Cleanaway Waste Management Limited (CWY) Earnings Call Transcript

Welcome, ladies and gentlemen, to the 2022 Annual General Meeting of Cleanaway Waste Management. My name is Mark Chellew; and as Chairman of Cleanaway, I will be chairing the meeting today. As there is a quorum present, I declare the meeting open. Before we start, I'd like to make everyone aware of the safety exits. The main fire exits are located out towards the illuminated exit signs on the right corner at the front of this room. This fire alarm is a constant beep and on the sounding of the evacuation alarm, which is a whooping sound, there will be a PA announcement asking us all to evacuate. Sofitel Wentworth Hotel staff will assist in the evacuation process. And I note that the assembly point is on 1 Chifley Square, Phillip Street. Before we begin the proceedings, I would like to acknowledge the Gadigal of the Eora Nation, the traditional custodians of this land, and pay my respects to the elders past, present and emerging. The notice of the meeting dated the 19th of September 2022 was made available to all shareholders. I propose to take the notice of meeting as read. I would like now to introduce my fellow directors, the General Counsel, the Company Secretary and the CFO. On my left, we have Dan Last, the General Counsel and Company Secretary. On my right, we have Mark Schubert, Chief Executive Officer and Managing Director. In the front row, and then just sort of stand up and wave as I read out. In the front row, we have Ray Smith, Ingrid Player, Michael Kelly, Samantha Hogg, Terry Sinclair, Jackie McArthur, and Philippe Etienne; and our CFO, Paul Binfield. I would also like to introduce the company's auditor, Ernst & Young, which is represented by Ashley Barton, a partner with the firm. Meeting format. So shareholders were given the opportunity to submit their questions prior to the meeting, and we expect to respond to any of these questions. There will also be an opportunity for you ask questions on each of the resolutions as they arise. Voting. Voting will be conducted by a way of a poll on all items of business, and the procedures of this will be outlined at the time. To provide you enough time to vote, I'll now declare voting open on all terms of business. So it will convert whenever they light from now on. Before we move to the formal part of the meeting, I will first spend some time providing an overview of Cleanaway's past performance. After my address, Mark Schubert will provide an update on the company's business activities, including the strategic direction of the company and a trading update. I will then return to open the formal proceedings. It is my pleasure to address the shareholders once again as Chairman of Cleanaway Waste Management Limited. In a year of significant challenges for our industry and the wider economy, I am pleased to report that Cleanaway delivered a strong underlying financial performance while continuing to prioritize safety and refreshing our strategy. In February 2022, we introduced our new strategy known as BluePrint 2030. It's the outcome of a process led by our new CEO, Mark Schubert, who joined us in August 2021. Mark will speak to the strategy in more details in his address. BluePrint 2030 is an evolution of our previous strategy and provides a framework to guide Cleanaway through the next period of this growth in a rapidly changing world. A high level of rigor and governance has gone into its planning and execution. The Board strongly believes that it will lay the foundations for a long-term sustainable growth for Cleanaway. 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 originally defined in the Paris Agreement. We have separate targets for carbon and methane reduction for 2030 and 2050. Our carbon and methane reduction targets are consistent with Australia's international commitments to reduce greenhouse gas emissions, and were set using a robust process based upon the latest climate [indiscernible] signs. Furthermore, we have included our tranche of our executives' long-term incentive program that relates to interim methane reduction targets, which are consistent with our 2030 targets. Health, safety and environmental performance were reset as key foundations of our business during the year. Both are critical to the delivery of our mission of making our sustainable future possible. Customers entrust us to manage their waste streams in a safe, sustainable and compliant manner. And these are responsibilities we take very seriously. Our safety performance, as measured by our total recordable injury frequency rate, increased to 4.2%. This represented a 17% deterioration from the prior year. This was very disappointing considered the heightened focus our new CEO and management team put on safety during the year. While many of the incidents were minor in nature, there were some significant injuries to our people. The lessons to be learned from these incidents are being incorporated throughout our organization. Tragically, there were also 3 fatalities during the year, 2 of them were nonwork-related medical incidents, while the third related to a fall from height that was under the control of a landlord of our site at the time of the incident. While the company was not a fault in those incidents, the loss of lives had a significant impact on our family and friends left behind and the broader Cleanaway family. The 2022 financial year was another year impacted by COVID-19. Variant outbreaks and government restrictions placed significant strain on labor availability in operations. If you cast back, we had Delta in July, August, September, and then we had Omicron in January, February, March. Seems all so long ago. We are very proud of our frontline workers who continue to work hard in very difficult circumstances to perform essential services in the communities that we support. In particular, I would like to acknowledge our health services team who played a very important role in keeping our essential health services functioning under very arduous situations. They had to process significantly increased volumes of medical waste from facilities during COVID-19, vaccine rollouts, hotel quarantine and hospital care and recovery. 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 $145 million, still 5% lower than the prior year. This reflected relatively flat EBIT and higher interest expense, largely related to the fully debt funded Sydney Resource Network acquisition. This translated into a 4.8% lowest earnings per share of $0.07 per share. On a statutory basis, net profit after tax of $80.6 million was 45% lower than the prior year, largely reflecting costs and provisions taken to rectify the New Chum landfill, acquisition and integration costs, leadership transition costs and the cost associated with the loss of a key item of equipment in our Health Services division. The business remains in a very strong financial health. During the year, we raised $500 million -- during the year, we raised a $500 million 3-year committed debt facility to purchase the Sydney network -- Sydney Resource Network under the group's syndicated facility agreement. We had $473 million of undrawn debt facilities and an average debt maturity of 4.1 years as of the 30th of June 2020. Our net debt-to-EBITDA ratio of 2.23 as of the 30th of June 2022 is elevated as a result of debt funding the Sydney Resources Network transaction that remains comfortably inside the [ covenant ]. We have demonstrated a history of prudently reducing our gearing following our acquisitions, and we expect to do so again in this instance. We will continue to monitor market for accretive acquisition opportunities and remain disciplined with respect to capital allocation. On the 19th of August, together with the GRL acquisition, we launched an equity raise comprising a $350 million placement and a $50 million share purchase plan. Both components of this raise were heavily oversubscribed, and I wish to thank the shareholders for their support. It was very appreciated. The proceeds raised from the equity raise will provide significant balance sheet capacity to fund medium-term opportunities aligned to the BluePrint 2030 strategy. Our strong financial performance and financial position enabled us to increase our dividend, and the Board was pleased to declare a final unfranked dividend of [ $2.1 ] per share, taking the totally partial franked dividend to 4.1% -- $4.1 per share payable on the 7th of October. Everyone should have their checks about now. This was a 6.5% increase on the prior year and represents a 70.5% payout ratio, in line with our stated policy of paying 50% to 75% of underlying profits. Because of lower tax payments resulting from the Commonwealth government assistance instant write-off scheme, we do not expect to resume franking dividends fully until calendar year 2024. We are also aware that some shareholders disagreed with the Board's assessment of certain remuneration matters this year. I think even with some of my fellow directors have engaged very extensively to shareholders and proxy advisers and have heard their concerns. As a Board, we seek to remunerate executives appropriately and understand that some [indiscernible] than others. The significant events and challenges of full year '22 made our assessment of executive performance more difficult, and we acknowledge that some shareholders felt we didn't get the balance right. We'll continue to work constructively with our shareholders in seeking to deliver equitable outcomes. I would like now to talk about the program of our very orderly Board renewal. We appointed 2 new independent non-executive directors during the year with Michael Kelly joining the Board in November 2021 and Jackie McArthur appointed in August 2022. Michael and Jackie are both experienced executives with diverse and complementary domestic and international experience. Michael and Jackie both bring in well for skills and experience from which the Board will benefit. I look forward to them playing key roles in the contributing of the execution of our BluePrint 2030 strategy over the coming years. I'm delighted to welcome Michael and Jackie to the Board of Cleanaway and congratulate them on their respective appointments. Both are standing for election today. With Jackie's appointment, female representation on the board is now more than 30% and ensuring appropriate diversity at the Board level, including by gender. This will be continued to be a key priority for the Board. I would also like to recognize Mike Harding's value as a service to Cleanaway since his appointment as a Non-Executive Director in 2013. Mike stepped down as a director effective yesterday. Mike has made a significant contribution to the company, and particularly his role as Chair of the Human Resources Committee. I would like to thank Mike personally, along on behalf of this Board for his wise counsel over many years. I would also like to take the opportunity to thank our executive CEO, Mark Schubert, the executive management team and all of Cleanaway employees. They demonstrated very significant dedication and remarkable resilience in what was a very, very challenging operational year. I acknowledge my fellow Board members and thank them for their extended efforts, commitments and wise counsel over this past year. I look forward to continuing to work with them to shape the future of Cleanaway. Finally, I would like to thank the shareholders for their continual support that you've given the Board and the management of Cleanaway. I will now pass over to Mark Schubert to address the meeting.

Thanks, Mark, and good morning, everyone. On behalf of the Cleanaway team, it's my pleasure to report to shareholders on your company's performance over the past year. If you remember, when I addressed you last year, I'd only just recently joined the company and told you I had 4 priorities. They were, firstly, ensuring that we are working in a safe and compliant way. That's always a foundation. Secondly, ensuring our culture and teamwork is fit for purpose as we embark on the next stage of our journey together. Thirdly, it was ensuring that our performance measures, while assessing what we have achieved, also capture key measures that will contribute to future value creation. And finally, refreshing our strategy to evolve our strategic direction and ensuring we're looking far enough forward that we're capturing the tailwind opportunities provided by decarbonization and a circular economy. I will speak to all those points individually, but first, let me talk to the outcomes, which is the financial performance of the company during the year. In a year of significant challenges posed by global pandemic, natural disasters, supply chain disruptions and emerging inflation, Cleanaway delivered a strong financial performance. We reported underlying net profit after tax of $145 million, 5.4% lower than the prior year, translating to earnings of $0.07 per share. COVID-19 continued to adversely affect the market and our business throughout the year. Increased clinical waste volumes challenged our health services business, lockdowns impacted revenues and efficient operations, while widespread community infections reduced labor availability and increased pandemic lead costs. Against this drop, it was pleasing that we were able to grow net revenue by 18.4% to $2.6038 billion and underlying EBITDA by 8.7% to $581.6 million. Underlying EBIT was marginally lower than the prior year at $257.1 million. After many years of low inflation, we started to see inflation increase sharply across the economy. And there were several reasons for this. These included supply chain constraints, the war in Ukraine and the wider economic impacts of the pandemic. One of the largest contributors to rising operating costs was fuel, with the price of oil having risen dramatically over the year. We do have strong contractual mechanisms that allow us to recoup rising costs over time. However, as we've talked extensively with investors, there is a temporary impact on margins due to the lag. During the year, flooding in New South Wales and Queensland caused inefficiencies in our operations in the affected areas. This included disruption to services and unavailability of vehicles in sites. In response, we've relocated vehicles from other regions to support the local operations. We have new fleet vehicles on order, but it does take some time to get back to normal operations. Constraints on labor availability continued to impact our ability to service our customers and operate efficiently. Our team has mitigated the impact by making an extraordinary effort to balance our labor pools and maintain our service levels as we continue to fill the job vacancies. Each of our operating segments reported year-on-year revenue growth. If we move to solid waste services, net revenue increased 23.2% or $342 million to $1.82 billion. EBITDA increased 15.8% or $64 million to $469 million, and EBIT increased 6.9% or $14.8 million to $228 million. Solid Waste Services benefited from an initial contribution from the Sydney Resource Network assets, new municipal collection and post-collection contracts, higher commodity prices and a full year contribution from the Perth MRF. This was partially offset by the impacts of COVID lockdowns, contributions from flood affected regions, lower volumes into New Chum landfill and higher operating costs discussed earlier. During the year, the team successfully tendered for the Bayside, Eurobodalla, City of Clarence and City of Vincent municipal contracts. The TOMRA Cleanaway joint venture was awarded an extension to the New South Wales CDS contract until late 2026. And Cleanaway was also awarded the Supplier Service Champion of the Year by Coles for supporting its landfill diversion goal. As Mark mentioned, the significant floods and damage to that cell of New Chum landfill during the year resulted in a decision to temporarily close the landfill until rectification work is complete. We are progressing well with our project plan. We have installed storm water bonds, removed the water body and are installing more landfill gas capture infrastructure and remediating the cell. We completed the acquisition of the Sydney Resource Network from Suez on the 18th of December 2021. And our integration team quickly onboarded 100 new employees. The integration team worked tirelessly over the first few days post acquisition to ensure a seamless transition for customers and Cleanaway. This was completed with full operational handover to the New South Wales business unit in February. We're also benefiting from enhanced operating leverage through expanded footprint and route optimization and we expect to extract further synergies through leveraging the network, the licenses and the land to accelerate the progress of our organics and C&D blueprints in New South Wales. If we move to the Liquid Waste & Health Services segment, revenue increased 7.4% to $550.5 million, while EBITDA decreased 12.5% to $96.2 million. EBIT decreased 21.6% to $53 million. From an EBITDA perspective, the hydrocarbons business performed in line with the prior year. Revenue benefited from higher post-collections volumes and prices and higher Cleanaway Equipment Services revenue from increased machine sales and growth in servicing activity. The Health Services business revenue increased by 12%, largely attributable to the increased clinical and general waste at health care facilities because of the pandemic and an increase in biosecurity waste as borders reopened. EBITDA decreased by 36%, and that reflected significantly higher costs. The second half was particularly impacted by 2 incidents that resulted in damage and the loss of waste processing equipment, including at our [indiscernible] site in Victoria, where customer contaminated clinical waste led to damage and loss of [indiscernible]. As a result, we decided to install autoclaves across our sites to eliminate the risk associated with the mechanical processing of incompatible waste. The Liquid & Technical Services business realized 9% higher revenue and 6% higher EBITDA, predominantly due to a strong recovery in Queensland, significant work on the Tottenham [ Canara ] and Parramatta light rail projects, and this was partially offset by the cost of disposal in New South Wales, capacity constraints due to labor availability and higher fuel and labor costs. We are exploring opportunities to treat more complex waste streams and are working collaboratively with clients on future issues and how we can support them. If we move to IWS or Industrial & Waste Services where we reported an EBITDA of $47.2 million, 1.7% lower than FY '21. This was a good performance in challenging market circumstances. The performance reflected higher unit labor costs and costs to cover pandemic leave, higher fuel costs, fewer high-margin infrastructure projects in various states which were delayed due to COVID. This was partially offset by a strong performance in Western Australia, South Australia and Northern Territory markets that were less affected by COVID during the year. During the year, IWS [ reassigned ] all available contract extensions with 100% renewal rate and progressively improved its new business win road. Indigenous participation is an increasingly important consideration for Tier 1 resource companies. The Pilbara Environmental Services joint venture between Cleanaway and King Kira Group will be well placed to participate in the next wave of industrial services contracts starting in Northwest WA. IWS continues to deliver organic growth from its existing client base plus new business across the regions with the outlook for sustainable growth over the next few years, supported by a healthy pipeline of work. At a group level, net cash from operating activities increased by $41.9 million to $466.3 million compared to FY '21, 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 effectively 100%. I'd now like to share with you the progress on my 4 priorities, starting with the foundations. During the year, we redefined protecting our people and protecting the environment as the 2 foundations upon which we operate. Defining the 2 as foundations rather than priorities is both deliberate and important as it entrenches the primacy in everything we do. It also ensures in situations where, in particular, our frontline team members need to choose. Our foundations always come first. Over the last 12 months, we have intensified the focus on our foundations across our operations. To further improve our performance, we have been developing a small set of core processes to manage critical risks consistently. Furthermore, with our growing fixed asset footprint, we are improving our preventative maintenance system which will improve our fixed asset reliability. In addition to the intense focus on our foundations, we have now placed sustainability including circularity and carbon at the center of our customer value proposition and employed specialist resources to drive this. We have set 2030 and 2050 greenhouse gas reduction targets that align to both COP26 and are supported by the IPCC's 2022 assessment report. Reducing methane, which represents about 80% of our greenhouse gas emissions, is now an element of management's long-term incentive targets for the next 3 years, and we have identified strong initiatives to support the delivery of these targets. Moving to culture and teamwork. I am pleased to report that the team engagement across the organization continues to head in the right direction with this year's employee engagement survey showing an increase in overall engagement from 66% to 67%. We also added diversity and inclusion questions to this year's survey and recorded an overall favorable inclusion score of 72%, as measured by equity, belonging and authenticity. From a gender perspective or gender diversity perspective, we also saw a 7.3% improvement in our female representation rate, increasing from 19.3% to 20.7%. Increasingly, at the executive and senior management level, we increased female representation from 15% to 23% over the year. Both metrics are well below where we want to be, and we have initiatives underway that will drive greater female representation across the organization, including our women's driver academies being run across the country as we speak. As part of the leadership transition, we recruited 3 new members during the year. Tracey Boyes, Michelle Mauger and Deborah Peach to join the executive team. They bring significant experience and capability to the organization. And with our broader leadership team, will shape the culture and behaviors that will support the delivery of our strategy. Although we are relatively early on this journey, I'm pleased to report to you that at the leadership team level, the team is very closely aligned. We shared goals and expectations. We are working collaboratively, identifying and managing risks, sharing our operational learnings, addressing challenges and celebrating shared and individual successes together. We're collaborating more effectively across business units and functions. And when we leverage the humble, willing and hard-working characteristics of our workforce, this becomes immensely powerful. In terms of performance, we are building on one of our competitive edges being our execution and performance focus and extending it with bottom-up involvement and innovation. We want all employees to behave like owners and unlock their passion and ideas to improve our business together. We have been piloting these changes in a number of first-mover lighthouse branches. This includes continuous improvement of branch-level value drivers. Each of our employees have a clear understanding of the daily activities that they control and that move the needle in terms of value. We then take the learnings from the Lighthouse pilots and implement them across our entire business that will deliver maximum value. At the branch level, we're also ensuring that managers are aware of the capital intensity of their activities in delivering financial outcomes through a discussion and analysis of branch level EBIT performance, whereas previously the focus was on EBITDA. If we moved to strategy. In the first half of FY '22, we developed Cleanaway's BluePrint 2030 strategy, which I introduced to the market in February '22. 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 our customers. Under BluePrint 2030, we'll 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'll do this in the most sustainable way possible while delivering an exceptional customer experience powered by the passion of our workforce. Building upon the platform created by Footprint 2025, BluePrint 2030 has 3 strategic pillars you'll see on the screen: strategic infrastructure growth, sustainable customer solutions and operational excellence. Under the strategic infrastructure pillar, we will continue to invest to extend our recycling and landfill diversion infrastructure and services platform. We'll innovate to ensure we are well positioned to capture opportunities from emerging upscale waste streams to meet the country's future recycling needs. Under our sustainability: the sustainable customer solutions pillar, we integrate our prized assets for circularity, carbon and seamless customer service. We will create products and services that provide our customers with access to integrated platforms that best meet their needs and the nature of their waste. And then under the operational excellence pillar, we'll align our culture with our strategy and extend our performance culture to the frontline, both to deliver for today and improve for tomorrow. We'll be better connected -- we will better connect our frontline teams to our business and work together for continuous improvement. And we'll work smarter through the data and analytics and digitization programs that we're rolling out. It's through those programs and how we use that we will achieve a step change in operational productivity. Strategy execution. Throughout the year, we advanced several growth projects and initiatives. We completed the acquisition of 2 landfills and 5 transfer stations from Suez. This was a transformational transaction for New South Wales business, giving us unrivaled scale and market presence in the state. And we now have integrated these assets, collectively referred to as the Sydney Resource Network, into our business. We have announced plans and have identified sites to develop energy from waste projects in Victoria and Queensland, which will be 100% owned by Cleanaway. Energy from Waste is one of the three plank -- or one of the key planks of BluePrint 2030. Our construction and demolition blueprint will benefit from our acquisition of the Vins Bins business in the Mornington Peninsula in Victoria. And during the year, we commissioned our first PET plastic pelletizing facility in Albury with our joint venture partners [ Pact ] Asahi and Coca-Cola. We also have plans to build a second facility in Victoria, and early work is underway at a separate HDPE and PP plastic pelletizing facility that we're building in a joint venture with [ Pact ]. That facility will be co-located with our material recovery facility at Laverton in Victoria, and we've also secured the extension to the New South Wales container deposit scheme network operator agreement. The acquisition of GRL on the 19th of August this year represents an important step in the acceleration of our BluePrint 2030 strategy, and in particular, the organics blueprint. [indiscernible] 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. It is clearly aligned to our strategy and can deliver high circularity and low-carbon solutions for customers today and in the future. Organic strategy includes plans to operate 2 strategically operated enclosed organic facilities to service the Sydney region. In addition to GRL, we plan to develop enclosed FOGO composting infrastructure at our existing Garden Organics composting site at [indiscernible]. With those facilities providing substantial processing capacity, there is potential over time to repurpose and redevelop the existing mixed waste and organic facility at the Inner Kemps Creek landfill into a C&D resource recovery facility. We also advanced our Customer Connect project, which when complete, will deliver a seamless, scalable and digitized service experience across the customer journey. It is a business-led multiyear program that is about helping our people to better serve our customers and make it easier for our customers to work with us. During the year, we were awarded the Coles Supplier Service Champion of the Year Award, recognizing outstanding service levels during a challenging operating environment and supporting achievement of Coles' sustainability goals. Onto the trading update. We expect that FY '23, the company will perform in line with the expectations that we communicated at our FY '22 full year results presentation. We continue to expect that FY '23 earnings to be higher than FY '22, and that's due to the full year contribution from the Sydney Resource Network, underlying growth, the GRL acquisition and our BluePrint 2030 initiatives. Including GRL, and I'll just restate that, so including GRL, we expect FY '23 underlying EBITDA to be in the range of $650 million to $690 million. Based on current operating conditions and a balanced assessment of the opportunities and risks, the business is tracking towards the midpoint of this range. However, the material factors that can influence the outcome, our volumes into post-collection assets, labor availability and commodity prices. Since the update that we provided to you in August, the inflationary pressures in the broader economy have increased, and we are continuing to see a challenging labor market which impacts cost and availability of labor. Managing these impacts by passing on the effects of inflation to our customers where possible and attracting and retaining the labor have been a key focus for the year-to-date. This includes the rollout of the RPO with highest recruitment and the continued success of our new hires coming from our ongoing women's driver academies. In the Health Services business, the new autoclaves to replace the hammer mill are on site. However, delays in regulatory approvals will mean that the new capacity will be operational around the end of the third quarter of FY '23. As previously advised, we're excluding the $2 million to $3 million per month of costs associated with the alternative temporary treatment and disposal solution in our underlying performance guidance. Depreciation and amortization, including GRL, is expected to be $365 million to $375 million. We will host the second of our strategy deep dives with investors on the 28th of November. And if you're interested in that, please reach out to Richie. In closing, I would like to reflect on team Cleanaway. It was gratifying that during the year in challenging conditions to see how much our teams truly care about each other on a personal level and also the work that we do. Those deep personal connections will be a foundation for the successful execution of our strategy. We'll keep each other safe. We'll protect the environment. We'll deliver for our customers today and improve for tomorrow as we continue to strive towards making a sustainable future possible together. I'd like to thank the Board and the executive team for the support they've given me in my first year leading this company. I'd also like to thank our 6500 strong workforce whose efforts make this business great, and I look forward to working together to deliver another strong performance in FY '23. I'll now hand back to Mark for the formal resolutions.

Thank you, Mark. It's an interesting company. We've got 2 Mark's leading the company. We've got various names but we could call it young Mark and old Mark. We call it Marc A, Mark C respect for my age. So thanks for that. Okay. Transcripts are both by addressing the CEO and the Managing Director, Mark Schubert, are available on our website and the ASX company announcement platform. Ladies and gentlemen, we'll now continue with the formal business of this meeting. First, I draw your attention to procedural matters. This is a shareholders' meeting and only the company's shareholders, their attorneys, proxies and authorized company representatives are entitled to speak and vote at this meeting. These persons have been issued with blue voting cards while entering the meeting, and we'll have 1 vote for each share they held. Any person believes they are entitled to vote and ask questions during the meeting, but does not have a blue card should now see a member of the Computershare staff at the back of the room. Any person with the yellow card can only ask questions. If you are here as a proxy and have been instructed how to vote, I ask to ensure that you cast your vote in accordance with those instructions. The number of proxies received this meeting was approximately [ 1,554,646 -- 282 ] to get votes on right place here, equivalent to approximately 69.84% of the company's issued capital. As you're aware from the notice of the meeting, there are 5 items of business. Items 2, 3, 4 and 5 require a vote. I confirm that I will vote all open proxies given to my discretion as Chairman in favor of all resolutions. Finally, I appoint Barry as a party of Computershare Investor Services as a returning officer. I will now move to the first item of business. The first item of business is the receipt and consideration of the company's financial report for year ending 30th June 2022 and the director's report and the auditor's report, which are now before the meeting. This item also gives shareholders the opportunity to ask questions about the company and its operations. Please note that there is no vote on this item of business. Ashley Butler, our partner at Ernst & Young, Cleanaway's auditors, is also present to address any questions you may have in relation to the conduct of the 2022 audit. Any questions for Ashley should be directed through me as Chairman, and must be relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company relevant to the preparation of financial statements and the independence of the voter in relation to the conduct of the audit. There will be a chance to ask questions on the remuneration report during the next item of business, so if you can please refrain from asking any questions on that report at the present moment. If you have questions, please raise your blue voting card and wait until a microphone is handed to you so that all shareholders can hear your questions. I also ask you to start by stating your name before addressing the meeting. I'll now open the floor for questions.

Hello, my name is [ Jane Mark, ] I'm a shareholder. I just noticed that you're reducing the methane gas. Is there any way that you could use an energy source to run those factories or whatever you do with the resources?

I'll hand it over to Mark. Shortly, this is a great new story because gas prices have gone up. We can use it. But Mark, would you like to comment a bit more on that?

Thank you for your question. So the first thing is to capture it. So to get it out of the landfill. First step is to capture, the next thing we do is we flare it. And obviously, that's better than producing methane because of the impact on greenhouse, sort of impacted sort of 80x better to flare than it is to produce those methane. The next thing we do, if there's enough volume as we try and capture it, and turn it into something beneficial to some of our sites. We turn it into electricity, such as the Melbourne Regional landfill where we produce about enough electricity to power 10,000 homes. In places like Erskine Park, we supply to Brickworks. And they should produce bricks from that, obviously, processing the gas a bit. But in every case, what we're looking to do is to get it from capture, flare and then beneficial reuse, and that's the sort of the objective. But in some cases, it's [indiscernible] in some cases, it's gas. In some cases, just flaring because there's not enough volume.

Okay. Any other questions? Yes?

Mr. Chairman, just following on from the lady's question with regards to the utilization of the methane. This might seem a silly idea. You mentioned the flaring as a temporary measure or interim measure or the other. Isn't it concerning to explore the possibility of, say, putting some sort of thermal or electric converter at the top of the [indiscernible] to convert some of the heat emitted from the flaring into electricity, albeit probably a very small amount, depending on the estimated wattage output of the flare. Just for demonstration purposes, whether that sort of thing would be worthwhile or -- I'm not a specialist in that note, it might be a bit fanciful, the efficiency might not be high enough.

Well, we -- thank you for the question. We welcome all questions and sometimes we get questions we haven't thought the answer of. So I think we'll probably take that on notice a little bit. But what we do at the moment, we do have actually generators, actually get the electric and turn into -- sorry, get the gas and turn into electricity, where we're using what usage as could work -- I'm not sure, but we'll take it on note, and we'll think about it and we might come back some time later on this year and just get back to you, okay? But thank you for the question.

My name is Patrick is, I'm representing Deborah. But I've also got share in [indiscernible] but I wanted to ask a question about whether the contract you have with [indiscernible] and suppling spare parts around Australia for the Cleanaway -- various Cleanaway vehicles, whether that's actually beneficial to Cleanaway, whether it's actually showing that it's saving you money on parts for the vehicles.

I'm not sure we -- I'm not sure we would have that detail. Can we maybe just get your name and get back to you. We don't have that level of granularity at least at our level. But we'll take that question and we'll try and get back to you over the coming weeks to see if we can dig it up and where we're allowed to disclose it, but thank you for the question. Are there any other questions? Thank you, ladies and gentlemen. As noted earlier, voting on all resolutions will be by way of the poll. The poll will be conducted at the end of the meeting. I'll now briefly ask -- briefly speak to each of these resolutions. Shareholders will have the opportunity to ask questions on each resolution as I come to it. The number of proxies received in respect of each resolution will also be displayed on the screen. Item 2 is the adoption of the remuneration report. Item 2 is on the agenda to consider the company's remuneration report for the year ending 30th of June 2022, as it appears in the 2022 annual report and to pass a nonbinding resolution to accept the report. You'll see from the screen the number of proxies received for the resolution. In accordance with the Corporations Act, the company will disregard any cast votes on this resolution by any key management personnel of the company including the directors and closely related parties of these persons. Are there any questions or comments on the remuneration report? If there are no questions, I will move to the next item. Election and re-election of directors. Items 3A, 3B and 3C relate to the election and re-election of directors. A separate resolution will be put for each director. Item 3A relates to my re-election, and I'll now pass the meeting to a member of the Board, Ray Smith, who is the Chairman of the Audit and Risk Committee, to chair this part of the meeting as the next matter relates to my re-election. Over to you, Ray.