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2023 ReportPeers and competitors of Cleanaway:
Augean PlcMaking a sustainable
future possible
together
ANNUAL REPORT 2023
Contents
01 Overview
2023 Snapshot 2 Sustainability Snapshot 4
Chairman’s Report 6 A Message from the CEO 10
14 Segment performance
Solid Waste Services 14 Industrial and Waste Services 16
Liquid Waste and Health Services 18
20 Sustainability
Sustainability 20
24 Corporate information
Board of Directors 24 Senior Executive Team 27
29 Financial report
Financial Statements 29 Directors’ Report 30
144 Other information
Other Information 144 Corporate Directory 145
The Company’s 2023 Annual General Meeting will be held at 11am (Brisbane time) on Friday 20 October 2023
at Customs House, 399 Queens Street Brisbane, QLD, 4000. The 2023 Corporate Governance Statement and Appendix
4G Disclosures are available on our website at www.cleanaway.com.au/about-us/for-investor/corporate-governance
A sustainable future
We take pride in this year’s progress alongside customers,
partners, and communities to make a sustainable future
possible together. With our foundations of safety and
environment, our commitment to the Blueprint 2030 strategy
remains steadfast, prioritising waste recovery and advancing
the local circular economy.
1
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT 2023 snapshot
Financial highlights 1, 2
Our financial performance enables us to continue
investing in better and more sustainable solutions.
$2,965.8m
Net Revenue ($m) 3
13.9% from FY22
$302.2m
EBIT
17.5% from FY22
$481.8m
Net Operating Cash Flow ($m)
3.3% from FY22
$4.9¢
Dividend (¢)
Flat on FY22
$3,558.8
million revenue
$2,965.8
million net revenue 3
$668.1
million EBITDA
$302.2
million EBIT
$146.7
million NPAT 4
4.9¢
dividends per share
6.6¢
earnings per share
18.4%
13.9%
14.9%
17.5%
2.4%
0.0%
4.3%
Represents underlying results.
Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019, as such FY19 comparatives have not been restated.
Net revenue is a non-IFRS measure that excludes landfill levies.
Attributable to ordinary equity holders.
1
2
3
4
2
1920212223192021222319202122231920212223 Operational highlights
Cleanaway is one of 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 together.
Our operations
7,500+
Employees
~330
Sites
6,100+
Vehicles
Landfills
Transfer Stations
Resource Recovery Facilities
Composting Centres
~130
EPA Licensed
Sites
Incinerators
1 Open and closed landfills under management.
17 1
105
50
5
2
3
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT Sustainability snapshot
Health and safety
People and culture
We measure our performance using
total recordable injury frequency
rate (TRIFR). 1
1
TRIFR is measured per million hours worked
and includes both employees and contractors.
22.8%
9.6% from FY22
Proportion of females
employed across Cleanaway
28.0%
9.8% from FY22
Proportion of females in
management roles
10.0%
35.1% from FY22
Proportion of females in
operational roles
40:40 Vision
For a given cohort, headcount identifying as:
Women
Men
Any gender
40%
40%
20%
Our target is 40% females at CEO+1 by 2027 and
40% females at CEO+2 by 2030
FY23 Female representation
Board
CEO+1
CEO+2
33%
33%
36%
Suppliers
We support Australian businesses by sourcing goods, resources,
and services locally and sustainably. With a strong sense of
responsibility, we work alongside our partners to optimise
our operations and manage supply chain risk.
Our suppliers
Spend – SME ($m)
Spend – First Nations businesses ($m)
Spend – Social enterprises ($m)
FY23
FY22
398.6
317.3
10.8
4.2
9.5
3.5
ACSI acknowledged our FY22 Modern
Slavery Statement as above average
amongst ASX200 companies.
In FY23, we further enhanced
our remediation processes and
policy framework to manage
modern slavery risk.
4
FY213.64.23.7FY22FY23 Environment
Contributing to a cleaner environment
Recovery breakdown
219Mm3
Landfill gas captured
FY22 196Mm3
We are capturing the gas produced from the natural
breakdown of waste in our landfills, turning some into
electricity and sending it to the grid; contributing to a
reduction in reliance on fossil fuels.
193kt
Containers 1
FY22 186kt
~432kt
Paper and cardboard
FY22 ~435kt
1,250kt CO2-e
Net scope 1 and 2 greenhouse gas emissions
FY22 1,308kt CO2-e
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 have established challenging yet credible 2030 and 2050
emission reduction targets, and are on track to deliver on our
2030 commitment.
~32kt
Plastic
FY22 ~24kt
~32kt
Steel and aluminium
FY22 ~40kt
242GWh
Renewable energy generated
FY22 190GWh
~108ML
Used oil recovered
for reuse
289kt
Composted
organics
FY22 ~104ML
FY22 170kt
By using the gas that we capture from our landfills to
generate electricity, enough renewable energy has been
produced to power more than 47,200 average homes.
1
Collected through Container Deposit Schemes
in NSW, QLD, WA and SA.
5
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT Chairman’s Report
With our foundations
set, Blueprint 2030
is progressing well
I am pleased to present Cleanaway
Waste Management Limited’s 2023
Annual Report, my first as Chairman
of the Company.
After serving as a Non-Executive Independent Director
of Cleanaway since May 2014, it is an honour to be
appointed Chairman.
The 2023 financial year was a much-improved year for
Cleanaway. Our Blueprint 2030 strategy is in place and
progressing well. The business has stabilised following an
extended period of internal and external challenges, and we
are making strides towards turning around the Company’s
financial performance. Having delivered an underlying financial
outcome in line with our guidance for the year, we have now
set ambitious mid-term financial targets that are aligned with
Blueprint 2030. In summary, we expect to deliver EBIT of
greater than $450 million in FY26 while progressively improving
our return on invested capital. I look forward to periodically
reporting on our progress towards achieving these goals.
Our safety performance, measured by the total recordable
injury frequency rate (TRIFR), improved to 3.7 from 4.2 in FY22.
While this progress is promising, it falls short of our heightened
safety expectations for the year. Our commitment to ensuring
everyone returns home unharmed from work remains
unwavering, driving our ongoing efforts. While many of the
incidents were minor in nature, there were some significant
injuries to our people, and the lessons to be learned from these
events are being incorporated throughout the organisation.
Tragically, there was one fatality in our operations during the
year. The fatality occurred at the Kemps Creek landfill, in an
6
“ Having delivered an underlying financial outcome in line with our guidance for the year, we have now set ambitious mid-term financial targets that are aligned with Blueprint 2030.”Philippe Etienne Chairman “ In the context of the challenges faced during the year,
Cleanaway delivered a strong underlying financial
performance. We reported an underlying net profit
after tax of $148.6 million, 2.5% higher than the
previous year.”
Philippe Etienne Chairman
area where a contractor had operational control, and the worker
was an employee of the contractor. Our thoughts go out to the
worker’s family and all those impacted by the incident.
In the context of the challenges faced during the year, Cleanaway
delivered a strong underlying financial performance. We reported
an underlying net profit after tax of $148.6 million, 2.5% higher
than the previous year. This reflected strong EBIT growth, up
17.5%, which was mostly offset by a significantly higher interest
expense in a rising interest rate environment.
This translated into 4.3% lower earnings per share of 6.6 cents.
On a statutory basis, net profit after tax attributable to ordinary
equity holders of $21.6 million was 72.6% lower than the prior
year, largely reflecting costs associated with the loss of Health
Services processing equipment net of insurance recoveries, as well
as costs and provisions taken to rectify and remediate the New
Chum landfill. This included an impairment charge as a result of
the unsuccessful height rise court appeal decision.
Each of our segments reported top line growth in FY23.
Our Solid Waste Services benefited from the initial Global
Renewables Holdings (GRL) contribution and full year Sydney
Resource Network (SRN) contribution, organic growth and
contractual price increases, which helped deliver strong EBITDA
and EBIT growth. Despite challenges in labour availability, the
Industrial and Waste Services segment performed well delivering
EBIT growth of over 33%, while continuing to grow its pipeline
of opportunities. The Liquid Waste and Health Services segment
was boosted by good performances from the Liquid Waste and
Technical Services business, driven by strong project-related
work and favourable product prices, as well as volumes in the
Hydrocarbons business. This offset a poor performance by the
Health Services business, which was adversely impacted by the
loss of medical waste processing equipment and related network
capacity issues. As a result, the segment’s underlying EBIT was
7.9% lower than FY22.
Labour availability, efficiency and persistent cost inflation were key
challenges for the business during the year. Some of these costs
will be recovered through our contractual mechanisms. During the
year, we commenced construction of our second Circular Plastics
Australia (PET) plastic pelletising facility in Altona, Victoria. This
new facility is in collaboration with our joint venture partners Pact
Group Holdings Ltd, Asahi Beverages and Coca-Cola Europacific
Partners, and follows the success of our first operating facility
in Albury, New South Wales. We are also nearing completion of
the Circular Plastics Australia (PE) HDPE and PP plastic pelletising
facility that we are building in a joint venture with Pact Group.
The facility is co-located with our Material Recovery Facility at
Laverton, Victoria.
These projects are underpinned by our strategic pillar of
creating sustainable customer solutions with high-circularity
and low-carbon emissions.
With our commitment to reducing greenhouse gas emissions in
line with the Glasgow Climate Pact and integrating this goal into
our executive long-term incentive plans, we’ve achieved good
progress on the activities that will help us to deliver. On 19 August
2022, we announced the acquisition of the GRL business for
$168.5 million, together with an equity raise comprising a $350
million placement and up to $50 million share purchase plan.
The acquisition of GRL is strategically aligned and core to our
NSW Organics Blueprint. The equity raise was strongly supported
by both institutional and retail shareholders, and the Board
wishes to thank all shareholders for their ongoing support. The
proceeds raised have provided significant balance sheet capacity
to fund medium-term opportunities aligned to our Blueprint
2030 strategy.
7
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Chairman’s Report
“ Our Blueprint 2030 strategy is in place and progressing
well, the business has stabilised following an extended
period of internal and external challenges, and we are
making strides towards turning around the Company’s
financial performance.”
Philippe Etienne Chairman
Our strategy to gain greater exposure to the Oil and Gas sector is
progressing well, with our Industrial and Waste Services business
securing two significant contracts during the year with Santos
and ExxonMobil.
not due until December 2024. Our net debt to EBITDA ratio of 1.9x
as at 30 June 2023 was 0.3x lower than 30 June 2022, as a result
of equity raised during the year and remains comfortably within
our covenant.
Through our joint venture with TOMRA, we successfully tendered
for the Western regional and metro zones of the Victorian Container
Deposit Scheme. We anticipate an attractive return profile based on
a progressive ramp up of the scheme, as we deploy approximately
$40 million of capital.
We have been constructing our Western Sydney Material Recovery
Facility during the year. The facility is underpinned by a commingled
recycling contract with Blacktown City Council. We have also been
advancing the long lead items related to our Energy from Waste
developments in Victoria and Queensland. During the year, we
acquired a site for our Queensland project in Bromelton, while
in Victoria we have submitted our Development Licence and
Planning Approval applications. We continue to take a capital light
approach to the projects and remain disciplined in our approach
to capital allocation.
On 21 August 2023, we completed the acquisition of Australian
Eco Oils (AEO) for $39 million. The acquisition provides an attractive
entry point into a new, adjacent market for Cleanaway at a time
when high-quality, traceable used cooking oil (UCO) is becoming
an increasingly important source of feedstock in the production
of renewable fuels, including sustainable aviation fuels and
renewable diesel.
In August 2023, the Board declared a final unfranked dividend of
2.45 cents per share taking the total unfranked franked dividend
for the year to 4.9 cents per share, payable on 6 October 2023.
This was in line with the previous year and represents a payout
ratio of 74.3%, in line with our stated policy of paying out 50-75%
of underlying profits. Cleanaway is eligible to participate in the
Commonwealth Government’s Instant Asset Write Off Scheme,
which has reduced tax payments made by the Group in FY22,
FY23 and will continue into FY24. Because of lower tax payments
resulting from the Instant Asset Write Off Scheme, Cleanaway
does not expect to resume franking dividends fully until calendar
year 2024.
During the year, we continued our program of orderly Board
renewal with the appointment of two new Independent
Non-Executive Directors, with Jackie McArthur joining the
Board in September 2022 and Clive Stiff in June 2023.
Jackie and Clive are both experienced executives with diverse
and complementary international and domestic experience.
I look forward to both playing key roles in contributing to the
development and execution of our Blueprint 2030 strategy over the
coming years. I am delighted to welcome Jackie and Clive to the
Board of Cleanaway and congratulate them on their appointments.
Cleanaway remains in very strong financial health. We have
$504.5 million of undrawn debt facilities and an average debt
maturity of 3.6 years as at 30 June 2023, with our next refinancing
Ray Smith retired as a Director with effect 31 August 2023 and
I would like to recognise his service to the Company since his
appointment as a Non-Executive Director in 2011. Ray made a
8
Thank you also to my fellow Board members for their support,
particularly as I begin my chairmanship.
Finally, I would like to thank our shareholders for your continued
support of Cleanaway. On behalf of the Board, I acknowledge
the concerns raised by shareholders last year that resulted in our
first strike against the Remuneration Report. The Board has taken
action to address those concerns and continues to seek and listen
to shareholder feedback to ensure we have a fit for purpose
Remuneration Framework. We have outlined the changes that we
have implemented in the FY23 Remuneration Report, which you
can refer to in section 5 of this Annual Report.
I look forward to speaking to you again at our Annual General
Meeting on 20 October 2023.
Philippe Etienne
CHAIRMAN
significant contribution to the growth and success of Cleanaway.
As a Director and Chair of the Audit and Risk Committee, he has
played a key role in steering the performance improvement and
growth of the Company. His deep understanding of finance,
operations and strategy and broad corporate experience with
industrial companies has been a significant asset to the Board.
On behalf of the Board, I thank Ray for his wise counsel over
many years and wish him all the best in his retirement.
I would also like to pay tribute to our outgoing Chairman,
Mark Chellew and recognise the immense achievements and
milestones delivered during his tenure.
Mark has made a tremendous contribution to Cleanaway over the
last 10 years. As a Board, we have greatly benefited from his strong
leadership, deep knowledge and experience which has driven a
period of significant growth and success. This included the acquisition
of Toxfree and the Sydney Resource Network, development of the
Footprint 2025 strategy and development and execution of the
Blueprint 2030 strategy. We wish Mark well in his retirement.
With the departures of Ray and Mark, Michael Kelly and Jackie
McArthur will take on the chairmanship of the Audit and Risk
Committee and Sustainability Committee respectively. As part of
our continued Board renewal, we will seek to appoint another
Director over the course of FY24.
I would also like to take this opportunity to thank our CEO Mark
Schubert, the Executive Leadership Team and all Cleanaway
employees for their efforts in delivering robust operational and
financial outcomes. Every day, our team strives to deliver great
customer service safely, and I recognise the extraordinary effort that
was required to do so in a particularly tight labour market this year.
9
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION A message from the CEO
Navigating challenges,
delivering results
10
“ Our Blueprint 2030 strategy will create superior shareholder value by integrating and extending our leading network of infrastructure assets to provide high-circularity, low-carbon solutions, seamless customer service and value for money for our customers.”Mark Schubert CEO Dear Shareholder,
I am proud to report the performance of your Company for the
financial year ended 30 June 2023. We have continued to make
good operational and strategic progress, including:
• Delivering strong revenue and EBIT growth as we benefit
from emerging efficiencies
• Embedding operational excellence through the business
• Strengthening our safety and environment foundations
• Continuing to address key operational headwinds
impacting margins
• Securing significant contracts with Santos, ExxonMobil
and through the Victorian Container Deposit Scheme
• Completing Global Renewables Holdings (GRL) acquisition
and leveraging it to accelerate the Organics Blueprint
• Delivering financial and environmental benefits from our
Landfill Gas Capture Program, including achieving carbon
emissions reductions consistent with our targets
• Completing the acquisition of Australian Eco Oils
Our foundations
With “protecting our people” and “protecting the environment”
now entrenched as the two foundations upon which Cleanaway
operates, we are confident that in situations where our team
members must choose, our foundations always come first.
Together with our people, our foundations are central to our
purpose of making a sustainable future possible together.
Over the last 12 months, we have embedded new health, safety
and environment (HSE) capability and our team has rapidly
developed a HSE strategy and Intensive Improvement Roadmap
focused on three key areas – improved critical risk management;
growing leadership capability and safety culture; and embedding
a learner’s mindset.
Our lagging safety indicators, while improving, are not where we
want them to be with our total recordable injury frequency rate
(TRIFR) on 30 June 2023 at 3.7 compared to 4.2 at 30 June 2022.
This represented 83 instances where one of our teammates required
medical treatment. The injuries were predominantly sprains,
strains, slips, trips and falls. Many of these have been identified by
improved reporting as a result of our ‘no blame’ culture, as well as
an improved approach to workers compensation claim acceptance.
This improved reporting provides a richer data set for deeper
learning, which in turn enables a more proactive approach and
the ability to improve our strategies, processes and controls.
We have also worked hard to mitigate the risks to HSE performance
from higher vacancies and turnover. We have focused on bridging
critical vacancies and prioritising hiring into those roles.
Our core process development is also progressing well with our
first two pilots now complete on Management of Change and
Manage Contract Execution. These are two key safety-related core
processes, now being rolled out Cleanaway-wide. These processes
are important because they provide a consistent approach to
manage these risks, assure the controls, and deliver a platform
for continuous improvement. While we have made important
improvements, we are not satisfied with the injury performance
and will focus intensively on delivering our new HSE strategy
tailored to the current performance.
With the proliferation of lithium-ion batteries and other
non-compatible waste ending up in waste streams, fires are a
growing risk across the waste and recycling industry. To keep
our people, environment and assets safe, we are progressively
upgrading our facilities with rapid detection and response
equipment. In the interim, we have implemented controls including
providing portable fire monitors at high-risk sites and training
our teams to deploy them. As with HSE, we have installed new
capability to ensure we evolve our culture and grow our capability
to deliver Blueprint 2030.
We have done the internal work to re-imagine our Cleanaway
values, which are aligned to our strategy, and we are on track to
launch these soon. Rather than simply words on a page, we are
focused on bringing our values to life with actions: how we work,
how we lead, how we show up and how we treat each other.
Our people strategy is designed to embed the reinforcing
mechanics that will support a Cleanaway culture where our 300
branches are at the centre of our Company with capable leaders,
local ownership, care, connection and a view well beyond today.
At the same time, we are focused on ensuring we build a strong
talent pipeline with successors identified for all business-critical
roles to support the growth embedded within Blueprint 2030.
Blueprint 2030
Our Blueprint 2030 strategy will create superior shareholder value
by integrating and extending our leading network of infrastructure
assets to provide high-circularity, low-carbon solutions, seamless
customer service and value for money for our customers.
Under Blueprint 2030, we will create a competitive advantage and
generate significant value by extending and integrating our assets
and capabilities to address Australia’s increasingly complex waste
needs. We will do this in the most sustainable way we can, while
delivering an exceptional customer experience, powered by the
passion of our workforce.
To better define our meaning of high-circularity, we have taken
the well-known concept of waste hierarchy and re-imagined it
to become the Cleanaway Circularity Hierarchy, recognising that
different recycling solutions have very different circularity and
carbon outcomes.
When looking at circularity, we set ourselves the task of being able to
give meaning to ‘high-circularity’ in the context of offering the most
circular and lowest carbon solutions for our customers. We have
also developed a simple approach that can be used to assess our
business, customer solutions and investment opportunities against
an expanded waste hierarchy. This hierarchy recognises degrees of
circularity and reflects the desirability of first supporting domestic
and then international circular economies over downcycling.
As I reflect on the progress our team has made since we released
our strategy, I am filled with pride. We have developed detailed
plans across our 14 Blueprints that will drive the growth of the
business, with the expected timeline and deliverables under each
plan tracked and reviewed monthly by the Executive Team and
relevant leaders. We have installed new capacity to support the
delivery of the strategy and foundations including a refreshed
and aligned Executive Team that is passionate about our purpose
and strategy and new and significantly improved capability
11
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION A message from the CEO
“Together, we look forward to
realising the financial benefits
of much of this effort over the
next few years...”
Mark Schubert CEO
in areas such as HSE, Carbon, Organics, Construction and
Demolition (C&D), Landfill Gas and Sustainability. We have two
new verticals established in the Container Deposit Schemes and
C&D business units.
We have set greenhouse gas reduction targets aligned to a 1.5°C
pathway. During the year, we drilled more than 250 landfill gas
wells, improved gas capture efficiency by more than 15% and
reduced our carbon emissions by 9% on a like-for-like basis. This
has resulted in Cleanaway being well on the path to meeting
those targets.
We acquired Global Renewables Holdings (GRL), a site and facility
that provides a strategic location and infrastructure to enhance our
broader network and customer offering today and into the future, as
we position ourselves to capture share of the growing FOGO (Food
Organics Garden Organics) market opportunity.
We have secured strategic sites for our proposed Energy from Waste
facilities in Melbourne and Queensland and advanced the planning
workstreams for each of the projects.
We have commenced and/or completed the construction of three
mechanical plastic pelletising facilities while we continue to expand
our core infrastructure footprint, including the recent Victorian
Container Deposit Scheme Network Operator appointment.
We identified the automation and digitisation needs of the business
and have commenced the delivery of CustomerConnect and rolled
out analytics tools that will support improved profitability.
We have commenced the digitisation of our workshops and fleet,
and our Sales Team have been trained and equipped with tools to
improve sales effectiveness.
We have been publicly recognised by one of our largest customers
for our customer service, and our customer value proposition is
central to our strategy. Done well, we will see Cleanaway increasingly
becoming the supplier of choice for recycling, resource recovery and
waste management services across a broad spectrum of customers.
We are delivering on our strategy to increase our participation in the
Oil and Gas sector with significant contract wins with Santos and
ExxonMobil. We have further exciting opportunities in the pipeline
which will position us well to participate in the decommissioning
growth vector in that sector.
We have made this progress with safety and the environment as our
foundations, and we have done all of this through very challenging
operating conditions. Together, we look forward to realising the
financial benefits of much of this effort over the next few years
and for many years to come.
i Further details are available in the key business
strategies and prospects section on pages 34 to 36.
Financial performance
Against a backdrop of high inflation, a tight labour market and
operational challenges, Cleanaway delivered strong financial
performance in FY23.
The Company reported net revenue growth of 13.9% to $2,965.8
million and grew underlying EBITDA by 14.9% to $668.1 million.
Underlying EBIT was 17.5% higher than the prior year at $302.2
million. Underlying net profit after tax was $148.6 million, 2.5%
higher than the previous year, translating to underlying earnings
of 6.6 cents per share.
Statutory net profit after tax attributable to ordinary equity
holders of $21.6 million was 72.6% lower than the previous
year. This largely reflects costs associated with the rectification
and remediation of the New Chum landfill, resulting from the
significant flood events. It also includes the impairment of the
New Chum landfill due to an unsuccessful court appeal that sought
an extension of its height. Additionally, alternative disposal costs
were incurred for processing medical waste following the loss of
the hammermill in Victoria (net of insurance recoveries) along with
acquisition and integration costs.
During the year, we incurred more overtime and more expensive
labour hire to supplement our general workforce. We have
implemented several successful strategies to address the
challenges. These included having supervisors backfilling labour
gaps, our Recruitment Process Outsourcing (RPO) program, and
the continued success of the Women’s Driver Academy.
Our branch-level labour value drivers are tracking and improving
daily performance, particularly now that vacancy rates have
declined. Our actions have led to vacancies in August 2023 being
approximately 40% lower compared to October of the previous year,
after accounting for unfilled growth positions such as the Victorian
Container Deposit Scheme
With retention being the focus now, we have ongoing initiatives in
place across onboarding, closing our Enterprise Agreement backlog
and a culture refresh. We feel very confident that this decreasing
vacancy trend will continue and that we will deliver significant
operational and financial improvements.
Both Queensland Solids and Health Services business units
endured ongoing challenges from FY22 and we have performance
restoration plans that are making good progress.
The Fleet Replacement Program for approximately 40 trucks that
were lost during the Queensland floods was completed during
the year. This has resolved some of the availability, repair and
maintenance challenges associated with operating a makeshift fleet.
The Queensland network is now set up to operate without the New
Chum landfill, and today the Queensland business has stabilised and
is focused on driving productivity and efficiency initiatives. With a
new management team and replacement fleet in place following
the floods of early 2022, we are making pleasing progress and
seeing that business performing and improving as planned.
We undertook substantial rectification works at the New
Chum landfill in preparation for the wet season. We expect to
recommence construction of the final cell in FY24 and expect the
landfill should deliver a modest contribution in FY25. The court
appeal for a height rise at New Chum was unsuccessful and we have
12
“We will endeavour to keep each other safe, protect the
environment, deliver today and improve for tomorrow as
we continue to strive towards our mission, together.”
Mark Schubert CEO
decided not to pursue any further appeals. As a result, we are now
planning for its closure and final remediation.
FY26 EBIT of greater than $450 million. This is to be achieved with
incremental improvements in return on invested capital (ROIC).
In our Health Services business, we have installed our new autoclave
units in Victoria replacing our hammermill and we are recovering
the higher costs of autoclave processing through higher prices.
Disappointingly, the recovery in the Health Services business is
lagging from a timing perspective only, with a full reset of the
entire Health Services business performance well underway.
We have been successful in addressing inflationary pressures
through the contractual mechanisms that allow us to recoup rising
costs over time, however temporary impact on margins remain
while inflation remains elevated.
Each of our operating segments – Solid Waste Services,
Liquid Waste and Health Services, and Industrial and Waste
Services – reported revenue growth compared to the previous
corresponding period:
• Solid Waste Services reported increases in net revenue,
EBITDA and EBIT of 15.0%, 19.9% and 22.1% respectively
• Liquid Waste and Health Services reported 10.9% higher revenue
with EBITDA and EBIT 4.0% and 7.9% lower respectively
•
Industrial and Waste Services reported increases in net revenue,
EBITDA and EBIT of 14.4%, 11.7% and 33.2% respectively.
A more detailed analysis of the performance of our operating
segments can be found on pages 14 to 19 of this Annual Report.
Net cash from operating activities increased by $15.5 million to
$481.8 million compared to FY22, reflecting increased underlying
EBITDA and lower tax payments, partially offset by cash outflows
attributable to underlying adjustments and higher interest
payments. This resulted in a strong cash conversion ratio of 98.3%.
Our capital expenditure of $431.0 million reflected investment in a
number of critical areas. The primary areas of investment were in:
fire detection and suppression equipment, landfill gas (LFG) capture,
contract renewals and replacement/refurbishment of existing
assets. We allocated growth capital expenditure to our HDPE/
PP plastic pelletising facility, the Industrial and Waste Services-led
Santos total waste management contract, the development of our
Western Sydney Material Recovery Facility, the acquisition of our
Queensland Energy from Waste site and our CustomerConnect
project. A growing business and high inflation have also contributed
to the step up in capital expenditure.
Mid-term financial ambition
With good progress stabilising the business and capability in place
to deliver the Blueprints and associated progress, we have outlined
our three-year financial targets and a scorecard aligned to Blueprint
2030 linked to the long-term incentive plan. We are targeting an
We are committed to maintaining a strong balance sheet. Our
focus is on how we are allocating capital across the group and
have refined our processes to support our capital decision-making
process. Our benchmark is always relative to a return of capital to
shareholders, and we assess our growth opportunities with that in
mind. The Group’s balance sheet remains strong and Cleanaway will
continue to maintain its culture of financial discipline.
Our people
Pleasingly, female participation at all levels of the Company has
steadily improved over the last two years, ensuring our teams and
our leaders are representative of the communities we serve. I look
forward to continuing this trend and extending this focus to ensure
every single person at Cleanaway can be their best self each day.
From a gender diversity perspective, we saw a 9.6% or 200bps
improvement in female representation rate, increasing from 20.8%
to 22.8%. We are making good progress toward our target of
having at least 40% female leaders either reporting to me or
reporting to the Executives that report to me.
During the year, Scott Nicholls joined the Executive Team as the
executive responsible for Liquid Waste and Health Services, and
Industrial and Waste Services. Scott brings significant experience
and capability to the organisation that will support the delivery of
our strategy.
I would like to thank the Board and the Executive Team for the
support they have given me throughout the year leading your
Company. I would also like to particularly acknowledge our
outgoing Chairman, Mark Chellew for the support and guidance he
has provided me since I joined Cleanaway. I wish him all the best.
I would also like to thank our more than 7,500-strong workforce
for their perseverance this year. Knowing the pride our team has
in delivering for our customers every day, I truly appreciate their
extraordinary efforts as we worked through our labour shortage
challenges. It is our people that make this business great. We will
endeavour to keep each other safe, protect the environment, deliver
today and improve for tomorrow as we continue to strive towards
our mission, together.
Mark Schubert
CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
13
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Segment 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.
14
Solid Waste Services (SWS) net revenue increased 15.0% or $273.1
million to $2,091.7 million. Underlying EBITDA increased 19.9%
or $93.3 million to $562.7 million, and underlying EBIT increased
22.1% or $50.3 million to $278.1 million.
The Solid Waste Services FY23 results include the first full-year
contribution from the now fully-integrated Sydney Resource
Network (SRN) and a ten month contribution from Global
Renewables Holdings (GRL).
Solid Waste Services revenue benefited from a full year contribution
from SRN, cost recovery through price increases in the existing
customer base and increases in most landfill volumes. This was
partially offset by lower commodity prices and no waste accepted
at the New Chum landfill.
Commodity prices have partly recovered over the second half of the
financial year and customer rebates have declined to restore margins.
In addition to costs associated with new assets and contracts,
higher operating costs were driven mainly by significantly higher
diesel prices, higher working capital costs in flood affected
regions, higher fleet repair and maintenance costs and the general
278.1
EBIT
$278.1m
EBITDA
$562.7m
22.1%
19.9%
227.8
212.7
213.0
Net Revenue
($million)
EBITDA
($million)
EBITDA
margin
EBIT
($million)
EBIT
margin
FY23
FY22
CHANGE
2,091.7
1,818.6
15.0%
562.7
469.4
19.9%
26.9%
25.8%
110bps
278.1
227.8
22.1%
13.3%
12.5%
80bps
28.3
27.5
25.8
26.9
15.5
14.4
12.5
13.3
2020
2020
2021
2021
2022
2022
2023
2023
EBITDA margin (%)
EBIT margin (%)
EBIT ($m)
inflationary environment. Labour costs were higher due to greater
use of overtime and sub-contractors. As a result, underlying EBITDA
increased 19.9%, while underlying EBITDA margins increased
110bps across the year reflecting several factors including business
mix and contractual cost recovery beginning to restore margins.
The segment reported 17.8% higher depreciation and amortisation
costs compared to the previous period. The increase was
predominantly due to the full year contribution of SRN, the initial
contribution from GRL, increased volume into Erskine Park landfill
following the Mechanically Stabilised Earth (MSE) wall completion
and a larger fleet. Furthermore, rising inflation has impacted cell
construction and remediation costs contributing to a higher landfill
depreciation expense.
Underlying EBIT increased 22.1% to $278.1 million, with underlying
EBIT margins increasing 80bps. Cleanaway completed the
acquisition of GRL on 31 August 2022. GRL operates a facility that
processes approximately 220kt p.a. of Sydney’s ‘red bin’ putrescible
waste. The business is strategically located and is currently delivering
>30% landfill diversion. During the period, the operational team
undertook trials at the facility with further analysis underway to
determine the optimal transition plan for the facility as it prepares
to capture the emerging Sydney Food Organics Garden Organics
(FOGO) processing opportunity.
During the year, the business continued to leverage the network,
licences and land from the SRN transaction to advance the progress
of Solid Waste Services’ organics blueprint in NSW.
The TOMRA Cleanaway joint venture was appointed the Network
Operator for the Victorian Container Deposit Scheme Western
metro and regional zones. The joint venture is expecting to process
an estimated 500 million containers per annum once it ramps up to
the initial target capacity.
The Ipswich City Council (ICC) refused an application by Cleanaway
that would have allowed for additional airspace at the New Chum
landfill. In October 2021, Cleanaway concluded its appeal of the
decision of the ICC to refuse the application to the Queensland
Planning and Environment Court, but in the decision handed down
in June 2023, was unsuccessful in those proceedings. Cleanaway
has decided not to appeal the decision and have commenced an
end-of-life plan for the landfill. Cleanaway is currently awaiting
approval from ICC to complete the necessary works that will allow
us to fill the remaining airspace at the site.
15
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Segment performance
Industrial
and Waste
Services
Cleanaway’s Industrial and
Waste Services provides a
wide variety of specialised
services to the resources,
oil and gas, infrastructure
and industrial markets.
These services include drain
cleaning, non-destructive
digging, vacuum loading,
high pressure cleaning and
pipeline maintenance.
Industrial and Waste Services (IWS) revenue increased 14.4%
or $47.2 million to $375.8 million driven by significant project
activity across key contracts. Underlying EBITDA increased 11.7%
or $5.5 million to $52.7 million. The segment performed well in
challenging external market circumstances.
Underlying EBIT increased by $6.6 million to $26.5 million and
underlying EBIT margin increased 100bps to 7.1%.
During the year, IWS achieved a 92% renewal rate on available
contract extensions. New contracts signed in FY23 represented
almost three times the annual value of contracts signed in FY22.
Inflationary pressures, particularly fuel costs and labour rate
pressures, impacted the segment performance. These higher costs
will be directly reflected in the pricing of new contracts.
IWS continues to deliver organic growth from its existing client base
(re-signs and increasing scope of services) plus new business across
the regions, with the outlook for sustainable growth over the next
few years supported by a healthy pipeline of work. This pipeline
continues to be developed and balanced across the key segments in
16
26.5
EBIT
$26.5m
EBITDA
$52.7m
33.2%
11.7%
22.6
21.4
19.9
15.7
14.6
14.4
14.0
6.8
7.4
7.1
6.1
2020
2021
2022
2023
EBITDA margin (%)
EBIT margin (%)
EBIT ($m)
Net Revenue
($million)
EBITDA
($million)
EBITDA
margin
EBIT
($million)
EBIT
margin
FY23
FY22
CHANGE
375.8
328.6
14.4%
52.7
47.2
11.7%
14.0%
14.4%
40bps
26.5
7.1%
19.9
33.2%
6.1% 100bps
which IWS operate. IWS expect to see the segment portfolio shift
from a historical Resources segment bias to a greater share of the
Oil and Gas sector.
During the year, IWS secured significant contracts in the Oil and Gas
sector with ExxonMobil and Santos. The ExxonMobil contract was
followed by an earlier contract to undertake decommissioning tank
cleaning work at ExxonMobil’s Altona plant. The Santos contract
spans WA, NT, QLD and SA showcasing IWS national capability. In
addition, Cleanaway successfully tendered for a Snowy 2.0 contract
with a further opportunity to extend the contract in the future.
First Nations participation continues to be an important
consideration and requirement for Tier 1 resource companies
who are looking to ensure their efforts in this area result in direct
financial benefits to First Nations peoples and businesses. The
Pilbara Environmental Services joint venture between Cleanaway
and King Kira Group (a 100% female Indigenous-owned business)
will be well placed to participate in the upcoming IWS contract
opportunities in north-west WA.
The infrastructure segment remains buoyant with opportunities to
participate in large Government sponsored projects. Opportunities
in the mining and mineral processing and Oil and Gas sector
continue to have a positive outlook, with the larger contract and
project opportunities more suited to the larger Tier 1 national
providers like IWS in the pipeline.
Furthermore, there is a significant opportunity related to
decommissioning ageing Oil and Gas assets. Much of Australia’s
onshore and offshore Oil and Gas infrastructure is approaching the
end of its productive life, leading to a significant forecast ramp-up
in decommissioning activity through the next decade and beyond.
The total cost will be an estimated $50 billion.
17
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Segment performance
Liquid Waste
and Health
Services
Cleanaway’s Liquid Waste
and Health Services
comprises three national
strategic business units:
Liquid and Technical
Services, Hydrocarbons
and Health Services.
Liquid Waste and Health Services revenue increased 10.9% to
$610.6 million while underlying EBITDA decreased 4.0% to
$92.4 million. Underlying EBIT decreased 7.9% to $48.8 million
and underlying EBIT margins decreased 160 basis points to
8.0%. The performance of the Health Services business weighed
on the segment performance. Excluding Health Services, the
segment expanded EBIT margins by 40 bps versus the previous
corresponding period.
The Liquid and Technical Services (LTS) business realised 11.9%
higher revenue than the previous corresponding period,
predominantly due to increased project work including for NSW
Health, where Cleanaway processed and recycled bulk quantities
of expired hand sanitiser, and the remediation of a site in Victoria
on behalf of the EPA where hazardous waste was illegally dumped.
The business managed increases in freight and labour costs through
a combination of minimising use of third-party contractors and
through contractual price increases.
18
67.6
64.3
20.7
21.5
12.5
13.2
53.0
48.8
17.5
9.6
15.1
8.0
2020
2020
2021
2021
2022
2022
2023
2023
EBITDA margin (%)
EBIT margin (%)
EBIT ($m)
EBIT
$48.8m
EBITDA
$92.4m
7.9%
4.0%
Net Revenue
($million)
EBITDA
($million)
EBITDA
margin
EBIT
($million)
EBIT
margin
FY23
FY22
CHANGE
610.6
550.5
10.9%
92.4
96.2
4.0%
15.1%
17.5% 240bps
48.8
53.0
7.9%
8.0%
9.6% 160bps
Hydrocarbons revenue increased 16.6% benefiting from
favourable post collections price and volume mix and higher
Cleanaway Equipment Services revenue. This was offset by higher
natural gas and diesel input costs and higher freight and labour
costs. From an underlying EBIT perspective, the Hydrocarbons
business outperformed the prior year with EBIT growing 8.1%
to $16.1 million.
The Health Services business revenue was largely flat on the previous
corresponding period. The Health Services business benefited from
increases in revenue from biosecurity and cruise ships, following the
rebound of the travel sector. Revenue uplift was offset by volume
losses from lower network capacity and lower COVID-19 related
clinical waste from hotel quarantine, hospital and vaccination
clinics and aged care centres resulting in flat revenue growth
when compared to previous corresponding period.
The loss of the hammermill in Victoria resulted in a strain on the
processing capability and network capacity of the Health Services
business. Consistent with the broader Cleanaway business, the
Health Services business experienced higher gas, labour and diesel
costs, resulting in significantly lower EBIT.
In March 2023, the Health Services business received EPA approval
for the business’ two autoclave units (a replacement for the
hammermill) and have since installed these units and successfully
begun operating them. The units have reached initial target
production rates with several initiatives underway to exceed
these rates and increase throughput.
19
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Making a sustainable
future possible
together
As one of Australia’s leading total
waste management providers,
our high‑circularity, low‑carbon
solutions are helping enable
society’s transition to a more
sustainable future.
To some, waste may seem like an ordinary part of everyday life. But we know it has
extraordinary potential.
We aspire to be the most innovative and sustainable waste management company and see
this as fundamental to fulfilling our customer-led strategy, Blueprint 2030. We will create
competitive advantage and generate significant value by extending and integrating our
assets and capabilities to address Australia’s increasingly complex waste needs.
We will do this in the most sustainable way we can, while delivering an exceptional
customer experience, powered by the passion of our workforce.
This is how we’re finding better, smarter, and cleaner ways to make a sustainable future
possible, together; for people, our planet and prosperity of all our stakeholders.
20
Sustainability Our people
Our people and their contributions are the
driving force behind our success. We aim to
unlock the passion, pride, and diversity of our
workforce so that we can make the greatest
sustainability impact possible.
We believe that achieving the highest standards of health and
safety is critical for the success and sustainability of our business.
It enables our customers, communities, shareholders, and
regulators to have confidence in our capabilities. Although we
continue to invest in safety, unfortunately, isolated but significant
safety incidents occurred this year.
Tragically, there was one fatality in our operations during the year.
The fatality occurred at our Kemps Creek landfill. At the time of
the incident, the employee of a contractor was undertaking a
routine task within their area of operational control. Immediately
following the incident, Cleanaway performed an enterprise-wide
review of processes and controls relevant to the task. It was only
when we were satisfied with outcomes of this review, that the
task was recommenced.
Reducing the severity and likelihood of our most material
safety risks continues to be a core area of focus. The instance
of recordable safety injuries is measured and reported as total
recordable injury frequency rate (TRIFR) and while we have seen
a 11.9% improvement from the previous year with a lower TRIFR
rate of 3.7 for FY23, we continue to work intensively to address
safety risks and engage our workforce.
In FY22, we reset safety and environment as our foundations
which makes it simple for our frontline teams to prioritise; our
foundations always come first. True to this belief, in FY23 we
commenced a journey to transform the way safety risk is managed
to achieve the performance we desire, and our people deserve.
Starting at the top, we have recast our health, safety and
environment (HSE) vision; to be an industry leader in safety and
environment performance enabled by our people, safe reliable
assets, and an incredible learning culture. Underpinning our new
vision are five strategic imperatives guiding a risk-prioritised 5-year
roadmap, which will simplify how we work and make it easy for
our people to get it right every day.
A number of work programs are currently in execution, including:
• Reviewing critical risks and controls, including developing
simplified standards, tools and improving risk control definition
• Enabling operational safety leadership and culture through
our HSE Leadership Development Program
• Embedding learning from our successes and failures to foster
enhanced practices across our business
• Management of fire risk, including deploying 78 portable
ground monitors to high-risk sites as part of our National
Interim Fire Suppression Program and progressive upgrade
of fire detection and suppression controls.
Amplifying our focus on safety is our commitment to building
a work culture where each individual feels a sense of belonging,
is able to thrive, and help our organisation make the greatest
impact. We have been on a journey to reimagine the culture at
40:40 Vision
In FY22, we introduced new female participation
targets aligned to 40:40 Vision. We have
challenged ourselves to achieve at least 40%
females in the Executive Team (defined as CEO+1)
by 2027. This target has been broadened to include
at least 40% females in leadership roles (defined
as CEO+2) by 2030.
We are on track to meet both of these targets.
40%
Target by 2027
Females in the Executive
Team (defined as CEO+1)
33.3%
FY23 result
40%
Target by 2030
Females in leadership
roles (defined as CEO+2)
36.2%
FY23 result
Cleanaway by empowering local ownership across our network
of over 300 branches. Our aim is to build highly capable leaders,
who think beyond today, have a deep sense of care and create
strong connections; inside and outside the organisation.
These changes will set a new standard of behaviour at Cleanaway,
and we are committed to evolving our culture and creating an
environment where everyone feels safe, included and respected.
As a traditionally male-dominated industry, we are committed to
creating opportunities across our organisation for greater gender
balance, and recognise the social, financial and ethical benefits of
doing so. An important part of fostering a diverse and inclusive
workplace is increasing female participation across our workforce.
Throughout FY23, we made significant progress in increasing
the number of females employed across Cleanaway. However,
we acknowledge there is more work to be done. Females in
operations roles increased to 10.0%, up from 7.4% in the
previous year. Similarly, the overall proportion of females
employed at Cleanaway increased to 22.8%, up from 20.8% in
the previous year. Underpinning this is our Respect@Cleanaway
Program, which will be launched in FY24. Centred around the
principles of leadership, culture, and knowledge, this holistic
initiative strives to enhance the prevention and response to
workplace respect issues.
21
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Caring for the planet
Maintaining the health of our planet is vital.
It’s one of the reasons we are passionate about
the role we play in developing sustainable,
high-circularity, low-carbon solutions for
customers, the community and the planet.
In the tightly regulated waste industry, we strive to maintain high
environmental performance standards throughout our operations.
As with safety, FY23 saw the commencement of a journey to
transform the way environment risk is managed across our
operations. While we are working hard to improve and embed
industry-leading standards, from time to time incidents and
non-compliances can occur.
A fire event occurred onsite at our Artarmon SRN Transfer Station in
Sydney on 4 December 2022. The site was fully evacuated and there
were no injuries to our people or any members of the public. Despite
significant on-site firewater holding capacity, a portion of fire-fighting
foam concentrate and firewater made its way to a local waterway.
Once alerted to this, our team acted with urgency to limit any
environmental impact, using vacuum trucks, booms and hand tools
to scoop the surface of the water body. Since the incident, water
quality has returned to the same levels recorded prior to this incident.
We are continuing to invest in management of potential fire risks and
build on our emergency responses for these incidents. We have also
rolled out the National Interim Fire Suppression Program to improve
operational safety to ensure everyone at Cleanaway gets home safely
and minimise the likelihood of fire events in the future.
Continuing the trend from previous years, there has been a sustained
reduction in direction notices from state-based environmental
regulators. In FY23, we received a total of 25 direction notices and
formal warnings, a significant reduction from the previous year.
Over FY23, Cleanaway was issued five fines from our environmental
regulators, totalling $57,214. This compares to four fines totalling
$14,678 in FY22. Three fines were issued for matters relating to
record keeping, one was issued in relation to storage of hazardous
materials and one in relation to operation of plant and equipment.
Over the same period, two court imposed penalties to a total value
of $38,000 were also incurred for non-compliance with licence
conditions. No environmental harm was alleged. Each of these
instances is an opportunity for learning and improvement, which in
turn brings us closer to making a sustainable future possible together.
1.5°C ambition
One of the ways we are contributing to a better
climate future is by reducing our greenhouse
gas emissions. This in turn allows us to deliver
lower carbon services to our customers.
We are prioritising greenhouse gas emission reductions
that are both material and readily addressable. For
Cleanaway, this means initially focusing on reducing
methane emissions from our landfills through improved
landfill gas capture. As a low-carbon fuel source, the
capture and productive use of landfill gas means it can
be converted into useful energy forms such as renewable
electricity and renewable natural gas both for on-site
and customer consumption. We are currently exploring
a range of opportunities.
In FY22, Cleanaway established greenhouse gas emission
reduction targets of 43% reduction in carbon dioxide and
34% reduction in methane by 2030, in reference to FY22
as the base year.
These targets are aligned to the most conservative 1.5ºC
scenarios presented in IPCC’s AR6 1, and are consistent
with limiting global warming to 1.5ºC above pre-industrial
levels by 2100. The methane targets are also aligned to
the Global Methane Pledge.
Performance is tracked on a net emissions basis,
determined from:
• Total Scope 1 and Scope 2 greenhouse gas emissions as
reported under the National Greenhouse and Energy
Reporting Scheme (NGERS), and calculated using
prescribed methodologies
• Addition of all Australian Carbon Credit Units (ACCUs)
issued in the financial year from abatement projects
registered with the Australian Government
• Subtraction of ACCUs deemed surrendered, and
third party carbon offsets purchased and surrendered.
In FY23, Cleanaway’s net combined greenhouse gas
emissions were 1,250 kt CO2-e, equalling our FY23
reduction objective. We remain on track to meet our net
2030 greenhouse gas emissions reduction targets for
methane and carbon dioxide.
We are also investigating ways to reduce carbon dioxide
emissions by trialling new technologies, evaluating fuel
switching for our heavy vehicle fleet, and assessing
opportunities to reduce consumption of fossil fuels,
natural gas, and electricity.
1
Sixth Assessment Report (AR6) of Working Group III by the Intergovernmental Panel on Climate Change (IPCC), entitled Climate Change 2022:
Mitigation of Climate Change.
22
Sustainability Working towards a prosperous future
As one of Australia’s leading waste management
companies, we see waste as a resource and
recognise the value it can generate. Our goal is
to lead the transition to a more sustainable future.
a new HDPE (high-density polyethylene) and PP (polypropylene)
recycling plant in Laverton. When operational in FY24 the site will
process 20,000 tonnes (or the equivalent of half a billion plastic
milk bottles and food tubs each year) and convert them into plastic
pellets used to manufacture new bottles and food containers.
Enabling a circular economy is one of the ways we will get there.
Blueprint 2030 establishes our commitments and actions to
accelerate our business from a linear to a circular waste value chain.
To make sustainable change greater than ever before, we must
carefully consider the actions of the organisations we work with.
Cleanaway operates diverse supply chains across various industries
and regions, collaborating with like-minded organisations aligned
with our social and environmental goals. We support Australian
businesses by sourcing goods, resources, and services locally and
sustainably. With a strong sense of responsibility, we work alongside
partners to optimise our operations and supply chain, prioritising
positive outcomes for both people and the planet.
In FY23, we expanded our footprint with Circular Plastics Australia
with the construction of the new PET (polyethylene terephthalate)
recycling plant in Altona North. The plant will commence operation
in FY24 and process plastic waste from kerbside recycling bins, as
well as the Container Deposit Scheme to launch in Victoria in FY24,
with TOMRA Cleanaway appointed as Network Operator. We also
expanded our partnership with PACT Group, with the addition of
We completed the acquisition of Australian Eco Oils (AEO) on
21 August 2023. AEO is one of Australia’s leading collectors and
processors of used cooking oil (UCO) processing ~11,500 tonnes per
annum of UCO from 1,500 customers across 4,000 collection points
and selling the processed product into the stockfeed and renewable
fuel sectors.
In FY24, we are excited to collaborate with organisations
and local communities across Australia to manage resources.
This presents opportunity to expedite the nation’s journey
toward sustainability. Our FY23 Sustainability Report
outlines more initiatives and achievements that have created
value for people, the planet and prosperity and is available
at www.cleanaway.com.au/sustainability-report/
Target 2030 1
Target 2050 1
34%
57%
Methane reduction
Methane reduction
43%
Net Zero
Carbon dioxide reduction
Beyond our focus on reducing greenhouse gas emissions,
Cleanaway understands and acts on its responsibility to
identify and respond to physical and transitional climate
risks, and ensure climate change adaptation, mitigation,
and resilience strategies are embedded in Cleanaway’s Risk
Management Framework.
Work continues to embed climate change considerations into
our risk management approach through:
• Understanding of climate risk and opportunity through
research and scenario analysis
• Embedding climate risk management in the Enterprise Risk
Management Framework
• Bringing focus and connectedness to climate risk
mitigants into our strategic and line decision making.
A deep dive assessment of physical climate risk has been
completed. Results from the modelling suggested that
Cleanaway’s assets are not highly impacted. Both policy
and climate science are moving at pace. We are currently
updating our climate risk and opportunity assessment
and scenario analysis, with the help of a third-party
consultant. This assessment is being undertaken in
alignment with the TCFD Good Practice Handbook
(2nd Edition 2021), leveraging specific experience at
Cleanaway in combination with broader sector-based
climate expertise.
We expect the quantitative transition and physical
climate scenario analysis will be completed by December
2023. This will enhance understanding of climate change
impacts on Cleanaway and be used to inform development
of our Climate Action Roadmap. Cleanaway identifies
and manages climate change risk in alignment with the
recommendations of the Financial Stability Board’s Task
Force on Climate-related Financial Disclosures (TCFD).
i Cleanaway’s response against these pillars is set
out in our ESG Databook, which can be found here
www.cleanaway.com.au/sustainability-report/
5
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1
Base year (FY22) CO2-e emissions were adjusted to 1,308kt in FY23 to reflect the acquisition of Global Renewables Holdings Pty Ltd and full-year
ownership of SRN.
23
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATIONCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
Board of Directors
Philippe Etienne
Independent Non-Executive Chairman
Independent Non-Executive Director since
29 May 2014, was appointed Deputy Chair
on 14 June 2023.
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).
Mark Schubert
CEO and Managing Director
Philippe has held a range of other senior
executive positions with Orica in Australia,
the USA and Germany, including strategy and
planning and responsibility for synergy delivery
of large-scale acquisitions.
He holds a Bachelor of Science in Physiology
and Pharmacology and a Master of Business
Administration (MBA). A Graduate of the Australian
Institute of Company Directors and has completed
post-graduate qualifications in marketing.
Mark joined Cleanaway as Chief Executive
Officer and Managing Director in August 2021.
and transforming major assets, including world
class LNG projects and oil refineries.
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
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.
Michael Kelly
Independent Non-Executive Director
• Chair of the Audit & Risk Committee
Independent Non-Executive Director since
1 December 2021.
Michael was Chief Financial Officer of Adbri
Ltd from 2010 to 2018 and Executive General
Manager of Strategy and Development at Adbri
Ltd from 2006 to 2010.
Prior to this, Michael held senior positions
at Rinker Ltd 2003 to 2006 and at CSR Ltd
from 2001 to 2003.
Michael is an experienced executive with over
30 years’ experience in finance, corporate
strategy, operations and acquisitions across
construction materials, building products,
resources and media, within Australia
and internationally.
Michael holds a Bachelor of Commerce and
is a Certified Practising Accountant.
24
Samantha Hogg
Independent Non-Executive Director
• Chair of the Human Resources Committee
• Member of the Audit and Risk Committee
Independent Non-Executive Director since
1 November 2019.
Samantha is the Deputy Chair and Lead
Independent Director (since March 2023),
Non-Executive Director (since March 2022)
of Adbri Limited, and a Non-Executive Director
of IGO Limited (since January 2023).
Samantha was formerly a Non-Executive Director
of De Grey Mining Limited (resigned 17 October
2022), Australian Renewable Energy Agency
(retired July 2020), TasRail (resigned December
2019), MaxiTRANS Industries Limited (resigned
March 2021), Hydro Tasmania (retired August
2021) and Infrastructure Australia (ceased
November 2021), former Chair of Marinus Link
Pty Ltd (resigned June 2023), and former Chair
Jackie McArthur
Independent Non-Executive Director
• Chair of the Sustainability Committee
Independent Non-Executive Director since
1 September 2022.
Jackie McArthur is a Non-Executive Director
of Inghams Group Ltd and Qube Holdings Ltd.
Jackie was formerly a Non-Executive Director of
Blackmores Ltd, Invocare Ltd and Tassal Group Ltd.
Jackie has held various senior executive positions
including Managing Director of Martin-Brower ANZ,
a global leading distributor and supply chain services
provider. She has also held various senior executive
positions with McDonalds, both in Australia and
overseas, including Vice President of Supply Chain for
Asia, Pacific, Middle East and Africa. Ms McArthur
Ingrid Player
Independent Non-Executive Director,
• Member of the Sustainability Committee
• Member of the Human Resources Committee
Independent Non-Executive Director since
1 March 2021
Ingrid Player is a Non-Executive Director at Integral
Diagnostics Limited (since August 2023), Cogstate
Ltd (since August 2019), HealthShare Victoria
(since January 2021) and Epworth Foundation
(since November 2021).
Ingrid is an experienced executive with international
commercial and regulatory experience in mergers
and acquisitions, corporate governance, capital
of Tasmanian Irrigation (resigned December 2022),
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 Chief Financial Officer of
Transurban Group.
Samantha holds a Bachelor of Commerce
and is a member of the Australian Institute
of Company Directors.
has more than 20 years’ experience at executive
and board level roles in general management and
strategy, supply chain and logistics, operations,
food and packaging manufacturing, emerging
brand issues and crisis management, corporate
social responsibility, governance, engineering and
information technology.
Jackie was the 2016 Telstra NSW Business Woman
of the Year and 2016 Telstra Business Women’s
Awards – Corporate and Private National Winner.
She has completed the INSEAD International
Executive Program, has a Bachelor of Engineering
from the University of Sydney and is a member
of the Australian Institute of Company Directors.
developments, risk and sustainability that spans
different markets and industries in Australia and
Europe. During her executive career, she held senior
executive roles with Healthscope Ltd, including the
positions of Group Executive – Legal, Governance
and Sustainability, and General Counsel and
Company Secretary. Prior to this, she worked as a
lawyer in private practice in Australia and overseas.
Ingrid holds a Bachelor of Economics and Bachelor
of Laws (Hons) and is a member of the Australian
Institute of Company Directors.
25
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Terry Sinclair
Independent Non-Executive Director
• Member of the Audit and Risk Committee
•
Member of the Human Resources Committee
Independent Non-Executive Director since
1 April 2012.
Terry currently serves as Chairman Silk Logistics
Holdings Limited ASX:SLH (effective July 2020),
Non-Executive Director of Indara Corporation Pty
Ltd (formerly known as Australia Tower Networks
Pty Ltd) (effective November 2021), as well as
Senior Advisor to Australian Super (effective
October 2019).
Formerly, he was a Non-Executive Director of
Faethm.ai Pty Ltd, Ovato Limited and Zoom2U
Technologies, Managing Director of Service
Clive Stiff
Independent Non-Executive Director
• Member of the Audit and Risk Committee
Member of the Sustainability Committee
•
Stream Limited, Executive Chairman of AUX
Investments (jointly owned by Qantas and
Australia Post), Chairman of Star Track Express,
Director of Sai Cheng Logistics (China) and
Director of Asia Pacific Alliance (HK).
Terry has significant operations and corporate
development experience across the Industrial,
Resources and Consumer Services sectors
including 20 years in senior management roles
in BHP (Minerals, Steel and Transport/Logistics)
and Australia Post (Head of Logistics and
Corporate Development).
Independent Non-Executive Director since
1 June 2023.
Chair of T2 Tea, and Non-Executive Director of
Foodbank NSW & ACT.
Clive is a Non-Executive Director of GrainCorp
Limited (since October 2021), a member of
the Quantium Advisory Board, and a member
of the Genpact Australian Advisory Council.
Clive is an external advisor to Bain & Company,
and a member of the University of New South
Wales Business School Advisory Council.
Clive was formerly a Non-Executive Director
of Australian Pharmaceutical Industries Limited,
Chair of the Australian Food & Grocery Council,
Clive has over 35 years of experience
in the fast moving consumer goods industry.
He was formerly CEO of Unilever Australia &
New Zealand, CEO of Procter & Gamble France,
and previously held other senior executive roles
with the company internationally, as well as locally
with Goodman Fielder.
Clive holds a Master of Science in Management,
and is a Fellow of the Australian Institute of
Company Directors.
Board of Directors
26
Senior Executive Team
Mark Schubert
CEO 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.
Tracey Boyes
Executive General Manager, Solid Waste Services
Tracey joined Cleanaway as Executive General
Manager, Solid Waste Services in February
2022. Tracey has broad experience in managing
large scale operations, with particular expertise
in driving value creation and innovation,
HSE and risk management, corporate strategy
and sustainability. Prior to joining Cleanaway,
Tracey held a number of senior and executive
roles at Origin Energy, Contact Energy and
News Corporation. Tracey holds a Bachelor
of Commerce and Administration majoring in
accounting and commercial law, and is a member
of the Institute of Chartered Accountants in
Australia and New Zealand.
Scott Nicholls
Executive General Manager, Liquid Waste and Health Services, Industrial and Waste Services
Scott joined Cleanaway in March 2023 as
Executive General Manager, Liquid Waste and
Health Services, Industrial and Waste Services.
Before joining Cleanaway, Scott was the President
of Resources and Industrial for five years at Linfox
Pty Ltd. Prior to this, Scott spent over 15 years with
Caltex Australia Ltd where he fulfilled a variety
of senior executive roles in strategy, operations
and sales. Scott holds a Bachelor of Engineering
(Mechanical) from the University of Wollongong
and has completed the Advanced Management
Program at Harvard Business School.
Michele Mauger
Chief People Officer
Michele joined Cleanaway in March 2022
as the Chief People Officer. She has more
than 30 years’ of Human Resources and
Communications experience, with the last
15 years fulfilling Executive Leadership roles
including Chief People and Corporate Affairs
Officer with Incitec Pivot, Executive GM People,
Capability and Communications with Thiess,
Group People Director with Worley and Head of
Human Resources with Grocon. Michele partners
with business leaders to deliver excellence
through innovative people and communication
solutions. She is very experienced in establishing
and delivering business aligned people and
communications strategies, and is well versed at
leading teams through complex transformation
programs, underpinned by robust change
management. Michele is a Board Member of Arts
Project Australia, a not-for-profit organisation
supporting artists with disabilities.
27
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEWCLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT3SUSTAINABILITY6OTHER INFORMATION Senior Executive Team
28
Dan Last
General Counsel and Company Secretary
Dan joined Cleanaway as General Counsel and
Company Secretary in March 2014. Dan is an
experienced General Counsel and Company
Secretary with over 20 years’ experience in law
firms and senior in-house legal roles. Prior to
joining Cleanaway, Dan was the General Counsel
and Company Secretary of Foster’s Group
Limited. He has also worked in top tier law firms
in Australia and overseas. Dan has a Bachelor
of Laws (Hons), a Bachelor of Commerce, is a
Fellow of the Governance Institute of Australia,
and a Graduate of the Australian Institute of
Company Directors.
Frank Lintvelt
Executive General Manager, Strategy, Mergers & Acquisitions
Frank was appointed Executive General Manager,
Strategy, Mergers & Acquisitions in November
2019. He first joined Cleanaway in 2013 as
Corporate Development Manager, has since been
Head of Mergers & Acquisitions and more recently
added strategy to his responsibilities. 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.
Michael Bock
Executive General Manager, Integration and Enterprise Services
Michael joined Cleanaway in March 2018
as Executive General Manager, Integration.
Before joining Cleanaway, Michael was a
Senior Vice President in McKinsey & Company’s
transformation practice. Michael has spent more
than 20 years’ in executive roles, including seven
years at ANZ Bank where he led the mortgages
business and business improvement program;
and 12 years at General Electric (GE), responsible
for the trailer and fleet leasing businesses in both
Australia and Mexico. He also served as the Global
Lean Six Sigma Leader across 54 countries for one
of GE’s largest divisions. Michael holds a Bachelor’s
Degree in Economics from Harvard University
and a Masters of Business Administration from
the Kellogg School of Management.
Chris Avramopoulos
Executive General Manager, Growth and Customer
Chris joined Cleanaway in February 2020 as
Executive General Manager, Customer and
Growth. Prior to joining Cleanaway, Chris held
several senior positions at Orica over more
than 20 years including Vice President – Asia,
Chief Transformation Officer and Vice President
– Commercial. He has vast international
experience serving customers in all continents,
including a secondment in Asia. Chris has a
Bachelor of Science, majoring in Mathematics
& Computer Science.
Deborah Peach
Executive General Manager, Health, Safety and Environment
Deborah joined Cleanaway in August 2022
as Executive General Manager Health, Safety
and Environment. Deborah joins Cleanaway from
Woodside Energy where she most recently held
the roles of Vice President Australia Operations
Support and Vice President Governance,
Risk and Compliance. Prior to that, she held
executive and senior leadership roles spanning
Health, Safety and Environment in the mining,
consulting and energy sectors. Deborah brings
to Cleanaway 26 years’ of HSE expertise in
high-risk operational settings with demonstrated
success in driving transformational change,
aligning businesses with regulatory requirements,
practical mitigation of risk, improving
performance and strengthening organisational
culture. She has a Bachelor of Science (Hons)
majoring in Environmental Science and is a
Graduate of the Australian Institute of Company
Directors. Deborah is a Board Member of Safer
Together WA/NT, a not-for-profit organisation
committed to improving safety culture and
performance across industry.
Contents of Financial Statements
For the financial year ended 30 June 2023
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
30
44
70
71
72
73
74
75
76
138
139
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. Borrowings
16. Issued capital
17. Reserves
18. Dividends
19. Capital management
Other information about our financial position
20. Property, plant and equipment
21. Leases
22. Intangible assets
23. Equity accounted investments
24. Other assets
25. Employee entitlements
26. Provisions
27. Other liabilities
Information about our group structure
28. Business combinations
29. Subsidiaries
30. Deed of Cross Guarantee
31. Parent entity
Information about financial risks and
unrecognised items
32. Financial risk management
33. Contingent liabilities
34. Commitments
Other information
35. Share-based payments
36. Auditor’s remuneration
37. Related party transactions
38. Events occurring after the reporting date
Accounting policies
39. New standards adopted
40. New standards and interpretations not yet adopted
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
29
2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION The Directors present their Report (including the Remuneration Report) together with the Consolidated Financial
Statements of the Group, consisting of Cleanaway Waste Management Limited (the Company) and its controlled entities
(Cleanaway or the Group), for the financial year ended 30 June 2023 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
M J Schubert
R M Smith
T A Sinclair
R M Harding
P G Etienne
S L Hogg
I A Player
A M Kelly
J McArthur
C M Stiff
Chairman and Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (retired 20 October 2022)
Deputy Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed 1 September 2022)
Non-Executive Director (appointed 1 June 2023)
The office of Company Secretary is held by D J F Last, LLB (Hons), B.Com, FGIA, GAICD.
On 15 June 2023 the Group announced that Non-Executive Chairman Mark Chellew will retire from the Cleanaway Board
before the 2023 Annual General Meeting. Philippe Etienne has been appointed Deputy Chairman of Cleanaway and will
be appointed Chairman following Mark Chellew’s retirement later in the year.
Particulars of Directors’ qualifications, experience and special responsibilities can be found on pages 24 to 28.
Principal activities
During the financial year the principal activities of Cleanaway were:
• Commercial and industrial, municipal and residential collection services for all types of solid waste streams,
including general waste, recyclables, construction and demolition waste and medical and washroom services;
• Ownership and management of waste transfer stations, resource recovery and recycling facilities,
secure product destruction, quarantine treatment operations and landfills;
• Sale of recovered paper, cardboard, metals and plastics to the domestic and international marketplace;
• Collection, treatment, processing and recycling of liquid and hazardous waste, including industrial waste,
grease trap waste, oily waters and used mineral and cooking oils in packaged and bulk forms;
•
Industrial solutions, including industrial cleaning, vacuum tanker loading, site remediation, sludge management,
parts washing, concrete remediation, CCTV, corrosion protection and emergency response services;
• Refining and recycling of used mineral oils to produce fuel oils and base oils; and
• Generation and sale of electricity produced utilising landfill gas.
30
Directors’ Report Dividends
The Company declared unfranked dividends on ordinary shares for the financial year ended 30 June 2023 of 4.90 cents
per share, being an unfranked interim dividend of 2.45 cents per share and an unfranked final dividend of 2.45 cents per share.
The record date of the final dividend is 15 September 2023, with payment to be made 6 October 2023. The financial effect
of the final dividend has not been brought to account in the Financial Statements for the financial year ended 30 June 2023
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 2022: 2.45 cents per share (2021: 2.35 cents per share)
Interim dividend for 2023: 2.45 cents per share (2022: 2.45 cents per share)
Total dividends paid
Operating and financial review
2023
$'M
54.5
54.5
109.0
2022
$'M
48.4
50.5
98.9
Review of financial position
Operating cash flows increased by 3.3% to $481.8 million (2022: increase of 9.9% to $466.3 million).
The Group’s net assets have increased from $2,628.2 million to $2,945.4 million. At 30 June 2023, the Group had a net
current asset deficiency of $170.0 million (2022: $242.4 million). The Group has sufficient unutilised committed debt facilities
at 30 June 2023 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 $1,145.0 million (2022: $1,195.0 million), US Private
Placement Notes of $348.3 million (2022: $351.9 million), financing arrangements with the Clean Energy Finance Corporation
of $90.0 million (2022: $90.0 million) and an uncommitted bank guarantee facility of $95.0 million (2022: $95.0 million).
The headroom available in the Group’s facilities at 30 June 2023 was $528.2 million (2022: $487.7 million) and cash on
hand was $102.1 million (2022: $66.5 million). Further information on the Group’s financing facilities is provided in note 15
to the Financial Statements.
The Group’s gearing ratio at period end, defined as net debt over net debt plus equity, was 34.3% (2022: 38.7%).
The weighted average debt maturity is 3.6 years (2022: 4.1 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.
Review of financial results
The Group’s statutory profit after income tax (attributable to ordinary equity holders) for the financial year ended 30 June 2023
was $21.6 million (2022: $78.9 million). The Group’s underlying profit after income tax (attributable to ordinary equity
holders) for the year ended 30 June 2023 of $146.7 million was up 2.4% on the prior year (2022: $143.3 million) after
adjusting for the significant items which impacted the Group’s result during the current period by $125.1 million, net of tax
(2022: $64.4 million, net of tax).
Revenue from ordinary activities increased by 18.4% to $3,558.8 million (2022: $3,006.2 million). Excluding the collection
of levies, net revenue increased by 13.9% to $2,965.8 million (2022: $2,603.8 million).
Total expenses increased by 20.8% to $3,031.0 million (2022: $2,510.1 million). Excluding levies collected and paid, total
expenses increased by 15.7% to $2,438.0 million (2022: $2,107.7 million). Depreciation and amortisation expense increased
by 12.8% to $365.9 million (2022: $324.5 million).
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
31
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Operating and financial review (continued)
Review of financial results (continued)
Group results for the financial year ended 30 June 2023
UNDERLYING ADJUSTMENTS
ACQUISITION
&
INTEGRATION
COSTS 4
$'M
FLOOD
IMPACTS 5
‘M
MEDICAL
WASTE
FACILITY
INCIDENTS 6
‘M
NEW CHUM
HEIGHT RISE 7
‘M
STATUTORY 1
$'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 assets
EBIT 3
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
546.6
(365.9)
(51.3)
129.4
(96.1)
33.3
(9.8)
23.5
21.6
1.9
7.9
62.2
–
–
7.9
–
7.9
(1.1)
6.8
6.8
–
–
–
62.2
–
62.2
(18.7)
43.5
43.5
–
22.1
–
0.2
22.3
–
22.3
(6.7)
15.6
15.6
–
23.2
–
51.1
74.3
–
74.3
(22.3)
52.0
52.0
–
6.1
–
–
6.1
–
6.1
1.1
7.2
7.2
–
562.7
52.7
92.4
(0.7)
707.1
(39.0)
668.1
(365.9)
–
302.2
(96.1)
206.1
(57.5)
148.6
146.7
1.9
1
The use of the term ‘Statutory’ refers to IFRS financial information and ‘Underlying’ refers to non-IFRS financial information. Underlying earnings are
categorised as non-IFRS financial information. 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, depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
2
3
4 Acquisition and integration costs of $7.9 million include transaction costs and other costs associated with the acquisition and integration of Global
Renewables Holdings Pty Ltd of $5.3 million and the final integration costs related to the Sydney Resource Network acquisition of $2.6 million.
Several Cleanaway sites were impacted by the East Coast floods that occurred during late February and early March 2022. Flood impacts in the current
period of $62.2 million relate mainly to further rectification works on the cell at the New Chum landfill which was under construction at the time of
the floods. More stringent requirements have been imposed by the regulator and works to rectify the damaged cell have taken longer than anticipated.
In June 2022, a fire caused significant damage to equipment at the medical waste processing facility in Dandenong, Victoria. The Victorian Health
business has incurred additional expenses of $39.3 million during the financial year, largely related to alternative waste disposal costs. Insurance
recoveries of $17.0 million have been recognised during the period in relation to property damage and business interruption claims agreed by the
insurers. Further insurance claims are expected to be recognised in the year ending 30 June 2024.
5
6
7 On 20 June 2023, the Planning and Environment Court in Queensland dismissed an appeal by Cleanaway against the decision of the Ipswich City
Council to refuse an application that would have allowed for additional airspace at the New Chum landfill. As a result of this decision, assets related
to the New Chum landfill of $51.1 million have been written-off. In addition, the remediation provision has increased by $23.2 million as future spend
on infrastructure, including gas and stormwater management, will no longer qualify to be recognised as assets when incurred. Furthermore, capping
works will be brought forward and results in discounting the cashflows in the nearer term.
8 Other underlying adjustments comprise:
•
IT costs associated with the transformational CustomerConnect project of $6.1 million related to customisation and configuration of cloud-based
software, which Cleanaway does not control and therefore the costs do not qualify for capitalisation as intangible assets. The income tax benefit
related to these costs is $1.8 million.
• During the period, the Group agreed a final settlement with New Zealand Inland Revenue regarding their review of various matters related to the
Group’s prior ownership of the New Zealand business, which resulted in an additional tax liability. As a result, the Group has raised an additional
tax provision of $2.9 million.
32
Directors’ Report
Operating and financial review (continued)
Review of financial results (continued)
Group results for the financial year ended 30 June 2022
UNDERLYING ADJUSTMENTS
STATUTORY 1
$'M
ACQUISITION &
INTEGRATION
COSTS 4
$'M
FLOOD
IMPACTS 5
‘M
MEDICAL
WASTE
FACILITY
INCIDENTS 6
‘M
CEO TRAN-
SITION &
RESTRUCT-
URING
PROJECTS 7
‘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 assets
Impairment of assets
EBIT 3
Net finance costs 9
Profit before income tax
Income tax expense
Profit after income tax
Attributable to:
Ordinary equity holders
Non-controlling interest
510.8
(324.5)
(8.1)
(8.9)
169.3
(53.0)
116.3
(35.7)
80.6
78.9
1.7
21.1
38.6
–
–
8.9
30.0
2.5
32.5
(6.9)
25.6
25.6
–
–
4.9
–
43.5
–
43.5
(13.0)
30.5
30.5
–
7.7
–
3.2
–
10.9
–
10.9
(3.3)
7.6
7.6
–
12.0
(8.6)
–
–
–
12.0
–
12.0
(3.6)
8.4
8.4
–
–
–
–
(8.6)
(2.5)
(11.1)
3.4
(7.7)
(7.7)
–
469.4
47.2
96.2
(1.1)
611.7
(30.1)
581.6
(324.5)
–
–
257.1
(53.0)
204.1
(59.1)
145.0
143.3
1.7
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. 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, depreciation, amortisation and impairments.
EBIT represents earnings before interest and income tax.
2
3
4 Acquisition and integration costs include transaction costs and other costs mainly associated with the acquisition and integration of the Sydney Resource
Network of $22.5 million offset by $1.4 million remeasurement of the contingent consideration in relation to the acquisition of the Grasshopper Group.
In addition, a $8.9 million impairment charge was recognised related to assets which will have no future economic benefit to the Group post acquisition
and $2.5 million of net finance costs were incurred to retain financing for the acquisition of the Sydney Resource Network.
5 As reported previously, several Cleanaway sites were impacted by the East Coast floods which occurred during late February and early March 2022.
Clean up expenses incurred to 30 June 2022 totalled $4.0 million plus the costs of $10.2 million associated with the rectification of the New Chum
landfill. A further provision of $28.6 million for the rectification activities to bring the New Chum landfill back into compliance has been made.
In addition, plant and equipment of $4.9 million was written off. Insurance proceeds of $4.2 million have been recognised in relation to damaged fleet.
A material damage and business interruption claim is subject to agreement by the insurers and has not been accounted for in these results.
6 During February 2022, critical equipment at the medical waste processing facility in Dandenong, Victoria was put out of service. In June 2022 a fire
caused significant damage to equipment at the site. The Victorian health business has incurred additional expenses, largely related to alternative waste
disposal costs to 30 June 2022 of $7.7 million and the damaged equipment, with a net book value of $3.2 million, has been written off.
7 On 30 August 2021, Mr Mark Schubert commenced in the role of CEO. Costs related to his sign-on bonus and performance rights incurred in the current
period total $1.1 million. On commencement, Mr Schubert commissioned some initiatives to enhance compliance and safety processes across the Group,
appointed consultants to conduct a review into the future strategy of the Group, and has appointed new members of the Group Executive Team. Costs
incurred on these projects and related to the termination of outgoing Executive Team members total $10.9 million.
8 Other EBIT adjustments comprise:
• On 15 July 2021, the Group completed the sale of a depot located in Erskine Park, New South Wales for a sum of $15.7 million and will lease it back
•
•
•
over a term of seven years with five, five-year options to extend the lease. A gain of $8.2 million resulted from the transaction.
The increase in discount rates used to determine the net present value of remediation provisions related to closed landfill sites and industrial
properties has given rise to a credit of $6.3 million to the income statement (refer note 26 to the Financial Statements).
Insurance proceeds of $0.4 million were received in relation to an outstanding insurance claim in respect of the fire that occurred at the Materials
Recycling Facility in Guildford, Western Australia on 25 November 2019.
Following the NSW Government release of their Energy from Waste Infrastructure Plan on 10 September 2021, the Eastern Creek site designated
by the Western Sydney Energy and Resource Recovery Centre Pty Ltd project, and owned 51% by the Group, is no longer considered a viable site
for development of an Energy from Waste facility. Costs related to the environmental impact study of $6.3 million, which were to be recovered from
the joint venture company upon the project reaching financing stage, have been written off.
9 Underlying adjustments to net finance costs include the fair value gain on USPP Notes of $15.6 million, offset by the fair value loss on cross-currency
interest rate swaps of $13.1 million.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
33
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION
Operating and financial review (continued)
Key business strategies and prospects
As previously outlined, Cleanaway’s BluePrint 2030 strategy was developed in late 2021 and introduced in February 2022.
Through BluePrint 2030 we will create superior shareholder value by integrating and extending our leading network
of infrastructure assets to provide high-circularity low-carbon solutions, seamless customer service and value for money
for our customers. Our goal is to be recognised by our customers as the most innovative and sustainable waste management
company, with industry leading HSE performance.
Over the last year, we have made significant progress in our Blueprint 2030 strategy by installing new capacity to support
the delivery of the strategy and foundations including, but not limited to, a refreshed and aligned executive team that
is passionate about our purpose and strategy and a significantly new and improved capability in areas such as HS&E, carbon,
organics, C&D, landfill gas and sustainability to name just a few. We have developed detailed plans across our 14 blueprints
that will drive the growth of the business. The expected timelines and deliverables under each plan are tracked and reviewed
monthly by the executive team and relevant leaders.
People and Culture sit across all three of our BluePrint 2030 pillars as a key enabler of our strategy. We recognise that
our people and how we work together is central to fully achieving our mission.
Over the last 12 months we have been on a journey to reimagine the culture at Cleanaway. We are unlocking capability
by empowering local ownership in our network of 300+ branches. We are building highly capable leaders who think
beyond today, have a deep sense of care and who create strong connections inside and outside the organisation.
We recognise that care, inclusion, respect and empathy hasn’t always been ingrained in all the ways we work. However,
we are committed to evolving our culture and creating an environment where everyone feels safe, included, respected
and confident to bring their unique selves to work every day.
We are doing this because we believe that while we are strong individually, by working together as 7,500 passionate
employees, contractors and partners, we become unstoppable. We are developing our new values that will shape who
we are, how we work, how we show up, how we lead and how we treat each other. By truly living these we know we will
create an environment where our people can thrive, and we can achieve amazing things together.
To enable the successful execution of Blueprint 2030, we are designing, and embedding a People First culture that inspires
people to bring their best selves to work every day, where they are empowered and enabled; are curious learners; and act
as owners and perform highly for our customers, which in turn delivers great results for our shareholders.
We plan to launch our reimagined values in FY24.
Blueprint 2030
Strategic Infrastructure Growth
Under our Strategic Infrastructure Growth pillar, we will continue to invest to extend our recycling and landfill diversion
infrastructure and services platforms. We will be more innovative and ensure we are well positioned to capture opportunities
from emerging at-scale waste streams to meet the country’s future recycling needs. Throughout the year we have progressed
several infrastructure opportunities including Organics.
This is the fastest growing segment of the waste industry, as more and more councils move to source separated organics
collections. We will continue to target food and garden organics, as well as grease trap waste through our liquids business.
We will continue to develop a vertically integrated business comprising collections, processing, and product sales, with
feedstock volumes sourced from a combination of long-term council contracts and commercial & industrial (C&I) customers.
Our ability to offer integrated solutions to our customers positions us well to win long-term organics contracts, which
will underpin the development of new facilities. Progress in Organics has been pleasing with our South-East Organics
depackaging facility expected to double in capacity by early 2024 growing from 30tpd to 60tpd.
The completion of the GRL acquisition on 31 August 2022 represents an important step in the acceleration of our Blueprint
2030 strategy, and in particular, our organics Blueprint. The site and facility provide a strategic location and infrastructure
to enhance our broader network and customer offering today and into the future as we position ourselves to capture share
of the growing FOGO market opportunity. We completed the acquisition of GRL during the year, with GRL contributing
10 months of earnings and performing in line with expectations.
GRL is currently delivering >30% landfill diversion. During the period the operational team undertook trials at the facility,
with further analysis underway to determine the optimal transition plan for the facility as it prepares to capture the emerging
Sydney FOGO opportunity.
34
Directors’ Report Operating and financial review (continued)
Key business strategies and prospects (continued)
On the Container Deposit Scheme (CDS), we’ve expanded our core infrastructure footprint through our recent appointment
as one of the network operators for the Victorian Container Deposit Scheme. The zones allocated to our TOMRA Cleanaway
Joint Venture are expected to represent 500 million containers per annum, and we have developed plans to optimise the
current footprint across our segments.
The scheme is expected to commence in November 2023, and we’ve already commenced the roll out and development
of associated infrastructure.
The TOMRA Cleanaway joint venture will also continue in the role of Network Operator under the New South Wales CDS,
‘Return and Earn’ until late 2026, with the Network Operator Agreement having been recently extended for four years.
Our aspiration is to position Cleanaway as the partner of choice for current and emerging solid product stewardship schemes.
We have successfully expanded our C&D business with the establishment of a dedicated vertical, executive and team.
With this dedicated focus, we will optimise Cleanaway’s existing C&D collections and resource recovery business. We will
leverage our related infrastructure, including transfer stations and landfills that will be critical parts of the vertical value chain.
From there we can grow across the value chain and infill footprint gaps though a combination of green and brownfield
developments and selective acquisitions.
We continue to progress long lead items related to our Energy from Waste (EfW) developments. In Victoria, we have submitted
applications for a development license and a planning permit. Following this, we will be seeking to secure an allocation under
the cap and we are preparing our submission in anticipation of the request for proposals. In Queensland, we acquired a site
in Bromelton strategically located next to the Brisbane and Gold Coast markets.
Whilst we have spent considerable time and effort on assessing the strategic fit of EfW projects as part of our broader
portfolio, the capital investment to date has been relatively modest and focused on creating the option value to execute
on these projects, when the returns are attractive. We have been, and continue to be, very disciplined in our approach
to capital allocation and will only deploy capital with a clear path to an appropriate rate of return.
We completed the acquisition of Australian Eco Oils (AEO) on 21 August 2023. AEO is one of Australia’s leading collectors
and processors of used cooking oil (UCO) processing ~11,500 tonnes per annum of UCO from 1,500 customers across 4,000
collection points and selling the processed product into the stockfeed and renewable fuel sectors. We expect to offer UCO
collection to our existing grease trap collection customer base, thereby positioning Cleanaway as a supplier of choice.
Our Albury (NSW) PET pelletising facility has been built with our Altona (VIC) PET facility under construction and is expected
to be completed in H1 FY24. The combined facilities have a total processing capacity of 60kt per annum.
Separately, our second Victorian facility in Laverton is currently being constructed in a 50/50 JV with Pact Group. It will have
an annual capacity of 20kt HDPE and PP pelletising, and is expected to be completed in H1 FY24.
Finally, from an infrastructure expansion perspective, the SRN transaction has contributed a full year of earnings following
transaction completion in FY22.
We have delivered the current footprint through significant investment in the expansion and upgrade of our resource
recovery infrastructure, and we will continue to expand our existing core business across all segments to build on our
competitive advantage and capture efficiencies. We continue to recognise that in order to move to a fully circular economy,
continued investment in new solutions and technologies is required. There are three key focus areas.
The first is to constantly reduce waste sent to landfill. This is about targeting waste streams with low resource recovery rates
and identifying new ways to collect, sort and process these. The second is to create more sustainable solutions for materials
already collected. This is about finding the highest order, most circular and lowest carbon outcomes for these materials.
The third is to tap into large, new and emerging waste streams linked to the energy transition and other structural changes.
We will continue to invest in proven technologies and support the development of emerging technologies to achieve these
objectives. In doing so, we will be able to offer our customers sustainable solutions that will make us a supplier of choice.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
35
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Operating and financial review (continued)
Key business strategies and prospects (continued)
Sustainable Customer Solutions
Our mission is to offer the most circular and lowest carbon solutions for our customers. As part of that we assess our
business and opportunities against an expanded waste hierarchy that recognises the degrees of circularity.
In our efforts to tackle climate change our ambition is to reduce our emissions in accordance with the Glasgow Climate
Pact, which reaffirmed the long-term global goal defined in the Paris Agreement, to hold the increase in the global average
temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C
above pre-industrial levels.
As we move down the pathway to delivery on this ambition we will earn the confidence and credibility needed to offer
decarbonisation products and services to our customers from our key strategic infrastructure. So we have adopted targets
that are both scientifically rigorous and consistent with global commitments.
Operational Excellence
Under our Operational Excellence pillar, we will align our culture with our strategy and extend our performance culture
to the frontline to both deliver for today and improve for tomorrow. We will better connect our frontline teams to our
business and work together for continuous improvement.
The Data & Analytics component of our operational excellence pillar is one that spans our entire organisation and provides
our teams with the tools that inform the thousands of decisions they make every day, by focusing on improving the
important drivers of value that they control.
Under our Data & Analytics blueprint, we are undertaking four key programs of work spanning data infrastructure and
governance, Reporting & Business intelligence, insights delivery and Advanced Analytics.
Our work on data infrastructure and governance is helping us to ingest and cleanse the data generated across the various
systems and databases in our organisation.
The Reporting & Business intelligence workstream is seeking to standardise and improve the level of reporting across the
business thereby enabling more informed decisions.
Our work in insights delivery is to take our outputs from the Reporting & Business intelligence workstream and generate
insights and value drivers to improve financial performance.
The Advanced Analytics program is longer dated and it will utilise artificial intelligence and machine learning to support
decision making across the organisation.
These programs will enable us to work smarter, make more informed decisions and ultimately achieve a step change
in operational productivity.
We are creating a scalable, seamless and digitised service experience across the customer journey through CustomerConnect.
This is a business led multi-year program. At its core, CustomerConnect is about helping our people to better serve our
customers, and making it easier for our customers to work with Cleanaway.
We will deliver best-in-class productivity and drive sustainable margin expansion as outlined in our mid-term margin
scorecards. We will do this in part by aligning our strategy and our culture. We will bring about this change by working
together with our more than 7,500 employees, by integrating our assets together and working together with our partners
and customers.
We will continue with our top-down execution focus and culture and extend it and complement it with bottom-up
involvement and innovation. We will have all employees behaving like owners and unlock their passion and ideas to improve
our business – doing it together.
We have been piloting these changes in our branches, as outlined at our June 2023 strategy day. This includes continuous
improvement of branch level value drivers. Each of our employees will have a clear understanding of the daily activities they
can control and that creates value. We will look to rapidly take the learnings from the branch pilots and replicate across our
entire business.
36
Directors’ Report Operating and financial review (continued)
Capital allocation
With regards to capital allocation, our over-arching principle is a commitment to maintaining a strong balance sheet.
In the last 12 months we have increased our focus on how we are allocating capital across the Group, and have improved
our processes to support our decision making. The recently announced mid-term financial ambition, with their focus
on continuously improving ROIC and growing EBIT, should serve to reinforce the group’s financial discipline with respect
to capital decision making. Our benchmark is always relative to a return of capital to shareholders and our growth
opportunities are assessed with that in mind. The Group’s balance sheet remains strong and Cleanaway will continue
to maintain its culture of financial discipline.
Principal risks
The Board has adopted an Enterprise Risk Management Policy which articulates Cleanaway’s commitment to the establishment
of a sound system of risk oversight, management, and internal control.
Our growth and success depend on our ability to understand and respond to the challenges of an uncertain and changing
world. This uncertainty generates risk, with the potential to be a source of both opportunities and threats. By understanding
and managing risk, we provide greater certainty and confidence for all our shareholders.
The Policy is supplemented by an Enterprise Risk Management Methodology 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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
37
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Operational
risks
Industry
consolidation
Integration
of acquisitions
Attract and
retain key
management
Delivering on our mission and customer proposition
relies, among other things, on control over a network
of infrastructure assets. This requires high quality,
competitive, integrated assets in the right locations
across the value chain which provide the most
sustainable outcomes in the waste hierarchy for each
of the waste streams.
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 and systems security
or data breaches.
Delivery of the Cleanaway strategy requires the
construction of additional assets and landfill cells
and gas infrastructure. These projects will need
to be delivered in line with our sustainability
standards, on time and within the approved budget.
The projects must also be delivered in a manner
that ensures that required metrics/assumptions and
performance standards are delivered.
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.
Cleanaway operates in a competitive and evolving
landscape. It is important that Cleanaway
understands the competitive threats and builds
appropriate action plans in the context of industry
consolidation, single waste stream entrants and
potential disrupters.
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’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 Group
may be unable to recruit suitable replacements within
a short timeframe.
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.
Cleanaway has a range of controls and
strategies in place to manage the delivery
of major projects, including project gateway
and financial metrics, specialist infrastructure
and landfill engineering teams and proven
partnerships to deliver on time and budget.
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.
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.
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.
38
Directors’ Report Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Health and
Safety
Cleanaway’s operations involve risks to property,
personnel and members of the public. 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.
Sustainability
risks
Environment
risks
Cleanaway faces a variety of risks that could
impact on its sustainability due to changing social
and environmental factors. How risk is managed
is integral to ensuring the Group achieves its mission
of making a sustainable future possible together.
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 regulatory and social licence
to operate in the communities in which it has
significant operations.
There is potential for damage to the environment
arising from Cleanaway’s operations. If mishandled,
waste can pose hazards to the environment, such
as contaminating waterways, contaminating soil,
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 regulatory approvals and our social licence
to operate, and causes reputational damage with
our stakeholders and investors.
Cleanaway embraces fit-for-purpose
technologies and engineering controls which
enhance the safety of our fleet, fixed plant
and equipment.
Cleanaway assesses and manages
sustainability-related risks in accordance with
its Enterprise Risk Management Framework,
which is aligned to International Standard
AS/NZS ISO 31000 and broader industry
practice. This includes regularly reviewing
our operating environment, emerging
and current risks, and risk mitigation and
control. Cleanaway continues to focus
on Environmental, Social and Governance
(ESG) risks and enhance its disclosure
in relation to ESG matters. ESG disclosures
set out in our Sustainability Report are
underpinned by a comprehensive materiality
assessment and align with the Sustainability
Accounting Standards Board (SASB) Waste
Management Standard.
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 Our Foundations and there
are various internal systems, processes
and toolkits that support our approach
to compliance with environmental regulations,
standards and requirements.
Our Environment 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 WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
39
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Operating and financial review (continued)
Principal risks (continued)
RISK
DESCRIPTION
MITIGATION
Climate change
Financial and
insurance risks
Climate change is an emerging risk and presents
complex challenges for companies, governments
and society. We believe that the transition
to a carbon constrained 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 government policy
to effect rapid decarbonisation; and an increase
of frequency and severity of extreme weather
events. Opportunities for Cleanaway may include
increased regulation to reduce embodied carbon
emissions favouring resource recovery and the
domestic recycling industry, development of low
carbon customer solutions and increased incentives
to invest in Energy from Waste plants.
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. In addition, Cleanaway is exposed
to the risk of attracting and retaining insurers
to prudently transfer insurable risks. These risks may
have an adverse effect on the Company’s operating
and financial performance.
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.
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 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.
The Group has in place treasury and insurance
policies that focus on managing these risks.
These policies are reviewed by the Audit and
Risk Committee and approved by the Board.
Treasury and insurance 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 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.
Information on how Cleanaway manages
commodity price risks is included in note 32
to the Financial Statements.
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.
Incident response and disaster recovery plans
are in place and assessed on an ongoing basis.
40
Directors’ Report Significant changes in the state of affairs
Other than matters mentioned in this Report, no other significant changes in the state of affairs of the Group occurred
during the financial year ended 30 June 2023.
Events subsequent to reporting date
Acquisition of Australian Eco Oils
On 21 August 2023, the Group acquired the business and assets of Australian Eco Oils (AEO) for consideration of $39 million.
Trading under the Scanline brand, AEO collects and processes used cooking oils to improve the quality and then sells the
product into the stockfeed and renewable fuel sectors.
The acquisition includes three licensed processing facilities in Riverstone NSW, Rocklea QLD, and Laverton VIC,
with a combined capacity of approximately 30,000 tonnes per annum of used cooking oil, a fleet of 26 vehicles and
30 employees.
Other than noted above, there have been no matters or circumstances that have arisen since 30 June 2023 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. Aggregated fines paid during the
year and up to the date of this report were $151,960 (2022: $670,178).
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
41
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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
M J Schubert
R M Smith 3
T A Sinclair
R M Harding
P G Etienne 2, 4
S L Hogg 5
I A Player
A M Kelly
J McArthur
C M Stiff
12
12
12
12
5
12
12
12
12
9
2
12
12
11
12
5
12
12
12
12
9
2
–
–
4
4
–
4
4
–
4
–
–
–
–
4
3
–
4
4
–
4
–
–
–
–
–
–
1
4
–
4
–
3
–
–
–
–
–
1
4
–
4
–
3
–
–
–
4
4
–
–
4
3
–
–
–
–
–
4
3
–
–
4
3
–
–
–
1 Chairman of the Board.
2 Deputy Chairman of the Board.
3 Chairman of the Audit and Risk Committee.
4 Chairman of the Sustainability Committee.
5 Chairman of the Human Resources Committee.
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
M J Schubert
R M Smith
T A Sinclair
P G Etienne
S L Hogg
I A Player
A M Kelly
J McArthur
C M Stiff
ORDINARY
SHARES
PERFORMANCE
RIGHTS
170,442
–
152,091
1,815,881
143,034
54,920
91,925
20,000
30,228
51,123
30,571
–
–
–
–
–
–
–
–
–
Shares under option and performance rights
During the financial year ended 30 June 2023 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 2023 and
2022 financial years are set out in the Remuneration Report. Total performance rights outstanding as at 30 June 2023
are 7,585,392 (2022: 7,375,723). Performance rights outstanding at the date of this report are 7,363,779.
42
Directors’ Report Shares issued on the exercise of performance rights
During the financial year ended 30 June 2023 and up to the date of this Report, the Company issued 1,603,565 shares
as a result of the exercise of performance rights that vested during the year. During the financial year ended 30 June
2022 and up to the date of the 2022 Report, the Company issued 1,542,569 ordinary shares as a result of the exercise
of performance rights that vested on 30 June 2022.
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 2023,
non-audit services provided by Ernst & Young included other advisory services relating to the Group’s FY22 and FY23
Sustainability Reports and verification procedures in relation to the investor presentation for the August 2022 capital raise.
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 $227,960 provided by Ernst & Young during the period represented 10.5% of the
total services;
• All non-audit services were subject to the corporate governance procedures adopted by the Company to ensure they
do not impact the integrity and objectivity of the auditor; and
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants, as they did not involve the reviewing or auditing the auditor’s
own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the
Company or jointly sharing risks and rewards.
Ernst & Young:
Audit services
Audit related services
Non-audit services:
Other advisory services
Total
2023
$
2022
$
1,554,800
1,360,630
393,346
190,550
227,960
32,000
2,176,106
1,583,180
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 70.
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 44 to 69, is made in accordance with a resolution of the Board.
M P Chellew
Chairman
Melbourne, 23 August 2023
M J Schubert
Chief Executive Officer and Managing Director
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
43
Directors’ Report2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Contents
The Report contains the following sections:
Dear Shareholders,
Introduction from the Chair of the Human
Resources Committee
Introduction from the Chair of the Human
Resources Committee
FY2023 Remuneration Report (Audited)
1. Key Management Personnel
2. Response to concerns raised regarding
the FY2022 Report
3.
4.
5.
6.
7.
8.
Executive reward strategy and
framework
FY2023 Company performance and
Executive remuneration outcomes
FY2023 Incentive plans – detailed
outcomes
Executive KMP – remuneration tables
Executive KMP – equity grants
Executive KMP – contract terms
9. Governance and role of the Board
10. Non-Executive Directors’ remuneration
11. Shareholdings and other related party
transactions
PAGE
44
46
47
48
50
53
57
59
65
66
67
69
On behalf of the Board of Directors of Cleanaway, I present
to you the Remuneration Report for the financial year ended
30 June 2023.
FY2023 performance and remuneration outcomes
As for many other companies, this year has been
a challenging one for your Company with rising input costs,
wages and interest rates and a number of individually
significant items relating to events that occurred in FY2022,
including further rectification costs following the flooding
of our New Chum landfill site in Queensland and the costs
associated with the loss of our hammermill medical waste
processing equipment. We also wrote off the New Chum
landfill assets following an unsuccessful court appeal that
sought to have a height extension at the landfill approved.
As a result, our FY2023 statutory profit which includes these
costs, was materially lower than our FY2023 underlying
profit. It was also materially lower than our FY2022
statutory profit.
Our underlying Group EBIT, which is a key performance
measure in our annual Short-Term Incentive (STI) program,
was very close to our budget set at the start of the year.
The Board considered the calculated outcomes under
our STI program and weighed them in light of the
materially lower statutory profit result, our flat share price
performance for the year and the fact that we maintained
dividends at 2022 levels. Consistent with the Board’s
ultimate discretion in awarding incentive payments, the
Board decided to reduce executive STI award payments
for the year by 30% from the assessed outcomes to better
align them with the experience of our shareholders.
Ultimately, this resulted in us awarding our CEO & MD
55.2% of his target STI for 2023. We have not taken this
decision lightly, as we do recognise the efforts of our
new leadership team throughout the year in continuing
to grow our business, to continually improve our practices
and processes, to manage our costs and in completing the
acquisition and integration of GRL.
However, the Board determined that this was a substantial
but equitable reduction in the circumstances and
represented an appropriate balance between reflecting
shareholders’ experience and attracting and retaining
executive talent.
44
Remuneration Report (Audited) Response to the 2022 first strike
Other matters
The Board has engaged broadly with our stakeholders
following the 25.5% vote against our Remuneration Report
at the 2022 AGM. We have considered the many and varied
views of our shareholders and taken that feedback into
account in making changes to our executive remuneration
framework for FY2024.
The key feedback we heard related to decisions we made
in awarding the 2022 STI to executives. The Board has
taken onboard that feedback, particularly in relation to the
inclusion of the Sydney Resource Network business earnings,
the number and quantum of underlying adjustments, and
the impact of the environmental incident at New Chum
landfill last year in the financial outcomes for 2022.
In light of that feedback, for FY2023 we have excluded
the earnings of the GRL business, which we acquired during
the year, from the 2023 STI calculation as this was not
a budgeted item. We have not awarded any STI against
our environmental measures this year and we have exercised
discretion to further moderate STI outcomes downwards
in light of the quantum of underlying adjustments.
Section 2 of the Report sets out the key issues raised
by investors and the way in which we have sought
to address those issues.
In addition to the items I have referred to above we have
decided to make some further changes in FY2024, the key
changes are:
• Group Underlying EBIT will constitute 60%
of our STI scorecard in FY2024 as we concentrate
on growing profits. Net Revenue has been removed
as a performance measure from the STI plan in FY2024;
• ROIC has been reintroduced into the LTI plan for FY2024
as a fourth performance measure to focus us on the
efficient use of capital.
Our 2021 Long-Term Incentive (LTI) program was tested
at the end of FY2023. Amongst our Executive KMP, only
our current CFO participated in that Plan (the other current
Executive KMP being more recently appointed, including
our CEO & MD). That program vested at 50% as we ranked
in the top quartile of our relative Total Shareholder Return
(rTSR) peer group (being the ASX200 with exclusions) over
the three-year performance period. The EPS performance
measure was not met and so the other 50% of that
program lapsed.
In order to ensure our executive and non-executive
compensation remains market competitive to attract
and retain the right people, in early FY2023 we made
a number of changes to the Executive KMP fixed
remuneration levels and to our Board fees. This included
a 10.7% increase in fixed remuneration compared to
FY2022 for the CEO & MD. This reflected the relatively
low positioning of his fixed remuneration on joining the
company and our desire to bring him up to a level that
is competitive with his ASX-listed peers as he entered
his second year as CEO & MD.
The details of these increases are set out in Sections 4B
and 10 of this report.
Your Board is committed to refining and implementing
a remuneration framework that works effectively to reward
our team in line with corporate performance and the
experience of our shareholders while retaining discretion
to adjust outcomes where appropriate. We have made
the decision to reduce the STI outcome for FY2023 for
our Executive KMP and to make further changes to our
remuneration framework for FY2024 applying this principle.
We look forward to ongoing engagement with
our shareholders.
Further changes to our remuneration framework for FY2024
are set out in Sections 5A and 7A.
I commend this report to you.
Samantha Hogg
Chair, Human Resources Committee
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
45
Remuneration Report (Audited)2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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.
To further strengthen and increase capability to deliver on our Blueprint 2030 strategy, two appointments were made to the
Executive Leadership Team during FY2023. Mr Scott Nicholls commenced in March 2023 in the Key Management Personnel
(“KMP”) role of Executive General Manager – Liquid Waste & Health Services and Industrial & Waste Services following the
resignation of Mr Tim Richards in December 2022. In addition, Ms Deborah Peach was appointed in August 2022 in the role
of Executive General Manager – Safety and Environment, demonstrating the Board’s commitment to improve health, safety
and environmental performance.
The KMP disclosed for the year ended 30 June 2023 are set out in the table below. Non-Executive Directors Mr Harding,
Ms McArthur and Mr Stiff, and Executive KMP Mr Richards and Mr Nicholls, were all considered KMP, for a part of the year
ended 30 June 2023 as described in the footnotes to the table.
NAME
TITLE
NON-EXECUTIVE DIRECTORS
M P Chellew
R M Smith
T A Sinclair
R M Harding 1
P G Etienne 2
S L Hogg
I A Player
A M Kelly
J McArthur 3
C M Stiff 4
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Deputy Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes
S Nicholls 5
Chief Executive Officer (CEO) and Managing Director
Chief Financial Officer (CFO)
Executive General Manager – Solid Waste Services
Executive General Manager – Liquid Waste & Health Services and Industrial & Waste Services
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
T Richards 6
Executive General Manager – Liquid Waste & Health Services and Industrial & Waste Services
1 Mr Harding ceased as Non-Executive Director on 20 October 2022.
2 Mr Etienne was appointed as Deputy Chairman from 15 June 2023.
3 Ms McArthur was appointed as Non-Executive Director from 1 September 2022.
4 Mr Stiff was appointed as Non-Executive Director from 1 June 2023.
5 Mr Nicholls was appointed as Executive General Manager – Liquid Waste & Health Services and Industrial & Waste Services from 1 March 2023.
6 Mr Richards ceased employment with Cleanaway as Executive General Manager – Liquid Waste & Health Services and Industrial & Waste Services
effective 23 December 2022.
46
Remuneration Report (Audited) 2 Response to concerns raised regarding the FY2022 Report
At our AGM in October 2022, shareholders representing 25.5% of the voted shares voted against the FY2022 Remuneration
Report, resulting in a “first strike”. Throughout FY2023, the Board and Human Resources Committee actively consulted
with shareholder representatives, proxy advisors, investment managers and shareholders. The feedback received has been
valuable and has been reflected in some of the changes to our executive remuneration framework considerations.
We have outlined below key concerns raised through this consultation and how we have addressed those concerns
throughout the year and in determining FY2023 outcomes.
Concern
Response
Impact on STI outcomes
of unbudgeted
acquired earnings
• The Board acknowledges the feedback in relation to the inclusion of the earnings from
SRN in the FY2022 STI outcomes.
• The Board has excluded the financial contribution of the GRL business which was acquired
during the year in assessing the FY2023 STI outcomes.
Impact on STI outcomes
and underlying EBIT
adjustments
• The Underlying EBIT measure in the STI scorecard is set with regard to the annual budget
each year. It is a measure of underlying earnings from our business excluding one off
significant items that may occur in the year that are not included in the budgeting process.
Environmental KPI
assessment
• These may include the impact of material acquisitions and divestment and can include the
impact of other events such as fires, floods and other unforeseen events.
•
In assessing the impact of underlying adjustments on remuneration outcomes, the
Board considers a range of factors including whether the relevant matter was within the
reasonable control or foresight of management.
• The Board noted the feedback from investors, particularly providing improved disclosures
in relation to its consideration of these issues. The Board has provided reasons for
decisions made on FY2023 STI outcomes within this Report.
• The assessment of and decision to award the Environmental KPI in FY2022 in light
of the significant flooding event at New Chum and its consequential impact was difficult.
While the cause of the event was beyond management’s control, the Board acknowledges
the feedback in relation to the assessment of this measure in the FY2022 scorecard.
• This measure has been assessed as not achieved for FY2023.
• To reduce ambiguity in our assessment of this measure, the Board has reviewed
and strengthened the assessment criteria for this measure. For FY2024 the assessment
will be directly aligned to the definition of Significant and Major Environmental matters
contain within the Environmental Impact and Compliance categories of Cleanaway’s Risk
Matrix. A Significant and Major Environmental matter is an incident that is considered
to have a long-term impact to an ecosystem.
Executive remuneration
design
• The Board undertook a review of the executive remuneration framework and design
features during the year and made adjustments to ensure it remained sound and fit for
Cleanaway’s purpose. The Board heard shareholder concerns and will be implementing
the following key changes to STI and LTI measures in FY2024:
–
–
The removal of Group Net Revenue as an STI measure with Group Underlying EBIT
being the sole financial measure with a 60% weighting on the Scorecard;
Inclusion of ROIC in the LTI Plan as a fourth performance measure, given its suitability
as a longer-term performance measure of the efficient use of our capital.
Further details of all changes are described in Sections 5A and 7A of this Report.
Disclosures
• The FY2023 Report contains a number of areas where we have provided improved
disclosure, including the following:
– Rationale for the Board’s decision to exercise downward discretion and adjust FY2023
STI assessed outcomes.
– Rationale behind changes to FY2023 STI and LTI measures.
– Highlighting changes for FY2024 executive incentive measures.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
47
Remuneration Report (Audited)2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 3
Executive reward strategy and framework
3A. 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. As set out in Sections 5 and 7, further changes to the executive remuneration
framework have been made to reflect feedback from stakeholders.
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 Cleanaway’s business
strategy
Link outcomes to
Cleanaway’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
Cleanaway’s performance,
business unit and
individual performance
20% of STI outcome issued
is deferred as Deferred
Equity Rights (for certain
senior executives)
Deferred Equity Rights are
restricted for one year
LTI Performance Rights
subject to performance
conditions over three years
50% subject to TSR
25% subject to EPS CAGR
25% subject to
Emission reductions
Remuneration time horizon
Element
Year 1
Year 2
Year 3
Total Fixed
Remuneration
Base Salary plus
superannuation
STI
Annual Scorecard assessed at
conclusion of Financial Year
Cash
80%
Deferred Equity Rights
20%
LTI
Performance Rights tested at the conclusion of three-year performance period
Performance testing
Payment/vesting 1
1 Equity vesting coincides with the release of our annual results which is ordinarily in late August each year.
48
Remuneration Report (Audited) 3
Executive reward strategy and framework (continued)
3B. Total Fixed Remuneration (TFR)
TFR consists of base salary plus statutory superannuation contributions. Senior Executives receive a fixed remuneration
package which is reviewed annually by the Human Resources 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.
3C. Short-Term Incentive
Executive KMP, other Senior Executives and eligible employees participated in the Group STI Plan. The table below represents
the annualised target and maximum annual STI opportunity as a percentage of TFR for Executive KMP.
EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes and S Nicholls
TARGET
MAXIMUM
100%
60%
50%
150%
120%
100%
Executive KMP awards are paid as 80% cash payment with the remaining 20% awarded as deferred equity rights with
a 12-month deferral period.
Long-Term Incentive
3D.
Offers under the Cleanaway Long-Term Incentive (LTI) Plan are made on an annual basis. Executive KMP and other selected
Senior Executives are eligible to be invited to participate in the Group LTI Plan. The table below represents the annualised
maximum LTI opportunity as a percentage of TFR (at grant) for Executive KMP.
EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield, T Boyes and S Nicholls
MAXIMUM
120%
60%
Executive KMP LTI grants are determined at face value and based on the five-day volume weighted average price
of Cleanaway’s shares on the ASX during the five trading days prior to 30 June each year.
3E. Remuneration elements and mix
Cleanaway aims to provide a competitive mix of remuneration components that reflect the Board’s commitment
to performance-based rewards. The total remuneration mix for Executive KMP comprising Total Fixed, STI at target
and LTI at maximum grant value is illustrated below.
CEO
CFO
Operational
KMP
REMUNERATION MIX
31.2%
25.0%
6.3%
37.5%
45.4%
47.6%
21.8%
5.5%
27.3%
19.0%
4.8%
28.6%
TFR
STI Cash
Deferred STI (equity)
LTI (equity)
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
49
Remuneration Report (Audited)2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION
4
FY2023 Company performance and Executive remuneration outcomes
4A. Company performance – FY2019–FY2023 summary
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 the Directors’ Report.
COMPANY PERFORMANCE
Net Revenue – $’M 1
Statutory profit attributable to
ordinary equity holders – $’M 2
Underlying EBIT $'M
EPS – cents 3
Underlying EPS – cents 3, 4
Dividends per share – cents
FY2019 5
2,109.1
120.4
240.8
5.9
6.8
3.55
FY2020
2,100.1
FY2021
2,198.9
FY2022
2,603.8
FY2023
2,965.8
112.9
256.6
5.5
7.3
4.10
145.3
258.7
7.0
7.3
4.60
78.9
257.1
3.8
6.9
4.90
21.6
302.2
1.0
6.6
4.90
Shares on issue – number
2,044,507,391 2,053,944,831 2,059,434,558 2,062,587,594
2,226,243,110
Market capitalisation – $’M
Share price at 30 June – $
Change in share price – $
4,763.7
2.33
0.64
4,518.7
2.20
(0.13)
5,436.9
2.64
0.44
5,197.7
2.52
(0.12)
5,766.0
2.59
0.07
ASSESSED INCENTIVE OUTCOMES
FY2019
FY2020
FY2021
FY2022
FY2023
STI Outcome MD – % Target 6
STI Outcomes – Exec KMP Ave % Target 6
LTI Vesting – %
97.3
99.7
86.9
37.8
50.3
84.8
N/A
97.8
50.0
79.6
89.6
49.2
55.2
61.5
50.0
1 Net Revenue is Revenue excluding landfill levies (FY2019: $174.0 million, FY2020: $232.0 million, FY2021: $207.5 million, FY2022: $402.4 million and
2
3
FY2023: $593.0 million).
Includes underlying adjustments after tax; (FY2019: $20.1 million, FY2020: $37.4 million, FY2021: $5.5 million, FY2022: $64.4 million and FY2023:
$125.1 million). All underlying adjustments from FY2019 to FY2023 represent a net expense to the statutory profit.
The calculation of EPS for comparative periods prior to FY2023 was adjusted to reflect the bonus element in the equity raising which occurred during
August 2022 and September 2022.
Basic EPS on underlying results are categorised as non-IFRS financial information.
4
5 Cleanaway applied the modified retrospective approach on adoption of AASB 16 Leases on 1 July 2019. As such, comparatives for FY2019 have not
6
been restated.
Represents Short-Term Incentive scorecard outcomes; however for FY2020, former CEO & MD actual assessed outcome was 50.3% however award
amount reduced by 25%. FY2021 no CEO & MD in place. FY2023 assessed outcomes were 78.9% for the CEO & MD and 87.8% for Executive KMP.
Award payments were reduced by 30%, resulting in adjusted Scorecard outcome of 55.2% for CEO & MD and 61.5% for Executive KMP.
Total Shareholder Return: CWY vs ASX 200 Industrials Sector Index (XNJ)
CWY
ASX 200 Industrials Sector Index
June
2020
June
2021
June
2022
June
2023
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
June
2019
50
Remuneration Report (Audited) 4
FY2023 Company performance and Executive remuneration outcomes
(continued)
4B. Remuneration outcomes for FY2023 – summary
Executive Fixed
Remuneration (TFR)
During FY2023 the Board undertook a review of executive remuneration levels. This review
took into consideration a number of factors, including significant pressure and heightened
activity in the executive recruitment market contributing to the overall challenge in the
attraction and retention of executive talent.
The Board reviewed external market benchmarking data from a number of ASX-listed company
peer groups. The Board considered that as the CEO & MD entered his second year in the
role, having been newly appointed in FY2022 on comparatively low TFR, a TFR increase was
appropriate to ensure his TFR remains market competitive. Following benchmarking of TFR
levels, the Board has moved the CEO & MD’s TFR to around the median of ASX51–150 peers.
As a result of this review, the following TFR increases were made to Executive KMP during FY2023:
• Mr Schubert from $1,400,000 to $1,550,000 – Effective 1 July 2022
• Mr Binfield from $817,911 to $840,000 – Effective 1 October 2022
• Ms Boyes from $700,000 to $750,000 – Effective 1 October 2022
• Mr Richards from $580,000 to $600,000 – Effective 1 October 2022
(resigned 23 December 2022)
During FY2023 the Board appointed Mr Nicholls to Cleanaway with TFR of $725,000. The Board
considered this in line with the role, accountabilities and external market competitiveness.
Details of the remuneration arrangements for Mr Nicholls on his appointment are set out
in Section 8B of this Report.
As participants in the FY2022 STI, Executive KMP had 20% of their total STI award deferred
as equity rights for a period of 12 months. These rights were granted at face value (i.e. 20%
of the FY2022 STI award) and the number of rights determined by the five-day volume weighted
average price of Cleanaway’s shares on the ASX during the period 24 June to 30 June 2022 being
$2.5560. These rights were granted immediately following the publication of Cleanaway’s
FY2022 annual results with the exception of Mr Schubert, whose rights were granted
immediately following Shareholder approval granted at the Annual General Meeting held
in October 2022.
Accordingly, the FY2022 deferred rights, each which will vest in August 2023 and result in the
allocation of one ordinary share in Cleanaway, are as follows:
• Mr Schubert – 75,970
• Mr Binfield – 34,406
• Ms Boyes – 9,613
• Mr Richards – 20,331
Having considered the STI scorecard outcomes for the year, the Board exercised its discretion
and made a 30% reduction against the award outcome amount. The Board considered this
reduction an appropriately significant impact to executives and alignment to shareholders
outcomes. This resulted in adjusted outcome for the CEO & MD of 55.2% of target (36.8%
of maximum). The same 30% reduction was applied to each of our Executive KMP. The FY2023
STI scorecard and performance outcomes along with the Board considerations in relation
to exercising discretion to adjust award amounts can be found in Section 5B of this Report.
The only Executive KMP member to participate in this LTI grant was the CFO (all other Executive
KMP having been appointed after this grant).
The assessed overall vesting of the FY2021 LTI was 50.0%. This outcome was driven
by Cleanaway’s TSR increase of 34.8% and TSR percentile ranking of 82.3% against the
prescribed comparator peer group being the ASX 200 (with exclusions). This resulted
in maximum 100% vesting for this measure. The ROIC FY2023 target, which acts as a gate
for the EPS measure, was not achieved and therefore resulted in nil vesting for this measure.
Details of the FY2021 LTI grant assessment can be found in Section 5C of this Report.
Vesting of deferred
rights arising from
FY2022 Short-Term
Incentive outcomes
FY2023 Short-Term
Incentive Plan
outcomes
FY2021 Long-Term
Incentive Plan
Outcomes
(performance period
FY2021–FY2023)
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FY2023 Company performance and Executive remuneration outcomes
(continued)
4C. Actual remuneration – summary
The table below sets out the actual remuneration paid or payable in relation to FY2023 to Executive KMP.
Note the following table is categorised as non-IFRS information and therefore has been presented in compliance with
ASIC Regulatory Guide 230 – Disclosing non-IFRS information. Statutory disclosures for Executive KMP are set out
in Section 6C of this Report and will differ from actual pay received as set out below due to the accounting treatment,
which includes unvested LTI awards.
TOTAL SALARY 1
$
STI
CASH PAID 2
$
STI
DEFERRED 3
$
LTI
VESTED 4
$
SIGN ON
VESTING
$
POST
EMPLOYMENT
BENEFITS
$
TERMINATION
BENEFITS
$
TOTAL
$
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert 5
P A Binfield
T Boyes 6
S Nicholls 7
T Richards 8
Total
1,524,708
684,852
171,213
–
421,292
809,617
247,807
61,952
280,881
712,639
184,380
222,471
59,574
46,095
14,894
–
80,654
–
–
–
–
–
25,292
25,292
25,292
8,431
– 2,827,357
– 1,425,549
– 1,049,060
–
305,370
12,646
96,953
36,166
321,281
36,166 5,928,617
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
272,469
–
–
3,541,904
1,176,613
294,154
280,881
501,946
1
2
3
4
5
6
Total Salary equates to gross taxable cash salary.
Represents 80% of the total FY2023 STI award amount to be paid as cash in September 2023.
Represents 20% of the FY2023 total award to be deferred into deferred rights for a period of 12 months. The number of rights will be allocated by taking
the STI deferred value divided by Cleanaway’s (ASX:CWY) Volume Weighted Average Price (VWAP) for the five trading days for the period ended 30 June 2023
being $2.5285.
Represents the indicative value of the FY2021 LTI rights vesting multiplied by Cleanaway’s (ASX:CWY) Volume Weighted Average Price (VWAP) for
the five trading days for the period ended 30 June 2023 being $2.5285. Mr Schubert, Ms Boyes and Mr Nicholls are not eligible for FY2021 LTI awards
as these grants were made prior to their appointments to Cleanaway.
Tranche 1 of Mr Schubert’s sign-on rights vested and converted to shares on 30 August 2022. The value represents 152,091 shares times $2.7700 being
the closing share value of Cleanaway on the day of vesting.
Tranche 1 of Ms Boyes sign-on rights vested and converted to shares on 22 August 2022. The value represents 29,983 shares times $2.6900 being the
closing share value of Cleanaway on the day of vesting.
7 Amounts for Mr Nicholls represent actual amounts earned from the period of his appointment being 1 March 2023, including a pro rata STI award
from that date. On his appointment, Mr Nicholls was granted additional one-off sign-on remuneration arrangements which are detailed in Section 8B
of this Report.
8 Amounts for Mr Richards represent actual amounts earned up to his cessation being 23 December 2022.
52
Remuneration Report (Audited) 5
FY2023 Incentive plans – detailed outcomes
5A. FY2023 Short-Term Incentive
The Board introduced changes to the FY2023 STI Scorecard to align with Cleanaway’s key strategic focuses for FY2023.
Changes for FY2023 are as follows:
Financial measures – total financial measures weighted to 60% of the overall STI Scorecard (previously 65%).
• Net Revenue
– 15% (reduced from 20%)
• Underlying EBIT
– 45% (increased from 30%)
• ROIC
– removed as considered a less relevant short-term measure given lag between financial contribution
and capital deployment (previously 15%)
The Board considers these changes as appropriately balanced between increased focus on profitability and the short-term
impact to ROIC as a result of growth-related capital and investment decisions aligned to the Blueprint 2030 strategy.
Approach to Underlying EBIT
Group Underlying EBIT is used to set targets as it is a measure aligned with budgeting for our business. Adjustments from
statutory profit are made in accordance with our accounting policy. During the year the Board reviewed and clarified the
accounting policy that deals with underlying adjustments.
The Board excluded a number of matters in FY2023 in line with this policy. At the end of each performance period the
Board also considers whether it is appropriate to adjust remuneration outcomes for the impact of these adjustments.
The Board considered whether the underlying adjustments, as set out on page 32 of the Directors’ Report should be taken
into account in assessing whether the underlying EBIT gateway was achieved for the purposes of the FY2023 STI. In all of the
circumstances, in particular that current Executive KMP did not have responsibility for, or control over, many of the matters
that gave rise to underlying adjustments, the Board concluded that the underlying EBIT gateway had been achieved.
Non-financial measures – weighted to 40% of the overall STI scorecard (previously 35%).
• TRIFR, Environmental Incidents, Female Representation – retained from FY2022 with no change in 10% weighting each.
• Employee Voluntary Turnover 10% – (replaced Group Employee Engagement 5%). Considered an appropriate measure
as it supports labour efficiency and cost outcomes particularly in a competitive labour market.
•
In addition, the non-financial measures ensure focus on delivering diverse, safe and reliable and cost-efficient operations
along with reducing the impact of our business on the environment.
Application of discretion
Having regard to the STI scorecard outcomes, the Board determined to reduce overall FY2023 STI award outcomes for
Executive KMP by 30%, in order to ensure alignment between remuneration outcomes and shareholders’ experience.
The rationale for this assessment is set out in Section 5B.
FY2024 approach
The Board has approved further changes to STI arrangements for FY2024 with the removal of the Group Net Revenue
measure and reweighting of Group Underlying EBIT as the sole financial measure. Group Underlying EBIT will carry a 60%
weighting and is designed to increase focus on profitability and shareholder value creation. FY2024 performance ranges
will be set in line with the approved budget and financial plan aspirations that the Board considers appropriate in light
of the prevailing opportunities and challenges that the business is facing.
To better connect our assessment of the Environmental measure in the STI, the Board has reviewed and strengthened the
assessment criteria for this measure. For FY2024 the assessment will be directly aligned to the definition of Significant
and Major environmental matters contained within the Environmental Impact and Compliance categories of Cleanaway’s
Risk Matrix. A Significant and Major Environmental matter is an incident that is considered to have a long-term impact
to an ecosystem.
FY2024 non-financial measures and their respective performance ranges are generally set based on actual FY2023
performance with improvement factors applied across the performance ranges.
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FY2023 Incentive plans – detailed outcomes (continued)
The details of the FY2023 STI arrangements are summarised in the table below.
Purpose of the
STI Plan
Reward the achievement of key Financial, People and Culture and Health, Safety & Environment
(HSE) metrics that are key to the sustainable success of Cleanaway.
Performance period
1 July 2022 to 30 June 2023.
Gateway
• Achievement of a gateway based on a threshold level of Group Underlying EBIT performance
for Executive KMP. In addition, no breaches of the Company’s Code of Conduct also acts
as a gateway to overall personal STI eligibility.
Key performance
metrics
• Financial metrics: 60% weighting.
• HSE metrics: 20% weighting.
• People and Culture metrics: 20% weighting.
Financial metrics
• Financial metrics and their respective weightings are:
– Group Underlying EBIT: 45% weighting.
Health, Safety
& Environment
(HSE) metrics and
gateways
– Group Net Revenue: 15% weighting. Included as it drives growth in our business.
• HSE metrics and their respective weightings are:
– Group Total Recordable Injury Frequency Rate (TRIFR): 10% weighting. Included
as it measures the outcome of our injury prevention strategies and programs; and
– Group Environmental Incidents: 10% weighting. Included as it measures the outcome
effectiveness of our environmental risk management strategies and programs.
• TRIFR metric has a target and stretch level of performance with a corresponding STI
outcome set out below. The gateway condition for the TRIFR metric is that there are
no at-fault work-related fatalities.
• Group Environment Incident metric of no significant or major rated environmental incidents
has a target level performance and outcome only.
People and Culture
Metrics
• People metrics and their respective weightings are:
– Group Voluntary Turnover: 10% weighting.
– Group Female Representation: 10% weighting.
Performance
outcomes
• Once gateways are achieved, performance against the financial, health safety, and people
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 – CEO & MD 150% other Executive KMP 200% of on-target STI opportunity.
• Threshold performance for TRIFR and Environmental Incidents are not applicable.
Board discretion
• The Board has absolute discretion in relation to assessing performance and determining
the amount, if any, of STI awards.
Deferral
• 20% of STI awards to Executive KMP are deferred for 12 months in the form of deferred
equity rights.
• Deferred equity 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 2023 being $2.5285.
• Deferred rights do not attract dividends during the deferral period.
Deferred rights –
Malus and claw back
• The Board retains absolute discretion to determine any treatment in relation to the grant
of Deferred Rights, including, without limitation, the vesting conditions or restrictions
applicable to rights or shares, lapsing or forfeiture of rights, and the repayment of the value
of shares allocated on vesting of rights.
54
Remuneration Report (Audited) 5
FY2023 Incentive Plans – detailed outcomes (continued)
FY2023 Short-Term Incentive – scorecard result
5B.
The table set out below shows details of performance against the FY2023 STI scorecard.
The Board considered the assessed outcomes and weighed them in light of the materially lower statutory profit result and
our share price and dividend performance this year. The Board decided to apply discretion to significantly reduce Executive
KMP STI award payments for the year by 30% to more closely align them with the experience of our shareholders.
This resulted in the CEO being awarded 55.2% of target opportunity, or 36.8% of his maximum STI for 2023. The amount
of this award payment reduction equated to $366,885. Executive KMP were also reduced by 30% resulting in the award
of 61.5% of target or 30.7% of maximum.
The Board did not take this decision lightly, as the management team’s performance in a challenging year to continue
to grow our business, continually improve our practices and processes, to manage our costs and in completing the GRL
acquisition were commendable. However, the Board considers the balance struck to be equitable.
ELEMENT
MEASURE
WEIGHTING
TARGET
KPIs
Group Net Revenue 1
15% $2.744b
THRESHOLD
THRESHOLD
TARGET
TARGET
STRETCH
STRETCH
Group Underlying EBIT 1
45% $284.9m
Group TRIFR
Group Environmental
Incidents
Group Voluntary
Turnover
Group Female
Representation
Total Assessed
Scorecard
Adjusted STI
Scorecard Outcome 2
10%
10%
3.3
Nil
10%
18.6%
10%
22.8%
100%
Key:
Below threshold
Above threshold but below target
Above target
1
2
FY2023 target and assessed outcome exclusive of GRL financial contribution.
The Board exercised its discretion and reduced the CEO & MD and Executive KMP award payment amount by 30%.
WEIGHTED VESTING
CEO & MD
% TARGET
EXECUTIVE
KMP
% TARGET
22.5%
46.4%
0.0%
0.0%
30.0%
47.8%
0.0%
0.0%
0.0%
0.0%
10.0%
10.0%
78.9%
87.8%
55.2%
61.5%
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5
FY2023 Incentive Plans – detailed outcomes (continued)
KPI commentary
While the Board ultimately exercised discretion to reduce the level of STI awards, commentary on our performance against
the original scorecard is set out below:
Group Net Revenue
($2,965.8m or
$2,963.6m ex GRL)
Group Underlying EBIT
($302.2m or $285.8m
ex GRL)
Assessed as Stretch. Full-year net revenue growth up 13.9% on FY2022, reflecting organic
growth in most parts of the business, the full-year contribution of the SRN assets and
recovery of persistent high inflation through contractual cost mechanisms and fuel levies.
Assessed slightly above target. Assessed against underlying results, noting assessment
excluded the contribution from the GRL acquisition. Improved performance for each
segment (excluding the impact of the Health Services business) compared to FY2022.
Details of the underlying adjustments can be found on page 32 of the Directors’ Report.
Group TRIFR
(3.7)
Assessed as not achieved. Albeit the FY2023 outcome was an improvement on the FY2022
result of 4.2. Year-on-year improvements was a result of the implementation of a range
of initiatives including the development of a detailed HS&E strategy in FY2023.
Group Environmental
Incidents
This measure has been assessed as not achieved for FY2023. This is due to our Artarmon
transfer station fire which resulted in contaminated water and foam being released into
a nearby creek.
Group Voluntary
Turnover
(21.5%)
Group Female
Representation
(22.8%)
Assessed as not achieved. Tight labour market conditions have contributed to elevated
vacancies numbers and new employee turnover. Labour availability and productivity
remained a focus, with improvements made to the overall vacancy rate during the year.
Assessed at target. Increased from 20.8% in FY2022 as a result of increased focus on equal
gender split through recruitment processes along with the ongoing development of the
Women’s Driver Academy. Greater than 40% female representation at senior management
levels achieved.
FY2021 Long-Term Incentive outcome (i.e. performance period 1 July 2020 to 30 June 2023)
5C.
The Board assessed the performance of the LTI awards granted in FY2021, representing the performance period from
1 July 2020 to 30 June 2023. The performance criteria tested were the relative Total Shareholder Return and Earnings Per
Share measures. The Board confirmed the gateway to the EPS measure being the Group ROIC performance for the period
ended 30 June 2023 being above 5.5% as not being achieved and therefore nil vesting for this measure. Overall, the Board
determined that a partial vesting of 50% of maximum of 100% opportunity as set out in the following table:
The only member of the Executive KMP participating in the FY2021 LTI grant was the CFO, as all other Executive KMP
(including the CEO & MD) joined the Group after this grant was made.
ELEMENT
MEASURE
WEIGHTING
TARGET PERFORMANCE ASSESSMENT
50% 50th percentile
and above
Overall TSR of 34.8% which
resulted in a percentile ranking
of 82.3%. This generates
a maximum vesting for this KPI
WEIGHTED
VESTING
50%
KPIs
Relative Total Shareholder
Return (TSR) targets over
the performance period.
The Comparator group being
S&P/ ASX 200 Index (with
exclusion for companies
classified as mining, financial
services and overseas
domiciled companies)
Earnings per Share Compound
Annual Growth Rate
(EPS CAGR)
50%
4% CAGR ROIC Gate not achieved
0%
therefore nil vesting for this
measure. Had gateway been
achieved, EPS would not
have vested as threshold was
not met.
Total
100%
50.0%
56
Remuneration Report (Audited) 6
Executive KMP – remuneration tables
6A. FY2023 Short-Term Incentive Plan outcomes
The STI payments received or receivable by Executive KMP for the year ended 30 June 2023 are summarised in the
following table:
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes
S Nicholls 3
TOTAL STI
$
CASH
COMPONENT 1
$
DEFERRED
SHARE
COMPONENT 1
$
PERCENTAGE
OF TARGET STI
OPPORTUNITY 2
$
PERCENTAGE OF
MAXIMUM STI
OPPORTUNITY 2
2023
2022
2023
2022
2023
2022
2023
856,065
970,902
309,758
439,709
230,475
122,862
74,468
684,852
171,213
776,722
247,807
351,767
184,380
98,290
59,574
194,180
61,952
87,942
46,095
24,572
14,894
55.2%
79.6%
61.5%
89.6%
61.5%
89.6%
61.5%
36.8%
53.1%
30.7%
44.8%
30.7%
44.8%
30.7%
Executive KMP STI awards are made based on 80% cash payment and 20% deferral for one year as equity rights.
1
2 Calculated based on total STI as a percentage of target and maximum STI opportunities respectively.
3
Represents the pro rata value applicable for the period of employment from 1 March 2023.
FY2023 Long-Term Incentive Plan outcomes
6B.
As a result of the Board approved vesting level of 50% a summary of FY2021 LTI Performance rights subject to vesting is set
out below. Mr Schubert, Ms Boyes and Mr Nicholls were ineligible for FY2021 LTI awards as these were made prior to their
commencement with Cleanaway.
P A Binfield
222,171
111,086
280,881
111,085
1
Represents the indicative value of the FY2021 LTI rights vesting multiplied by Cleanaway’s (ASX:CWY) Volume Weighted Average Price (VWAP) for the
five trading days for the period ended 30 June 2023 being $2.5285.
TOTAL FY2021
PERFORMANCE
RIGHTS
GRANTED
RIGHTS
VESTING
VALUE 1
$
RIGHTS
LAPSING
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Executive KMP – remuneration tables (continued)
6C. Remuneration received
The remuneration received or receivable by Executive KMP for the years ended 30 June 2022 and 30 June 2023 is set out
in the following table:
FINANCIAL
YEAR
SALARY
AND FEES
$
STI
CASH
$
NON-
MONETARY
BENEFITS 1
$
TERMINATION
BENEFITS
$
SHARE-
BASED
PAYMENTS 2
POST
EMPLOYMENT
BENEFITS
$
TOTAL
$
PERFORMANCE
RELATED
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert 3
2023 1,524,708
684,852
2022 1,610,553
776,722
1,439
3,310
P A Binfield
T Boyes 4
S Nicholls 5
2023
2022
2023
2022
2023
809,617
247,807
2,180
790,334
351,767
712,639
184,380
267,103
98,290
651
668
–
222,471
59,574
1,342
– 1,112,126
25,292 3,348,417
– 1,225,342
21,604
3,637,531
–
–
–
–
–
276,269
25,292 1,361,165
250,315
23,568
1,416,635
191,044
25,292 1,114,023
215,070
257,645
9,820
590,283
8,431
549,463
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
T Richards 6
B J Gill 7
M Crawford 8
2023
2022
272,469
–
1,942
36,166
(144,554)
12,646
178,669
556,432
207,872
–
–
150,692
23,568
938,564
2022
733,729
403,956
542
788,500
157,325
17,676
2,101,728
2022
465,531
218,599
62
630,338
99,337
17,676
1,431,543
Total
2023 3,541,904 1,176,613
7,571
36,166 1,692,530
96,953 6,551,737
2022 4,423,682 2,057,206
4,565
1,418,838
2,098,081
113,912
10,116,284
53.7%
55.0%
38.5%
42.5%
33.7%
53.1%
57.7%
-80.9%
38.2%
26.7%
22.2%
1 Non-monetary benefits relate to car parking.
2
Share-based payments consist of performance and deferred rights. The fair value of the performance rights is measured at the date of grant using the
Monte Carlo simulation and the Black-Scholes model and is allocated to each reporting period evenly over the performance period. 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.
FY2022 values represent the pro rata amounts applicable for the period of employment from 16 August 2021 to 30 June 2022. Salary and Fees amount
includes $400,000 sign-on cash payment. Non-monetary benefits relate to car parking and travel. Share-based payments include value of deferred
sign-on rights granted on commencement.
FY2022 values represent the pro rata amounts applicable for the period of employment from 7 February 2022 to 30 June 2022. Share-based payments
include the value of deferred sign-on rights granted on commencement.
Represents the pro rata amounts applicable for the period of employment from 1 March 2023. Share-based payments include fair value of deferred
sign-on rights granted on commencement.
3
4
5
6 Represents the pro rata value applicable for the period up to date of cessation of employment being 23 December 2022.
7
Represents the pro rata value applicable for the period up to 31 March 2022. Non-monetary benefits relate to car parking. Mr Gill received a one-off
termination payment equivalent to 100% of his base salary averaged over the preceding three years prior to his time of cessation.
Represents the pro rata value applicable for the period up to 31 March 2022. Non-monetary benefits relate to car parking. Mr Crawford received
a one-off termination payment equivalent to 100% of his base salary averaged over the preceding three years prior to his time of cessation.
8
58
Remuneration Report (Audited) 7
Executive KMP – equity grants
FY2023 Long-Term Incentive Plan – key features
7A.
Changes were made to our performance measures for FY2023 LTI grant applicable for the three-year performance period
covering FY2023–FY2025. Shareholders approved CEO & MD Mark Schubert’s grant at our AGM held in October 2022.
A summary of these changes made as follows are:
• Relative Total Shareholder Return – (no change).
• EPS – ROIC gateway removed, and EPS measure reweighted to 25% (previously 50%).
•
Introduction of CH4 (Methane) Emissions Reduction measure with a 25% weighting.
The Board removed the ROIC gateway to the EPS measure for the FY2023 LTI Offer because at the time that the offer was
made, the Board anticipated that there may be significant capital expenditures during the performance period in relation
to Energy-from-Waste, which would not contribute to earnings in that period. This would limit the usefulness of ROIC
as a gateway measure.
The introduction and performance ranges setting for the emissions reductions measure was designed to drive focus on our
overall emissions footprint aligned to keep atmospheric warming within agreed international standards and is embedded
in our Blueprint 2030 strategy. Performance ranges were set against longer-term aspirations with FY2023 target and stretch
performance set as challenging. Reporting will be under the NGERs framework which is the emissions reporting standard
in Australia.
FY2024 changes
The Board intends to make further changes to LTI arrangements for FY2024 applicable for the performance period
FY2024–FY2026.
These proposed changes are set as follows:
• Relative Total Shareholder Return – Alignment of the relative rTSR percentile ranking against the comparator peer group
being ASX 150 – (excluding companies classified as mining, financial services, overseas domiciled companies and oil and
gas) noting this was previously ASX 200 – with exclusions. Reweighted to 40% (previously 50%).
• EPS measure reweighted to 20% (previously 25%).
• CH4 (Methane) Emissions Reduction measure reweighted to 20% (previously 25%).
•
Inclusion of a ROIC measure with a weighting of 20%.
The Board considered the above changes appropriately balanced to drive sustainable performance outcomes aligned
to longer-term shareholder value creation. Performance ranges for the EPS and ROIC are to be set with consideration
and alignment to the key attributes of our mid-term financial ambitions and ongoing delivery of our Blueprint 2030 Strategy.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Executive KMP – equity grants (continued)
The details of the FY2023 LTI offer are summarised in the table below.
Purpose of the LTI Plan
• Focus Executive performance on drivers of shareholder value over a three-year
performance period.
• Align the interests of the Executive with those of shareholders.
Performance period
1 July 2022 to 30 June 2025.
Form of award
Performance rights.
Number of
performance rights
• Performance rights are granted at face value as a % of participant TFR.
• CEO & MD – 120%, other Executive KMP – 60%.
• 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 2022 to 30 June 2022 being $2.5560.
Performance hurdles
Performance rights issued under the FY2023 Plan are subject to three performance hurdles:
• 50% of the performance rights will be subject to relative Total Shareholder Return
(TSR) targets over the performance period. The Board considers relative TSR to be an
appropriate performance measure for Executive KMP reward as it focuses on the extent
to which shareholder returns (being income and capital gain) are generated relative
to the performance of a comparator group of companies. The comparator group is the
constituent companies that remain listed in the S&P/ASX 200 (excluding companies
classified as mining, financial services and overseas domiciled companies) for the
duration of the performance period;
• 25% of the performance rights will be subject to 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 sustainable profit growth; and
• 25% of performance rights will be subject to CH4 (Methane) Emissions Reduction
targets. The Board considers the inclusion of a greenhouse gas emissions reduction
target as appropriate and aligned with Cleanaway’s Blueprint 2030 strategy.
14 days after the release of the financial results for the financial year ending 30 June 2025.
No retesting is available. LTI performance rights are only tested once at the end of the
relevant performance period and unvested rights lapse.
Vesting date
Retesting
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
Malus and Claw back
Under the terms of the Plan, 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. Where a participant is determined by the Board to be a Bad
Leaver prior to the end of the performance period, all rights lapse. For participants who
leave in other circumstances, rights remain on foot to be tested in the ordinary course.
The Board has the discretion to determine a lower level of vesting (i.e. pro rata) in individual
cases once the rights are tested. The Board also has discretion to determine the extent
of vesting in the event of a change of control. Performance rights lapse when performance
hurdles are not met.
The Board retains absolute discretion to determine any treatment in relation to the grant
of Long-Term Incentive Rights including, without limitation, the vesting conditions or
restrictions applicable to rights or shares, lapsing or forfeiture of rights and the repayment
of the value of shares allocated on vesting of rights.
Number of
performance rights
remaining on issue
as at 30 June 2023
Executive KMP 1,271,125.
All participants 2,608,324.
60
Remuneration Report (Audited) 7
Executive KMP – equity grants (continued)
FY2023 Long-Term Incentive Plan vesting conditions
7B.
Performance rights issued under the FY2023 Plan are subject to three performance measures with the following
performance vesting schedules:
Relative TSR
performance
measured over three
years from 1 July 2022
to 30 June 2025
EPS CAGR performance
measured over three
years from 1 July 2022
to 30 June 2025
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
Cleanaway EPS CAGR
Less than 5%
At 5%
Greater than 5% and up to
(and including) 10%
Greater than 10% and up to
(and including) 11%
100%
Percentage of EPS CAGR performance
rights that vest
Nil
30%
Straight line pro rata vesting between 30%
and 80%
Straight line pro rata vesting between 80%
and 100%
EPS Emissions
Reduction performance
measured over three
years from 1 July 2022
to 30 June 2025
Above 11%
100%
CH4 (Methane) Emissions Reduction
Percentage of CH4 (Methane) Emissions
Reduction performance rights that vest
FY2025 CH4 emission is greater than 95%
of FY2022 emission
At 95% of FY2022
Between 95% and 87% of FY2022
Nil
50%
Straight line pro rata vesting between 50%
and 100%
Below 87% of FY2022
100%
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Executive KMP – equity grants (continued)
7C. Prior Long-Term Incentive awards
The following table outlines the terms of prior LTI offers outstanding:
FY2021 LTI 1, 2
FY2022 LTI 1
Performance period
Three years four months: 1 March 2020
to 30 June 2023
Three years: 1 July 2021 to 30 June 2024
Overview
Performance rights vesting subject to:
Performance rights vesting subject to:
• Relative TSR (50%)
• EPS CAGR (50%)
• Relative TSR (50%)
• EPS CAGR (50%)
• The Return on Invested Capital (ROIC)
for year ended 30 June 2023 acts
as a gateway to EPS CAGR.
• The Return on Invested Capital (ROIC)
for year ending 30 June 2024 acts
as a gateway to EPS CAGR.
Relative TSR
performance hurdles
TSR ranking against the constituents of the S&P/ASX200 with exclusions for companies
classified as mining, financial services and overseas domiciled companies:
• 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
EPS CAGR performance
hurdles
EPS CAGR:
• Below 4%–0% vesting
• At 4%–40% vesting
EPS CAGR:
• Below 5%–0% vesting
• At 5%–30% vesting
• 4%–8% – straight line vesting between
• 5%–10% – straight line vesting between
40% and 90%
30% and 80%
• 8%–10% – straight line vesting between
• 10%–11% – straight line vesting
90% and 100%
between 80% and 100%
• At or above 10%–100% vesting
• At or above 11%–100% vesting
Performance rights under the EPS measure
will only vest if ROIC is at least 5.5%
or more for the financial year ended
30 June 2023
Performance rights under the EPS measure
will only vest if ROIC is at least 5.6%
or more for the financial year ending
30 June 2024
Expiry date
None
None
Number of
performance rights
remaining on issue
at 30 June 2023
Executive KMP 222,171
Executive KMP 974,588
All participants 1,534,801
All participants 2,317,331
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.
For the FY2021 grant, the Board had approved a change to the TSR performance period so that the impact of COVID-19 was removed from the
beginning of the performance period. The performance period commences the TSR measurement from 1 March 2020 and concluding 30 June 2023.
2
62
Remuneration Report (Audited) 7
Executive KMP – equity grants (continued)
7D. Performance and deferred rights granted and movement during the year
The aggregate number of performance and deferred rights in the Company that were granted as compensation,
exercised or lapsed in relation to each Executive KMP for the year ended 30 June 2023 is set out in the following table:
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
$
LAPSED/
CANCELLED
DURING
THE YEAR
NUMBER
BALANCE AT
30 JUNE 2023
NUMBER 3
BALANCE AT
1 JULY 2022
NUMBER
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes
S Nicholls
1,164,302
803,670
1,637,212
(152,091)
419,281
421,290
231,587
523,670
317,218
185,669
406,990
(14,510)
(29,983)
–
343,933
825,325
–
38,658
82,656
–
–
–
–
–
1,815,881
638,367
472,904
343,933
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
T Richards 4
420,917
161,175
361,869
(81,938)
224,133
(479,823)
20,331
1
2
Performance and deferred rights were granted under the FY2023 LTI Offer and FY2022 STI Deferral Plan in September 2022, with the exception
of Mr Schubert whose rights were granted immediately following Shareholder approval at the Annual General Meeting held in October 2022 and
Mr Nicholls, FY2023 LTI and sign-on right offers which were granted on commencement.
The fair value of the performance rights under the FY2023 LTI offer, granted to Executive KMP, was calculated using the Monte Carlo simulation and
Black Scholes model and reflects there is no dividend entitlement during the deferral period. For Mr Binfield and Ms Boyes, the fair value of $1.687
to $2.623 per performance right was determined based on the grant date of 16 September 2022. For Mr Schubert, the fair value of $1.532 to $2.429
per performance right was determined on the grant date of 21 October 2022, following approval of the grants at the Annual General Meeting.
For Mr Nicholls, the fair value of $1.59 to $2.46 per performance right was determined on the grant date of 1 March 2023. The fair value of sign-on
rights to Mr Nicholls is determined with respect to the share price on the date the rights were granted. Refer to note 35 to the Consolidated Financial
Statements which sets out the fair value per tranche of performance and deferred rights granted.
3 All performance and deferred 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.
4 Mr Richards LTI grants lapsed upon his resignation in accordance with the Plan Rules.
Performance and deferred rights as at 30 June 2023
7E.
The number of performance and deferred rights as at 30 June 2023 by plan for the Executive KMP is set out in the
following table:
ISSUED
2022
STI
2021
LTI
2022
LTI
2023
LTI
SIGN ON
BALANCE AT
30 JUNE 2023
FY2022 STI
VESTED &
EXERCISABLE
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes
S Nicholls
75,970
34,406
9,613
–
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
T Richards 1
20,331
–
631,983
222,171
184,609
–
–
–
157,996
–
–
727,700
197,181
176,056
170,188
380,228
1,815,881
–
129,239
173,745
638,367
472,904
343,933
75,970
34,406
9,613
–
–
–
20,331
20,331
1
For the purpose of FY2022 STI and in accordance with the plan rules, Mr Richards remains eligible to participate in this plan in accordance with the terms
of his cessation of employment.
As at 30 June 2023, there are no outstanding vested rights which remain unexercised. No terms of performance or deferred
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Executive KMP – equity grants (continued)
Securities trading policy
7F.
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.
7G. Shareholding guideline
The CEO & MD and Executive Team are encouraged to build and maintain a shareholding in the Company equivalent to:
• CEO & MD – 100% of TFR;
• Executive Team including Executive KMP – 50% of TFR.
It is expected that this shareholding will be accumulated within five years from the date of their appointment to the
Executive KMP. The number of performance rights, deferred rights and ordinary shares in the Company held by each
Executive KMP is set out in Sections 7D, 7E and 11A.
In FY2021, the Board introduced guidelines regarding shareholdings for Non-Executive Directors. Under the guidelines,
Non-Executive Directors will have five 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.
64
Remuneration Report (Audited) 8
Executive KMP – contract terms
8A. Current Executive KMP
All Executive KMP are employed on the basis of an Executive Service Agreement (Agreement) that contains a range of terms
and conditions, including remuneration and other benefits, notice periods and termination benefits. Notice periods for
Executive KMP as at 30 June 2023 are as follows:
EXECUTIVE SERVICE AGREEMENTS
TERM OF AGREEMENT
NOTICE PERIOD BY EXECUTIVE
NOTICE PERIOD BY CLEANAWAY
EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes
S Nicholls
Open
Open
Open
Open
12 months
6 months
6 months
6 months
12 months
6 months
6 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.
8B. Executive KMP changes – remuneration arrangements
During FY2023, Mr Nicholls commenced with Cleanaway in an Executive KMP role. In addition, previous Executive KMP
Mr Richards ceased employment with Cleanaway.
Terms of appointment of Mr Nicholls
Mr Nicholls commenced with Cleanaway on 1 March 2023 at which time his remuneration arrangements comprised:
• Fixed annual remuneration of $725,000, inclusive of superannuation.
• A short-term incentive opportunity of 50% per annum of fixed remuneration at target and 100% at maximum.
• A long-term incentive opportunity of 60% per annum of fixed remuneration maximum at grant.
Mr Nicholls also received a sign-on entitlement in recognition of the forfeiture of certain incentives upon resigning from his
prior employment. The deferred sign-on equity rights granted to a face value total of $450,000 were made to Mr Nicholls
on commencement with the rights issued at an allocation price of $2.5900, being Cleanaway’s five-day volume weighted
average price (VWAP) in the period immediately following his commencement.
The total number of rights granted and vesting periods are set out in the following table:
Tranche 1
Tranche 2
RIGHTS GRANTED
VESTING DATE
77,220
96,525
30 August 2023
30 August 2024
The grant date for each tranche of performance rights is set out in note 35 to the Consolidated Financial Statements.
The vesting of these rights is subject to Mr Nicholls being employed by Cleanaway on the relevant dates and Mr Nicholls
not having provided notice of resignation nor having been terminated for cause prior to the relevant dates.
Mr Nicholls was also granted 170,188 performance rights associated with the FY2023 LTI. This grant was made pursuant
to the terms and conditions of that plan outlined in Sections 7A and 7B of this Report.
Terms of separation Mr Richards
Former Executive General Manager Liquid Waste & Health Services – Industrial Waste Services Mr Tim Richards resigned
from Cleanaway effective 23 December 2022. All statutory terminations payments, including salary to date of separation,
superannuation and unused leave entitlements, were paid to Mr Richards upon his resignation.
Mr Richards was granted 20,331 deferred rights under the Company’s FY2022 STI Deferred Equity Plan which, as a result
of his resignation, have remained on foot in accordance with the Plan Rules and will vest in August 2023.
All Long-Term Incentive Performance rights granted to Mr Richards lapsed in accordance with the Plan Rules and consistent
with the treatment for a resignation.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Remuneration Report (Audited)2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 9 Governance and role of the Board
9A. 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 plan for the Board and Executive management team;
corporate culture and engagement; and diversity and inclusion strategy.
The Committee’s charter is available online at: https://www.cleanaway.com.au/about-us/for-investor/corporate-governance/
The Committee is comprised entirely of independent Non-Executive Directors: Samantha Hogg (Chair), Mike Harding
(up to 20 October 2022), Ray Smith, Terry Sinclair and Ingrid Player (from 1 December 2022). Non-Executive Directors,
who are not Committee members, are entitled to attend meetings as observers. The CEO & MD and other Executives are
invited to attend Committee meetings as required however they do not participate in discussions concerning their own
remuneration arrangements.
9B. 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 Executive 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 Executive KMP. During the year ended 30 June 2023, remuneration consultants were engaged to provide
services to the Group, including the provision of Executive market benchmarking data, equity plan management, service
agreement and separation agreement preparation advice. The fees paid for these services were $81,900 (2022: $41,800).
No remuneration recommendations were received from consultants during FY2023.
66
Remuneration Report (Audited) 10 Non-Executive Directors’ remuneration
10A. Fee structure
Following a review conducted by the Board, fees for the Chairman, Non-Executive Director and Committee membership
were increased effective 1 July 2022. The Board considered benchmark data comprising a peer group of selected ASX-listed
companies with regards to the Company’s market capitalisation, assets, revenue, EBITDA and operational scope. The Board
considered these fee increases necessary to remain market competitive to enable the ongoing attraction and retention
of Directors through succession planning activities, its current orderly transition, and also into the future. The fee structure
(inclusive of superannuation) effective 1 July 2022 is detailed in the following table:
Board
Audit and Risk Committee
Sustainability Committee
Human Resources Committee
FY2022
CHAIRMAN
$
405,000
35,000
27,000
27,000
FY2022
NON-EXECUTIVE
DIRECTOR
$
165,000
16,000
16,000
16,000
FY2023
CHAIRMAN
$
450,000
38,000
32,000
32,000
FY2023
NON-EXECUTIVE
DIRECTOR
$
170,000
20,000
20,000
20,000
10B. Aggregate fee limit
The current aggregate amount of remuneration that can be paid to Non-Executive Directors of $2,300,000 was approved
by shareholders at the Company’s 2022 Annual General Meeting.
For the year ended 30 June 2023, the aggregate remuneration paid to all Non-Executive Directors was $1,957,000 which
results in an 85% utilisation of the aggregate fee limit.
FY2023 fees paid represent an increase of 4.1% compared with the year ended 30 June 2022. This increase was due
to Director appointments aligned to succession planning and increases in base Director and Committee fees.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Remuneration Report (Audited)2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 10 Non-Executive Directors’ remuneration (continued)
10C. Current Non-Executive Director fees
The remuneration received by Non-Executive Directors for the years ended 30 June 2023 and 30 June 2022 is set out in the
following table:
FINANCIAL YEAR
SALARY AND FEES
$
ADDITIONAL FEES
$
SUPERANNUATION
BENEFITS
$
TOTAL
$
450,000
567,500
228,000
216,000
210,000
197,000
64,166
207,084
222,000
208,000
222,000
197,916
201,667
181,000
190,000
105,583
155,000
14,167
25,292
23,568
21,665
19,636
19,955
17,909
6,097
18,826
–
–
21,095
17,992
19,163
16,455
18,054
9,598
14,728
1,346
147,395
123,984
1,957,000
1,880,083
NON-EXECUTIVE DIRECTORS
M P Chellew
R M Smith
T A Sinclair
R M Harding 1
P G Etienne
S L Hogg
I A Player
A M Kelly
J McArthur 2
C M Stiff 3
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2023
2023
2022
424,708
381,432
206,335
196,364
190,045
179,091
58,069
188,258
222,000
208,000
200,905
179,924
182,504
164,545
171,946
95,985
140,272
12,821
1,809,605
1,593,599
–
162,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
162,500
1 Non-Executive Director Mr Harding retired from the Cleanaway Board on 20 October 2022.
2 Ms McArthur was appointed as an Independent Non-Executive Director from 1 September 2022.
3 Mr Stiff was appointed as an Independent Non-Executive Director from 1 June 2023.
68
Remuneration Report (Audited) 11 Shareholdings and other related party transactions
11A. Shareholdings
All Non-Executive Directors have increased their shareholding during the year with the exception of Mr Stiff who has not
been a Non-Executive Director during a trading window. All eligible Executive KMP have retained shares granted as a result
of the exercising of rights occurring throughout the year. The movement for the year ended 30 June 2023 in the number
of ordinary shares in the Company held, directly or indirectly or beneficially, by each Executive KMP, including their related
parties, is detailed in the following table:
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
NAME
NON-EXECUTIVE DIRECTORS
M P Chellew
R M Smith
T A Sinclair
R M Harding 1
P G Etienne
S L Hogg
I A Player
A M Kelly
J McArthur 2
C M Stiff 3
CURRENT EXECUTIVE KEY MANAGEMENT PERSONNEL
M J Schubert
P A Binfield
T Boyes
S Nicholls 4
156,548
128,364
49,417
29,696
82,715
–
20,000
46,000
–
–
–
30,000
–
–
–
–
–
–
–
–
–
–
–
–
152,091
14,510
29,983
–
13,894
14,670
5,503
–
9,210
20,000
10,228
5,123
30,571
–
–
3,341
–
–
–
170,442
143,034
54,920
29,696
91,925
20,000
30,228
51,123
30,571
–
152,091
47,851
29,983
–
196,744
FORMER EXECUTIVE KEY MANAGEMENT PERSONNEL
T Richards 5
114,806
81,938
1
2
3
4
5
The balance for Mr Harding reflects his shareholding on the date he ceased being Non-Executive Director on 20 October 2022.
The balance at the start of the year for Ms McArthur reflects her shareholding on the date she commenced as a Non-Executive Director on 1 September 2022.
The balance at the start of the year for Mr Stiff reflects his shareholding on the date he commenced as a Non-Executive Director on 1 June 2023.
The balance at the start of the year for Mr Nicholls reflects his shareholding on the date he commenced as an Executive KMP on 1 March 2023.
The balance at the end of the year for Mr Richards reflects his shareholding on the date he ceased being Executive KMP on 23 December 2022.
11B. Loans to Executive Key Management Personnel
There were no loans to Executive KMP made during the period and no outstanding balances at the reporting date.
11C. 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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
69
Remuneration Report (Audited)2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION
Ernst & Young
Ernst & Young
Ernst & Young
8 Exhibition Street
8 Exhibition Street
8 Exhibition Street
Melbourne VIC 3000 Australia
Melbourne VIC 3000 Australia
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
GPO Box 67 Melbourne VIC 3001
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Tel: +61 3 9288 8000
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
Fax: +61 3 8650 7777
Fax: +61 3 8650 7777
ey.com/au
ey.com/au
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 2023,
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;
(b) no contraventions of any applicable code of professional conduct in relation to the audit;
(c) no non-audit services provided that contravene 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
Ashley Butler
Partner
23 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
70
Auditor’s Independence Declaration Revenue
Other income
Labour related expenses
Collection, recycling and waste disposal expenses
Fleet operating expenses
Property expenses
Other expenses
Write down loan to equity accounted investment
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
5
23
5
5
8
9
2023
$’M
2022
$’M
3,558.8
3,006.2
18.8
(1,205.9)
(1,174.2)
(380.3)
(64.5)
(205.4)
–
(0.7)
(365.9)
(51.3)
–
129.4
(96.1)
33.3
(9.8)
23.5
21.6
1.9
23.5
14.7
(1,043.2)
(957.8)
(310.4)
(52.9)
(138.4)
(6.3)
(1.1)
(324.5)
(8.1)
(8.9)
169.3
(53.0)
116.3
(35.7)
80.6
78.9
1.7
80.6
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
71
Consolidated Income Statement For the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Profit after income tax
Other comprehensive income (to be reclassified to profit or loss
in subsequent periods)
Net (loss)/gain on cross-currency interest rate swaps (net of tax)
17
Net comprehensive income recognised directly in equity
Total comprehensive income for the year
NOTES
Attributable to:
Ordinary equity holders
Non-controlling interest
Total comprehensive income for the year
2023
$’M
23.5
(1.5)
(1.5)
22.0
20.1
1.9
22.0
2022
$’M
80.6
3.3
3.3
83.9
82.2
1.7
83.9
Earnings per share attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
10
10
1.0
1.0
3.8
3.8
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
72
Consolidated Statement of Comprehensive Income For the year ended 30 June 2023 NOTES
2023
$’M
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Equity accounted investments
Net deferred tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Lease liabilities
Employee entitlements
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease 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
11
12
13
24
20
21
22
23
9
24
14
21
25
26
27
15
21
32
25
26
27
16
17
Restated 1
2022
$’M
66.5
532.5
26.7
0.2
29.6
655.5
1,434.5
614.7
3,060.3
52.2
11.4
20.1
102.1
551.7
31.2
–
29.7
714.7
1,577.9
609.4
3,072.5
51.6
19.5
27.7
5,358.6
6,073.3
5,193.2
5,848.7
495.3
3.2
98.4
97.0
144.7
46.1
884.7
950.4
540.3
46.1
10.0
564.3
132.1
2,243.2
3,127.9
2,945.4
470.1
–
100.6
91.0
197.0
39.2
897.9
1,042.9
540.3
39.3
8.7
536.0
155.4
2,322.6
3,220.5
2,628.2
3,101.8
2,700.6
34.0
(194.3)
31.6
(106.9)
2,941.5
2,625.3
3.9
2.9
2,945.4
2,628.2
1 Comparative amounts have been restated to reflect the final determined fair values related to the SRN acquisition. Refer to note 28.
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
73
Consolidated Balance SheetAs at 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION PARENT ENTITY INTEREST
RESERVES
$’M
RETAINED
EARNINGS
$’M
NON-
CONTROLLING
INTEREST
$’M
TOTAL
$’M
At 1 July 2022
Profit for period
Other comprehensive income
Total comprehensive income for the year
Issue of shares (net of transaction costs)
Share-based payment expense (net of tax)
Dividends reinvested/(paid)
Balance at 30 June 2023
At 1 July 2021
Profit for period
Other comprehensive income
Total comprehensive income for the year
Share-based payment expense (net of tax)
Dividends reinvested/(paid)
Balance at 30 June 2022
ORDINARY
SHARES
$’M
2,700.6
–
–
–
395.1
–
6.1
31.6
–
(1.5)
(1.5)
–
3.9
–
3,101.8
34.0
2,695.7
25.1
–
–
–
–
4.9
–
3.3
3.3
3.2
–
(106.9)
2,625.3
21.6
–
21.6
–
–
(109.0)
(194.3)
(86.9)
78.9
–
78.9
–
(98.9)
21.6
(1.5)
20.1
395.1
3.9
(102.9)
2,941.5
2,633.9
78.9
3.3
82.2
3.2
(94.0)
2,700.6
31.6
(106.9)
2,625.3
TOTAL
EQUITY
$’M
2,628.2
23.5
(1.5)
22.0
395.1
3.9
(103.8)
2,945.4
2,636.3
80.6
3.3
83.9
3.2
(95.2)
2,628.2
2.9
1.9
–
1.9
–
–
(0.9)
3.9
2.4
1.7
–
1.7
–
(1.2)
2.9
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
74
Consolidated Statement of Changes in EquityFor the year ended 30 June 2023 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
Remediation and rectification provision remeasurement
Share of losses from equity accounted investments
Net gain on disposal of property, plant and equipment
Net gain on sale and leaseback of property
Write down loan to equity accounted investment
Other non-cash items
Net cash from operating activities before changes in assets and liabilities
Changes in assets and liabilities:
Increase in receivables
(Increase)/decrease in other assets
Increase in inventories
Increase in payables
Increase in employee entitlements
Increase/(decrease) in other liabilities
Increase/(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
Loans to equity accounted investments
Loans repaid by equity accounted investments
Dividends received from 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
Proceeds from issue of ordinary shares
Payment of dividends to ordinary equity holders
Payment of dividends to non-controlling interests
Net cash from financing activities
NOTES
2023
$’M
2022
$’M
33.3
116.3
365.9
51.3
–
96.1
3.4
(1.9)
0.7
(0.5)
(1.3)
–
(0.9)
546.1
(19.2)
(1.5)
(2.9)
19.6
5.0
6.2
2.6
555.9
(64.7)
(9.4)
481.8
(369.7)
(16.2)
(172.0)
10.2
(0.9)
(2.0)
1.7
0.8
(548.1)
–
(94.1)
(93.1)
(7.1)
400.0
(102.9)
(0.9)
101.9
35.6
66.5
102.1
324.5
8.1
8.9
53.0
3.1
(6.3)
1.1
(1.9)
( 8.2)
6.3
(2.5)
502.4
(161.0)
0.3
(3.3)
171.6
8.4
(1.7)
(5.4)
511.3
(38.5)
(6.5)
466.3
(257.5)
(5.5)
(516.6)
22.9
(12.7)
(5.0)
–
1.0
(773.4)
500.0
(15.0)
(82.3)
(3.3)
–
(94.0)
(1.2)
304.2
(2.9)
69.4
66.5
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
75
Consolidated Statement of Cash FlowsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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 2023 were authorised for issue
in accordance with a resolution of the Directors on 23 August 2023.
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 2023, the Group had a net current asset deficiency of $170.0 million (2022: $242.4 million). As set out in note 15
to the Financial Statements, the Group has unutilised committed debt facilities, excluding facilities for bank guarantees,
of $504.5 million at 30 June 2023 (2022: $454.1 million) 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.
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 found within the following notes:
• Note 9
Income Tax
• Note 20
Property, plant and equipment
• Note 21
Leases
• Note 22
Intangible assets
• Note 26
Provisions
• Note 28 Business combination
76
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 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.
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.
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.
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
77
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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
2023
Revenue
Revenue from customers
2,601.7
364.8
30.6
52.4
–
11.0
2,684.7
375.8
562.7
(284.6)
278.1
52.7
(26.2)
26.5
Other revenue
Inter-segment sales
Total revenue
Underlying EBITDA 1
Depreciation and amortisation
Underlying EBIT 1
Flood impacts 2
Acquisition and integration costs 3
Medical waste facility incidents 4
IT transformation costs 5
New Chum height rise 6
Profit from operations (EBIT)
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
540.6
21.1
48.9
610.6
92.4
(43.6)
48.8
–
–
(112.3)
(112.3)
–
–
–
3,507.1
51.7
–
3,558.8
707.8
(354.4)
353.4
–
–
–
–
(0.7)
–
(0.7)
–
–
3,507.1
51.7
–
–
– 3,558.8
(39.0)
668.1
(11.5)
(365.9)
(50.5)
302.2
(62.2)
(7.9)
(22.3)
(6.1)
(74.3)
129.4
(96.1)
33.3
(9.8)
23.5
Property, plant and equipment
Intangible assets
270.4
0.2
41.1
–
51.5
–
–
–
363.0
0.2
–
–
6.7
369.7
16.0
16.2
1 Underlying earnings are categorised as non-IFRS financial information. The exclusion of underlying adjustments provides a result which, in the Directors’
2
view, more closely reflects the ongoing operations of the Group. The non-IFRS financial information is unaudited.
Several Cleanaway sites were impacted by the East Coast floods that occurred during late February and early March 2022. Flood impacts in the current
period of $62.2 million relate mainly to further rectification works on the cell at the New Chum landfill which was under construction at the time of the
floods. More stringent requirements have been imposed by the regulator and works to rectify the damaged cell have taken longer than anticipated.
3 Acquisition and integration costs of $7.9 million include transaction costs and other costs associated with the acquisition and integration of Global
Renewables Holdings Pty Ltd of $5.3 million and the final integration costs related to the Sydney Resource Network acquisition of $2.6 million.
In June 2022, a fire caused significant damage to equipment at the medical waste processing facility in Dandenong, Victoria. The Victorian Health
business has incurred additional expenses of $39.3 million during the financial year, largely related to alternative waste disposal costs. Insurance
recoveries of $17.0 million have been recognised during the period in relation to property damage and business interruption claims agreed by the
insurers. Further insurance claims are expected to be recognised in the year ending 30 June 2024.
IT costs associated with the transformational CustomerConnect project of $6.1 million related to customisation and configuration of cloud-based
software, which Cleanaway does not control and therefore the costs do not qualify for capitalisation as intangible assets.
5
4
6 On 20 June 2023, the Planning and Environment Court in Queensland dismissed an appeal by Cleanaway against the decision of the Ipswich City
Council to refuse an application that would have allowed for additional airspace at the New Chum landfill. As a result of this decision, assets related
to the New Chum landfill of $51.1 million have been written-off. In addition, the remediation provision has increased by $23.2 million as future spend
on infrastructure, including gas and stormwater management, will no longer qualify to be recognised as assets when incurred. Furthermore, capping
works will be brought forward and results in discounting the cashflows in the nearer term.
78
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 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
2022
Revenue
Revenue from customers
2,161.6
318.9
488.8
Other revenue
Inter-segment sales
14.8
44.6
–
9.7
22.1
39.6
–
–
(93.9)
2,969.3
36.9
–
2,221.0
328.6
550.5
(93.9)
3,006.2
469.4
(241.6)
227.8
47.2
(27.3)
19.9
96.2
(43.2)
53.0
–
–
–
612.8
(312.1)
300.7
Total revenue
Underlying EBITDA 1
Depreciation and amortisation
Underlying EBIT 1
Flood impacts 2
Acquisition and integration costs 3
CEO transition and restructuring 4
Write down loan to Sydney EfW 5
Medical waste processing facility
incidents 6
Gain on sale and leaseback of
property 7
Remediation and rectification
provision remeasurement 8
Material recycling facility fire 9
Profit from operations (EBIT)
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Capital expenditure:
–
–
–
–
(1.1)
–
(1.1)
– 2,969.3
–
–
36.9
–
– 3,006.2
(30.1)
581.6
(12.4)
(324.5)
(42.5)
257.1
(43.5)
(30.0)
(12.0)
(6.3)
(10.9)
8.2
6.3
0.4
169.3
(53.0)
116.3
(35.7)
80.6
Property, plant and equipment
Intangible assets
188.0
0.7
10.7
–
49.8
0.2
–
–
248.5
0.9
–
–
9.0
4.6
257.5
5.5
1 Underlying earnings are categorised as non-IFRS financial information. The exclusion of underlying adjustments provides a result which, in the Directors’
2
view, more closely reflects the ongoing operations of the Group. The non-IFRS financial information is unaudited.
Several Cleanaway sites were impacted by the East Coast Floods which occurred in the second half of the financial year. Clean up expenses incurred
to 30 June 2022 totalled $4.0 million plus the costs of $10.2 million associated with the rectification of the New Chum landfill. A further provision
of $28.6 million for the rectification activities to bring the New Chum landfill site back into compliance has been made. In addition, plant and equipment
of $4.9 million was written off. Insurance proceeds of $4.2 million have been recognised in relation to the damaged fleet. A material damage and
business interruption claim is subject to agreement by the insurers and has not been accounted for in these results.
3 Acquisition and integration costs include transaction costs and other costs mainly associated with the acquisition and integration of the Sydney Resource
Network of $22.5 million offset by $1.4 million remeasurement of the contingent consideration in relation to the acquisition of the Grasshopper Group.
In addition, an $8.9 million impairment charge was recognised related to assets which will have no future economic benefit to the Group post acquisition.
4 On 30 August 2021, Mr Mark Schubert commenced in the role of CEO. Costs related to his sign-on bonus and performance rights costs incurred in the
5
current period total $1.1 million. On commencement, Mr Schubert commissioned some initiatives to enhance compliance and safety processes across the
Group, appointed consultants to conduct a review into the future strategy of the Group, and has appointed new members of the Group Executive Team.
Costs incurred on these projects and related to the termination of outgoing Executive Team members total $10.9 million.
Following the NSW Government release of their Energy from Waste Infrastructure Plan on 10 September 2021, the Eastern Creek site designated
by the Western Sydney Energy and Resource Recovery Centre Pty Ltd project, and owned 51% by the Group, is no longer considered a viable site for
development of an Energy from Waste facility. Costs related to the environmental impact study of $6.3 million, which were to be recovered from the
joint venture company upon the project reaching financing stage, have been written off.
6 During February 2022, critical equipment at the medical waste processing facility in Dandenong, Victoria was put out of service. In June 2022, a fire
caused significant damage to the equipment at the site. The Victorian health business has incurred additional expenses, largely related to alternative
waste disposal costs to 30 June 2022 of $7.7 million and the damaged equipment, with a net book value of $3.2 million, has been written off.
7 On 15 July 2021, the Group completed the sale of a depot located in Erskine Park, NSW for a sum of $15.7 million and will lease it back over a term
8
9
of seven years. A gain of $8.2 million resulted from the transaction.
The credit of $6.3 million relates to the increase in discount rate on remeasurement of remediation liabilities related to closed landfill sites and industrial properties.
Insurance proceeds of $0.4 million were received in relation to an outstanding insurance claim in respect of the fire that occurred at the Materials
Recycling Facility in Guildford, WA on 25 November 2019.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
79
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 6
Revenue
Revenue from customers 1
Other revenue 1
1
Refer to note 5 for disaggregation of revenue.
2023
$’M
3,507.1
51.7
2022
$’M
2,969.3
36.9
3,558.8
3,006.2
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.
Accounting Policy
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.
80
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 7 Other income
Net gain on disposal of property, plant and equipment
Net gain on sale and leaseback
Insurance recoveries
Accounting Policy
Insurance recoveries are recognised only when realisation is virtually certain.
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
Transaction costs expensed
Amortisation of gain on modification of fixed rate borrowings
Fair value gain on USPP Notes
Fair value loss on cross-currency interest rate swaps (CCIRS) 1
Finance income
Interest revenue
Net finance costs
2023
$’M
0.5
1.3
17.0
18.8
2022
$’M
1.9
8.2
4.6
14.7
2023
$’M
(46.6)
(23.4)
(1.4)
(24.8)
–
(2.0)
4.1
(5.0)
2022
$’M
(19.2)
(19.6)
(1.8)
(11.2)
(2.5)
(1.9)
15.6
(13.1)
(99.1)
(53.7)
3.0
3.0
(96.1)
0.7
0.7
(53.0)
1
Fair value loss on CCIRS includes net loss of $5.0 million (2022: $13.1 million) relating to fair value and cash flow hedges (including net hedge ineffectiveness
of $(1.0) million (2022: $(1.5) 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.
Accounting Policy
Finance costs are recognised as expenses in the period utilising the effective interest rate method.
Interest
Interest revenue is recognised based on the effective interest rate, taking into account the interest rates applicable
to the financial assets.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
81
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 9
Income tax
(a) Amounts recognised in the Consolidated Income Statement
Current tax expense
Current year
Adjustments in respect of prior years
Deferred tax expense
Origination and reversal of temporary differences
Adjustments in respect of prior years
Income tax expense
2023
$’M
(1.3)
(0.7)
(2.0)
12.9
(1.1)
11.8
9.8
2022
$’M
(2.5)
(2.1)
(4.6)
38.3
2.0
40.3
35.7
(b) Amounts recognised directly in other comprehensive income or equity
Deferred income tax benefit recognised in other comprehensive income of $0.6 million (2022: expense of $1.4 million)
relates to the tax effect of items recognised in the hedge reserve.
Deferred income tax benefit recognised directly in equity for the year totalled $2.7 million (2022: $0.1 million), of which
$2.2 million (2022: nil) relates to capital raising costs recognised in ordinary shares and $0.5 million (2022: 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% (2022: 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
New Zealand tax matter1
Employee share plan (benefits)/expenses
Non-assessable gain on remeasurement of contingent consideration
Other
Income tax expense
2023
$’M
33.3
10.0
0.5
0.2
1.2
(1.8)
(3.1)
2.9
(0.1)
–
–
9.8
2022
$’M
116.3
34.9
0.6
0.4
3.4
(0.1)
(3.1)
–
0.1
(0.6)
0.1
35.7
1 During the period, the Group agreed a final settlement with New Zealand Inland Revenue regarding their review of various matters related to the Group’s
ownership of the New Zealand business, which resulted in an additional tax liability. As a result, the Group has reclassified $8.9 million of deferred tax
liability into income tax payable and raised an additional tax provision of $2.9 million.
82
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 9
Income tax (continued)
(d) Deferred tax
Deferred tax in the Consolidated Balance Sheet relates to the following:
2023
PP&E
Intangible assets
Leases
Employee benefits
Provisions
Tax losses
Other
Net deferred tax assets
OPENING
BALANCE
$’M
(9.6)
(194.7)
(8.1)
32.7
166.5
4.6
20.0
11.4
RECOGNISED
IN PROFIT
OR LOSS
$’M
RECOGNISED
IN OTHER
COMPREHENSIVE
INCOME
$’M
RECOGNISED
DIRECTLY
IN EQUITY
$’M
(30.9)
19.5
(6.6)
2.2
8.3
–
(4.3)
(11.8)
–
–
–
–
–
–
0.6
0.6
–
–
–
–
–
–
2.7
2.7
2022
PP&E
Intangible assets
Leases
Employee benefits
Provisions
Tax losses
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
36.8
(122.9)
3.6
28.4
83.0
0.9
22.4
52.2
(42.9)
23.0
(11.7)
3.6
(11.0)
(0.2)
(1.1)
(40.3)
–
–
–
–
–
–
(1.4)
(1.4)
–
–
–
–
–
–
0.1
0.1
ACQUIRED
IN BUSINESS
COMBINATION
$’M
0.5
(3.1)
–
0.6
1.2
0.3
0.6
0.1
ACQUIRED
IN BUSINESS
COMBINATION
$’M
(3.5)
(94.8)
–
0.7
94.5
–
–
(3.1)
OTHER
$’M
CLOSING
BALANCE
$’M
–
–
–
–
–
6.7
9.8
16.5
OTHER
$’M
–
–
–
–
–
3.9
–
3.9
(40.0)
(178.3)
(14.7)
35.5
176.0
11.6
29.4
19.5
CLOSING
BALANCE
$’M
(9.6)
(194.7)
(8.1)
32.7
166.5
4.6
20.0
11.4
Deferred tax assets total $245.9 million (2022: $249.8 million) and deferred tax liabilities were $226.4 million
(2022: $238.4 million).
Accounting Policy
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
83
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 9
Income tax (continued)
Accounting Policy
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.
Critical accounting estimates and judgements – Recovery of deferred tax assets
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 tax losses and 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.
84
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 10 Earnings per share
Basic earnings per share
Diluted earnings per share
2023
CENTS
1.0
1.0
2022
CENTS
3.8
3.8
(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 attributable to non-controlling interests
Profit after tax attributable to ordinary equity holders
2023
$’M
23.5
(1.9)
21.6
2022
$’M
80.6
(1.7)
78.9
The calculation of weighted average number of ordinary shares for the current and comparative periods have been adjusted
to reflect the bonus element in the equity raising which occurred during August 2022 and September 2022 and did not
impact earnings per share reported in the comparative period.
A reconciliation of weighted average number of ordinary shares:
Weighted average number of ordinary shares used as the denominator
in calculating earnings per share
Number for basic earnings per share
Effect of potential ordinary shares
Number for diluted earnings per share
2023
Restated
2022
2,212,975,561
2,074,002,367
7,228,035
6,689,216
2,220,203,596
2,080,691,583
(ii) Diluted earnings per share
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 performance rights do not give rise to any adjustments in the profit
attributable to ordinary shareholders in the calculation of diluted earnings per share.
11 Cash and cash equivalents
Composition of cash and cash equivalents
Cash at bank and on hand
Accounting Policy
2023
$’M
102.1
102.1
2022
$’M
66.5
66.5
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 earn interest at the respective
short-term deposit rates.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
85
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 12 Trade and other receivables
Trade receivables
Contract assets 1
Other receivables
Provision for expected credit losses
2023
$’M
536.8
2.1
15.4
(2.6)
2022
$’M
515.7
1.6
17.2
(2.0)
551.7
532.5
1 Contract assets arise when the Group has performed work but does not yet have the right to invoice. This is the case in the Industrial & Waste Services
operating segment when work is performed on a fixed price quote.
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 recognised
Reversal of provisions
Utilisation of provisions
Closing balance
2023
$’M
443.0
57.1
25.6
11.1
536.8
2023
$’M
2.0
2.2
–
(1.6)
2.6
2022
$’M
420.0
68.9
18.8
8.0
515.7
2022
$’M
2.1
(0.1)
1.3
(1.3)
2.0
No single debtor’s annual revenue is greater than 4.6% (2022: 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.
Accounting Policy
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.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include: a failure of the debtor to engage in the collection attempts
of the Group; confirmation that the debtor has been placed into liquidation or is bankrupt; and an assessment that the
debt is no longer commercially viable to pursue.
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).
86
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 13
Inventories
Raw materials and consumables – at cost
Work in progress – at cost
Finished goods – at cost
2023
$’M
17.7
0.2
13.3
31.2
2022
$’M
14.5
0.1
12.1
26.7
Total inventory costs recognised as an expense were $109.9 million (2022: $134.7 million).
Accounting Policy
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.
14 Trade and other payables
Trade payables
Other payables and accruals
2023
$’M
226.3
269.0
495.3
2022
$’M
219.0
251.1
470.1
Accounting Policy
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
87
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 15 Borrowings
Opening balance at 1 July 2022
Repayments of borrowings
Cash flows
Non-cash drawdowns
Fair value changes
Borrowing costs (accrued)/reversed
Amortisation of gain on modification of fixed rate borrowings
Amortisation of borrowing costs
Closing balance at 30 June 2023
Opening balance at 1 July 2021
Proceeds of borrowings
Borrowing costs paid
Cash flows
Non-cash repayments
Fair value changes
Borrowing costs reversed
Amortisation of gain on modification of fixed rate borrowings
Amortisation of borrowing costs
Closing balance at 30 June 2022
BANK
LOANS
$’M
607.5
(94.1)
(94.1)
3.2
–
(1.2)
–
1.2
UNSECURED
US PRIVATE
PLACEMENT
NOTES
$M
CLEAN ENERGY
FINANCE
CORPORATION
$’M
TOTAL
BORROWINGS
$’M
351.9
83.5
1,042.9
–
–
–
(4.1)
0.3
–
0.2
–
–
–
–
–
2.0
–
85.5
(94.1)
(94.1)
3.2
(4.1)
(0.9)
2.0
1.4
950.4
516.6
348.3
UNSECURED
US PRIVATE
PLACEMENT
NOTES
$'M
CLEAN ENERGY
FINANCE
CORPORATION
$’M
366.7
81.5
–
–
–
–
(15.6)
0.6
–
0.2
–
–
–
–
–
–
1.9
0.1
TOTAL
BORROWINGS
$’M
573.9
485.0
(0.8)
484.2
(3.9)
(15.6)
0.6
1.9
1.8
351.9
83.5
1,042.9
BANK
LOANS
$’M
125.7
485.0
(0.8)
484.2
(3.9)
–
–
–
1.5
607.5
Financing facilities
The facility limits and maturity profile of the Group’s main financing facilities are as follows:
FACILITY
Syndicated Facility Agreement
Facility A
working capital tranche
Facility B
Facility C
Facility E
4 year revolver
5 year revolver
3 year non-revolving
term loan facility
AMOUNT
MATURITY
$180 million
$200 million
$265 million
31 July 2025
30 June 2027
30 June 2028
$500 million
17 December 2024
US Private Placement (USPP) Notes
8 year debt notes
US$90 million
11 February 2028
Clean Energy Finance Corporation (CEFC)
8 year term loan
$90 million
17 August 2025
Uncommitted bank guarantee facility
$95 million
31 December 2023
10 year debt notes
US$90 million
11 February 2030
12 year debt notes
US$90 million
11 February 2032
88
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
15 Borrowings (continued)
The headroom available in the Group’s facilities at 30 June 2023 is summarised below:
Syndicated Facility Agreement
US Private Placement (USPP) Notes
CEFC Term Loan 4
Bank guarantee facilities 1
Facility A 1, 2, 3
Facility B 3
Facility C 3
Facility E 3
AVAILABLE
$’M
180.0
200.0
265.0
500.0
348.3
90.0
95.0
UTILISED
$’M
(121.2)
(5.0)
(5.0)
(500.0)
(348.3)
(90.0)
(80.6)
1,678.3
(1,150.1)
NOT UTILISED
$’M
58.8
195.0
260.0
–
–
–
14.4
528.2
1
These facilities include $179.8 million (2022: $177.0 million) in guarantees and letters of credit which only give rise to a liability where the Group fails
to perform its contractual obligations. Included in the not utilised Facility A is $9.3 million (2022: $19.2 million) which can only be used for bank guarantees.
2
This facility includes $4.5 million (2022: $4.5 million) of corporate credit card limit utilisation and $15.0 million (2022: $15.0 million) of overdraft utilisation.
3 Amounts utilised exclude capitalised transaction costs of $2.0 million (2022: $2.0 million) and $6.1 million (2022: $3.7 million) of bank loans advanced
under uncommitted facilities.
4 Amount utilised excludes capitalised transaction costs of $0.1 million (2022: $0.1 million) and unamortised gains on fixed rate debt of $4.4 million
(2022: $6.4 million).
To access the unutilised facilities the Group must comply with certain financial covenants. During, and at the end of the
reporting periods, the Group was in compliance of its obligations under its financing facility agreements, including these
financial covenants.
The headroom available in the Group’s facilities at 30 June 2022 is summarised below:
Syndicated Facility Agreement
US Private Placement (USPP) Notes
CEFC Term Loan
Bank guarantee facilities
Facility A
Facility B
Facility C
Facility E
AVAILABLE
$’M
UTILISED
$’M
NOT UTILISED
$’M
180.0
200.0
315.0
500.0
351.9
90.0
95.0
(126.7)
(95.0)
–
(500.0)
(351.9)
(90.0)
(80.6)
1,731.9
(1,244.2)
53.3
105.0
315.0
–
–
–
14.4
487.7
Accounting Policy
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
89
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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.
Opening balance
2,062,587,594
2,700.6
2,059,434,558
2023
NUMBER
OF SHARES
2022
$’M
NUMBER
OF SHARES
Issue of shares under dividend reinvestment plan
Issue of shares under employee incentive plans
Equity raising 1
Costs related to equity raising, net of tax 2
Closing balance
2,273,267
1,381,952
160,000,297
–
6.1
–
400.0
(4.9)
1,799,628
1,353,408
–
–
2,226,243,110
3,101.8 2,062,587,594
2,700.6
$’M
2,695.7
4.9
–
–
–
1 On 24 August 2022, the group raised $350.0 million in a fully underwritten placement to institutional investors at a price of $2.50 per share.
On 19 September 2022, the Group raised a further $50.0 million in a Share Purchase Plan at a price of $2.50 per share.
2 Costs of $7.1 million (after tax $4.9 million) were incurred in relation to the equity raising.
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 rate 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)/gain on currency basis (net of tax)
Closing balance
2023
$’M
2.5
(1.5)
1.0
2022
$’M
(0.8)
3.3
2.5
The effective portion of cash flow hedges was $(13.8) million (2022: $(31.1) 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
2023
$’M
29.1
3.9
33.0
2022
$’M
25.9
3.2
29.1
90
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 18 Dividends
The Company declared unfranked dividends on ordinary shares for the financial year ended 30 June 2023 of 4.90 cents
per share, being an interim unfranked dividend of 2.45 cents per share and an unfranked final dividend of 2.45 cents
per share. The record date of the final dividend is 15 September 2023 with payment to be made on 6 October 2023.
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
2023
2022
CENTS PER
SHARE
$’M
CENTS PER
SHARE
2.45
2.45
4.90
2.45
2.45
4.90
54.5
54.5
109.0
54.5
54.5
109.0
2.35
2.45
4.80
2.45
2.45
4.90
$’M
48.4
50.5
98.9
50.5
50.5
101.0
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 final 2023 dividend determined after 30 June 2023 will be unfranked.
The unadjusted balance of the franking account at 30 June 2023 was $5.3 million (2022: nil).
19 Capital management
2023
$’M
4.7
2022
$’M
–
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 certain undertakings under
its debt facilities which include financial covenants typical for corporate financing facilities. The Group’s financial ratios
are reported to the Board of Directors on a monthly basis and the Company regularly assesses its position to ensure
financial covenants are met as part of its capital management activities.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
91
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 19 Capital management (continued)
The gearing ratio of the Group at reporting date was as follows:
Current lease liabilities
Non-current borrowings and lease liabilities
Derivative financial instruments 1
Cash and cash equivalents
Net debt
Total equity attributable to the ordinary equity holders
Gearing ratio 2
2023
$’M
98.4
1,490.7
46.1
(102.1)
1,533.1
2,941.5
34.3%
2022
$’M
100.6
1,583.2
39.3
(66.5)
1,656.6
2,625.3
38.7%
1 At 30 June 2023, 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 Group’s gearing ratio at period end, defined as net debt over net debt plus equity, was 34.3% (2022: 38.7%). The weighted average debt maturity
is 3.6 years (2022: 4.1 years).
20 Property, plant and equipment
2023
NON-
LANDFILL
LAND AND
BUILDINGS
$’M
LANDFILL
ASSETS
$’M
LEASEHOLD
IMPROVEMENTS
$’M
PLANT AND
EQUIPMENT
$’M
Opening net book value
256.2
364.1
55.3
602.3
Additions
Acquisitions of businesses
Net movement in remediation assets 1
Disposals
Transfers of assets
Depreciation
Write-off of assets
Closing net book value
Cost
Accumulated depreciation
Net book value
–
2.6
–
(4.7)
1.8
(4.0)
–
–
–
35.1
–
57.0
(62.8)
(31.8)
251.9
268.3
(16.4)
251.9
361.6
1,007.1
(645.5)
361.6
–
0.4
–
(0.1)
7.3
(6.7)
–
56.2
92.8
(36.6)
56.2
–
19.4
–
(1.4)
170.7
(132.6)
(3.0)
655.4
2,043.1
(1,387.7)
CAPITAL
WORK IN
PROGRESS
$’M
156.6
347.7
–
–
–
(235.0)
–
(16.5)
252.8
252.8
TOTAL
$’M
1,434.5
347.7
22.4
35.1
(6.2)
1.8
(206.1)
(51.3)
1,577.9
3,664.1
–
(2,086.2)
655.4
252.8
1,577.9
1 Net movement in remediation assets reflects adjustments to the remediation provision for open landfill sites and leasehold improvements.
2022
NON-
LANDFILL
LAND AND
BUILDINGS
$’M
LANDFILL
ASSETS
$’M
LEASEHOLD
IMPROVEMENTS
$’M
PLANT AND
EQUIPMENT
$’M
CAPITAL
WORK IN
PROGRESS
$’M
TOTAL
$’M
Opening net book value
194.4
268.0
59.8
600.9
118.4
1,241.5
–
306.3
Additions
Acquisitions of businesses
Net movement in remediation assets 1
Disposals
Transfers of assets
Depreciation
Write-off of assets
Closing net book value
Cost
Accumulated depreciation
Net book value
–
52.4
–
(6.1)
19.3
(3.8)
–
256.2
270.8
(14.6)
256.2
–
15.7
7.4
–
121.1
(48.1)
–
364.1
915.0
(550.9)
364.1
–
–
–
–
2.0
(6.5)
–
55.3
85.4
(30.1)
55.3
18.4
–
(0.2)
123.9
(125.8)
(14.9)
602.3
1,892.0
(1,289.7)
602.3
–
–
–
(266.0)
–
(2.1)
306.3
86.5
7.4
(6.3)
0.3
(184.2)
(17.0)
156.6
156.6
1,434.5
3,319.8
–
(1,885.3)
156.6
1,434.5
1 Net movement in remediation assets reflects adjustments to the remediation provision for open landfill sites and leasehold improvements.
92
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 20 Property, plant and equipment (continued)
Accounting Policy
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).
The Group is responsible for a total of 17 landfills (2022: 17 landfills). Of the 17 landfills, eight are open and nine are
closed. Those that are open are expected to close between 2025 and 2064. 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:
• Capitalise the cost of cell development to landfill assets;
• Capitalise the cost of purchased landfill assets;
• Capitalise the estimated future costs of remediation;
• Depreciate the capitalised landfill assets over the useful life of the landfill asset or site; and
• Recognise income generated from the landfill assets in the reporting period earned.
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 Accounting Policy – Provision
for landfill remediation in note 26) 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.
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 meets 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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
93
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 20 Property, plant and equipment (continued)
Accounting Policy
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 of both the
useful life and any residual value 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
2.5 to 20 years
5 to 10 years
1 to 50 years
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.
Critical accounting estimates and judgements – 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.
94
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 21
Leases
(a) Right-of-use assets
2023
Opening net book value
New leases
Remeasurement due to a variation in lease term
Remeasurement due to rental increases
Depreciation
Closing net book value
Cost
Accumulated depreciation
Net book value
2022
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
(b) Lease liabilities
Opening balance
New leases
Acquisition of businesses
Lease principal payments
Remeasurements
Closing balance
Current
Non-current
PROPERTIES
$’M
PLANT AND
EQUIPMENT
$’M
347.5
19.1
15.0
11.5
(45.7)
347.4
483.5
(136.1)
347.4
267.2
45.1
(1.5)
–
(48.8)
262.0
413.6
(151.6)
262.0
PROPERTIES
$’M
PLANT AND
EQUIPMENT
$’M
228.9
33.9
125.4
(2.8)
3.5
(41.4)
347.5
443.9
(96.4)
347.5
250.3
58.4
3.2
(0.7)
–
(44.0)
267.2
381.7
(114.5)
267.2
2023
$’M
640.9
66.8
–
(93.1)
24.1
638.7
98.4
540.3
TOTAL
$’M
614.7
64.2
13.5
11.5
(94.5)
609.4
897.1
(287.7)
609.4
TOTAL
$’M
479.2
92.3
128.6
(3.5)
3.5
(85.4)
614.7
825.6
(210.9)
614.7
2022
$’M
499.4
95.5
128.6
(82.3)
(0.3)
640.9
100.6
540.3
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
95
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 21
Leases (continued)
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.
The following lease payments were made during the period:
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
Lease principal payments
Interest expenses relating to lease liabilities
2023
$’M
25.9
1.7
55.3
93.1
23.4
2022
$’M
19.6
1.5
51.1
82.3
19.6
199.4
174.1
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.
Accounting Policy
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.
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.
96
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 21
Leases (continued)
Critical accounting estimates and judgements – 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.
22
Intangible assets
2023
GOODWILL
$’M
LANDFILL
AIRSPACE
$’M
Opening net book value
2,352.2
475.3
BRAND
NAMES
$’M
78.6
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
129.8
Additions
Acquisitions of businesses
Remeasurement of associated
remediation liability
Amortisation
Closing net book value
Cost
Accumulated amortisation
Net book value
2022
Opening net book value
Additions
Acquisitions of businesses
Remeasurement of associated
remediation liability
Amortisation
Closing net book value
Cost
Accumulated amortisation
Net book value
–
60.2
–
–
2,412.4
2,412.4
–
2,412.4
GOODWILL
$’M
1,851.7
–
500.5
–
–
2,352.2
2,352.2
–
2,352.2
–
–
(9.3)
(41.3)
424.7
532.7
(108.0)
424.7
LANDFILL
AIRSPACE
$’M
227.1
–
307.7
(29.6)
(29.9)
475.3
542.0
(66.7)
475.3
–
–
–
–
78.6
78.6
–
78.6
BRAND
NAMES
$’M
78.6
–
–
–
–
78.6
78.6
–
78.6
Goodwill and brand names are monitored at an operating segment level.
OTHER
INTANGIBLES
$’M
24.4
16.2
10.4
–
(7.6)
43.4
122.6
(79.2)
43.4
–
–
–
(16.4)
113.4
231.3
(117.9)
113.4
CUSTOMER
INTANGIBLES
AND LICENCES
$’M
OTHER
INTANGIBLES
$’M
137.6
–
8.2
–
(16.0)
129.8
231.3
(101.5)
129.8
25.4
8.0
–
–
(9.0)
24.4
96.0
(71.6)
24.4
TOTAL
$’M
3,060.3
16.2
70.6
(9.3)
(65.3)
3,072.5
3,377.6
(305.1)
3,072.5
TOTAL
$’M
2,320.4
8.0
816.4
(29.6)
(54.9)
3,060.3
3,300.1
(239.8)
3,060.3
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
97
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 22
Intangible assets (continued)
The carrying amount of goodwill and non-amortising intangible assets (brand names) are allocated to operating segments
as follows:
2023
Goodwill
Brand names
Total
2022
Goodwill
Brand names
Total
SOLID WASTE
SERVICES
$’M
1,871.8
78.6
1,950.4
SOLID WASTE
SERVICES
$’M
1,811.6
78.6
1,890.2
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID WASTE
& HEALTH
SERVICES
$’M
TOTAL
$’M
168.2
372.4
2,412.4
–
–
78.6
168.2
372.4
2,491.0
INDUSTRIAL
& WASTE
SERVICES
$’M
LIQUID WASTE
& HEALTH
SERVICES
$’M
TOTAL
$’M
168.2
372.4
2,352.2
–
–
78.6
168.2
372.4
2,430.8
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. Cash generating units (CGUs) 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 exceeded the carrying amounts
at 30 June 2023 and 2022.
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 by a market participant because they have positive NPV have also been
included in the determination of recoverable value. Growth projects, including potential Energy from Waste and other
Blueprint 2030 projects, which are not yet endorsed by the Board have not been incorporated into the cashflows. The fair
value less costs to dispose calculations use cash flow projections based on actual operating results, the budget for the year
ending 2024 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.
These inputs have been reviewed to ensure they are consistent with market participants inputs. CPI and GDP growth
estimates are derived from the Reserve Bank of Australia economic forecasts.
The terminal value growth rate has been based on long-term growth rates. The terminal growth rate for Solid Waste
Services was 2.5% (2022: 2.5%). The terminal growth rate for Industrial & Waste Services and Liquid Waste & Health
Services remains at 2.0% (2022: 2.0%). The discount rate has been based on the Weighted Average Cost of Capital (WACC)
as determined by an independent expert.
Forecast revenue, EBITDA and capital spend assumptions used in 30 June 2023 impairment testing have been adjusted for
known and anticipated future operational changes and additional potential risk identified since 30 June 2022. These changes
are reflected in the following summary of key assumptions table.
98
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 22
Intangible assets (continued)
The table below provides a summary of the key assumptions used in the impairment testing:
ASSUMPTIONS
EBITDA growth 1
EBIT 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
2023
7.0%
10.3%
11.9%
2.5%
7.9%
11.3%
2022
7.4%
9.8%
11.3%
2.5%
7.6%
2023
12.3%
13.1%
9.3%
2.0%
7.9%
2022
7.0%
9.9%
6.9%
2.0%
7.6%
2023
12.1%
15.5%
8.6%
2.0%
7.9%
2022
9.5%
11.9%
7.6%
2.0%
7.6%
10.9%
11.3%
10.9%
11.3%
10.9%
1 Growth rates represent a compound annual growth rate over five years and have been calculated with 30 June 2023 underlying EBITDA and EBIT
as a base, excluding corporate overheads.
Reflects capital spend as a percentage of revenue, excluding government levies collected, calculated as the five-year average of forecast spend.
2
EBITDA growth assumptions
Solid Waste Services EBITDA growth of 7.0% (2022: 7.4%) assumes long-term GDP of 2.0% (2022: 2.0%) and CPI of 3.0%
(2022: 3.0%) across all activities. Short-term growth also considers major new commercial and municipal contract wins and
cost savings.
Industrial & Waste Services EBITDA growth of 12.3% (2022: 7.0%) is mainly a result of GDP and CPI growth but also
considers new and expiring contracts and cost savings.
Liquid Waste & Health Services EBITDA growth of 12.1% (2022: 9.5%) also assumes GDP and CPI growth but is adjusted
for growth achievable in the current economic and competitive environment and cost savings.
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 generally the least as its primary source of revenue is technical labour services.
Investment in capital for newly won significant contracts by the Industrial & Waste Services segment is reflected in the
short-term capital assumptions.
Climate change
Climate change is an emerging risk and presents complex challenges for companies, governments and society.
Balancing the risks of climate change through enabling the development of the circular economy in Australia, Cleanaway
has the opportunity to help its customers and the broader community take advantage of the benefits of higher-circularity,
low-carbon waste management solutions.
Cleanaway understands and acts on its responsibility to identify and respond to physical and transitional climate
risks and ensure climate change adaptation, mitigation, and resilience strategies are embedded in Cleanaway’s risk
management framework.
In FY20, Cleanaway undertook its first assessment of climate risk and opportunities, drawing on two scenarios from the
Intergovernmental Panel on Climate Change Fifth Assessment Report, with a time horizon of 2030 and 2050.
Risks identified from this assessment included:
• decarbonisation of the economy leading to contraction in carbon-intensive industries and a flow through to reduced
service demand from affected sectors;
•
the introduction of an explicit or implied carbon price; and
• an increase in the frequency and severity of extreme weather events.
A deep dive assessment of physical climate risk was completed in June 2021. Results from the modelling suggested that
Cleanaway’s assets are not highly impacted in future years.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
99
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION
22
Intangible assets (continued)
Balancing these risks are opportunities associated with the transition to a higher-circularity, low-carbon economy, such as:
•
Increased regulation favouring the domestic recycling industry (e.g. container deposits schemes, government investments
into recycling infrastructure) to reduce embodied carbon emissions;
• Emergence of new waste streams and growth in low-carbon customer solutions for existing waste streams; and
• Utilisation of the inherent energy content of waste and incentives to invest in Energy-from-Waste plants.
The Group is currently updating its climate risk and opportunity assessment and scenario analysis, with the help of a third-party
consultant. This assessment is being undertaken in alignment with the TCFD Good Practice Handbook (2nd Edition 2021),
leveraging specific experience at Cleanaway in combination with broader sector-based climate expertise. The results of this
assessment will be incorporated within our impairment assessment from 2024.
Whilst Cleanaway continues to refine its understanding of climate risk and opportunity through research and scenario
analysis, certain adjustments are built into our impairment testing models, reflecting that investment is being made now
to support both physical and transition risk. This includes:
•
•
•
Investment in landfill gas capture and processing to reduce our carbon emissions. For the year ended 30 June 2023,
a significant number of new wells were drilled to increase gas capture, existing well fields and supporting infrastructure
optimised for gas capture, and investment made in bringing on-line generators to produce renewable energy. Future
cashflows reflect increased investment in these activities.
Investigation into potential low-carbon fuel sources to replace diesel. Our future cashflows reflect the investment in two
trials of hydrogen fuelled heavy goods vehicles.
Increased environmental and property risk controls at our sites, in particular controls to manage risk associated with high
rainfall events and fire. The increased cost of management of these risks is included in the Group’s cashflows, together
with the additional expected capital requirements.
Cleanaway is also investing in opportunities to take advantage of the benefits of transitioning to a low-carbon economy.
Future revenue opportunities arising from this investment include:
• Generation of additional Australian Carbon Credit Units from increased landfill gas capture and other abatement
methods available under Australian legislation.
• GRL acquisition to capture future organics opportunities in the Sydney market.
• Revenue from increased focus on resource recovery and emerging policy to incorporate recycled content in packaging,
including our investment in three plastic pelletising plants in Victoria and New South Wales.
• Revenue from our collection activities related to the Victorian Container Deposit scheme, due to commence
in November 2023.
To the extent that opportunities are still in concept phase and the projects are not yet endorsed by the Board, these
cashflows have not been incorporated into the cashflows.
100
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 22
Intangible assets (continued)
Impact of possible changes in key assumptions
Any variation in the key assumptions used to determine the recoverable amount would result in a change to the estimated
recoverable amount. If variations in assumptions had a negative impact on the recoverable amount it could indicate
a requirement for some impairment of non-current assets. If variations in assumptions had a positive impact on the
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 2023:
Decrease in CAGR% – EBITDA
Increase in capital spend rate
Decrease in terminal value growth rate
Increase in post-tax discount rate
REASONABLY
POSSIBLE CHANGE
2%
1%
1%
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 regulatory and 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:
2023
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
2022
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
358.3
3.6%
4.4%
2.2%
1.8%
99.7
2.3%
1.3%
2.5%
1.8%
180.8
2.8%
1.7%
2.2%
1.6%
SOLID WASTE
INDUSTRIAL &
SERVICES
WASTE SERVICES
LIQUID WASTE &
HEALTH SERVICES
225.1
3.5%
2.7%
2.4%
1.8%
90.4
3.2%
1.4%
2.3%
1.6%
305.6
5.0%
2.8%
3.7%
2.6%
1
2
Percentage changes presented above represent the absolute change in the assumption value (for example post-tax discount rate increasing by 1.8% from
7.9% to 9.7%).
Terminal value for Industrial & Waste Services and Liquid Waste & Health would reflect a negative value as they are currently modelled at 2.0% terminal
growth rates.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
101
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 22
Intangible assets (continued)
Accounting Policy
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, associate or joint venture at the date of acquisition. Goodwill
on the acquisition of businesses or subsidiaries is included in intangible assets. Goodwill on acquisition of joint
ventures and associates is included in investments in joint ventures and 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 operating segments for the purpose of impairment testing.
Brand names
The useful life of brands are assessed on acquisition. The brands which are not considered to have foreseeable brand
maturity dates have been assessed as having indefinite useful lives as there is a view that there is no foreseeable limit
to the period over which brands are expected to generate net cash inflows for the entity. These brands are therefore
not amortised. Instead, these brand names are tested for impairment annually, or more frequently if events or changes
in circumstances indicate that they might be impaired, and are carried at cost less accumulated impairment losses.
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, Australian Carbon Credit
Units (ACCUs) and licences. Other intangible assets that are acquired by the Group are stated at cost less accumulated
amortisation and impairment losses. ACCUs are recognised upon generation of the ACCUs at fair value and
derecognised once sold.
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). 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.
Impairment of assets
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.
102
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 22
Intangible assets (continued)
Critical accounting estimates and judgements – Recoverable amount of non-financial 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 utilise a discounted cash flow approach which requires 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.
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.
NAME OF ENTITY
Joint ventures:
Cleanaway ResourceCo RRF Pty Ltd
Circular Plastics Australia Pty Ltd
Tomra Cleanaway Pty Ltd
Western Sydney Energy and Resource
Recovery Centre Pty Ltd 1
Wonthaggi Recyclers Pty Ltd
Daniel Sharpsmart New Zealand Limited
New Zealand
Associates:
Circular Plastics (PET) Holdings Pty Ltd
Australia
30 June
OWNERSHIP
INTEREST
CARRYING VALUE
OF INVESTMENT
COUNTRY
REPORTING
DATE
2023
%
2022
%
2023
$’M
2022
$’M
Australia
Australia
Australia
Australia
Australia
30 June
30 June
30 June
30 June
30 June
30 June
45
50
50
51
50
50
33
45
50
50
51
50
50
33
14.4
7.7
6.2
9.5
0.4
–
13.4
51.6
16.2
7.7
5.4
9.5
0.3
–
13.1
52.2
1 Decisions regarding relevant activities of the entity requires unanimous consent of owners, and as such, the Group has joint control.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
103
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 23 Equity accounted investments (continued)
(a) 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 $1.6 million (2022: $1.0 million) and
prepayments $1.5 million (2022: $1.3 million)
Non-current assets
Current liabilities
Non-current liabilities, including deferred tax liabilities $0.6 million (2022: $2.6 million) and
long-term borrowings $49.5 million (2022: $48.3 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 $3.0 million (2022: $3.7 million)
Finance costs, including interest expense $3.3 million (2022: $2.4 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
2023
$’M
5.7
82.4
(3.9)
(52.2)
32.0
14.4
14.4
2023
$’M
22.8
(13.6)
(9.9)
(3.3)
(4.0)
–
(4.0)
(4.0)
(1.8)
2022
$’M
6.9
84.9
(4.4)
(51.4)
36.0
16.2
16.2
2022
$’M
19.7
(13.2)
(10.8)
(2.4)
(6.7)
–
(6.7)
(6.7)
(3.0)
The joint venture had capital commitments of $0.3 million as at 30 June 2023 (2022: $0.1 million). The joint venture had
no contingent liabilities as at 30 June 2023 (2022: nil). Cleanaway ResourceCo RRF Pty Ltd cannot distribute its profits
without consent from both venture partners.
104
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 23 Equity accounted investments (continued)
(b) Circular Plastics Australia Pty Ltd
The Group has a 50% interest in Circular Plastics Australia Pty Ltd, a plastics recycling plant for the processing of post-consumer HDPE
and PP located in Laverton, VIC. 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 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 Circular Plastics Australia Pty Ltd:
Current assets, including cash and cash equivalents $1.6 million (2022: $2.5 million)
Non-current assets
Current liabilities
Non-current liabilities, including long-term borrowings $18.4 million (2022: $1.0 million)
Equity
Group’s share in equity
Group’s carrying amount of the investment
2023
$’M
1.6
34.6
(2.4)
(18.4)
15.4
7.7
7.7
2022
$’M
2.5
17.7
(0.5)
(4.3)
15.4
7.7
7.7
The construction of a recycling plant in Laverton, VIC was being commissioned at 30 June 2023.
The joint venture had capital commitments of $8.0 million as at 30 June 2023 (2022: nil). The joint venture had no contingent
liabilities as at 30 June 2023 (2022: nil). Circular Plastics Australia Pty Ltd cannot distribute its profits without the consent
from both venture partners.
(c) Tomra Cleanaway Pty Ltd
The Group has a 50% interest in Tomra Cleanaway Pty Ltd, a provider of network operator services for the NSW Container
Deposit Scheme. The Group’s interest in Tomra Cleanaway 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 Tomra Cleanaway Pty Ltd:
Current assets, including cash and cash equivalents $30.2 million (2022: $26.8 million)
and prepayments $0.5 million (2022: $0.2 million)
Non-current assets
Current liabilities
Non-current liabilities, including long-term borrowings nil (2022: $3.4 million)
Equity
Group’s share in equity
Group’s carrying amount of the investment
Summarised statement of profit or loss of Tomra Cleanaway Pty Ltd:
Revenue
Expenses
Profit before tax
Income tax expense
Profit for the year
Total comprehensive profit for the year
Group’s share of profit for the year
2023
$’M
37.2
0.1
(24.9)
–
12.4
6.2
6.2
2023
$’M
218.4
(216.2)
2.2
(0.7)
1.5
1.5
0.8
2022
$’M
37.1
0.3
(23.2)
(3.4)
10.8
5.4
5.4
2022
$’M
200.5
(195.3)
5.1
(1.5)
3.6
3.6
1.8
The joint venture had no contingent liabilities or capital commitments as at 30 June 2023 (2022: nil). Tomra Cleanaway
Pty Ltd cannot distribute its profits without the consent from both venture partners.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
105
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 23 Equity accounted investments (continued)
(d) 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 non-current assets held by the joint venture reflect
the cost of property purchased and located in Eastern Creek, Western Sydney. This property is still held by the Joint Venture
company. 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 (2022: $0.1 million)
Non-current assets
Equity
Group’s share in equity
Group’s carrying amount of the investment
2023
$’M
0.1
18.6
18.7
9.5
9.5
2022
$’M
0.1
18.6
18.7
9.5
9.5
The joint venture had no contingent liabilities or capital commitments as at 30 June 2023 (2022: nil). Western Sydney Energy
and Resource Recovery Centre Pty Ltd cannot distribute its profits without consent from both venture partners.
(e) Other joint ventures (disclosed in aggregate)
Summarised statement of profit or loss of all other joint ventures:
Profit for the year
Total comprehensive income for the year
Group’s share of profit for the year
2023
$’M
1.8
1.8
0.9
2022
$’M
1.8
1.8
0.9
(f) Circular Plastics (PET) Holdings Pty Ltd
The Group has a 33% interest in Circular Plastics (PET) Holdings Pty Ltd, which constructed a PET recycling facility in Albury,
NSW. The Group’s interest in Circular Plastics (PET) Holdings 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 (PET) Holdings 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
2023
$’M
9.6
98.0
(21.1)
(46.5)
40.0
13.4
13.4
2022
$’M
8.0
78.0
(14.2)
(32.4)
39.4
13.1
13.1
106
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 23 Equity accounted investments (continued)
Summarised statement of profit or loss of Circular Plastics (PET) Holdings Pty Ltd:
Revenue
Expenses
Loss before tax
Income tax benefit
Loss for the year
Total comprehensive loss for the year
Group’s share of loss for the year
2023
$’M
33.5
(36.1)
(2.6)
0.8
(1.8)
(1.8)
(0.6)
2022
$’M
5.5
(9.0)
(3.5)
1.1
(2.4)
(2.4)
(0.8)
The associate had capital commitments of $9.0 million as at 30 June 2023 (2022: $1.2 million). The associate had
no contingent liabilities as at 30 June 2023 (2022: nil). Circular Plastics (PET) Holdings Pty Ltd cannot distribute its profits
without the consent from a simple majority of associate partners.
(g) Transactions with equity accounted investments
The following table provides the total amount of transactions with equity accounted investments during the year ended
30 June 2023:
Joint ventures
Associates
Joint ventures
Associates
SERVICES TO EQUITY
ACCOUNTED INVESTMENTS
PURCHASES FROM EQUITY
ACCOUNTED INVESTMENTS
INTEREST REVENUE FROM EQUITY
ACCOUNTED INVESTMENTS
2023
$’M
93.0
9.6
102.6
2022
$’M
83.5
1.6
85.1
2023
$’M
0.8
–
0.8
2022
$’M
2.3
–
2.3
2023
$’M
1.2
0.2
1.4
2022
$’M
0.7
–
0.7
TRADE AMOUNTS OWED
BY EQUITY ACCOUNTED
INVESTMENTS
TRADE AMOUNTS OWED TO
EQUITY ACCOUNTED
INVESTMENTS
LOANS TO
EQUITY ACCOUNTED
INVESTMENTS 1
2023
$’M
0.4
0.1
0.5
2022
$’M
0.7
0.5
1.2
2023
$’M
–
0.3
0.3
2022
$’M
3.6
–
3.6
2023
$’M
15.4
3.7
19.1
2022
$’M
16.6
1.5
18.1
1
Loans to equity accounted investments comprise unsecured loans to: Cleanaway ResourceCo RRF Pty Ltd of $15.1 million (2022: $14.6 million) repayable
on 30 June 2027; Circular Plastics Australia (PET) Pty Ltd of $3.7 million (2022: $1.5 million) repayable on 2 March 2026; Daniels Sharpsmart New Zealand
Limited of $0.3 million (2022: $0.3 million) repayable on 22 December 2025; and Tomra Cleanaway Pty Ltd of nil (30 June 2022: $1.7 million).
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
107
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 23 Equity accounted investments (continued)
Accounting Policy
Equity accounted investments are those entities over which the Group has either significant influence (associate
entities) or joint control and has rights to the net assets of the entity (joint venture entities). The Group does not
have power over these entities either through management control or voting rights. Investments in associates and
joint ventures are accounted for using the equity method of accounting and are collectively referred to as “equity
accounted investments” in this report.
Under the equity method of accounting, the investments in associates and joint ventures are initially recognised
at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the
associate or joint venture in the Consolidated Income Statement. Dividends received from associates and joint
ventures are recognised as a reduction in the carrying amount of the investment.
Where the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate
or joint venture, including any other unsecured long-term receivables, the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the associate or joint venture.
Unrealised gains on transactions with associates and joint ventures are eliminated to the extent of the Group’s
interest in the associates and joint ventures. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of the associates and joint ventures have
been changed where necessary to ensure consistency with the policies adopted by the Group.
24 Other assets
Current
Prepayments
Loans to equity accounted investments 1
Total current other assets
Non-current
Costs to fulfil contracts 2
Prepayments
Loans to equity accounted investments 1
Total non-current other assets
2023
$’M
29.7
–
29.7
7.8
0.8
19.1
27.7
2022
$’M
26.4
3.2
29.6
5.0
0.2
14.9
20.1
1
2
The Group has assessed expected credit loss (ECL) on the loans to equity accounted investments, and based on the expected earnings to be generated
by the joint ventures, has not recognised any provisions for ECL.
The Group amortised $1.6 million (2022: $0.6 million) of capitalised costs to fulfil contracts during the period.
Accounting Policy
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.
108
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 25 Employee entitlements
Current
Annual leave
Long service leave
Other
Total current employee entitlements
Non-current
Long service leave
Total non-current employee entitlements
2023
$’M
53.3
26.6
17.1
97.0
10.0
10.0
2022
$’M
48.6
24.3
18.1
91.0
8.7
8.7
During the year the Group contributed $60.7 million (2022: $51.6 million) to defined contribution plans. These contributions
are expensed as incurred.
Accounting Policy
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and vesting sick leave 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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
109
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 26 Provisions
Current
Rectification provisions
Remediation provisions
Other
Total current provisions
Non-current
Rectification provisions
Remediation provisions
Other
Total non-current provisions
2023
$’M
2022
$’M
42.4
66.3
36.0
144.7
16.6
514.4
33.3
564.3
33.7
52.9
110.4
197.0
9.5
487.9
38.6
536.0
Included in other provisions is an amount of $21.4 million (2022: $21.1 million) in relation to workers compensation
self-insurance of the Group under the Comcare scheme. This amount is comprised of $8.1 million (2022: $7.9 million)
classified as current and $13.3 million (2022: $13.2 million) classified as non-current. The provision for workers compensation
represents the future claim payments required under the Safety, Rehabilitation and Compensation Act 1998, and associated
expenses, in respect of claims incurred from 1 July 2006, being the commencement of the self-insurance arrangements,
up to 30 June 2023. The provision has been calculated using a claim inflation rate of 3.62% (2022: 3.71%) and
a discount rate of 4.18% (2022: 3.38%). 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 1
Provisions made
Provisions used
Provisions reversed
Unwinding of discount
Change in discount rate
Change in assumptions 2
Rectification and remediation spend
Closing balance
RECTIFICATION
REMEDIATION
OTHER
TOTAL
2023
$’M
2022
$’M
2023
$’M
2022
$’M
2023
$’M
2022
$’M
2023
$’M
2022
$’M
43.2
15.9
540.8
306.8
149.0
51.9
733.0
374.6
–
–
–
–
0.4
(0.1)
51.0
(35.5)
59.0
–
–
–
–
0.2
(0.4)
29.7
(2.2)
–
282.0
23.2
9.7
–
–
15.1
(22.0)
56.6
(33.0)
–
–
4.6
(98.1)
58.7
(22.9)
(70.4)
29.4
(36.3)
(1.3)
0.3
(1.4)
–
–
105.4
25.3
(31.4)
(1.8)
0.1
(0.5)
–
–
(70.4)
52.6
(36.3)
(1.3)
15.8
(23.5)
107.6
(68.5)
387.4
35.0
(31.4)
(1.8)
4.9
(99.0)
88.4
(25.1)
43.2
580.7
540.8
69.3
149.0
709.0
733.0
1
2
The amount of $70.4 million relates to the unfavourable contracts recognised in the acquisition of the Sydney Resource Network, which were settled
in the current period as a result of the acquisition of GRL. Refer to note 28.
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 4.18% (2022: 3.68%) for landfill remediation and rectification of landfills and 4.12%
(2022: 3.59%) for industrial property remediation.
110
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 26 Provisions (continued)
Accounting Policy
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.
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 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 the 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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
111
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 26 Provisions (continued)
Accounting Policy
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.
Critical accounting estimates and judgements – 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.
The rectification provision related to the damage caused by recent floods at the New Chum landfill site have been
determined applying the most likely method to bring the landfill back into compliance. Judgement has been applied
in determining the amount of leachate expected to be extracted from the landfill body and the method of treating
and disposing groundwater which rose after the flood event.
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.
Critical accounting estimates and judgements – Climate Change
The Group has considered the emerging risk of climate change in determining the remediation provisions for the
landfills. In particular, an assessment has been conducted to determine the most reliable and durable capping design.
Across most of the Group’s landfill sites conventional geosynthetic capping designs have been assumed. There has
been a move away from Phytocaps where extreme drought and rainfall events can affect the viability of the cap.
112
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 27 Other liabilities
Current
Deferred settlement liabilities 1
Landfill creation liability 2
Contract liabilities 3
Total current other liabilities
Non-current
Deferred settlement liabilities 1
Landfill creation liability 2
Contract liabilities 3
Total non-current other liabilities
2023
$’M
5.8
28.5
11.8
46.1
78.7
51.8
1.6
2022
$’M
6.1
26.7
6.4
39.2
78.4
76.2
0.8
132.1
155.4
2
1
Includes $84.5 million (2022: $84.1 million) relating to the acquisition of Melbourne Regional Landfill, acquired on 28 February 2015. The deferred
consideration was recognised at the acquisition date resulting from transaction payments for site preparation and operation under the agreement
to be paid to Boral over the life of the landfill and was determined using a discount rate of 7.0%.
The landfill creation liability relates to Melbourne Regional Landfill and is the amount payable to Boral in relation to airspace progressively made available
by Boral. Cleanaway pay Boral for the airspace as the airspace is consumed, however the liability arises as Cleanaway takes control of the airspace.
3 A contract liability is the obligation to provide services to a customer for which the Group has received consideration from the customer. These liabilities
generally arise when a customer is invoiced upon delivery of a container or bin, but Cleanaway still has the obligation to pick up the container or bin
and dispose of the waste collected. Revenue for the period included $6.4 million (2022: $5.7 million) which was included in contract liabilities at the
beginning of the year.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
113
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 28 Business combinations
Year ended 30 June 2023
Global Renewables Holdings Pty Ltd
On 31 August 2022 the Group acquired a 100% interest in the Global Renewables Holdings Pty Ltd (GRL). GRL
is a New South Wales (NSW) Environmental Protection Authority (EPA) licensed, large-scale composting facility that
processes approximately 220kt per annum of Sydney’s mixed household waste in Western Sydney. The acquisition
of GRL accelerates Cleanaway’s BluePrint 2030 organics strategy by providing high circularity, low-carbon solutions for
‘Red bin’ mixed waste today and future FOGO bin waste. In acquiring this business the unfavourable contract provision,
recognised in the acquisition of the Sydney Resource Network from Suez, is settled. Details of the business combination
are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Global Renewables Holdings 31 August 2022
Licensed composting facility based
in Sydney, NSW
Solid Waste Services
The final 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
Tax receivable
Inventories
Property, plant and equipment
Intangible assets
Net deferred tax assets
Other assets
Liabilities
Trade and other payables
Employee entitlements
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
Intangibles represent the value assigned to 748,367 Australian Carbon Credit Units (ACCUs). The fair value attributed
to these ACCUs represents the value a market participant with a goal of reducing carbon emissions would pay.
Goodwill acquired comprises the value of expected synergies arising from integration of the acquired business and
is non-deductible for income tax purposes.
Cash paid (included in cash flows from investing activities)
Effective settlement of the unfavourable contract
Total purchase consideration
114
2023
$’M
0.9
5.0
1.6
3.4
22.4
10.4
0.1
0.7
44.5
5.8
2.3
8.1
36.4
60.2
96.6
2023
$’M
(167.0)
70.4
(96.6)
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 28 Business combinations (continued)
Net cash acquired (included in cash flows from investing activities)
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
2023
$’M
0.9
(167.0)
(3.4)
(169.5)
From the date of acquisition to 30 June 2023, the business contributed $2.2 million of revenue and $16.4 million to profit
before tax to the Group. If the business had been acquired at the beginning of the reporting period, revenue of $2.7 million
and profit before tax of $19.7 million would have been contributed to the Group.
Year ended 30 June 2022
(a) Sydney Resource Network
On 18 December 2021 the Group acquired a group of assets, located in Sydney, NSW from Suez Groupe (S.A.S) and Suez
International (S.A.S). The group of assets which constitute a business are known as the ‘Sydney Resource Network’ and
comprise the properties, right-of-use assets, plant and equipment and customer contracts to enable waste management
businesses to be conducted at Kemps Creek landfill which accepts dry/restricted waste and is an organics processing site;
Lucas Heights landfill which accepts putrescible waste; and five transfer stations. This acquisition complements the Group’s
existing NSW Solid Waste Service business and the Group expects to derive significant synergies from the acquisition.
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Sydney Resource Network 18 December 2021
Waste disposal business based
in Sydney, NSW
Solid Waste Services
As at 30 June 2022, provisionally determined values were reported. Subsequent to 30 June 2022, final fair values for the
business combination were determined. Comparative amounts for 30 June 2022 have been restated in this financial report
to the final determined fair values. The restated aggregated fair value of the identifiable assets and liabilities as at the date
of acquisition were:
Assets
Inventories
Property, plant and equipment
Right-of-use assets
Intangible assets
Other assets
Liabilities
Provisions 1
Employee entitlements
Lease liabilities
Net deferred tax liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
PROVISIONAL
FAIR VALUE
REPORTED AT
30 JUNE 2022
$’M
ADJUSTMENTS
TO
PROVISIONAL
FAIR VALUE
$’M
FINAL FAIR
VALUE
$’M
2.0
82.0
126.3
313.1
0.2
523.6
400.3
2.4
126.3
2.7
531.7
(8.1)
511.2
503.1
–
–
–
–
–
–
(14.0)
–
–
–
(14.0)
14.0
(14.0)
–
2.0
82.0
126.3
313.1
0.2
523.6
386.3
2.4
126.3
2.7
517.7
5.9
497.2
503.1
1
The decrease in the fair value of provisions of $14.0 million comprises: $15.7 million reduction in unfavourable contract provisions, $2.4 million increase
in remediation provisions and $0.7 million reduction in waste disposal provisions.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
115
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 28 Business combinations (continued)
For some sites that were acquired through the acquisition, the assessment of the extent of any environmental contamination
on the site and any remediation obligations continues. In each case the environmental contamination pre-dated the Group’s
acquisition of the sites. No present remediation obligation exists and therefore a contingent liability has not been recognised
on the acquisition Balance Sheet in respect of any such contamination.
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
2022
$’M
(503.1)
(17.0)
(520.1)
From the date of acquisition to 30 June 2022, the business contributed $270.0 million of revenue (revenue net of landfill
levies of $127.5 million) and $21.1 million of profit before tax to the Group, after amortisation of customer intangibles
of $0.2 million. If the business had been acquired at the beginning of the reporting period, revenue of $520.0 million
(revenue net of landfill levies of $242.7 million) and profit before tax of $40.4 million would have been contributed
to the Group.
(b) Vins Bins
During the year ended 30 June 2022, the Group acquired the business and assets of Vins Bins Pty Ltd. Details of the business
combination are provided below:
BUSINESS ACQUIRED
DATE OF ACQUISITION
DESCRIPTION OF THE BUSINESS
OPERATING SEGMENT
Vins Bins Pty Ltd
31 March 2022
Skip and bin hire services
in Mornington Peninsula, 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
Right-of-use assets
Intangible assets
Liabilities
Employee entitlements
Provisions
Lease liabilities
Net deferred tax liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration
Goodwill acquired comprises the value of expected synergies arising from integration of the acquired business 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)
Total purchase consideration
116
2022
$’M
4.5
2.3
2.8
9.6
0.3
1.1
2.3
0.4
4.1
5.5
3.3
8.8
2022
$’M
(8.4)
(0.4)
(8.8)
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 28 Business combinations (continued)
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
2022
$’M
(8.4)
(0.1)
(8.5)
From the date of acquisition to 30 June 2022, the business contributed $2.1 million of revenue and $0.2 million of profit
before tax to the Group. If the business had been acquired at the beginning of the reporting period, revenue of $8.3 million
and profit before tax of $0.6 million would have been contributed to the Group.
Accounting Policy
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 and included within other expenses in the
Consolidated Income Statement.
Critical accounting estimates and judgements – Airspace intangible acquired
in a business combination
When Cleanaway acquires landfills in a business combination, the fair value is based on the net present value (NPV)
of all cash flows to be derived from the landfill, excluding the remediation cashflows which are recognised as
a separate liability. Assumptions are made in respect of estimated forecast cash flows from the landfill throughout
the remaining useful life of the landfill (i.e. until all remaining airspace capacity is filled) and the cashflows are
discounted applying an implied internal rate of return of the overall acquisition. The key value drivers in the cashflow
estimates include remaining airspace capacity and compaction rates, assumed revenue to be derived from selling
the airspace, cost assumptions both fixed and variable to operate and maintain the landfill sites, capital expenditure
on cell construction and infrastructure, discount rate and working capital movements. The value of the airspace
is determined at the date of acquisition using assumptions that a market participant would apply. These estimates are
subject to risk and uncertainty; such that there is a possibility that changes in circumstances will alter the value of the
airspace in the future. The airspace is tested for impairment with other assets in the CGU to which it belongs. Further
details on the Group’s impairment assessment and policy are disclosed in note 22.
Critical accounting estimates and judgements – Valuation of unfavourable contracts acquired
in a business combination
The fair value attributed to unfavourable contracts considers the manner in which a market participant would seek
to settle that liability. A model determining the NPV of the unfavourable market terms is used as a basis to determine
the likely amount at which a market participant would be able to settle the liabilities either through trading out the
contracts or paying out the contracts. Judgement is applied in determining the inputs and assumptions in these models.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
117
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 29 Subsidiaries
The Group’s principal subsidiaries at 30 June 2023 are set out below:
EFFECTIVE INTEREST 4
2023
%
2022
%
Active Industrial Solutions Pty Ltd 1
AJ Baxter Pty Ltd 1
ASP Plastics Pty Limited 1
ASP Healthcare Pty Limited 1
Baxter Business Pty Ltd 1
Baxter Recyclers Pty Ltd 1
Cleanaway Co Pty Ltd 1
Cleanaway Daniels Australia Pty Ltd 1
Cleanaway Daniels FMD Pty Ltd 1
Cleanaway Daniels Laboratory Products Pty Ltd 1
Cleanaway Daniels NSW Pty Ltd 1
Cleanaway Daniels Pty Ltd 1
Cleanaway Daniels Services Pty Ltd 1
Cleanaway Daniels VIC Pty Ltd 1
Cleanaway Daniels Waste Services Pty Ltd 1
Cleanaway Daniels Wollongong Pty Ltd 1
Cleanaway Equipment Services Pty Ltd 1
Cleanaway Hygiene Pty Ltd 1
Cleanaway Industrial Solutions Pty Ltd 1
Cleanaway Industries Pty Ltd 1
Cleanaway Landfill Holdings Pty Ltd 1
Cleanaway (No. 1) Pty Ltd 1
Cleanaway Operations Pty Ltd 1
Cleanaway Organics Pty Ltd 1
Cleanaway Pty Ltd 1
Cleanaway Recycling Pty Ltd 1
Cleanaway Refiners Pty Ltd 1
Cleanaway Resource Recycling Pty Ltd 1
Cleanaway Solid Waste Pty Ltd 1
Cleanaway Superior Pak Pty Ltd 1
Cleanaway Waste Management Limited (Parent entity)
Daniels Manufacturing Australia Pty Ltd 1
Enviroguard Pty Ltd 1
Environmental Recovery Services Pty Ltd 1
Global Renewables Holdings Pty Ltd 1
Grasshopper Environmental Pty Ltd 1
Landfill Land Holdings Pty Ltd 1
Landfill Operations Pty Ltd 1
Mann Waste Management Pty Ltd 1
Max T Pty Ltd 1
Nationwide Oil Pty Ltd 1
NQ Resource Recovery Pty Ltd 1
118
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
100
100
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 29 Subsidiaries (continued)
Oil and Fuel Salvaging (Queensland) Pty Ltd 1
Pilbara Environmental Services Pty Ltd (formerly PTK Environmental Services Pty Ltd) 2
Pilbara Logistics Pty Ltd 1
PT Environmental Services Pty Ltd 1
PTW Environmental Services Pty Ltd 3
Rubus Holdings Pty Ltd 1
Rubus Intermediate One Pty Ltd 1
Rubus Intermediate Two Pty Ltd 1
RWS Admin Pty Ltd 3
Sterihealth Sharpsmart Pty Ltd 1
T Environmental Services Pty Ltd 1
Transpacific Baxter Pty Ltd 1
Transpacific Cleanaway Holdings Pty Ltd 1
Transpacific Co Pty Ltd 1
Transpacific Environmental Services Pty Ltd 1
Transpacific Innovations Pty Ltd 1
Transpacific Paramount Service Pty Ltd
Transpacific Resources Pty Ltd 1
Transwaste Technologies Pty Ltd 1
Transwaste Technologies (1) Pty Ltd 1
Waste Management Pacific (SA) Pty Ltd 1
Waste Management Pacific Pty Ltd 1
EFFECTIVE INTEREST 4
2023
%
100
50
100
100
–
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
2022
%
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1
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 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 entities were deregistered on 28 June 2023.
3
4 All entities were incorporated in Australia.
Accounting Policy
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
119
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 29 Subsidiaries (continued)
Accounting Policy
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.
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 set out below:
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
Write down loan to equity accounted investment
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
Other comprehensive income
Net (loss)/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.
120
2023
$’M
2022
$’M
3,504.6
2,959.6
19.6
(1,183.3)
(1,151.1)
(380.2)
(64.5)
(205.1)
–
(0.7)
(363.3)
(51.3)
–
124.7
(96.2)
28.5
(8.0)
20.5
(1.5)
(1.5)
19.0
15.9
(1,023.9)
(939.2)
(310.4)
(51.9)
(138.2)
(6.3)
(1.1)
(321.9)
(8.1)
(8.9)
165.6
(53.0)
112.6
(34.2)
78.4
3.3
3.3
81.7
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 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
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Lease liabilities
Employee entitlements
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease 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
2023
$’M
2022
$’M
99.1
541.7
31.2
29.2
701.2
1,577.6
609.4
3,072.5
51.6
19.5
46.3
65.7
523.4
26.7
29.6
645.4
1,434.5
612.2
3,060.3
52.2
9.7
19.3
5,376.9
6,078.1
5,188.2
5,833.6
489.1
3.3
98.4
97.0
144.7
46.1
878.6
950.4
540.3
46.1
10.0
564.3
153.3
2,264.4
3,143.0
2,935.1
465.9
–
98.1
91.0
197.0
39.2
891.2
1,042.9
540.2
39.3
8.7
536.0
155.3
2,322.4
3,213.6
2,620.0
3,101.8
34.0
(200.7)
2,700.6
31.6
(112.2)
2,935.1
2,620.0
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
121
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 31 Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Reserves
Total equity
Profit for the period
Total comprehensive income for the period
The parent entity guarantees the contractual commitments of its subsidiaries as requested.
32
Financial risk management
2023
$’M
0.1
2022
$’M
0.1
4,356.2
3,946.4
10.0
1,020.5
3.1
978.0
3,101.8
2,700.6
199.5
34.4
235.8
32.0
3,335.7
2,968.4
72.7
71.2
106.8
110.1
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.
122
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 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 Term Loan
Lease liabilities
Variable rate instruments
Bank and other loans
USPP Notes 1
2023
2022
WEIGHTED
AVERAGE
INTEREST RATE
%
BALANCE
$’M
WEIGHTED
AVERAGE
INTEREST RATE
%
2.1
3.6
5.3
5.5
85.5
638.7
724.2
516.6
348.3
864.9
2.3
3.5
2.4
2.5
BALANCE
$’M
83.5
640.9
724.4
607.5
351.9
959.4
1 At 30 June 2023, 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 the CCIRS
the variable three-month Bank Bill Swap Rate plus a weighted average margin of 1.61% (2022: 1.61%) is applied against a fixed principal balance
of A$397.6 million and 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 (2022: US$270.0 million) are also exchanged at drawdown
and maturity for A$397.6 million (2022: A$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 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 $8.7 million (2022: $10.1 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.
The export bans imposed by the government, which have the effect of banning export of certain waste recyclable materials
progressively over time from early 2021 through to mid 2024, have increased the amount of waste material that is recycled
and processed into value added products in Australia. All levels of Government have been 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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
123
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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 at bank and on hand
Trade and other receivables 1
Other financial assets 2
NOTE
11
12
2023
$’M
102.1
551.7
19.1
672.9
2022
$’M
66.5
532.5
18.1
617.1
1
2
Refer to note 12 for an analysis of credit risk and impairment associated with the Group’s trade receivables balance.
Refer to note 24 for an assessment of credit risk and impairment associated with the loans to equity accounted investments.
(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 2023 is $528.2 million (2022: $487.7 million). The current portion
of the Group’s borrowings at 30 June 2023 is nil (2022: nil). The Group considers liquidity risk to be mitigated due to the level
of unutilised facilities available, the level of headroom in each covenant measure and the maturity profile of existing facilities.
The following table discloses the contractual maturities of financial liabilities and derivative financial instruments,
including estimated interest payments and excluding the impact of netting agreements:
2023
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
47.0
105.8
495.3
34.2
682.3
532.9
94.3
–
37.2
664.4
393.7
228.2
–
44.5
666.4
294.3
197.6
–
167.8
659.7
1,267.9
625.9
495.3
283.7
950.4
638.7
495.3
164.8
2,672.8
2,249.2
22.0
(11.8)
10.2
21.7
(11.8)
9.9
196.2
(170.5)
25.7
305.6
(294.3)
11.3
545.5
(488.4)
57.1
n/a
n/a
(46.1)
124
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 32
Financial risk management (continued)
2022
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
30.5
109.2
470.1
32.8
642.6
30.5
92.6
–
33.5
156.6
867.5
239.9
–
73.7
1,181.1
426.1
226.8
–
174.2
827.1
1,354.6
1,042.9
668.5
470.1
314.2
640.9
470.1
187.4
2,807.4
2,341.3
11.4
(10.1)
1.3
11.4
(10.2)
1.2
34.3
(30.3)
4.0
426.1
(426.0)
0.1
483.2
(476.6)
6.6
n/a
n/a
(39.3)
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 $240.6 million (2022: $169.7 million). The Group has committed
to future cash outflows of $11.0 million (2022: $6.7 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 2023 (2022: nil).
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(b) for details of the
Group’s bank guarantees and insurance bonds.
(d) Fair value measurement and hedges
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:
2023
Opening fair value of liability as at 1 July 2022
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 2023
Carrying amount of liability as at 30 June 2023
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
(83.5)
–
–
(0.2)
–
–
(83.7)
(85.5)
–
(355.3)
–
17.9
–
(13.8)
–
(351.2)
(348.3)
46.4
(39.3)
0.3
(19.3)
0.1
14.2
(2.1)
(46.1)
(46.1)
n/a
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
125
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 32
Financial risk management (continued)
2022
Opening fair value of liability as at 1 July 2021
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 2022
Carrying amount of liability as at 30 June 2022
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
(91.6)
–
–
8.1
–
–
(83.5)
(83.5)
–
(370.9)
–
46.7
–
(31.1)
–
(355.3)
(351.9)
42.3
(31.5)
0.6
(44.1)
4.0
27.0
4.7
(39.3)
(39.3)
n/a
1
Fair value hedges fair value movements in the hedging instruments of $(19.3) million (2022: $(44.1) million) includes an effective portion of $(17.9) million
(2022: $(46.7) million) and an ineffective portion of $(1.4) million (2022: $2.6 million). Cash flow hedges fair value movements of $14.2 million
(2022: $27.0 million) includes an effective portion of $13.8 million (2022: $31.1 million) and an ineffective portion of $0.4 million (2022: $(4.1) million).
The notional amount of the derivatives are US$270.0/$397.6 million.
The cross-currency interest rate swaps (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 credit and debit 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.
126
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 32
Financial risk management (continued)
Accounting Policy
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.
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.
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
127
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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, SA. 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 was appealed
to the South Australian Supreme Court and was partly successful, with six of the eight charges being set aside. A further
appeal to the full bench of the South Australian Supreme Court with respect to the two outstanding charges has been
made by Cleanaway. The appeal was heard in November 2022 and Cleanaway are still awaiting the appeal judgement.
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 11 September 2020, the Victorian Environment Protection Authority (EPA) issued an invoice to the Group in the
amount of $6.9 million for an alleged underpayment of the landfill levy payable for financial year 2017–2018. The alleged
underpayment related to materials purchased from the adjacent Boral quarry. The Boral material was used by Cleanaway
at its Melbourne Regional Landfill as daily cover during financial year 2017–2018. The EPA’s position is that the landfill
levy is payable in respect of the Boral material as it was ‘waste’ within the meaning of the Environment Protection Act
1970. Cleanaway does not agree that this material was ‘waste’ as the material was purchased from Boral and used in its
landfilling operations. On 16 August 2021, the EPA commenced proceedings in the Magistrates’ Court of Victoria seeking
recovery of the $6.9 million plus interest and costs (Proceedings). The Proceedings have been moved to the Supreme Court
and Cleanaway are awaiting a court date. On 2 February 2022, the EPA issued an invoice to the Group for $4.7 million
in relation to an alleged underpayment of the landfill levy for financial year 2018–2019. The alleged underpayment also
relates to material Cleanaway purchased from Boral for use as cover material. Cleanaway’s position is that the material
is not waste and as such, does not attract the landfill levy.
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.
128
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 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
2023
$’M
102.7
6.7
109.4
2022
$’M
61.0
0.9
61.9
(b) 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 licences. 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
2023
$’M
18.6
179.8
80.9
279.3
2022
$’M
18.0
177.0
85.1
280.1
1
Excludes performance related obligations and other amounts that cannot be ascertained, including enforcement and other costs and charges which the
Group may become liable for in the event of non-performance.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
129
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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
END OF
PERFORMANCE
OR SERVICE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2022
GRANTED
DURING THE
PERIOD
VESTED AND
EXERCISED
DURING THE
PERIOD
FORFEITED
DURING THE
PERIOD
LAPSED
DURING THE
PERIOD
PERFORMANCE
RIGHTS AT
30 JUNE 2023
LONG-TERM INCENTIVE PLAN
2020 LTI
30-Oct-19
30-Jun-22
2,083,235
16-Dec-20
30-Jun-23
1,833,910
30-Jun-24
2,577,876
30-Jun-25
– 2,926,974
–
–
–
–
–
–
(299,109)
(260,545)
(318,650)
(1,010,717)
–
(1,072,518)
–
2021 LTI
2022 LTI
2023 LTI
25-Oct-21
Various 1
25-Oct-21
Various 2
22-Oct-21
SHORT-TERM INCENTIVE PLAN
2021 STI
2022 STI
OTHER GRANTS
CEO sign on
EGM SWS sign on 18-Feb-22
EGM LW&H and
I&WS sign on
01-Mar-23
Executive sign on 29-Aug-22
Executive sign on 10-Oct-22
Total
30-Jun-22
30-Jun-23
189,161
–
(189,161)
–
221,613
–
Various 3
Various 4
532,319
159,222
–
–
(152,091)
(29,983)
Various 5
Various 6
Various 7
–
–
–
173,745
145,048
75,063
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,534,801
2,317,331
2,608,324
–
221,613
380,228
129,239
173,745
145,048
75,063
7,375,723 3,542,443 (1,381,952) (878,304) (1,072,518)
7,585,392
Vested and exercisable at 30 June 2023
221,613
1 On 16 September 2022, 1,841,190 LTI 2023 rights were granted. On 10 October 2022, 32,419 LTI 2023 rights were granted. On 2 November 2022,
19,937 LTI 2023 rights were granted. Mr M Schubert’s 727,700 LTI 2023 rights were granted on 21 October 2022 following approval at the Annual
General Meeting (AGM). On 22 November 2022, 78,247 LTI 2023 rights were granted. On 16 December 2022, 31,672 LTI 2023 rights were granted.
On 16 January 2023, 25,621 LTI 2023 rights were granted. On 1 March 2023, 170,188 LTI 2023 rights were granted.
2 Grant date for all Executive STI 2022 rights was 15 September 2022, except for 75,970 rights which were granted to Mr M Schubert following approval
at the AGM on 21 October 2022.
3 Of the 532,319 sign on rights issued, 152,091 vested on 30 August 2022, 190,114 vest on 30 August 2023 and 190,114 vest on 30 August 2024.
4 Of the 159,222 sign on rights issued, 29,983 vested on 22 August 2022 and 129,239 vest on 21 August 2023.
5 Of the 173,745 sign on rights issued, 77,220 vest on 31 August 2023 and 96,525 vest on 31 August 2024.
6 Of the 145,048 sign on rights issued, 34,255 vest on 31 August 2023, 65,574 vest on 31 August 2024 and 45,219 vest on 31 August 2025.
7 Of the 75,063 sign on rights issued, 19,593 vest on 31 August 2023 and 55,470 vest on 31 August 2024.
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.
130
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 35 Share-based payments (continued)
(a) Long-Term Incentive (LTI) Plan
The Cleanaway LTI plan is designed to provide long-term incentives for senior executives to deliver long-term shareholder
returns. Under the plan, participants are granted performance rights which only vest if certain performance standards 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
2021 LTI AWARD UP TO THREE YEARS:
1 JULY 2020 TO 30 JUNE 2023
2022 LTI AWARD UP TO THREE YEARS:
1 JULY 2021 TO 30 JUNE 2024
Overview
Performance rights, of which:
Performance rights, of which:
Measured over three years to 30 June 2023
Measured over three years to 30 June 2024
• Up to 50% vest if a certain relative TSR
• Up to 50% vest if a certain relative TSR
ranking is achieved against the constituents
of the S&P/ASX 200 Industrial Sector Index
ranking is achieved against the constituents
of the S&P/ASX 200 Industrial Sector Index
• Up to 50% vest if a certain EPS CAGR target
• Up to 50% vest if a certain EPS CAGR target
is achieved
is achieved
• The ROIC for year ending 30 June 2023 acts
• The ROIC for year ending 30 June 2024 acts
as a gateway to EPS CAGR
as a gateway to EPS CAGR
Offer made in current reporting period – 2023 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.
• 25% of performance rights vest if a certain underlying EPS CAGR target is achieved.
• 25% of performance rights vest if a certain CH4 emissions reduction is achieved.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
131
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 35 Share-based payments (continued)
The following table sets out the assumptions made in determining the fair value of these performance rights:
VALUATION APPROACH
Performance period
Volatility (%) 1
GRANT DATE 16 SEPTEMBER 2022
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 21 OCTOBER 2022
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 10 OCTOBER 2022
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 2 NOVEMBER 2022
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 22 NOVEMBER 2022
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 16 DECEMBER 2022
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 16 JANUARY 2023
Number of rights
Risk-free interest rate (%)
Fair value per right 2
GRANT DATE 1 MARCH 2023
Number of rights
Risk-free interest rate (%)
Fair value per right 2
2023 LTI
TSR
TRANCHE
2023 LTI
EPS CAGR
TRANCHE
2023 LTI
CARBON
TRANCHE
Monte Carlo simulation
Black-Scholes model
Black-Scholes model
1 July 2022 – 30 June 2025 1 July 2022 – 30 June 2025 1 July 2022 – 30 June 2025
30.0%
920,600
3.42%
$1.69
363,850
3.72%
$1.53
16,209
3.42%
$1.54
9,969
3.34%
$1.59
39,123
3.23%
$1.60
15,836
3.14%
$1.55
12,811
3.20%
$1.54
85,094
3.51%
$1.45
30.0%
460,295
3.42%
$2.62
181,925
3.72%
$2.43
8,105
3.42%
$2.55
4,984
3.34%
$2.60
19,562
3.23%
$2.61
7,918
3.14%
$2.56
6,405
3.20%
$2.55
42,547
3.51%
$2.46
30.0%
460,295
3.42%
$2.62
181,925
3.72%
$2.43
8,105
3.42%
$2.55
4,984
3.34%
$2.60
19,562
3.23%
$2.61
7,918
3.14%
$2.56
6,405
3.20%
$2.55
42,547
3.51%
$2.46
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.
132
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 35 Share-based payments (continued)
The performance targets of the 2023 LTI award are set out in the table below.
Relative TSR performance measured over three years
from 1 July 2022 to 30 June 2025
Relative Total Shareholder Return (TSR) Ranking against the
constituents of the S&P/ASX200 Industrial Sector Index:
• Below 50th percentile – 0% vesting
• At 50th percentile – 50% vesting
• 50th to 75th percentile – straight line vesting between
50% and 100%
• Above 75th percentile – 100% vesting
EPS CAGR performance as measured over three years
from 1 July 2022 to 30 June 2025
Earnings per Share Compound Annual Growth Rate (EPS
CAGR) to be achieved:
FY2025 CH4 (Methane) Emissions (% of FY2022)
• < 5.0% – 0% vesting
• 5.0% – 30% vesting
• > 5.0% – ≤ 10.0% – straight line vesting between
30% and 80%
• > 10.0% – ≤ 11% – straight line vesting between
80% and 100%
• > 11.0% – 100% vesting
FY2025 CH4 Emissions (% of FY22):
• Greater than 95% of FY2022 – 0% vesting
• Equal to 95.0% of FY2022 – 50% vesting
• 95.0% to 87.0% of FY2022 – straight line vesting
between 50% and 100%
• Less than 87.0% of FY2022 – 100% vesting
(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. The fair value of the 2022 STI deferred rights was $2.87
for 145,643 rights granted on 15 September 2022 and $2.58 for 75,970 rights granted on 21 October 2022. The deferred
rights are not entitled to dividends during the vesting period.
(c) Other grants
Offers made in previous reporting period
The CEO and EGM SWS were awarded sign-on rights as they forfeited incentives upon resignation from their previous
employer. The following table sets out the assumptions in determining the fair value of these rights which are still
outstanding at 30 June 2023:
SCHEME
Number of rights
Grant date
Performance period
Risk-free interest rate
Volatility (%) 1
Fair value per right 2
CEO RIGHTS
CEO RIGHTS
EGM SWS RIGHTS
190,114
22 Oct 21
30 Aug 21–
30 Aug 23
0.28%
35.0%
$2.74
190,114
22 Oct 21
30 Aug 21–
30 Aug 24
0.63%
35.0%
$2.69
129,238
18 Feb 22
18 Feb 21–
22 Aug 23
0.28%
35.0%
$2.81
1
2
Expected volatility is based on the historic volatility of Cleanaway shares over a range of periods.
The fair value reflects the closing share price on the grant date and is reduced to reflect there is no dividend entitlement during the performance period.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
133
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 35 Share-based payments (continued)
Offers made in current reporting period
The EGM L&HS and IWS and other executives were awarded sign-on rights as they forfeited incentives upon resignation
from their previous employer. The following table sets out the assumptions in determining the fair value of these
performance rights.
SCHEME
EGM L&HS
AND IWS
EGM L&HS
AND IWS
OTHER EXEC
OTHER EXEC
OTHER EXEC
OTHER EXEC
OTHER EXEC
Number of rights
77,220
96,525
34,255
65,574
45,219
19,593
55,470
Grant date
1 Mar 23
1 Mar 23
29 Aug 22
29 Aug 22
29 Aug 22
10 Oct 22
10 Oct 22
Performance period
1 Mar 23–
31 Aug 23
1 Mar 23–
31 Aug 24
29 Aug 22–
31 Aug 23
29 Aug 22–
31 Aug 24
29 Aug 22–
31 Aug 25
10 Oct 22–
31 Aug 23
10 Oct 22–
31 Aug 24
Risk-free interest rate
Volatility (%) 1
Fair value per right 2
3.38%
30.0%
$2.80
3.53%
30.0%
$2.74
3.16%
30.0%
$2.71
3.31%
30.0%
$2.65
3.35%
30.0%
$2.60
3.16%
30.0%
$2.65
3.32%
30.0%
$2.60
1
2
Expected volatility is based on the historic volatility of Cleanaway shares over a range of periods.
The fair value reflects the closing share price on the grant date and is reduced to reflect there is no dividend entitlement during the performance period.
Accounting Policy
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.
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.
2023
$
2022
$
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
1,948,146
1,551,180
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements where there is discretion as to whether the service is provided
by the auditor or another firm
Fees for other services
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms of Ernst & Young (Australia)
Total fees to other overseas member firms of Ernst & Young (Australia)
Total auditor’s remuneration
72,000
–
155,960
32,000
2,176,106
1,583,180
–
–
–
–
2,176,106
1,583,180
134
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 37 Related party transactions
(a) Key Management Personnel
Disclosures relating to Key Management Personnel (KMP) are set out in the Remuneration Report on pages 44 to 69.
The KMP compensation included in employee expenses are as follows:
Short-term employee benefits
Post-employment benefits
Equity compensation benefits
2023
$
2022
$
6,571,859
9,660,390
244,348
237,896
1,692,530
2,098,081
8,508,737
11,996,367
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 2023 and 30 June 2022 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 2023 and 30 June 2022, except as presented in note 23.
38 Events occurring after the reporting date
Acquisition of Australian Eco Oils
On 21 August 2023, the Group acquired the business and assets of Australian Eco Oils (AEO) for consideration of $39 million.
Trading under the Scanline brand, AEO collects and processes used cooking oils to improve the quality and then sells the
product into the stockfeed and renewable fuel sectors.
The acquisition includes three licensed processing facilities in Riverstone NSW, Rocklea QLD, and Laverton VIC, with a combined
capacity of approximately 30,000 tonnes per annum of used cooking oil, a fleet of 26 vehicles and 30 employees.
Other than noted above, there have been no matters or circumstances that have arisen since 30 June 2023 that have affected
the Group’s operations not otherwise disclosed in this Report.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
135
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 39 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:
•
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. These amendments have not impacted the Consolidated Financial Statements.
40 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2023 and have not been applied in preparing these Consolidated Financial Statements. Those which may be relevant
to the Group are set out below. The Group does not plan to adopt these standards early.
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2023
30 June 2024
New standards
STANDARD/INTERPRETATION
Classification 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
1 January 2023
30 June 2024
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. The impact of
the amendment to the Group’s Financial Statements is yet to be determined.
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 has assessed this change and as the Group already account for
deferred tax in accordance with the requirements in the amendment, there
will be no impact to the Group on adoption of this amendment.
136
1 January 2023
30 June 2024
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 40 New standards and interpretations not yet adopted (continued)
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED IN THE
FINANCIAL YEAR ENDING
1 January 2023
30 June 2024
STANDARD/INTERPRETATION
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. The impact of
the amendment to the Group’s Financial Statements is yet to be determined.
Lease Liability in a Sale and Leaseback – Amendments to AASB 16
1 January 2023
30 June 2024
The AASB has issued amendments to AASB 16 Leases to specify the
requirements that a seller lessee uses in measuring the lease liability
arising in a sale and leaseback transaction. AASB 16 does not specify how
a seller-lessee measures the lease liability in a sale and leaseback transaction
and whether variable lease payments (regardless of whether they depend
on an index or rate) should be considered in the measurement of the
lease liability in these specific circumstances. The amendment does not
prescribe specific measurement requirements for lease liabilities, instead
it requires an entity to develop and apply an accounting policy that results
in information that is relevant and reliable.
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.
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
137
Notes to the Consolidated Financial StatementsFor the year ended 30 June 20232SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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 2023 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 2023; and
(e) As at the date of this declaration, there are reasonable grounds to believe that the members of the closed Consolidated
Group identified in note 29 will be able to meet any obligation or liabilities to which they are or may become subject to,
by virtue of the deed of cross guarantee.
This declaration is made in accordance with a resolution of the Directors.
M P Chellew
Chairman
Melbourne, 23 August 2023
M J Schubert
Chief Executive Officer and Managing Director
138
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 2023, 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 2023 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 judgement, were of most significance in our audit of the
financial report of the current year. These matters were addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section
of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures
designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion
on the accompanying financial report.
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CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
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Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 1.
Solids Queensland Post-Collection Asset (New Chum landfill) rectification provision and write down of assets
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
The Solids Queensland Post-Collection Asset
(New Chum landfill) site has been operationally
closed since March 2022 after being significantly
impacted by flood damage during the East Coast
flood events in February and March 2022.
During the year ended 30 June 2023, $61.6
million of costs have been incurred on flood
related rectification activities, with a provision
of $55.2 million recognised for costs to complete
the rectification works.
The provision is based on management’s best
estimate of the remaining costs to rectify flood
related matters at the landfill site and meet the
QLD Department of Environment & Science
(DES) requirements.
Note 26 of the financial report provides
further details on the rectification and
remediation provisions.
As disclosed in Note 5 the Group recorded
a write down of $51.1 million against the carrying
value of assets related to the New Chum landfill.
The Group has assessed that the remaining
assets are recoverable in the future through sale,
relocation or other future development.
Because of the subjective and complex nature
of the estimates involved in accounting for
the rectification provision and the write down
of assets, this is a key audit matter.
With respect to the New Chum rectification provision, we:
• Obtained and tested managements judgements and assumptions
applied in determining the rectification provision, including
management assumptions on the volume of water captured
in the voids, groundwater refill and assumed leachate levels, and
rate of groundwater and leachate removal, as well as evaluating
the adequacy of the contingency within the rectification
provision. We involved our environmental specialists to assist
in the execution of these procedures;
• Understood management’s cost estimates for the relevant
activities involved to rectify the site, including reviewing quotes
where relevant;
• Analysed fluctuations in costs incurred to date compared to costs
to complete to identify any significant changes;
• Agreed a sample of costs incurred during the period back to source
documentation such as invoices and contracts;
• Attended the New Chum Landfill site to observe the ongoing
impact of the flood damage;
• Tested the mathematical integrity of the model; and
• Assessed the adequacy of the disclosures made in the
financial report.
With respect for the impact of the unsuccessful appeal against the
Height Rise application and subsequent asset write down, we:
• Assessed whether the methodology used by the Group to test
for the carrying amounts of assets relating to the New Chum
landfill met the requirements of Australian Accounting Standards;
• Obtained and tested management’s calculation of the write
down recorded against the carrying value of the identified assets;
• Obtained a detailed understanding of management’s
process to identify the assets to be written down and tested
for completeness;
• Engaged our property valuation specialists to assess the
reasonableness of the valuation approach, methodology and
key assumptions used to fair value the land with reference
to observable market inputs; and
• Assessed the competence, qualifications and objectivity of both
the Group’s external specialists used in the determination of the
fair value of the land.
We also assessed the adequacy of the Group’s disclosures in the
financial report regarding the impact of New Chum height rise
dismissal and flood events, and their accounting impact in the
30 June 2023 financial statements.
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Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited 2. Acquisition of the Sydney Resource Network
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Our audit procedures included testing the mathematical integrity
of the discounted cash flow models and evaluation of the
assumptions and methodologies used.
We involved our environmental specialists to assist in the execution
of these procedures.
With respect to the Group’s remediation provisions, we:
• Conducted site visits to the Melbourne Regional Landfill and the
New Chum Landfill sites;
• Assessed the competence, qualifications and objectivity of the
Group’s internal and external experts used in the determination
of the provisions;
• Assessed the cost estimates for capping, post closure and
ongoing remediation activities with reference to available
external data, including 3rd party quotes, and relevant
environmental authority regulations and correspondence,
where available;
• Assessed the appropriateness of the escalation rate in light
of current wage price, labour availability and other inflationary
factors and performed a sensitivity analysis;
• Assessed discount rates with reference to observable market
inputs; and
• Assessed the adequacy of contingency amounts carried within
the remediation provisions.
We also assessed the adequacy of the Group’s disclosures in the
financial report regarding its remediation obligations.
Under the National Environment Protection
Council Act 1994 and various State based
regulations the Group has an obligation and
responsibility to remediate and rectify the land
in which landfill activities occur. These obligations
must be accounted for in accordance with
Australian Accounting Standards.
At 30 June 2023, the Group held $580.7 million
in remediation provisions based on discounted
cash flow models that incorporate critical
estimates in relation to capping, post closure
and ongoing remediation costs. Included in the
remediation provision is an amount of $23.2
million as a direct result of the New Chum height
rise dismissal mainly attributed to future site
infrastructure, capping and closure costs which
will no longer qualify to be capitalised as an asset
due to the asset write down recorded.
There are significant judgements in relation
to appropriate cost escalation and discount
rates, the timing of expected expenditure, the
possibility of new practices and methodologies
being available in the future and the adequacy
of the contingency factors. Estimates are
developed based on site-specific plans,
taking into consideration historical and
emerging practice in relation to remediation
activities, including better practice climate and
sustainability responses.
Because of the subjective nature of the estimates
involved in accounting for remediation and
rectification obligations, this is a key audit matter.
Note 26 of the financial report provides
further detail on the rectification and
remediation provisions.
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CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
141
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION 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 2023 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’
Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form
of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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142
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited Auditor’s Responsibilities for the Audit of the Financial Report (continued)
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, 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 44 to 69 of the Directors’ Report for the year ended 30 June 2023.
In our opinion, the Remuneration Report of Cleanaway Waste Management Limited for the year ended 30 June 2023,
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
Ashley Butler
Partner
Melbourne
23 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
CLEANAWAY WASTE MANAGEMENT LIMITED 2023 ANNUAL REPORT
143
Independent Auditor’s Reportto the Members of Cleanaway Waste Management Limited2SEGMENT PERFORMANCE4CORPORATE INFORMATION5FINANCIAL REPORT1OVERVIEW3SUSTAINABILITY6OTHER INFORMATION Top 20 Shareholders as at 25 August 2023
RANK
NAME
UNITS
% UNITS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
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