue.
2021
$’M
2,371.1
35.3
2,406.4
2020
$’M
2,299.8
32.3
2,332.1
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.
7 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 7 Other income
Gain on disposal of property, plant and equipment
Other
Insurance recoveries
8 Net finance costs
Finance costs
Interest on borrowings
Interest on leases
Amortisation of capitalised borrowing costs
Unwind of discount on provisions and other liabilities
Gain on modification of fixed rate borrowings 1
Amortisation of gain on modification of fixed rate borrowings
Fair value gain/(loss) on USPP Notes
Fair value (loss)/gain on cross currency interest rate swaps (CCIRS) 2
Finance income
Interest revenue
Net finance costs
2021
$’M
3.1
1.4
–
4.5
2020
$’M
12.7
1.1
20.8
34.6
2021
$’M
2020
$’M
(14.7)
(16.0)
(2.7)
(9.2)
7.9
(1.3)
60.7
(60.9)
(36.2)
0.3
0.3
(35.9)
(19.7)
(15.7)
(4.6)
(10.5)
–
–
(34.0)
33.4
(51.1)
1.4
1.4
(49.7)
1 On 19 October 2020 the $90.0 million Clean Energy Finance Corporation term loan facility was amended including a reduction in the fixed interest rate.
2
The $7.9 million gain on modification of fixed rate debt is net of fees of $1.7 million, paid to the lender.
Fair value (loss)/gain on CCIRS includes net loss of $60.9 million (2020: net gain of $33.4 million) relating to fair value and cash flow hedges (including
net hedge ineffectiveness $2.8 million (2020: $0.4 million)) and other fair value changes during the period. Refer to note 17(a) for fair value amounts
reclassified from the hedge reserve and 32(d) for all fair value movements on the CCIRS and USPP Notes.
Refer to note 39(c) for the Group’s accounting policy on finance costs.
7 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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
2021
$’M
41.1
1.6
42.7
18.5
(2.1)
16.4
59.1
2020
$’M
42.9
(4.8)
38.1
0.1
4.4
4.5
42.6
(b) Amounts recognised directly in other comprehensive income or equity
Deferred income tax benefit recognised directly in other comprehensive income of $0.3 million (2020: benefit of $0.1 million)
relates to the tax effect of items recognised in the hedge reserve.
Deferred income tax benefit recognised directly in equity for the year of $0.8 million (2020: nil) 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
Income tax using the corporation tax rate of 30% (2020: 30%)
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 gain on loss of control of subsidiary
Employee share plan expenses
Non-assessable gain on remeasurement of contingent consideration
Income tax expense
2021
$’M
2020
$’M
206.8
155.2
62.0
46.6
0.9
0.3
0.5
(0.5)
(3.1)
(0.1)
–
–
–
(0.9)
59.1
0.9
0.1
1.0
(0.4)
(3.1)
(3.4)
1.1
(0.3)
0.1
–
42.6
7 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 9 Income tax (continued)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2021
Deferred tax assets
PP&E
Leases
Employee benefits
Provisions
Tax losses
Other
Deferred tax liabilities
Intangible assets
Other
Net deferred tax assets
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
$’M
CLOSING
BALANCE
$’M
45.1
7.0
26.0
87.8
–
42.5
(126.5)
(15.0)
66.9
(7.0)
(3.4)
2.3
(8.7)
–
3.3
6.6
(9.5)
(16.4)
–
–
–
–
–
–
–
0.3
0.3
–
–
–
–
–
0.8
–
–
0.8
(1.3)
–
0.1
3.9
0.9
–
(3.0)
–
0.6
–
–
–
–
–
–
–
–
–
36.8
3.6
28.4
83.0
0.9
46.6
(122.9)
(24.2)
52.2
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
–
–
–
–
–
–
–
–
–
(0.6)
–
0.3
6.3
–
–
(1.3)
–
4.7
–
3.3
–
–
(1.2)
–
0.4
1.4
3.9
45.1
7.0
26.0
87.8
–
42.5
(126.5)
(15.0)
66.9
1 Other leases includes tax effect of initial application of AASB 16 of $3.3 million.
2
Includes $0.6 million related to the derecognition of subsidiary on loss of control. Refer to note 28.
7 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 10 Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
2021
7.1
7.0
2020
5.5
5.5
(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 (profit)/loss attributable to non-controlling interests
Profit after tax attributable to ordinary equity holders
Reconciliation of weighted average number of ordinary shares:
2021
$’M
147.7
(2.4)
145.3
2020
$’M
112.6
0.3
112.9
2021
2020
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
2,057,379,071
2,050,673,797
7,184,608
10,379,638
2,064,563,679
2,061,053,435
(ii) Diluted earnings per share
Diluted earnings per share adjusts basic earnings per share to take into account the after income tax effect of interest and
other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed
to have been issued for no consideration in relation to dilutive potential ordinary shares.
Dilutive potential ordinary shares are limited to performance rights issued under the Group’s Long-term and Short-term
Incentive plans. Refer to note 35 for details. The dilutive effect of the performance rights on basic earnings per share
reported above is not material.
11 Cash and cash equivalents
Composition of cash and cash equivalents
Cash at bank and on hand
Refer to note 39(g) for the Group’s accounting policy on cash and cash equivalents.
2021
$’M
69.4
69.4
2020
$’M
79.8
79.8
74
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 12 Trade and other receivables
Trade receivables
Contract assets 1
Other receivables
Provision for expected credit losses
2021
$’M
366.7
1.6
6.0
(2.1)
2020
$’M
347.6
1.5
4.8
(5.8)
372.2
348.1
1 Contract assets arise when the Group has performed work but does not yet have the right to invoice. This is the case in the Industrial & Waste Services
operating segment when work is performed on a fixed price quote.
Refer to note 39(h) for the Group’s accounting policy on trade and other receivables.
The ageing of the Group’s trade receivables at the reporting date was:
Not past due
Past due 1 – 30 days
Past due 31 – 120 days
Past due 121 days or more
The movement in the provision for expected credit losses during the year was as follows:
Opening balance
Provisions acquired
Provisions recognised 1
Reversal of provisions
Utilisation of provisions
Closing balance
2021
$’M
292.7
52.5
15.0
6.5
366.7
2021
$’M
5.8
0.1
2.7
(3.8)
(2.7)
2.1
2020
$’M
268.8
41.9
21.9
15.0
347.6
2020
$’M
5.8
–
6.0
(2.5)
(3.5)
5.8
1
Expected credit losses related to COVID-19 have been considered in determining the provision for the current and comparative year.
No single customer’s annual revenue is greater than 1.8% (2020: 1.7%) 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
Total inventory costs recognised as an expense were $89.3 million (2020: $93.2 million).
Refer to note 39(i) for the Group’s accounting policy on inventories.
2021
$’M
9.7
0.2
12.2
22.1
2020
$’M
7.2
0.2
12.0
19.4
7 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 14 Trade and other payables
Trade payables
Other payables and accruals
2021
$’M
148.6
149.0
297.6
2020
$’M
116.2
154.9
271.1
Refer to note 39(l) for the Group’s accounting policy on trade and other payables.
15 Interest-bearing liabilities
UNSECURED
SECURED
Opening balance at 1 July 2020
(Repayment)/proceeds of
borrowings
Borrowing costs paid
Cash flows
Lease drawdowns
Remeasurement of lease liabilities
Non-cash drawdowns
Interest bearing liabilities acquired
Gain on modification of fixed rate
borrowings 2
Fair value changes
Borrowing costs reversed/(accrued)
Amortisation of gain on modification
of fixed rate borrowings
Amortisation of borrowing costs
BANK
LOANS
$’M
111.1
US PRIVATE
PLACEMENT
NOTES
$M
CLEAN ENERGY
FINANCE
CORPORATION
$’M
426.9
89.7
5.2
(0.9)
4.3
–
–
8.2
–
–
–
(0.3)
–
2.4
–
–
–
–
–
–
–
–
(60.7)
0.3
–
0.2
–
–
–
–
–
–
–
(9.6)
–
–
1.3
0.1
81.5
LEASE
LIABILITIES 1
$’M
TOTAL
INTEREST-
BEARING
LIABILITIES
$’M
437.3
1,065.4
(64.0)
–
(64.0)
112.2
8.3
–
5.6
–
–
–
–
–
(59.2)
(0.9)
(60.1)
112.2
8.3
8.2
5.6
(9.6)
(60.7)
–
1.3
2.7
499.4
1,073.3
OTHER
$’M
0.4
(0.4)
–
(0.4)
–
–
–
–
–
–
–
–
–
–
Closing balance at 30 June 2021
125.7
366.7
Lease liabilities at 30 June 2021 consist of current lease liabilities of $76.9 million and non-current lease liabilities of $422.5 million.
1
2 On 19 October 2020 the $90.0 million Clean Energy Finance Corporation term loan facility was amended including a reduction in the fixed interest rate.
The fixed rate debt was remeasured by calculating the net present value of the modified cash flows discounted using the effective interest rate used
on initial recognition. The $9.6 million difference between the remeasured amount and the net present value of the remaining original cash flows was
recorded as a modification gain on fixed rate debt.
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) 1
2021
$’M
17.2
1.9
49.2
68.3
2020
$’M
23.9
1.7
49.3
74.9
1 Variable lease payments included in labour-related expenses reflect payments made to owner drivers, whereby a subcontractor will be paid for both the
use of their vehicle and collection services. Future cash outflows in respect of these leases are dependant upon owner driver jobs completed.
7 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 15 Interest-bearing liabilities (continued)
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
l
UNSECURED
SECURED
US PRIVATE
PLACEMENT
NOTES
$'M
CLEAN ENERGY
FINANCE
CORPORATION
$’M
OTHER
$’M
LEASE
LIABILITIES 2
$’M
BANK
LOANS
$’M
480.1
–
(365.1)
(0.9)
(366.0)
–
–
(7.5)
–
–
–
0.3
4.2
–
–
397.6
(1.8)
395.8
–
–
–
–
–
34.0
(3.1)
0.2
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
–
–
–
111.1
426.9
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 classified as operating leases have been brought on balance sheet as lease liabilities.
Lease liabilities at 30 June 2020 consist of current lease liabilities of $69.2 million and non-current lease liabilities of $368.1 million.
Refer to note 39(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
Facility E
AMOUNT
MATURITY
working capital tranche
$135 million
31 July 2023
4 year revolver
5 year revolver
$200 million
31 January 2025
$315 million
31 January 2026
3 year non-revolving
term loan facility
$500 million
To be determined 1
11 February 2028
US Private Placement (USPP) Notes
8 year debt notes
US$90 million
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
$95 million
31 December 2021
1 Maturity date of facility is three years from the date of initial drawdown which is required to occur no later than 5 April 2022.
7 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 15 Interest-bearing liabilities (continued)
The headroom available in the Group’s facilities at 30 June 2021 is summarised below:
Syndicated Facility Agreement
US Private Placement (USPP) Notes
Clean Energy Finance Corporation 5
Bank guarantee facilities 1
Facility A 1, 2, 3
Facility B 3
Facility C 3
Facility E 3,4
AVAILABLE
$’M
135.0
200.0
315.0
500.0
366.7
90.0
95.0
1,701.7
UTILISED
$’M
(114.1)
(120.0)
–
–
(366.7)
(90.0)
(80.6)
(771.4)
NOT UTILISED
$’M
20.9
80.0
315.0
500.0
–
–
14.4
930.3
1
2
These facilities include $174.5 million (2020: $145.7 million) in guarantees and letters of credit which only give rise to a liability where the Group fails
to perform its contractual obligations.
This facility includes $4.5 million (2020: $6.5 million) of corporate credit card limit utilisation and $15.0 million (2020: $15.0 million) of overdraft utilisation
and nil (2020: $6.6 million) of outstanding finance lease commitments.
3 Amounts utilised exclude capitalised transaction costs of $2.4 million (2020: $3.9 million) and $7.6 million (2020: nil) of bank loans advanced under
uncommitted facilities.
This facility is available to fund purchase of the Suez Sydney assets and related transaction costs under the Business Purchase Agreement dated 5 April 2021.
4
5 Amount utilised excludes capitalised transaction costs of $0.4 million (2020: $0.4 million) and unamortised gains on fixed rate debt of $8.3 million
(30 June 2020: nil).
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
Bank guarantee facilities
Facility A
Facility B
Facility C
AVAILABLE
$’M
UTILISED
$’M
NOT UTILISED
$’M
135.0
200.0
315.0
426.9
90.0
60.0
1,226.9
(118.2)
(115.0)
–
(426.9)
(90.0)
(55.7)
(805.8)
16.8
85.0
315.0
–
–
4.3
421.1
7 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 16 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.
2021
NUMBER
OF SHARES
2020
$’M
NUMBER
OF SHARES
Opening balance
2,053,944,831
2,688.7
2,044,507,391
Issue of shares under dividend reinvestment plan
Issue of shares under employee incentive plans
3,112,469
2,377,258
7.0
–
5,053,889
4,383,551
$’M
2,678.2
10.5
–
Closing balance
2,059,434,558
2,695.7 2,053,944,831
2,688.7
17 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 32(d).
Opening balance
Net loss on currency basis (net of tax)
Closing balance
2021
$’M
(0.1)
(0.7)
(0.8)
2020
$’M
–
(0.1)
(0.1)
The effective portion of cash flow hedges was $31.1 million (2020: $6.5 million) 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 35 for further details on these share-based payment plans.
Opening balance
Share-based payment expense (net of tax)
Closing balance
2021
$’M
24.0
1.9
25.9
2020
$’M
24.0
–
24.0
7 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 18 Dividends
The Company declared fully franked dividends on ordinary shares for the financial year ended 30 June 2021 of 4.60 cents
per share, being an interim dividend of 2.25 cents per share and final dividend of 2.35 cents per share. The record date of
the final dividend is 13 September 2021 with payment to be made on 5 October 2021.
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
2021
CENTS PER
SHARE
2020
CENTS PER
SHARE
2.10
2.25
4.35
2.25
2.35
4.60
1.90
2.00
3.90
2.00
2.10
4.10
2021
$’M
43.2
46.4
89.6
46.4
48.4
94.8
2020
$’M
38.9
41.0
79.9
41.0
43.2
84.2
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 2021 dividend determined after 30 June 2021 will reduce the franking account by $20.7 million.
The unadjusted balance of the franking account at 30 June 2021 was $21.7 million (2020: $19.0 million).
2021
$’M
27.7
2020
$’M
24.7
8 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 19 Capital management
When managing capital, the Group’s objective is to ensure that it uses a mix of funding options to optimise returns
to equity holders and manage risk. The facility limits and maturity profile of the Group’s main financing facilities are
contained in note 15.
The capital structure of the Group comprises: debt, which includes borrowings and 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
Derivative financial instruments 1
Cash and cash equivalents
Net debt
Total equity
Gearing ratio 2
2021
$’M
76.9
996.4
31.5
(69.4)
1,035.4
2,633.9
28.2%
2020
$’M
69.6
995.8
(30.0)
(79.8)
955.6
2,570.0
27.1%
1 At 30 June 2021, the Group held cross currency interest rate swaps (CCIRS) to protect against interest rate and foreign currency movements in relation to the USPP notes.
2
The gearing ratio is calculated as Net debt divided by Net debt plus Total equity attributable to the parent.
20 Property, plant and equipment
2021
NON-
LANDFILL
LAND AND
BUILDINGS
$’M
LANDFILL
ASSETS 2
$’M
LEASEHOLD
IMPROVEMENTS
$’M
PLANT AND
EQUIPMENT
$’M
CAPITAL
WORK IN
PROGRESS
$’M
TOTAL
$’M
Opening net book value
205.8
257.1
63.0
574.2
73.9
1,174.0
Additions
Acquisitions of businesses
Net movement in remediation assets 1
Disposals
Transfers of assets
Depreciation
Impairment of assets
Write-off of plant and equipment
Closing net book value
Cost
Accumulated depreciation
Net book value
–
0.3
–
(9.1)
1.1
(3.7)
–
–
194.4
208.0
(13.6)
194.4
–
2.1
28.2
–
26.4
(45.8)
–
–
268.0
769.6
(501.6)
268.0
–
0.4
(0.8)
(1.3)
8.3
(7.5)
–
(2.3)
59.8
83.8
(24.0)
59.8
–
11.3
–
(2.5)
141.0
(122.7)
–
(0.4)
600.9
1,804.1
(1,203.2)
600.9
225.9
225.9
–
–
–
(177.1)
–
(4.3)
–
14.1
27.4
(12.9)
(0.3)
(179.7)
(4.3)
(2.7)
118.4
118.4
1,241.5
2,983.9
–
(1,742.4)
118.4
1,241.5
1 Net movement in remediation assets reflects adjustments to the remediation provision for open landfill sites and leasehold improvements. Refer to note 39(j)
2
for details on the Group’s accounting policy.
Landfill assets are depreciated using airspace related to the current licensed areas and expected extensions of that landfill area. Total landfill assets
related to the New Chum landfill are currently being depreciated assuming that the height rise application, currently subject to appeal by Cleanaway in
the Land and Environment Court in Queensland, will be awarded in our favour. This position is based on our expectation that a height rise application
will be granted, given all relevant facts and circumstances, our own internal analysis and the views expressed by our third party experts. Should the
current appeal and any other future remedies available not be successful, the available airspace will need to be revised. Assets related to the New Chum
landfill and subject to the appeal total $28.2 million at 30 June 2021.
8 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 20 Property, plant and equipment (continued)
2020
Opening net book value
Adjustment on adoption of AASB 16 1
Additions
Acquisitions of businesses
Net movement in remediation assets
Disposals
Derecognition on loss of control of subsidiary
Transfer of assets
Depreciation
Write off of plant & 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
$’M
152.9
237.2
64.3
–
–
51.1
–
(2.6)
–
8.3
(3.9)
–
205.8
215.8
(10.0)
205.8
–
–
–
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)
–
19.5
–
(10.4)
(12.3)
120.0
(116.3)
(10.7)
574.2
1,736.4
(1,162.2)
574.2
CAPITAL
WORK IN
PROGRESS
$’M
66.1
(5.2)
215.3
–
–
–
(0.3)
(201.2)
–
(0.8)
73.9
73.9
TOTAL
$’M
1,232.0
(132.3)
215.3
70.6
4.4
(13.1)
(13.6)
(0.3)
(169.4)
(19.6)
1,174.0
2,821.1
–
(1,647.1)
73.9
1,174.0
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.
Accounting for landfill assets
The Group is responsible for a total of 15 landfills (2020: 14 landfills). Of the 15 landfills, nine are closed. Those that
are open are expected to close between 2026 and 2066. 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) Capitalise the estimated future costs of remediation;
(d) Depreciate the capitalised landfill assets over the useful life of the landfill asset or site; and
(e) Recognise income generated from the landfill assets in the reporting period earned.
Refer to note 39(j) for further details on the Group’s accounting policy on landfill assets.
8 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 21 Right-of-use assets
2021
Opening net book value
New leases
Acquisition of businesses
Remeasurement due to a variation in lease term
Remeasurement due to rental increases
Depreciation
Closing net book value
Cost
Accumulated depreciation
Net book value
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
233.1
18.1
5.6
2.1
4.6
(34.6)
228.9
292.9
(64.0)
228.9
183.6
93.6
–
4.6
–
(31.5)
250.3
322.6
(72.3)
250.3
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
416.7
111.7
5.6
6.7
4.6
(66.1)
479.2
615.5
(136.3)
479.2
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.
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.
8 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 22 Intangible assets
2021
GOODWILL
$’M
LANDFILL
AIRSPACE
$’M
Opening net book value
1,827.6
226.9
Additions
Acquisitions of businesses
Write-off of intangibles
Remeasurement of associated
remediation liability
Transfers to PP&E
Amortisation
Closing net book value
Cost
Accumulated amortisation
Net book value
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
–
24.1
–
–
–
–
1,851.7
1,851.7
–
1,851.7
GOODWILL
$’M
1,827.3
–
23.1
(22.8)
–
–
1,827.6
1,827.6
–
1,827.6
–
8.3
–
(0.7)
–
(7.4)
227.1
263.9
(36.8)
227.1
LANDFILL
AIRSPACE
$’M
233.5
0.2
–
–
–
(6.8)
226.9
256.3
(29.4)
226.9
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
TOTAL
$’M
143.2
–
10.0
–
–
–
(15.6)
137.6
223.1
(85.5)
137.6
29.9
2,306.2
7.1
–
(2.7)
–
(0.3)
(8.6)
25.4
88.0
(62.6)
25.4
7.1
42.4
(2.7)
(0.7)
(0.3)
(31.6)
2,320.4
2,505.3
(184.9)
2,320.4
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
OTHER
INTANGIBLES
$’M
TOTAL
$’M
156.6
28.9
2,324.9
–
4.5
(1.2)
–
(16.7)
143.2
213.1
(69.9)
143.2
9.1
–
–
0.3
(8.4)
29.9
83.9
(54.0)
29.9
9.3
27.6
(24.0)
0.3
(31.9)
2,306.2
2,459.5
(153.3)
2,306.2
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:
2021
Goodwill
Brand names
Total
2020
Goodwill
Brand names
Total
8 4
SOLID WASTE
SERVICES
$’M
1,311.1
78.6
1,389.7
SOLID WASTE
SERVICES
$’M
1,287.0
78.6
1,365.6
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID WASTE
& HEALTH
SERVICES
$’M
TOTAL
$’M
168.2
372.4
1,851.7
–
–
78.6
168.2
372.4
1,930.3
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID WASTE
& HEALTH
SERVICES
$’M
TOTAL
$’M
168.2
372.4
1,827.6
–
–
78.6
168.2
372.4
1,906.2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 22 Intangible assets (continued)
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, brand names and other non-
financial 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 2021.
Key assumptions used for annual impairment testing
The recoverable amount of each operating segment or CGU is determined based on fair value less costs to dispose
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. Capital projects
which are reasonably expected to be developed because they have positive NPV and are approved have also been included
in the determination of recoverable value. The fair value less costs to dispose calculations use cash flow projections
based on actual operating results, the budget for the year ending 2022 and a five-year strategic plan adjusted for known
developments and changes in information since the plan was formulated. As these forecasts are developed using the
Group’s own data they are Level 3 inputs in the fair value hierarchy. The recoverable amount of each CGU at 30 June 2020
was determined based on a value in use method.
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% (2020: 2.5%). The terminal growth rate for Industrial & Waste Services and Liquid Waste & Health
Services remains at 2.0% (2020: 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 2021 impairment testing have been adjusted for
known and anticipated future operational changes and additional potential risk identified since 30 June 2020. These changes
are reflected in the following summary of key assumptions table.
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
2021
JUNE
2020
7.1%
11.9%
2.5%
7.3%
10.4%
7.4%
10.7%
2.5%
7.3%
10.4%
JUNE
2021
6.5%
7.1%
2.0%
7.3%
JUNE
2020
6.3%
6.4%
2.0%
7.3%
JUNE
2021
6.9%
7.6%
2.0%
7.3%
JUNE
2020
7.7%
7.9%
2.0%
7.3%
10.4%
10.4%
10.4%
10.4%
1 Growth rates represent a compound annual growth rate over 5 years and have been calculated with 30 June 2021 underlying EBITDA as a base,
excluding corporate overheads.
Reflects capital spend as a percentage of revenue, calculated as the five-year average of forecast spend.
2
8 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 22 Intangible assets (continued)
EBITDA growth assumptions
Solid Waste Services EBITDA growth of 7.1% 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 6.5% is mainly a result of GDP and CPI growth but also considers new
and expiring contracts.
Liquid Waste & Health Services EBITDA growth also assumes GDP and CPI growth 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
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 the waste management
sector 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 waste management companies 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 fair
value less costs to dispose (FVLCD) 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.
• COVID-19 pandemic
Cleanaway has considered the impact of the COVID-19 pandemic in determining FVLCD. As the COVID-19 pandemic
has evolved, we have noted that small and medium enterprise (SME) demand for waste management services has been
negatively impacted, however we have also noted increased demand for other waste management services such as
health, municipal collection and related post-collections activities have remained 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 2021 which reflect slightly higher growth as 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 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 22 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 2021:
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
INDUSTRIAL &
SERVICES
WASTE SERVICES
LIQUID WASTE &
HEALTH SERVICES
886.2
5.4%
4.3%
3.6%
2.6%
108.7
3.6%
1.8%
2.7%
1.9%
411.5
6.3%
3.9%
4.9%
3.3%
1
2
Percentage changes presented above represent the absolute change in the assumption value (for example post-tax discount rate increasing by 2.6%
from 7.3% to 9.9%).
Terminal value for all segments would reflect negative value as they are currently modelled at 2.5% for Solid Waste Services and 2.0% for Industrial
& Waste Services and Liquid Waste & Health Services.
Refer to note 39(k) for further details on the Group’s intangible assets accounting policy.
8 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 23 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
NAME OF ENTITY
Joint ventures:
COUNTRY
REPORTING
DATE
2021
%
2020
%
Cleanaway ResourceCo RRF Pty Ltd
Earthpower Technologies Sydney Pty Ltd
Tomra Cleanaway Pty Ltd
Western Sydney Energy and Resource
Recovery Centre Pty Ltd 1
Wonthaggi Recyclers Pty Ltd
Associates:
Circular Plastics Australia Pty Ltd 2
Australia
Australia
Australia
Australia
Australia
30 June
30 June
30 June
30 June
30 June
Australia
30 June
45
50
50
51
50
40
45
50
50
51
50
–
2021
$’M
19.2
–
3.6
9.5
0.3
9.0
41.6
2020
$’M
20.9
–
2.5
10.5
0.6
–
34.5
1 Western Sydney Energy and Resource Recovery Centre Pty Ltd was formally known as A.C.N. 635 427 262 Pty Ltd.
2 On 3 August 2020 Cleanaway Pty Ltd subscribed for 9,008,640 shares in Circular Plastics Australia Pty Ltd, representing 40% of the paid-up capital of
the entity.
(a) Western Sydney Energy and Resource Recovery Centre Pty Ltd
The Group has a 51% interest in Western Sydney Energy and Resource Recovery Centre Pty Ltd, an entity which holds
the investment in the energy-from-waste project in western Sydney. The Group’s interest in Western Sydney Energy
and Resource Recovery Centre Pty Ltd is accounted for using the equity method in the consolidated financial statements.
Summarised financial information of the joint venture, based on its financial statements, and reconciliation with the carrying
amount of the investment in the consolidated financial statements are set out below:
Summarised statement of financial position of Western Sydney Energy and Resource Recovery Centre Pty Ltd:
Current assets, including cash and cash equivalents $0.1 million (2020: $0.1 million)
Non-current assets
Equity
Group’s share in equity
Group’s carrying amount of the investment
2021
$’M
0.1
18.6
18.7
9.5
9.5
2020
$’M
1.9
18.7
20.6
10.5
10.5
The project is to be assessed by the Independent Planning Commission. Development of the energy-from-waste plant
is subject to planning approval and a final investment decision. All costs in relation to feasibility costs and environmental
approvals have been capitalised and accordingly the joint venture has not contributed profit to the Group during the year
ended 30 June 2021.
The joint venture had no contingent liabilities or capital commitments as at 30 June 2021 (2020: nil). Western Sydney Energy
and Resource Recovery Centre Pty Ltd cannot distribute its profits without consent from both venture partners.
8 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 23 Equity accounted investments (continued)
(b) Cleanaway ResourceCo RRF Pty Ltd
The Group has a 45% interest in Cleanaway ResourceCo RRF Pty Ltd, a resource recovery facility located at Wetherill Park
in Western Sydney. The Group’s interest in Cleanaway ResourceCo RRF Pty Ltd is accounted for using the equity method
in the consolidated financial statements. Summarised financial information of the joint venture, based on its IFRS financial
statements, and reconciliation with the carrying amount of the investment in the consolidated financial statements are set
out below:
Summarised statement of financial position of Cleanaway ResourceCo RRF Pty Ltd:
Current assets, including cash and cash equivalents $2.9 million (2020: $0.5 million)
and prepayments $1.1 million (2020: $0.7 million)
Non-current assets
Current liabilities
Non-current liabilities, including deferred tax liabilities $0.1 million (2020: $0.1 million) and
long-term borrowings $39.5 million (2020: $30.9 million)
Equity
Group’s share in equity
Group’s carrying amount of the investment
Summarised statement of profit or loss of Cleanaway ResourceCo RRF Pty Ltd:
Revenue from contracts with customers
Cost of sales
Administrative expenses, including depreciation $2.8 million (2020: $1.0 million)
Finance costs, including interest expense $1.9 million (2020: $0.5 million)
Loss before tax
Income tax benefit
Loss for the year
Total comprehensive loss for the year
Group’s share of loss for the year
2021
$’M
9.4
81.4
(8.6)
(39.6)
42.6
19.2
19.2
2021
$’M
15.4
(10.1)
(8.8)
(1.9)
(5.4)
1.6
(3.8)
(3.8)
(1.7)
2020
$’M
6.1
80.5
(9.2)
(31.0)
46.4
20.9
20.9
2020
$’M 1
4.3
(3.9)
(3.5)
(0.6)
(3.7)
1.1
(2.6)
(2.6)
(1.2)
1
For the year ended 30 June 2020, the Group’s share of loss was equity accounted from 1 January 2020.
The joint venture had capital commitments of $0.2 million as at 30 June 2021 (2020: nil). The joint venture had no
contingent liabilities as at 30 June 2021 (2020: nil). ResourceCo RRF Pty Ltd cannot distribute its profits without consent from
both venture partners.
8 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 23 Equity accounted investments (continued)
(c) Other joint ventures (disclosed in aggregate)
Summarised statement of profit or loss of all other joint ventures:
Loss for the year
Total comprehensive loss for the year
Group’s share of loss for the year
2021
$’M
(0.7)
(0.7)
(0.3)
2020
$’M
(1.9)
(1.9)
(0.9)
(d) Circular Plastics Australia Pty Ltd
The Group has a 40% interest in Circular Plastics Australia Pty Ltd, which is currently constructing a PET recycling facility
in Albury, NSW. The Group’s interest in Circular Plastics Australia Pty Ltd is accounted for using the equity method in the
consolidated financial statements. Summarised financial information of the associate, based on its financial statements, and
reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below:
Summarised statement of financial position of Circular Plastics Australia Pty Ltd:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s share in equity
Group’s carrying amount of the investment
2021
$’M
5.7
17.4
(0.6)
–
22.5
9.0
9.0
2020
$’M
–
–
–
–
–
–
–
The construction of a PET plastic pelletising facility in Albury, NSW is well underway and expected to be completed by the
end of calendar year 2021. All costs related to the development of the facility have been capitalised and accordingly the
associate has not contributed profit to the Group during the year ended 30 June 2021.
The associate had no contingent liabilities as at 30 June 2021. Circular Plastics Australia Pty Ltd cannot distribute its profits
without the consent from all associate partners.
9 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 23 Equity accounted investments (continued)
(e) Transactions with equity accounted investments
The following table provides the total amount of transactions with equity accounted investments during the year ended
30 June 2021:
Joint ventures
Joint ventures
SERVICES TO EQUITY
ACCOUNTED INVESTMENTS
PURCHASES FROM EQUITY
ACCOUNTED INVESTMENTS
INTEREST REVENUE FROM EQUITY
ACCOUNTED INVESTMENTS
2021
$’M
85.7
85.7
2020
$’M
77.2
77.2
2021
$’M
4.0
4.0
2020
$’M
4.6
4.6
2021
$’M
0.4
0.4
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
2021
$’M
0.9
0.9
2020
$’M
0.5
0.5
2021
$’M
2.5
2.5
2020
$’M
1.2
1.2
2021
$’M
17.6
17.6
2020
$’M
10.7
10.7
1
This represents an unsecured loan to Tomra Cleanaway Pty Ltd of $3.8 million (2020: $3.8 million) repayable in full on 22 November 2022, an unsecured
loan to Cleanaway ResourceCo RRF Pty Ltd of $8.5 million (2020: $3.7 million) repayable on 30 June 2025 and an unsecured loan to Western Sydney Energy
and Resource Recovery Centre Pty Ltd of $5.3 million (30 June 2020: $3.2 million), repayable when the project has progressed to the financing stage.
24 Other assets
Current
Finance lease receivable 1
Prepayments
Other financial assets
Total current other assets
Non-current
Finance lease receivable 1
Costs to fulfil contracts 2
Prepayments
Loans to equity accounted investments
Other financial assets
Total non-current other assets
2021
$’M
3.9
21.9
3.0
28.8
–
5.8
0.6
17.6
0.1
24.1
2020
$’M
4.5
18.6
–
23.1
3.9
5.5
0.8
10.7
3.0
23.9
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.
9 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 25 Employee entitlements
Current
Annual leave
Long service leave
Other
Total current employee entitlements
Non-current
Long service leave
Total non-current employee entitlements
2021
$’M
40.2
23.7
14.9
78.8
9.9
9.9
2020
$’M
37.9
22.2
11.1
71.2
7.2
7.2
Refer to note 39(q) for the Group’s accounting policy on employee entitlements.
During the year the Group contributed $44.7 million (2020: $42.2 million) to defined contribution plans. These contributions
are expensed as incurred.
9 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 26 Provisions
Current
Rectification provisions
Remediation provisions
Other
Total current provisions
Non-current
Rectification provisions
Remediation provisions
Other
Total non-current provisions
2021
$’M
6.1
32.0
30.1
68.2
9.8
274.8
21.8
306.4
2020
$’M
2.3
41.0
35.7
79.0
13.1
256.5
18.0
287.6
Included in other provisions is an amount of $20.0 million (2020: $18.7 million) in relation to workers compensation
self-insurance of the Group under the Comcare scheme. This amount is comprised of $7.2 million (2020: $6.3 million)
classified as current and $12.8 million (2020: $12.4 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 2021. The provision has been calculated using a claim inflation rate of 2.97% (2020: 1.80%) and
a discount rate of 1.22% (2020: 0.83%). 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
RECTIFICATION
REMEDIATION
OTHER
TOTAL
2021
$’M
15.4
2.5
–
–
–
0.2
(0.2)
0.1
(2.1)
2020
$’M
2021
$’M
2020
$’M
28.3
297.5
308.1
–
–
–
–
0.2
0.2
(1.0)
(12.3)
7.4
8.6
–
–
3.0
(28.2)
42.2
(23.7)
19.3
7.0
–
–
3.8
12.7
(12.0)
(41.4)
2021
$’M
53.7
2.3
39.4
(43.5)
–
–
–
–
–
2020
$’M
2021
$’M
2020
$’M
45.5
366.6
381.9
1.7
40.9
(34.7)
(0.1)
–
0.1
0.3
–
12.2
48.0
(43.5)
–
3.2
(28.4)
42.3
(25.8)
21.0
47.9
(34.7)
(0.1)
4.0
13.0
(12.7)
(53.7)
Closing balance
15.9
15.4
306.8
297.5
51.9
53.7
374.6
366.6
1
The change in assumptions represents changes in environmental guidelines and cost estimates.
The provision for remediation has been estimated using current expected costs. 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 1.72% (2020: 1.12%) for landfill remediation and rectification of landfills and 1.35%
(2020: 0.64%) for industrial property remediation. Refer to note 39(o) for a summary of the accounting policy for provisions
for remediation and rectification.
9 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 27 Other liabilities
Current
Deferred settlement liabilities 1
Contingent consideration 2
Landfill creation liability 3
Contract liabilities 4
Other liabilities
Total current other liabilities
Non-current
Deferred settlement liabilities 1
Landfill creation liability 3
Other liabilities
2021
$’M
5.5
1.9
22.5
5.7
–
35.6
77.9
27.8
1.3
2020
$’M
5.4
–
22.9
6.5
0.1
34.9
77.2
49.7
1.8
Total non-current other liabilities
107.0
128.7
1
Includes $83.4 million (2020: $82.6 million) relating to the acquisition of Melbourne Regional Landfill, acquired on 28 February 2015. The deferred
consideration was recognised at the acquisition date resulting from transaction payments for site preparation and operation under the agreement
to be paid to Boral over the life of the landfill and was determined using a discount rate of 7.0%.
2 Contingent consideration of $1.9 million relates to the acquisition of the Grasshopper Group. The contingent consideration is measured utilising Level 3
3
inputs. The range of the payment is nil to $2.0 million and is based on future potential earnings targets for the year ending 30 June 2022.
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.
4 A contract liability is the obligation to provide services to a customer for which the Group has received consideration from the customer. These liabilities
generally arise when a customer is invoiced upon delivery of a container or bin, but Cleanaway still has the obligation to pick up the container or bin
and dispose of the waste collected. Revenue for the period included $6.5 million (2020: $7.2 million) which was included in contract liabilities at the
beginning of the year.
9 4
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 28 Business combinations and loss of control of subsidiary
Year ended 30 June 2021
Business combinations
During the year ended 30 June 2021, the Group acquired a 100% interest in the Grasshopper Holdings Pty Ltd and its
wholly-owned subsidiary Grasshopper Environmental Pty Ltd (together referred to as the Grasshopper Group). Details
of the business combination are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Grasshopper Group
1 October 2020
Waste disposal business based in
Sydney, NSW
Solid Waste Services
The fair values of the identifiable assets and liabilities, of the business combination at the date of acquisition were:
Assets
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax asset
Other assets
Liabilities
Trade and other payables
Employee entitlements
Provisions
Interest-bearing liabilities
Deferred tax liability
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
2021
$’M
1.0
4.2
7.4
2.9
8.3
2.2
0.5
26.5
2.5
0.2
0.5
2.9
4.6
10.7
15.8
13.5
29.3
The intangible assets identified as part of the acquisition included customer contracts and relationship intangibles and the
trademarks transferred to the Group. The fair value of the intangible assets is based on the present value of the expected cash
flows from the customers of the acquired business, applying an expected attrition rate of the customer base. The trademarks
were valued using the capitalisation of future maintainable profits method. Goodwill acquired comprises the value of
expected synergies arising from integration of the acquired businesses and is non-deductible for income tax purposes.
Cash paid (included in cash flows from investing activities)
Deferred consideration paid (included in cash flows from investing activities)
Contingent consideration
Total purchase consideration
2021
$’M
(23.0)
(1.3)
(5.0)
(29.3)
Contingent consideration to a maximum value of $5.0 million was to be paid if certain earnings target were met by 30 June
2021, by the acquired entity. On acquisition it was expected that the maximum target would be achieved however, these
targets were impacted by the delay in contracts being awarded due to COVID-19 and the contingent consideration was reset
and remeasured based on new targets set for the year ending 30 June 2022. Refer note 27.
9 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 28 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2021 (continued)
Net cash acquired (included in cash flows from investing activities)
Cash paid (included in cash flows from investing activities)
Deferred consideration paid
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash flow on acquisition
2021
$’M
1.0
(23.0)
(1.3)
(0.1)
(23.4)
From the date of acquisition to 30 June 2021, the business contributed $18.9 million of revenue and $0.1 million to profit
before tax to the Group, after amortisation of customer intangibles of $0.7 million. If the business had been acquired
at the beginning of the reporting period, revenue of $25.8 million and profit before tax of $0.6 million would have been
contributed to the Group.
During the year ended 30 June 2021, the Group acquired a business from Stawell Landfill Pty Ltd and Stawell Landfill
Holdings Pty Ltd (Stawell landfill). Details of the business combination are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Stawell landfill
14 August 2020
Landfill services business based in
Stawell, Victoria
Solid Waste Services
The final 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
Provisions
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
2021
$’M
3.2
3.5
8.3
15.0
11.7
11.7
3.3
6.7
10.0
The intangible assets identified as part of the acquisition included landfill airspace. The fair value of this intangible asset
is based on the present value of the expected cash flows from the airspace. Goodwill acquired comprises the value
of expected synergies arising from integration of the acquired business 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
2021
$’M
(10.0)
(0.5)
(10.5)
From the date of acquisition to 30 June 2021, the business contributed $4.7 million of revenue and $0.8 million to profit
before tax to the Group. If the business had been acquired at the beginning of the reporting period, revenue of $5.3 million
and profit before tax of $0.9 million would have been contributed to the Group.
9 6
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 28 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2021 (continued)
During the year ended 30 June 2021, the Group acquired a business from NPL4152 Pty Ltd and Certified Destruction
Services Pty Ltd (Pinkenba CDS) and a business from Oilwise Pty Ltd (Oilwise). Details of the business combinations
are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Pinkenba CDS
3 August 2020
Certified destruction services business
in Pinkenba, Queensland
Solid Waste Services
Oilwise
30 October 2020
Oil collection business, NSW
Liquid Waste & Health Services
The fair values of the identifiable assets and liabilities of the business combinations at the date of acquisition were:
Assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Liabilities
Employee entitlements
Interest-bearing liabilities
Deferred tax liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
2021
$’M
3.5
2.7
1.7
7.9
0.1
2.7
0.5
3.3
4.6
3.9
8.5
The intangible assets identified as part of the acquisitions included customer relationship intangibles. The fair value of the
intangible assets is based on the present value of 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
2021
$’M
(8.5)
(0.3)
(8.8)
From the date of acquisition to 30 June 2021, the Pinkenba CDS and Oilwise acquisitions contributed $5.9 million of revenue
and nil to profit before tax to the Group. If both businesses had been acquired at the beginning of the reporting period,
revenue of $6.5 million and profit before tax of $0.1 million would have been contributed to the Group.
9 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 28 Business combinations and loss of control of subsidiary (continued)
Year ended 30 June 2020
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
31 October 2019
Recycling business based in Victoria,
Tasmania and South Australia
Solid Waste Services
At 30 June 2020, provisionally determined values were reported. Subsequent to 30 June 2020, final fair values for the
business combination were determined. Comparative amounts for 30 June 2020 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
Property, plant and equipment 1
Deferred tax assets 2
Prepayments
Liabilities
Trade and other payables
Employee entitlements
Provisions 3
Interest-bearing liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
PROVISIONAL
FAIR VALUE
REPORTED AT
30 JUNE 2020
$’M
ADJUSTMENTS TO
PROVISIONAL
FAIR VALUE
$’M
FINAL
FAIR VALUE
$’M
68.3
3.3
0.1
71.7
0.5
0.9
8.8
0.9
11.1
60.6
5.4
66.0
(2.1)
2.7
0.1
0.7
0.1
–
12.2
–
12.3
(11.6)
11.6
–
66.2
6.0
0.2
72.4
0.6
0.9
21.0
0.9
23.4
49.0
17.0
66.0
1 A detailed review of the values placed on property, plant and equipment in the preliminary valuation has resulted in a net reduction in the fair value
by $2.1 million.
2 Deferred tax assets increased by $2.7 million mainly as a result of the adjustment to provisions.
3
The increase in the fair value of provisions by $12.2 million comprises: $11.6 million related to remediation of the properties acquired to ensure they
are compliant with the applicable laws and regulations and $0.6 million related to other provisions.
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
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 loans from SKM’s lender, 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 8
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 28 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 SEGMENTS
Statewide
16 December 2019
Waste disposal and recycling business
based in Warrnambool, Victoria
Solid Waste Services
The 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 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 9
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 28 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 23.
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
100
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 29 Subsidiaries
The Group’s principal subsidiaries at 30 June 2021 are set out below.
EFFECTIVE INTEREST 3
2021
%
2020
%
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 2
Cleanaway Daniels Australia Pty Ltd 2
Cleanaway Daniels FMD Pty Ltd 2
Cleanaway Daniels Laboratory Products Pty Ltd 2
Cleanaway Daniels NSW Pty Ltd 2
Cleanaway Daniels Pty Ltd 2
Cleanaway Daniels Services Pty Ltd 2
Cleanaway Daniels VIC Pty Ltd 2
Cleanaway Daniels Waste Services Pty Ltd 2
Cleanaway Daniels 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 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
Grasshopper Environmental 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
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
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 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 29 Subsidiaries (continued)
Oil and Fuel Salvaging (Queensland) Pty Ltd 2
Pilbara Environmental Services Pty Ltd (formerly PTK Environmental Services Pty Ltd) 1
Pilbara Logistics Pty Ltd 2
PT Environmental Services Pty Ltd 2
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
2021
%
2020
%
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
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 30 for Consolidated Statement
of Profit or Loss and Other Comprehensive Income and Consolidated Balance Sheet of the entities who are a party to the Deed of Cross Guarantee.
2
3 All entities were incorporated in Australia.
1 02
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 30 Deed of cross guarantee
The Consolidated Statement of Profit or Loss and Other Comprehensive Income and the Consolidated Balance Sheet of the
entities who are a party to the Deed of Cross Guarantee are:
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Gain on loss of control of subsidiary
Share of losses from equity accounted investments
Depreciation and amortisation expense
Impairment of assets
Write-off of assets
Profit from operations
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Net gain 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 29 for details of subsidiaries who are a party to the Deed of Cross Guarantee.
2021
$’M
2020
$’M
2,366.1
2,302.1
5.5
(889.7)
(608.7)
(243.4)
(44.6)
(60.5)
–
(2.0)
34.6
(854.2)
(631.1)
(227.2)
(45.7)
(93.8)
1.1
(2.1)
(276.4)
(261.2)
(4.3)
(5.4)
236.6
(35.9)
200.7
(56.5)
144.2
(0.7)
(0.7)
143.5
–
(19.6)
202.9
(48.8)
154.1
(41.6)
112.5
(0.1)
(0.1)
112.4
1 0 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 30 Deed of cross guarantee (continued)
BALANCE SHEET
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
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
Derivative financial instruments
Employee entitlements
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
2021
$’M
2020
$’M
68.8
363.5
22.1
28.8
483.2
1,241.5
479.2
2,320.4
41.6
50.5
–
23.3
76.6
343.2
19.4
23.1
462.3
1,174.0
416.7
2,306.2
34.5
65.1
30.0
23.2
4,156.5
4,639.7
4,049.7
4,512.0
293.7
265.7
5.9
76.9
78.8
68.2
35.6
5.7
69.6
71.2
79.0
34.9
559.1
526.1
996.4
31.5
9.9
306.4
107.0
1,451.2
2,010.3
2,629.4
995.7
–
7.2
287.6
128.9
1,419.4
1,945.5
2,566.5
2,695.7
2,688.7
25.1
(91.4)
23.5
(145.7)
2,629.4
2,566.5
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 2021 31 Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total equity
Profit/(loss) for the period
Total comprehensive income/(loss) for the period
The parent entity guarantees the contractual commitments of its subsidiaries as requested.
32 Financial risk management
2021
$’M
0.1
2020
$’M
–
3,573.4
3,568.6
8.5
624.3
7.7
646.5
2,695.7
2,688.7
227.8
25.6
209.2
24.2
2,949.1
2,922.1
108.0
108.7
(14.9)
(14.9)
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).
The Group holds 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 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 32 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
Variable rate instruments
Bank and other loans
USPP Notes 1
30 JUNE 2021
30 JUNE 2020
WEIGHTED
AVERAGE
INTEREST RATE
%
BALANCE
$’M
WEIGHTED
AVERAGE
INTEREST RATE
%
2.1
3.4
1.7
1.6
81.5
499.4
580.9
125.7
366.7
492.4
4.6
3.6
1.6
1.7
BALANCE
$’M
89.7
437.3
527.0
111.5
426.9
538.4
1 At 30 June 2021, 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% (2020: 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 (2020:
$270.0 million) are also exchanged at drawdown and maturity for A$397.6 million (2020: $397.6 million) under the terms of the CCIRS. The maturity
dates and principal amounts are equal to the USPP Notes (refer to financing facilities in Note 15).
The carrying amount of the Group’s AUD fixed rate borrowings, carried at amortised cost, is not impacted due to interest
rate movements, neither will future cash flows 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 $4.9 million (2020: $5.4 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 its 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.
106
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 32 Financial risk management (continued)
(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 gross 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 from its bank.
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 objective that the Group’s exposure to expected credit losses
is minimised.
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 which permits only dealing 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 1
Other financial assets
NOTE
11
12
2021
$’M
69.4
372.2
24.6
466.2
2020
$’M
79.8
348.1
22.1
450.0
1
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 2021 is $930.3 million (2020: $421.1 million). The current portion
of the Group’s borrowings at 30 June 2021 is nil (2020: $0.4 million). 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:
2021
Non-derivatives
Unsecured borrowings
Lease liabilities 1
Trade and other payables
Other financial liabilities
Total
Derivatives
Cross-currency interest rate swaps
inflow
(outflow)
Total
< 1 YEAR
$’M
1–2 YEARS
$’M
2–5 YEARS
$’M
> 5 YEARS
$’M
CONTRACTUAL
CASH FLOWS
$’M
CARRYING
AMOUNT
$’M
16.3
81.1
297.6
29.9
424.9
10.5
(6.6)
3.9
16.3
77.7
–
31.0
125.0
10.5
(6.6)
3.9
367.3
178.5
–
20.6
566.4
402.7
173.8
–
180.5
757.0
802.6
511.1
297.6
262.0
573.9
499.4
297.6
133.7
1,873.3
1,504.6
31.6
(19.7)
11.9
402.7
(422.7)
(20.0)
455.3
(455.6)
(0.3)
n/a
n/a
(31.5)
1 0 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 32 Financial risk management (continued)
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
< 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
271.1
28.3
391.5
19.3
66.8
–
31.6
117.7
282.0
175.7
–
41.4
499.1
539.2
161.8
–
186.6
887.6
860.2
476.7
271.1
287.9
628.1
437.3
271.1
155.2
1,895.9
1,491.7
11.4
(6.8)
4.6
11.4
(6.8)
4.6
34.3
(20.4)
13.9
448.9
(430.3)
18.6
506.0
(464.3)
41.7
n/a
n/a
30.0
1
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 $112.7 million (2020: $82.0 million). The Group has committed to
future cash outflows of $11.2 million relating to leases that have not yet commenced. No lease liabilities or right-of-use assets have been recognised in
relation to these leases at 30 June 2021.
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 34(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.
108
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 32 Financial risk management (continued)
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:
2021
Opening fair value of asset/(liability) as at 1 July 2020
Amortisation of fair value loss on recognition
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 liability as at 30 June 2021
Carrying amount of liability as at 30 June 2021
Accumulated fair value adjustments on the hedged items
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 (liability)/asset as at 30 June 2020
Carrying amount of (liability)/asset as at 30 June 2020
Accumulated fair value adjustments on the hedged items
FIXED RATE BORROWINGS MEASURED
AT AMORTISED COST
CLEAN ENERGY
FINANCE
CORPORATION
$’M
USPP NOTES
(HEDGED ITEMS)
$’M
DERIVATIVES
MEASURED AT
FAIR VALUE
CCIRS 1
(HEDGING
INSTRUMENTS)
$’M
(99.8)
–
–
8.2
–
–
(91.6)
(81.5)
–
(109.9)
10.5
–
(0.4)
–
–
(99.8)
(89.7)
–
(431.6)
–
29.6
–
31.1
–
(370.9)
(366.7)
26.7
–
(397.6)
(40.5)
–
6.5
–
(431.6)
(426.9)
(34.0)
30.0
0.3
(28.2)
(3.0)
(29.7)
(0.9)
(31.5)
(31.5)
n/a
–
(3.1)
39.5
(1.0)
(5.1)
(0.3)
30.0
30.0
n/a
1
Fair value hedges fair value movements in the hedging instruments of $(28.2) million (2020: $39.5 million) includes an effective portion of $(29.6)
million (2020: $40.5 million) and an ineffective portion of $1.4 million (2020: $(1.0) million). Cash flow hedges fair value movements of $(29.7) million
(2020:$(5.1) million) includes an effective portion of $(31.1) million (2020: $(6.5) million) and an ineffective portion of $1.4 million (2020: $1.4 million). The
notional amount of the derivatives are US$270.0/$397.6 million.
109
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 32 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 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 17(a) for amounts recognised in the hedge reserve.
33 Contingent liabilities
On 18 August 2014, a Cleanaway vehicle was involved in a motor vehicle accident on the South Eastern Freeway in Glen
Osmond, South Australia. The incident resulted in the death of two members of the public, and two other persons were
seriously injured. During the year ended 30 June 2017, Cleanaway was charged with work health and safety offences
in relation to the incident. Cleanaway was found guilty of these health and safety offences in April 2021 but this decision has
been appealed to the South Australian Supreme Court. There is a potential that other claims may emerge in due course and
the extent of Cleanaway’s liability and the timing for these matters to be resolved is not known at this time.
On 10 October 2020, the Victorian Environment Protection Authority (EPA) issued an invoice to the Group for $6.9 million
in respect of landfill levies on materials purchased from the Boral quarry, which were used by Cleanaway at its Melbourne
Regional Landfill as daily cover during the year ended 30 June 2018. Subsequent to this the EPA has issued its audit report in
respect of landfill levies paid during the year ended 30 June 2019 which requires an additional $4.7 million be paid in respect
of that period and also related to the cover materials. The EPA’s position is that the levy is payable as the cover material is
‘waste’ and no exemption applies. Cleanaway does not agree that this material is ‘waste’ as the material was purchased from
Boral and used in its landfilling operations. It therefore intends to defend this position.
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.
1 1 0
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 34 Commitments
(a) Capital expenditure
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
(b) Other commitments
2021
$’M
37.9
0.2
38.1
2020
$’M
28.9
0.2
29.1
Acquisition of Suez Sydney Assets
The Group has entered into an agreement to acquire two landfills and five transfer stations located across the greater
Sydney basin from Suez Group S.A.S. for consideration of $501.0 million. Based on the current timeline Cleanaway expects
the acquisition to complete in the second quarter of the year ending 30 June 2022. The acquisition is contingent upon the
completion of the takeover of Suez S.A by Veolia and various customary conditions including ACCC approval, no material
adverse change and transfer of certain customer contracts.
(c) Guarantees
The Group is, in the normal course of business, required to provide guarantees and other security to third-parties on behalf
of joint ventures and associates in respect of their contractual related obligations including financing agreements. The types
of guarantees and other security include contract performance and financial guarantees and indemnities, mortgages over
real property, bank guarantees and insurance bonds. The guarantees and other security only give rise to a liability or loss to
the Group where the joint venture or associate concerned fails to perform its contractual obligations.
Bank guarantees and insurance bonds are also issued in the normal course of business and held by beneficiaries as financial
assurance in relation to subsidiary customer contracts, property leases and licenses. The bank guarantees and insurance
bonds only give rise to a liability to the Group where the subsidiary concerned fails to perform its obligations.
Guarantees and other security provided on behalf of joint ventures and associates 1
Bank guarantees issued in respect of subsidiaries
Insurance bonds issued in respect of subsidiaries
2021
$’M
18.5
174.5
57.5
250.5
2020
$’M
16.8
145.7
46.2
208.7
1
Excludes performance related obligations and other amounts that can not be ascertained including enforcement and other costs and charges which the
Group may become liable for in the event of non-performance.
1 1 1
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT
35 Share-based payments
Total share-based payment expense included in the Consolidated Income Statement is set out in note 17(b).
Performance rights outstanding at the reporting date consist of the following grants:
OFFER
GRANT DATE
LONG-TERM INCENTIVE PLAN
END OF
PERFORMANCE
OR SERVICE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2020
GRANTED
DURING THE
PERIOD
VESTED
DURING THE
PERIOD
FORFEITED/
EXPIRED
DURING THE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2021
2018 LTI
2019 LTI
2020 LTI
2021 LTI
3 Nov 2017
30 Jun 2020
3,128,655
2 Nov 2018
30 Jun 2021
3,126,207
30 Oct 2019
30 Jun 2022
2,264,786
–
–
–
16 Dec 2020
30 Jun 2023
–
1,991,571
(2,156,283)
(972,372)
–
–
–
–
(528,675)
2,597,532
(41,183)
2,223,603
–
1,991,571
SHORT-TERM INCENTIVE PLAN
2019 STI
2020 STI
OTHER GRANTS
2019 TII
Total
30 Oct 2019
30 Jun 2020
220,975
–
(220,975)
16 Dec 2020
30 Jun 2021
–
91,767
–
–
–
–
91,767
26 Oct 2018
30 Jun 2020
1,574,769
–
–
(1,574,769)
–
10,315,392
2,083,338
(2,377,258)
(3,116,999)
6,904,473
Vested and exercisable at 30 June 2021
91,767
The vesting date for LTI offers is on or after 14 days after the date on which the annual financial results of the Group for the
financial year associated with the end of the performance period is released to the ASX. Other offers vest on or after the end
of the relevant performance or service period.
(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 are
met.
Offers made in previous reporting periods
The following table outlines the terms of the outstanding LTI offers made in previous reporting periods which remain on issue:
PERFORMANCE
PERIOD
2019 LTI AWARD UP TO THREE YEARS:
1 JULY 2018 TO 30 JUNE 2021
2020 LTI AWARD UP TO THREE YEARS:
1 JULY 2019 TO 30 JUNE 2022
Overview
Performance rights, of which:
Performance rights, of which:
Measured over three years to 30 June 2021
Measured over three years to 30 June 2022
• Up to 50% vest if a certain relative Total
• Up to 50% vest if a certain relative TSR
Shareholder Return (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 50% vest if a certain EPS CAGR target
• Up to 25% vest if a certain Return on Invested
is achieved
Capital (ROIC) target is achieved
• Up to 25% vest if a certain Earnings per Share
(EPS) Compound Annual Growth Rate (CAGR)
target is achieved
• The ROIC for year ending 30 June 2022 acts
as a gateway to EPS CAGR
1 1 2
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 35 Share-based payments (continued)
Offer made in current reporting period – 2021 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 EPS CAGR target is achieved.
• The ROIC for year ending 30 June 2023 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.
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
2021 LTI
1,991,571
16 December 2020
1 July 2020 – 30 June 2023
0.0%
35.0%
$1.57
$2.30
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 2021 LTI award are set out in the table below.
Relative TSR performance measured over the period
from 1 March 2020 to 30 June 2023
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 2020 to 30 June 2023
EPS CAGR to be achieved:
• < 4.0% – 0% vesting
• 4.0% – 40% vesting
• > 4.0% – ≤ 8.0% – straight line vesting between 40%
and 90%
• > 8.0% – ≤ 10% – straight line vesting between 90%
and 100%
• > 10.0% – 100% vesting
ROIC performance for the year ending 30 June 2023
Performance rights under EPS CAGR will only vest if ROIC
is at least 5.5% or more for the year ending 30 June 2023
1 1 3
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 35 Share-based payments (continued)
(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 EBIT targets as the main performance standard for the STI plan.
Vesting of the performance rights granted is deferred for one year.
(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 focused 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 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 lapsed.
36 Auditor’s remuneration
Details of the amounts paid or payable to the auditor and its related practices for audit and non-audit services are set out below.
2021
$
2020
$
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
1,386,642
1,593,111
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
32,960
–
–
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
208,842
248,068
1,628,444
1,841,179
–
–
–
–
1,628,444
1,841,179
37 Events occurring after the reporting date
There have been no matters or circumstances that have arisen since 30 June 2021 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 2021 38 Related party transactions
(a) Key management personnel
Disclosures relating to Key Management Personnel (KMP) are set out in the Remuneration Report on pages 40 to 58.
The KMP compensation included in employee expenses are as follows:
Short-term employee benefits
Post-employment benefits
Equity compensation benefits
2021
$
2020
$
9,040,411
5,338,542
198,411
481,877
189,032
965,732
9,720,699
6,493,306
Some of the Directors hold, or have previously held, positions in companies with which Cleanaway has commercial
relationships which are based on normal terms and conditions on an arm’s length basis. Transactions with entities where the
relationship is limited to a common Non-Executive Directorship, including any Chairperson roles, are not considered related
party transactions. The Board has assessed all of the relationships between the Group and companies in which Directors hold
or held positions and has concluded that in all cases the relationships do not interfere with the Directors’ exercise of objective,
unfettered or independent judgement or their ability to act in the best interest of the Group.
(b) Wholly-owned Group transactions
The wholly-owned Group consists of Cleanaway Waste Management Limited and its subsidiaries listed at note 29.
Transactions between Cleanaway Waste Management Limited and other entities in the wholly-owned Group during
the years ended 30 June 2021 and 30 June 2020 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 2021 and 30 June 2020, except as presented in note 23.
1 1 5
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 39 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 based on the effective interest rate, 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 2021 39 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 utilisingutilising the effective interest rate method.
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 recognised on initial application of AASB 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 and applies the
stand-alone tax payer method. 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 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 39 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 32(b).
Inventories
(i)
Inventories are valued at the lower of cost and net realisable value. The cost of inventories is based on the method
most appropriate to each particular class of inventory and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the
case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based
on normal operating capacity.
(j) Property, plant and equipment
Landfill assets
The Group owns landfill assets. A landfill site may be either developed or purchased by the Group.
Landfill assets comprise the acquisition of landfill land, cell development costs, site infrastructure and landfill site
improvement costs and the asset related to future landfill site restoration and aftercare costs (landfill remediation asset).
Landfill land will be recognised separately from other landfill related assets when it is considered to have value at the end
of the landfill site’s useful life for housing or commercial development. This land is not depreciated; it is carried at its original
cost and tested for impairment.
Cell development costs include excavation costs, cell lining costs and leachate collection costs. Cell development costs are
capitalised as incurred. Closed cells are capped and may return a future revenue stream to the Group, such as from the sale
of landfill gas.
The landfill remediation assets 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 39(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 2021 39 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 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 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 39 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 2021 39 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.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 39 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 2021 39 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.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 39 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. 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 2021 39 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.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT
40 New standards adopted
The Group has adopted all new and revised Standards and Interpretations issued by the Australian Accounting Standards
Board that are relevant to its operations and effective for the current reporting period.
New and revised Standards, amendments thereof and Interpretations which became effective during the current year and
relevant to the Group include:
• Amendments to AASB 3 - Definition of a Business
The amendment to AASB 3 Business Combinations clarifies that to be considered a business, an integrated set of activities
and assets must include, at a minimum, an input and a substantive process that, together significantly contribute to the
ability to create output. The new definition was considered in determining whether the acquisitions set out in Note 28
met the new definition of a business. This amendment has been applied prospectively and has not had an impact on any
acquisitions entered into prior to 1 July 2020.
• Amendments to AASB 101 and AASB 108 - Definition of Material
The amendments provide a new definition of material that states, “information is material if omitting, misstating or
obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements, which provide financial information about a specific reporting
entity.” The amendments clarify that materiality will depend on the nature or magnitude of information, either individually
or in combination with other information, in the context of the financial statements. A misstatement of information
is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had
no impact on the Consolidated Financial Statements.
• Conceptual Framework for Financial Reporting
The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or
requirements in any standard. The purpose of the Conceptual Framework is to assist the AASB in developing standards,
to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all
parties to understand and interpret the standards. The revised Conceptual Framework includes some new concepts, updated
definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had
no impact on the Consolidated Financial Statements of the Group.
•
Improvements to AASB 2018-2020 cycle - AASB 9 - Fees in the ‘10 per cent’ test for derecognition of financial
liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial
liability are substantially different from the terms of the original financial liability. These fees include only those paid or
received between the borrower and the lender. Cleanaway has applied this guidance in determining that the modification
of the CEFC fixed rate debt, which occurred on 19 October 2020, was not substantially different from the terms of the
original facility. The Group has early adopted this amendment. Refer to note 8.
126
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021 41 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2021 and have not been applied in preparing these Consolidated Financial Statements. Those which may be relevant
to the Group are set out below. The Group does not plan to adopt these standards early.
New standards
STANDARD/INTERPRETATION
Improvements to AASB 2018-2020 cycle – Reference to the Conceptual
Framework – Amendments to AASB 3
The amendments are intended to update a reference to the new Conceptual
Framework without significantly changing the requirements of AASB 3. The
amendments also add a new paragraph to AASB 3 to clarify that contingent
assets do not qualify for recognition at the acquisition date. This is not
expected to have any impact on the Consolidated Financial Statements.
This amendment will be applied to business combinations post adoption
and is not expected to have a significant impact on the Group.
CIassification of Liabilities as Current or Non-Current – Amendments to AASB 101
The AASB has issued amendments to AASB 101 Presentation of Financial
Statements to specify the requirements for classifying liabilities as current
or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its
deferral right
• That only if an embedded derivative in a convertible liability is itself an equity
instrument, would the terms of a liability not impact its classification
Cleanaway does not intend to early adopt this amendment. The impact of
the amendment to the Group’s Financial Statements is yet to be determined.
Definition of Accounting Estimates - Amendments to AASB 108
The AASB has issued amendments to AASB 108 Accounting Policies,
changes in Accounting Estimates and Errors in which it introduces a new
definition of ‘accounting estimates’. The amendments clarify the distinction
between changes in accounting estimates and changes in accounting policy
and the correction of errors. Also, they clarify how entities use measurement
techniques and inputs to develop estimates.
Cleanaway does not intend to early adopt this amendment.
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to AASB 112
The AASB issued amendments to AASB 112 Income Taxes which narrow
the scope of the initial recognition exception under AASB 112 so that it no
longer applies to transactions that give rise to equal taxable and deductible
temporary differences.
Cleanaway does not intend to early adopt this amendment. The impact of
the amendment to the Group’s Financial Statements is yet to be determined.
Disclosure of Accounting Policies - Amendments to AASB 101 and IFRS
Practice Statement 2
The AASB has issued amendments to AASB 101 Presentation of Financial
Statements and IFRS Practice Statement 2 Making Materiality Judgements
in which it provides guidance and examples to help entities apply materiality
judgements to accounting policy disclosures with the aim to making the
accounting policies more useful.
Cleanaway does not intend to early adopt this amendment.
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2022
30 June 2023
1 January 2023
30 June 2024
1 January 2023
30 June 2024
1 January 2023
30 June 2024
1 January 2023
30 June 2024
1 2 7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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 2021 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 2021; and
(e) as at the date of this declaration, there are reasonable grounds to believe that the members of the closed Consolidated
Group identified in note 29 will be able to meet any obligation or liabilities to which they are or may become subject to,
by virtue of the deed of cross guarantee.
This declaration is made in accordance with a resolution of the Directors.
M P Chellew
Executive Chairman
Melbourne, 19 August 2021
128
Directors’ Declaration Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
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 2021, 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 2021 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
129
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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 2021, the Group held $1,930.3 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 the recoverable
amount.
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.
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
and costs to dispose;
• Considered whether cost savings were reasonable;
• Assessed the capital expenditure forecasts against
comparable companies’ capital spend rate;
Note 22 of the financial report provides disclosure related
to the Group’s impairment testing and highlights the
impact of reasonably possible changes to key assumptions.
• 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;
• Considered key judgements made in relation to
unapproved height extensions including New Chum;
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
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
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 2021, the Group held $322.7 million in
rectification and remediation provisions. The rectification
and remediation provisions were based on discounted
cash flow models and incorporated critical estimates in
relation to capping, post closure and rectification costs
and an appropriate cost escalation rate, the timing of
expected expenditure, the possibility of new practices
and methodologies being available in the future and the
determination of an appropriate discount rate. These
estimates were developed based on the specific plans for
each site, taking into consideration historical experience
and emerging practice in relation to rectification and
remediation activities.
Because of the subjective nature of the estimates involved
in accounting for rectification and remediation obligations,
this is a key audit matter.
Note 26 of the financial report provides further detail on
the rectification and remediation provisions.
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.
We also assessed the adequacy of the Group’s disclosures
in the financial report regarding rectification and
remediation obligations.
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 2021 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 1
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT 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 judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• 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 2
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited 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
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 40 to 58 of the directors’ report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of Cleanaway Waste Management Limited for the year ended 30 June 2021,
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
19 August 2021
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 Limited234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Top 20 Shareholders as at 20 August 2021
RANK
NAME
UNITS
% UNITS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
CUSTODIAL SERVICES LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
MILTON CORPORATION LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
PETER & LYNDY WHITE FOUNDATION PTY LTD
WARBONT NOMINEES PTY LTD
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
BNP PARIBAS NOMINEES PTY LTD
Top 20 holders of Fully Paid Ordinary Shares
Total Remaining Holders Balance
Total Fully Paid Ordinary Shares on Issue
Substantial Shareholders
The Company had no substantial shareholders as at 20 August 2021.
590,152,159
421,507,233
278,562,016
124,150,921
123,785,828
71,212,198
57,230,139
41,315,336
36,842,392
28,243,420
19,715,894
17,014,194
11,710,000
6,973,852
6,809,593
6,685,222
5,947,377
4,949,087
4,688,676
3,922,692
28.65
20.47
13.53
6.03
6.01
3.46
2.78
2.01
1.79
1.37
0.96
0.83
0.57
0.34
0.33
0.32
0.29
0.24
0.23
0.19
1,861,418,229
198,108,096
90.38
9.62
2,059,526,325
100.00
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 20 August 2021 was 2,059,526,325 ordinary fully paid shares.
As at 20 August 2021, the total number of shareholders owning these shares was 17,614 on the register of members
maintained by Computershare Investor Services Pty Ltd.
90.38% of total issued capital is held by or on behalf of the 20 largest shareholders.
13 4
Other information Voting Rights
Under the Company’s Constitution, every member present is entitled to vote at a general meeting of the Company in person
or by proxy or by attorney or, in the case of a corporation, by representative, and shall, upon a show of hands, have one
vote only.
Proxies – Where a member is entitled to cast two or more votes it may appoint not more than two proxies or attorneys.
Where a member appoints two proxies, neither proxy is entitled to a vote on a show of hands.
Poll – On a poll, every member entitled to vote shall, whether present in person or by proxy or attorney or, in the case
of a corporation, by representative, has one vote for every share held by the member.
At 20 August 2021, there were 6,812,706 performance rights on issue to 26 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
4,582
1,001–5,000
5,001–10,000
10,001–100,000 100,001 AND OVER
6,215
3,016
3,589
212
TOTAL
17,614
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 $2.66 on 20 August 2021 was 415.
Securities Exchange Listing
The shares of the Company are listed on the Australian Securities Exchange under the code CWY.
1 3 5
Other information234516OVERVIEWBUSINESS REVIEWSUSTAINABILITYCORPORATE INFORMATIONFINANCIAL REPORTOTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2021 ANNUAL REPORT Corporate directory
Registered office
Level 4
441 St Kilda Road
Melbourne, VIC
3004 Australia
Telephone: +61 3 8397 5100
Company Secretary
Dan Last
Website
www.cleanaway.com.au
Share Registry
Computershare Investor Services Pty Limited
452 Johnston Street
Abbotsford, VIC
3067 Australia
Telephone: 1300 850 505 (within Australia) and +61 3 9415 4000 (outside Australia).
If you are a shareholder, 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
How to access information
on Cleanaway
Cleanaway produces a range of publications,
which are available to download at
cleanaway.com.au. If you are a shareholder, you
can also elect to receive a paper copy of the
Annual Report through the share registry.
Cleanaway Waste Management Limited
ABN 74 101 155 220
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
TAX TRANSPARENCY
REPORT 2020
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SUSTAINABILITY REPORT
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CLEANAWAY WASTE MANAGEMENT LIMITED ABN: 74 101 155 220
Sustainability
Report 2021
Tax Transparency
Report 2020
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