Cleanaway has released its 2018 annual report to shareholders, providing a comprehensive discussion of its strategies across the business.
It follows the release of its FY18 full-year results last month.
The report, titled Making a Sustainable Future Possible, provides a snapshot of Cleanaway’s business, having acquired Daniels Health and Toxfree and commenced operation in May of this year. With the two businesses in operation, Cleanaway has more than 260 sites across Australia, including more than 4000 vehicles and 115 licensed infrastructure assets.
The 2018 year at a glance shows underlying revenue of $1.7 million, up 17.9 per cent on last year. Earnings, before interest, tax, depreciation and amortisation (EBITDA) sat at $339.7 million – up 12.7 per cent.
Commenting on the full-year results last month in a statement, Cleanaway Chief Executive Officer Vik Bansal said that each of the company’s three operating divisions – solids collections, solids post collections and liquids and industrial services – again increased revenues and earnings in the period.
“Our quality of earnings experienced some downward pressure during the year driven by industry wide changes to the recycling and commodities markets as a result of China’s National Sword policy. This policy negatively impacted commodity prices and increased our costs of sorting material to required levels. However, over the past few months there has been some recovery in commodity prices, especially for higher quality recycled materials.
“Earnings quality was also impacted as we rolled out a number of major new contracts which have strengthened our market leading positions. We remain confident that margins will transition to normal levels as we complete the mobilisation phase of these contracts.”
According to the annual report, in 2018, Cleanaway recycled more than 320,000 tonnes of paper and cardboard, 16,000 tonnes of plastic packaging and 14,500 tonnes of steel, while less than 50,000 tonnes of organic liquid waste re-used as nutrient.
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In terms of community investments, more than $795,000 was invested in Australian communities and in excess of 1250 education programs held.
“A major highlight of FY2018 was the completion of our acquisition of Tox Free Solutions Limited (Toxfree). This consolidated Cleanaway’s position as Australia’s leading waste management company, strengthening our integrated total waste management offer,” the CEO’s report said.
“In FY2018 we commenced a number of significant new contracts – including Brisbane City Council, Chevron Wheatstone, Coles, New South Wales’ Central Coast and the Container Deposit Scheme in New South Wales. As sizeable contracts, each has incurred significant ramp up costs, impacting margins in the short term. We expect this margin pressure to ease in FY2019 as we complete the mobilisation phase of these contracts and move into ongoing operations.”
One section on the impact of China’s National Sword policy argues the strategic long-term answer to the policy is not to keep finding the next offshore market for commingled refuse, but to encourage investment in the domestic processing capacity.
“We also need to educate, sort, recycle and reuse locally based on a set of consistent standards. This will take a much stronger level of alignment between all levels of government as well as commitment from industry to use an increased percentage of recyclable materials in the production of new foods, and, of course, the continuing education and partnership with communities all over Australia,” the report says.
“Australians remain strongly supportive of more responsible waste management and recycling policies. An Australian Council of Recycling survey, conducted earlier this year, found that 91 per cent of respondents support a national action plan on recycling, and 88 per cent support new requirements for packaging to be recyclable and for national education to help reduce contamination in kerbside recycling,” it continues.
“We are working closely with both councils and the broader community to reduce the level of contamination in commingled recycling.”