I would now like to hand the conference over to Mark Schubert, Managing Director and CEO. Please go ahead.
Good morning, and welcome to everyone listening in today. Thank you for joining Cleanaway's financial results briefing for the first half of the 2026 financial year. I'm Mark Schubert, and I'm joined by Paul Binfield, Cleanaway's CFO, and Richie Farrell, General Manager of Investor Relations and Sustainability. Following the presentation, as usual, we will open the call for questions. Moving to slide 7. I want to begin today by addressing health and safety. This is foundational to who we are and what we do at Cleanaway. Regretfully, we reported two fatal incidents at sites that we own in the first half of FY26. Each occurred in different operational contexts, and in the case of MRL, it happened when a commercial customer was struck by one of their colleagues' vehicles in a park-up area.
We remain committed to learning from these tragic incidents and ensuring we have strong controls in place at our sites so that everyone goes home unharmed each day. I am pleased to report that we are seeing significant improvements in our safety performance. When compared to the first half of FY 25, our serious injury frequency rate was 64% lower at 0.36, and our total recordable injury frequency rate was 35% lower at 3.5. We know that our TRIFR is significantly below domestic comparable companies and international industry peers. A board-commissioned independent safety review has been completed over the last three months. There were four key findings from the review. Firstly, and importantly, no systemic safety issues or failures were identified. The HSE strategy is fit for purpose, reflects contemporary safety thinking, and is aligned to the organization's most significant risks.
That our implementation is well advanced at an enterprise level, but there is an opportunity to strengthen consistency and feedback loops closer to the front line, given the variable but improving translation at branch level. Finally, our overall approach is aligned with contemporary good practice in comparable high-risk asset-intensive industries. The report also found that fatality reporting across peers is inconsistent and in some cases lacks transparency, and therefore direct comparisons with Cleanaway are unreliable and should not be used to draw conclusions about relative safety performance. The external review confirmed our approach remains sound and that we should stay the course. The areas to work on are consistent with our stage of progress in the five-year strategy journey. We also commenced two key programs of work during the half that represent tangible evidence of systematic risk reduction across the enterprise.
By the middle of this calendar year, we will have completed the rollout of a yellow gear pedestrian detection system that uses latest- generation AI cameras to alert operators to human presence. By December 2026, we will have rolled out in-vehicle monitoring systems, or IVMS, across our roughly 3,500 collections heavy vehicles. The cost for all these initiatives are included in our FY26 CapEx guidance, with approximately AUD 21 million of capital spent on risk reduction in the first half. On the environment, we're proud to report zero major or significant incidents. Moving now to the first half FY26 financial results highlights. On behalf of the approximately 10,000 Cleanaway team, I'm pleased to report robust financial results for the half. Through our Blueprint 2030 Strategy, we are creating a stronger, more stable Cleanaway.
We have transformed the business by installing the foundations, the right people, the right standards, the right systems, the right network, and the right operating model. You can see those benefits coming through in the underlying performance. We have continued our track record of delivering on the fundamentals that matter, with 13% net revenue growth, driven by a combination of disciplined pricing and strategic acquisitions. The acquisitions completed in July last year brought further scale and industry-leading capability to our operations. Our continued focus on operational efficiency has translated into margin expansion. We did this through better rostering, better workforce planning, and more efficient fleet R&M. Contract Resources performance this half, with revenues up 19% and exceeding their 4-year CAGR of 13.5%, validates what we discussed after the acquisition. Group ROCE improved by 80 basis points to 9.4%.
This reflects our disciplined approach to capital allocation and the improvements we are making to operational efficiency. Importantly, this says we are growing profitably and efficiently. EPSA was 18.2% higher and reflects our ability to convert operational performance into improved shareholder value. The board declared an interim dividend of AUD 0.0335 per share, an increase of 19.6%. This reflects the board's confidence in our trading outlook, sustainable cash generation ability, and its commitment to providing attractive returns to shareholders while maintaining balance sheet strength. The free cash flow movement was driven by catch-up tax and acquisition integration costs, and our strategic indirect cost program that permanently lowers our cost base. We expect a significantly stronger second half cash flow.
Looking further forward to FY27, we won't have any of those items repeating. We will see further acceleration of free cash flow growth. Looking ahead to the second half EBIT, we have a clear pathway to support the earnings step- up. Our corporate costs were higher than usual in the first half. This was largely attributable to a planned project to upgrade our human resources systems, with costs to revert to their traditional run rate in the second half. The second half outlook for our Solids business is positive. Our environmental and technical solutions division is also well-positioned to deliver improved performance. We're expecting strong organic growth across most lines of the OTS business. We expect to deliver AUD 3 million in synergies from the Contract Resources acquisition and expect an initial AUD 15 million in-year capture of structural efficiencies from our strategic indirect cost review.
As part of our strategy refresh, we completed a comprehensive strategic review of our cost base and restructured our indirect labor to enable the strategy. We have restructured our Solid SBU down key business lines, centralized key functions such as sales, pricing, customer service, and fleet, removed duplication, and created a leaner, more efficient, and more aligned organization. This has resulted in a reduction of approximately 250 FTEs, with most of these changes already implemented. This supports continuing margin expansion, reinforces our market leadership, and sets us up to deliver our improved customer value proposition. We've also identified further opportunities for non-labor cost rationalization, spanning corporate overhead reduction, shared services optimization, and increased procurement efficiency. Once fully implemented from FY27, we expect at least AUD 35 million in annualized recurring benefit embedded in our operating model.
Based on a robust first half performance and our confidence in the outlook, we're pleased to be able to upgrade our full year EBIT guidance range to AUD 480 million-AUD 500 million. With that overview, I'll now move on to the segment results. Solid Waste Services delivered a strong performance in the first half. We grew net revenue by 7.5% to AUD 1.25 billion, EBIT is 11% higher at AUD 196.7 million. We also demonstrated the operating leverage in the business by expanding EBIT margins by 50 basis points to 15.7%. In collections, we grew our C&I net revenue through price increases, strong regional volume growth, and the Citywide acquisition. We also expanded margins by improving labor and fleet efficiency.
We delivered similar improvements in our municipal collections business, where, in addition to improving labor and fleet efficiency, we have remained focused on rigorous contract management to support improving profitability. We secured the Cairns Municipal Collections contract. This is a seven and a half year agreement starting in December 2026 and will contribute over AUD 100 million of revenue over the life of the contract. It is a strategically important win that demonstrates our ability to compete successfully in the municipal tender market when the economics are right. Our post collections business delivered net revenue and EBIT growth across our core landfill portfolio, driven primarily by higher project volumes and prices. As planned, we closed New Chum Landfill on the 30th of November, which incurred a loss of approximately AUD 3 million for the period. Our transfer station network delivered improved profitability.
We optimized our network, improved payloads, and reduced R&M costs. We delivered strong earnings from our resource recovery business through continued growth in CDS volumes and improved cost efficiencies. We also grew our organics volumes, primarily through successful tendering for commercial and municipal processing off the back of the FOGO mandate in New South Wales. This represents a long-term structural growth opportunity as more New South Wales councils implement FOGO. Old corrugated cardboard, or OCC, prices softened through the path. This created a slight headwind in the first half, where customers received rebates using a lagged price, noting we expect this to be a relative tailwind in the second half. As part of the strategy refresh, we have made the decision to retire the construction and demolition SBU and rationalize our service offering to align with our C&I customers' needs.
We will continue receiving C&D residuals through our post collections network. The decision is based on focusing on our efforts in parts of the market where we can achieve an adequate return and illustrates our commitment to disciplined capital allocation. Overall, Solid Waste Services is achieving strong results. The scale, diversity, and integration of our network provide a competitive advantage and a growing earnings and margin trajectory. We expect this momentum to continue through the second half. Moving now to our Oil and Technical Services and Health Services. In aggregate, net revenue fell 5.1% to AUD 342 million, and EBIT fell 12.6% to AUD 36 million. EBIT margin contracted 90 basis points to 10.5%, with the underperformance driven by health services.
In OTS, we delivered EBIT growth and margin expansion despite some revenue headwinds due to capacity constraints at Christie Street. We continue to perform strongly in packaged waste, with a high focus on high-margin work, where our portfolio of total waste solutions, network, and safety standards provide a competitive advantage. We realized the initial integration benefits from the former LTS and Hydro business units and simplified the network, as well as saw increases in volumes through our equipment services business. As expected in health services, our revenue declined following the competitive tender for the HealthShare Victoria work, where we retained 85% of the work. The disruption to our Yatala Health facility in Queensland continued in the first half following Ex-Cyclone Alfred. This resulted in approximately AUD 2.4 million of higher logistics costs. Repairs have now been completed and normal operations have resumed.
Importantly, we are seeing the turnaround in health services leading to a significantly stronger second half outlook. We are expecting higher revenue from increasing secure product destruction services. We're using data analytics to reduce revenue leakage. Turning now to slide 12. The performance of the Industrial Services segment is reflective of the outperformance from Contract Resources. At the overall segment level, we delivered 74% net revenue growth to AUD 339 million and 164% EBIT growth to AUD 28.8 million. EBIT margins increased 290 basis points to 8.5%. Contract Resources increased revenue by 19.5% to AUD 157.8 million during the first five months of ownership. This compares favorably to its four-year revenue CAGR of 13.5%.
Contract Resources increased EBIT to AUD 17.5 million and EBIT margin to 11.1%. This illustrates the quality and resilience of this production critical and turnaround services business. EBITA is a better reflection of CR's operating profit, given it adds back the non-cash amortization of quality customer contracts recognized at acquisition. EBITA for the half was AUD 20.1 million and converts to an EBITA margin of 12.7%. This is comparable to the overall group EBIT margin of 12.2%. The integration of CRs and our Industrial Services segment is on track and delivering synergies ahead of plan with our new structure in place since the 1st of January, under the leadership of the Contract Resources CEO. We're beginning to realize synergies, particularly in shared customers, workforce planning, and greater asset utilization.
We expect these to build during FY26 through cross-selling and operational leverage. We now have the leading Industrial Services platform that positions us to execute on the growing pipeline of significant decommissioning, decontamination, and remediation opportunities. In Cleanaway Industrial Services, we are undertaking a review of metro activities to align our operating and delivery models with the Contract Resources platform, improving consistency, scalability, and long-term performance. We also executed disciplined contract management and delivered on several fleet initiatives to offset the revenue headwinds. We will focus our IS work on activities where, like in CRs, we can earn appropriate risk-adjusted returns with less variable outcomes and, as a result, transition towards a structurally higher margin portfolio. With that, I'll hand it over to Paul.
Thank you, Mark. Cleanaway has a sustained track record of earnings improvement, having now delivered six consecutive hours of underlying EPS growth. This reflects the quality and resilience of our business model, shows the strength of our established integrated network of infrastructure. Looking at the underlying metrics on the left-hand side of the slide, net revenue for the first half came in at almost AUD 1.9 billion, up 13%. EBIT was AUD 228 million, up 16.9%, with the EBIT margin improving 40 basis points to 12.2%, reflecting improving asset utilization, cost efficiency, and demonstrating our operational leverage. EBITA was 17.4% higher at AUD 239 million. This metric excludes the non-cash acquired amortization charges and offers a clearer view of the business's underlying cash-generating capability.
The finance costs increased to AUD 73.4 million, reflecting a higher debt levels following the Contract Resources acquisition. The 2.3x leverage is reducing and well within our target and financial covenants. NPATA was 18.5% higher at AUD 117.3 million, with EPSA up 18.2% to AUD 0.052. Free cash flow was AUD 74.2 million, AUD 20 million lower than the prior period. Return on capital employed, or ROCE, is a metric that we're transitioning to, as it's more commonly used by our peers and adjusts for the non-cash amortization of acquired customer contracts. ROCE improved 80 basis points to 9.4%, proving that we're deploying capital more efficiently, generating better returns from our asset base. Similarly, ROIC increased 60 basis points to 6.3%. Moving now to underlying adjustments.
As Mark said in his overview, we're creating a stronger, more stable Cleanaway. The first phase was transforming the business by installing the foundations: the right people, the right standards, the right network, the right systems, and the right operating model. We think about the underlying adjustments through that lens, the cash costs fall into four categories, but all bar the first one align to our Blueprint 2030 Strategy. The first category relates to costs associated with issues identified as we laid in the strong foundations. In this case, it's treating legacy waste and remediating a legacy enterprise agreement, both dating back to 2018. In OTS, post Christie Street, we sought to increase the capacity of the network for our customers, we reviewed the waste inventory at all of our sites.
Retesting of legacy waste at one of our sites found that due to the nature of the waste, treatment and disposal costs would be significantly higher than expected. The subsequent independent review of the network has confirmed that all waste inventories are adequately provided for. Similarly, with respect to the enterprise agreement, as we strengthened our capabilities to address the backlog of expired EAs, we identified inconsistencies between the evolved scope of work at certain branches and how the expired EA had been drafted. Expense in this half includes review costs to date and a provision for potential further employee compensation that may arise following review EAs with similar characteristics. We expect to incur low single-digit million EA review costs in each of the next couple of years as we complete this assessment.
In both cases, the costs being incurred in this period don't relate to revenue generated in this or recent reporting periods, and therefore we've excluded them from our underlying result to provide a true reflection of our continuing performance. The second category of adjustments relates to one-off strategy refresh costs associated with executing the strategy, including driving towards a leaner organization. This will be completed in the second half with a similar cost to the first half. The third category relates to the one-off modernization of our IT systems, where costs cannot be capitalized due to the nature of the software solution. This is foundational to the way that we work going forward and underpins the strategy. We again expect a similar cost in the second half. The last category are the costs associated with building the right network of leading waste infrastructure assets.
In the past, that's been acquisitions like Suez, Sydney Assets, and GRL, and today it's Contract Resources and Citywide. This has created the leading waste infrastructure network in Australia. We expect approximately AUD 5 million of further integration costs in the second half. The strategy refresh is refined where we want to play, with our focus on attractive returns and capital discipline, and you can see this with the rationalization of our C&D service offering and reducing certain IS metro activities. The outcome of the assessment of the future profitability of the C&D business has resulted in a non-cash impairment of the associated assets. We also took a non-cash impairment charge against our investments in the Circular Plastics Australia joint venture, where policy is lagging the desire to promote recycled HDPE, resulting in a softer market price outlook.
Looking forward, we believe that underlying adjustments will reduce as a result of the foundations that we've installed to build a stronger and more stable Cleanaway. Now moving to free cash flow. Just focusing on the material items in the bridge, we generated AUD 56 million or 14.6% more underlying EBITDA. The cash impact of underlying adjustments was AUD 40.2 million or AUD 20.8 million higher than the prior corresponding period. This reflects the cash component of the underlying adjustments detailed in the earlier slide. We expect the full-year cash impact of underlying adjustments to be about AUD 30 million higher than the prior year. Working capital movements were adverse at AUD 12.2 million, largely attributable to an increase in receivables related to a growth in the business. Interest paid was AUD 9.2 million higher.
Again, this reflected the higher average debt balances from fully debt funding AUD 470 million in acquisitions. Tax paid was AUD 16.5 million higher, and this reflects our higher taxable earnings and an AUD 58.7 million catch-up tax payment. This is the final catch-up tax payment. Maintenance CapEx was AUD 22.7 million higher and is largely timing in nature, with the full year expected to be broadly in line with prior year. The net movements resulted in AUD 74.2 million free cash flow for the half. We expect significantly stronger free cash flow in the second half and importantly into FY27 as tax payments normalize, underlying adjustments reduce, and our relative capital intensity to continue to decline. Now moving to capital expenditure. Our total FY26 outlook stays unchanged at approximately AUD 415 million.
This includes AUD 15 million allocated to Contract Resources. HSE CapEx was AUD 8 million higher for the half, but the full year is expected to be lower than FY25. our investment in energy from waste continues to be modest as we pursue our originator model. However, recently, we did enter into a joint development agreement for the Parkes Special Activation Precinct in New South Wales. Our 35% minority interest has not resulted in any material upfront capital outlay or binding capital commitment, and any future investment will need to meet our investment hurdles. We decided to pursue the Parkes location when it became clear that there were complex planning issues that were in our way. Having largely built out our infrastructure network of scarce processing assets, our capital intensity is on a declining trajectory.
This year, our CapEx guidance as a percentage of net revenue will be the lowest for 5 years. Furthermore, you will see the nature of our CapEx change. There'll be fewer larger projects that have characterized our spend over the last 5-10 years and an increasing proportion of our spend on fleet. Fleet CapEx is, by its nature, lower risk, but still delivers good returns through reduced running costs, improved utilization, and more dependable customer service. Finally, I'll turn to net finance cost and dividends on slide 18. Underlying net finance costs increased AUD 14.5 million to AUD 73.4 million, driven by the debt financing of the Citywide and Contract Resources acquisitions, which was only possible due to the strength of our balance sheet. Our FY26 full-year outlook for net finance costs is around AUD 155 million.
Our previous guidance, approximately AUD 150 million, was based on the forward curve in August, when we provided our initial guidance. February rate rise is clearly outside of our control. What is in our control is delivering to or above operational expectations, which we're demonstrating today with our upgraded EBIT guidance. Moving to dividends, the board has declared a fully franked interim dividend of AUD 0.0335 per share, up 19.6%. This increase reflects the business's strong underlying growth, our confidence in future delivery and strategy execution, including our ability to deliver strong free cash flow growth. With that, I'll hand back to Mark.
All right, thanks, Paul. As we look beyond FY26, I want to provide a preview of how we are positioned for sustained value creation through to 2030. We have now completed a comprehensive refresh of our strategy that ensures we maintain the positive momentum generated over the last few years. The review of our cost base has always been part of our strategy. We have restructured our indirect labor, accelerating the realization of embedded operational efficiency created during the first phase of the Blueprint 2030 Strategy. We've also identified further non-labor cost reduction initiatives. At the heart of our refresh strategy is driving top-line growth by delivering an improved, hard-to-replicate customer value proposition that combines two critical elements. Firstly, value for money. This means competitive pricing backed by reliable service, operational excellence, and scale and network advantages that our customers can't get elsewhere.
Secondly, seamless customer experience. In today's digital world, this means customers expect easy and seamless experiences, transparency, responsiveness, and frictionless service. We're investing in systems and processes to deliver this. Our Customer Connect investment positions us as Australia's most digitally-enabled waste operator, creating barriers to entry that smaller competitors cannot replicate. Unlike fragmented regional players, Cleanaway's technology-enabled solutions will provide seamless customer experience across our unrivaled network. Our technology platform will increasingly leverage data analytics-led insights to understand customer behavior and optimize pricing by segment and route, allowing us to deliver personalized solutions that capture premium pricing where differentiated service is provided. We have the largest heavy vehicle fleet and the most extensive network of interconnected collections depots, transfer stations, processing facilities, and landfills across Australia. Our scale creates operating leverage and strategic advantage that's hard to replicate.
We will leverage our scale and lock it in in three ways. Firstly, we'll use our digitally-enabled sales and customer service teams to drive higher internalization and utilization of our integrated network. We capture a higher marginal contribution from every incremental ton of waste we handle through our existing network and through our powerful operating leverage. Secondly, we will extend our scale as an advantage by consistently executing best practices across our new national verticals in solid waste, by flexibly reallocating resources based on demand patterns, by cross-selling total waste services across our portfolio of customers, and by ensuring we get value for money pricing. Third, we'll hardwire our branch-led operating model end-to-end, which ensures stability, creates transparency, drives local ownership, and enables fast decision-making. Our refresh strategy will deliver strong free cash flow growth from top-line growth, margin expansion, and strong capital discipline.
We are planning a dedicated strategy investor briefing on the 21st of April, with further details to follow soon. Let me provide you with an update on our FY26 guidance and trading outlook. We are pleased to upgrade FY26 EBIT guidance to between AUD 480 million and AUD 500 million. This is based on the robust first half performance and our confidence in the outlook for the rest of the year. I will walk you through the key drivers of second half performance that give me the confidence in providing that guidance today. We will continue to exercise price discipline in our Solid segment and expect positive organic growth. We're seeing supportive market conditions for project work in post collections in the second half.
We also typically have a second half skew, with higher CDS volumes across all states during the late summer months and the timing of our carbon benefit realization. Our Environmental and Technical Solutions division is well positioned to deliver improved performance. We are expecting strong organic growth across most lines of the OTS segment. We expect continued OTS integration benefits and a strong recovery in health services, and we will also begin to realize some of the synergies resulting from the Contract Resources acquisition. As I discussed earlier, we're expecting to capture approximately AUD 15 million in year savings from the organization restructuring completed over the last couple of months. Importantly, these savings are expected to deliver an annual continuing benefit of at least AUD 35 million in FY27. This all supports a stronger second half, which is reflected in our guidance.
We have clear line of sight to these drivers, positive operational momentum, and confidence in our ability to deliver within this range. Noting the midpoint of the range represents approximately 19% year-on-year EBIT growth. What's exciting is the trajectory continues beyond FY26, with our refreshed strategy unlocking many organic growth levers. Critically, our capital intensity is on a declining trajectory. The AUD 415 million CapEx guidance will represent the lowest capital spend to revenue ratio in the last five years. This sets up accelerating free cash flow growth and improving returns beyond FY27, which brings me to my final slide for today. As you can see, we now have a track record spanning multiple years of doing what we said we would do.
Calling out a few highlights: We have grown the top line by 52.5% or AUD 646 million over this four and a half year period. We have demonstrated the powerful operating leverage we have in the business, growing underlying EBIT by 75.4% or AUD 98 million across the same period. We are focused on both the returns from capital we spend and improving the base business, this translates to the steadily improving return metrics you see here. What you cannot see on this graph is that we have done all of this by pulling sustainable handles. That is, handles that will continue to be available and grow into the future. We are delivering resilient and dependable returns underpinned by our network of infrastructure assets with an enviable growth trajectory.
Our expanding margins, improving returns, and strengthening free cash flow create compelling value. We are building a stronger, more stable, more capable, and more profitable Cleanaway. The exciting part is that with a refreshed strategy, we have line of sight and a laser focus to continuing this performance in the years ahead, and I'm really looking forward to discussing that with you soon. Before we hand over the questions, I do want to sincerely thank our employees for all their hard work. These strong results would not be possible without them. With that, we'll now take questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Lee Power, from JP Morgan. Please go ahead.
Morning. Thanks, team. Just, Mark, can you talk a little bit around the value, just the volume, backdrop? There's a lot of moving parts with the benefit of Citywide Waste. I think you're still calling out low metro volumes for C&I. I'm just trying to reconcile that volume piece with the pricing backdrop, given that commentary of the 2H around positive organic volume and price outlook.
Yeah, no worries, Lee. Thanks for the question. I mean, the first thing I'd say is sort of on metro C&I, we would say volume is flat, price is up. I think you should think about that as us, you know, also exiting some low value C&I, which creates capacity for higher margin customers. I think, yes, the Citywide obviously coming through on a PCP basis is a positive. I think then on sort of other sort of volume areas, so landfill volumes, just remember, landfill volumes is not just C&I, you know, there's muni, there's civil, there's C&I, there's restricted waste, all those different things. What we're seeing particularly strongly in landfill volumes is civil jobs coming through, so we've got a strong runway of civil jobs.
The example to bring that to life would be, say, the M8 Tunnel works in Sydney that we're seeing coming through. Finally, just on price. While I've got the sort of the question on volume, I'll also talk on price. I think, you know, price has been positive, and importantly, well above inflation.
Yep, that's really useful. Thank you. Then maybe just when we think about into the second half, like, if I, if I just annualize your implied 2H guide, the midpoint, you get AUD 524 million EBIT. Is there any sort of color you can give us around the seasonality? You've obviously called out a 2H in the Solids business or help us think about, you know, updated thinking on, you know, the ramping profile of acquisitions through that period. What I'm trying to get at is: what's a, what's an exit, a sensible exit run rate, and how much of that's your initiatives versus just a normal skew in the business?
Yeah, sure. I mean, let me try and bridge you the second half, which I think will answer your question. Like as you said, if you take the half 2 number implied by the midpoint of the guidance, that's how you get that number 260 odd that you just talked through. I think, you know, importantly, the drivers, we've got good line of sight too. If I split them in three ways, if I talk about Solids firstly, you know, what we're seeing on Solids is strong Solids volumes coming through and price. We just talked through some of the drivers of that just a moment before.
We are definitely seeing that Solid second half skew, and we talked about that previously, but just to go through it again, that's the CDS scheme is driven by volume in the late summer months. That's when the volume comes through, and that's obviously in the second half of the year. Carbon benefits also always come through in the second half. That's kind of the S olid fiction. If we go to ETS, you know, we can see a good outlook of projects, OTS projects, in the outlook. We can see the health business recovering. Just remember that's we won't have the same issues that we had in the first half, which were related to the roof at the Yatala facility, and having to track waste down to the South Coast. That business will recover.
We've got the OTS integration benefits coming through, remember, that's the merger of Hydro and the LTS business. I'm talking about those benefits coming through. You'll get the first round of CR synergies. That's around sort of AUD 3 million. The third bucket in the second half is you'll get the benefits of the indirect cost review. Remember, that's the AUD 15 million in the second half that helps us step- up those earnings. You know, just to kind of like recap and remember, that AUD 15 million is the number that then becomes more than AUD 35 million as we go into FY27. AUD 15 in the second half, more than AUD 35 in FY27. The difference is AUD 20.
Yep. Maybe just one more if I can, just Paul, you're obviously confident around the cash piece into the second half. I think in your comments, and correct me if I'm wrong, before you said, the full year cash impact of some of those adjustments would be AUD 30 million higher than the prior year. Obviously, the first half's a pretty big part of that. Can you just remind me what that means on a second half basis, in addition to the catch up of the cash tax piece finishing?
Sure. Lee, if we look at prior year, the impact, cash impact, underlying adjustments is roughly about AUD 50. I'm calling out a AUD 30 step-up on that, roughly AUD 80 for the full year. We've taken AUD 40 in the first half. In terms of the tax catch up, again, AUD 58 million that we paid in December, that is the last catch-up tax payment. We head back to normal installment payments into the second half. You should think of a figure sort of in that region of about AUD 48 million-AUD 53 million in terms of installments into H2. If you look then beyond that into 2027, again, hopefully fewer underlying adjustments. You're seeing no more catch-up tax payments. You're seeing a reduction in capital intensity in the business going forward and increased earnings.
Much of that increased earnings are obviously coming through from higher margin type activities. Again, you don't have that nasty pinch in terms of the need to deploy additional capital to drive those earnings. Again, it gives us some confidence that not only will H2 be better, but 2027 will build on that further.
Yep. Excellent. Thank you. I really appreciate the color on that. Thanks.
Thank you, Lee.
Thanks, Lee.
Thank you. The next question comes from Peter Steyn, from Macquarie. Please go ahead.
Hi, Mike and Paul. Thanks very much for your time, and congrats on the upgrade. Just, Paul, keen to just understand the underlying adjustments a little bit better and particularly the Toxfree impact and the EBA issues. If you could just. I mean, you've made the point that they are back, 2018 timelines. You know, how far did they extend timeline-wise? Why is it that they've only become an issue now? Just keen to understand that and then your conviction at it being the you drawing a line underneath those issues.
I might have a go at that, Pete, if that's all right. By the way, I got my motorways wrong in the previous question. It should be the M12, not the M8. I'm a bit confused about my motorways. Just in terms of legacy waste, let me start by saying today we are fully aware of our waste inventories. We only accept waste where we understand the disposal pathway. We have clean waste acceptance matrices that drive that, and we make appropriate provisions at the time of acceptance. Let's go through the history. The provision, the original provision was made at the acquisition in 2018, but the adequacy wasn't checked because of manual systems. Since 2022, what we've been doing is installing the foundations into the company.
We talked about safe, stable, profitable, Cleanaway, and like Paul said, right people, right standards, right systems. Post Christie Street, as we sought to maintain the capacity of the network for customers, we did a review of waste inventory at one of our sites and found that the cost of treating and disposing that waste was significantly more expensive. We had that validated by third parties. We also conducted further cross Cleanaway auditing to ensure there was nothing else like this. We also confirmed that there's nothing for the CRs acquisition, and there's nothing from Citywide. As Paul said, the costs are not related to the revenue received over the last 8 years, and that led to the decision to exclude it from the underlying, to give you the best view of the ongoing performance of the business.
If I run through the same summary for the enterprise agreements. Just remember, this has been flagged as a contingent liability for a couple of years now. This is about we've been installing the foundations into Cleanaway. Right people, right capability, those sorts of things. In the case of sort of industrial relations and enterprise agreements, we've been increasing the capacity and the capability of the function. We did that to initially clear the backlog of expired EAs, so we could get into the approach that we're in now, which is the proactive approach to negotiation. We renegotiated this time, we identified a 2018 enterprise agreement where the work on the ground was different to that anticipated by the expired enterprise agreement.
That led to a review of the enterprise agreement, and during the first half, the remediation of that enterprise agreement. We're now proactively looking at EAs with similar attributes. The underlying adjustment covers the 2018 EA, the remediation, the costs, and a provision for other similar EAs. I think hopefully, that sort of like summarizes both those answers, Pete, for you.
Yeah. Thanks, Mark. That's useful. Then just, if you could give us a little bit of a sense of what you're seeing around ops excellence more generally, you know, the margin improvements at Solid Waste Services was pretty handy in the half. If you could just shed a little bit more light on how the momentum in that program is going?
It's going strongly. I think what you should find is it'll really accelerate. We're pretty happy with the Solids performance and outlook. In terms of, in terms of the ops excellence, I mean, you saw us really focus on, you know, the branch operating model, labor and fleet efficiency. I think I say accelerate, Pete, because what we're seeing is we've got the branch-led operating model in now, what the switch now to the national verticals means that we've co-located all the like branches. All the landfills are together, all the transfer stations are together, all the resource recovery facilities together. The value drivers are all the same. The risks are all the same as well.
It just means we're gonna have experts, you know, running those plants, led by experts in those plants, and we will get much further operational excellence coming through. I think, you know, the initial strong foundations have set the branch, that operating model, enabled us to do the restructure in a stable way, and now we get to really accelerate through the ops excellence.
Fantastic. Thanks, Mark. Apologies if you heard some laughing in the background.
No, I didn't.
It was not mine. Thank you.
Thank you. The next question comes from Jakob Cakarnis, from Jarden Australia . Please go ahead.
Hi, Mark. Hi, Paul. I just wanted to focus on the free cash flow. I just wanted to focus on the free cash flow, if we could, please. I appreciate the commentary about a stronger second half. It looks like you might best the first half, somewhere between AUD 40 million-AUD 50 million, based on the bridge items that you've got us. It does look as though, at least from what I can see, initial impressions, you'll be below the PCP. Can you just kinda calibrate those two things for me, if that's the right way of thinking about it?
Yeah, I'm not gonna give specific guidance in terms of free cash flow for the half. I guess the important thing I'm seeing here, Jakob, is, you know, are the key trends in terms of an improving outlook. I think we're being pretty clear in terms of expectations about a further AUD 40 million in the second half of underlying adjustment spend. We've been through the CapEx lines in terms of giving you an indication as to how we see that spend dropping out. Working capital, typically really well controlled in this business. We haven't seen any real deviation in terms of cash collections or credit risk. I don't have concerns on that front.
I think importantly too, you should look at the impact of the strong second half EBITDA performance as well. That clearly has a beneficial impact in terms of the 2H cash flow. As I said, if you're looking at 27, you have the additional benefits of lower cash outflow in terms of underlying adjustments and decreasing capital intensity as well.
Thanks for that, Paul. Just one for Mark. I mean, Contract Resources for a lot of people was a little bit of a surprise. It's good to see that it's doing a little bit stronger, maybe than the business case and towards the margins that you thought it could do when you acquired it. Do you want to add just a little bit more color for how we think about that into 2027 as well, just the scope of work that's coming down the pipe, and I guess the integration, more importantly, with the existing business, please?
Yeah, sure. I think, maybe just in terms of, in terms of the second half, I mean, what I'd say is we had a really strong first five months from the Contract Resources team. I think you should understand that that includes sort of the peak Australian turnaround season, and that's just because really where winter falls, that's when the work gets done in those, in those plants, because it's the most comfortable time to do it. I think in terms of the sort of second or full year performance for Contract Resources, don't go and take 17.5 divided by 5 and multiply it by 11. That's not right.
Contract Resources and Citywide, you should think the number's about AUD 35 million, excluding the AUD 3 million of synergies. That's a really strong outcome. If you think about where we were in August last year when we were talking about sort of, you know, circa AUD 30 million. You're seeing the growth come through in all parts of CRs. You know, they are continuing to gain customers and grow the share of wallet within their customer set, both here and the Middle East. It's really positive performance, and it's pretty much exactly what we thought it would be as it's come across.
Just into 27, sorry, Mark. Like, is this-
Yeah.
a more sustainable earnings base, do you think, like a representation of go forward?
I mean, our expectation is CRs will continue to grow. I think there's real opportunities in the we'll be more thinking about CRs plus IS going forward, as opposed to CRs, you know, by itself. You know, we already see, you know, people dressed in red, driving blue trucks and all of that sort of thing. That's well in hand. It's gonna be really difficult to separate the two because the work's just getting done by the most logical group, and the assets are all starting to be shared. I think longer term, you should definitely think about, you know, that growing DD&R sort of, you know, vector. That's, that is alive and well.
You know, the example there is Contract Resources today, we've got three groups on three different platforms in Bass Strait doing work for Exxon. You know, that is, that's real DD&R. The nice part is Contract Resources doesn't even call it DD&R. They just call it work. You know, I think, you know, I think we should think that that will continue to grow steadily into the future.
Thanks, guys. Thanks for the questions.
Thank you. The next question come from Owen Birrell from RBC. Please go ahead.
Hi, team. Just a quick one on the financing cost. I think previously it was AUD 150 million, that's jumped up to AUD 155 million. Just off that leverage at 2.3x, is there a deleveraging timeline, or you guys are still pretty comfortable with where you sit in the headroom, and any refinancing risks looking into 2027 and 2028? Thanks.
Yeah, thanks, Owen. In terms of delevering, again, expectation that we will continue to steadily delever. If we take our long-term view into 2027 and 2028, we expect to see that to continue through that timeframe. Again, obviously, that's supported by the comments you've heard today about the lower capital intensity going forward. In terms of refinancing risk, you know, we've done the heavy lifting on that front. You'd have seen that we issued USPP notes for sort of AUD 500 million for tranches of 8, 10, 12, 15 years. We've pushed a really significant amount of debt out for some great tenures. To be honest, I don't have any concerns about refinancing risk at all, and I'm very comfortable, frankly, with the leverage as well.
Great. Thank you. Just one other one, the MRL southern expansion CapEx, is that just very much a one-off or can we expect more of that to come?
No, that simply is cell construction. The bit of MRL that we've moved into now, we call it the southern expansion, and that is simply constructing one of the major cells there. That simply is ongoing. It tends to be a bit lumpy, as you'd expect, it is simply ongoing.
Great, thank you. Just on associates, I noticed that was up AUD 6 million. Is that a sustainable piece or do you think a bit of a flash in the pan?
Yeah, no, the primary driver there has been, we've seen the improved profitability of the CPA PT facilities, which has been good. Obviously, the continued weakness in the HDPE facility, but the main driver was the Eastern Creek joint venture we have with Macquarie in terms of the old energy from waste property. We had a block of land there. Clearly, we had no need for that land going forward. We sold it at quite a significant profit. I think about an AUD 8 million profit. That would come through the JV result. That JV has been closed down now.
All right. Much appreciated. That's all from me. Thanks, guys.
Thank you. The next question comes from Cameron McDonald, from E&P. Please go ahead.
Oh, good morning, guys. Just two questions from me. Mark, just when you're talking about the visibility and the building blocks going into the second half and then into 2027, can we, can I just throw some numbers or some items at you to get some granularity, if we can? The defense contract, please, like, where what was sort of the benefit for that in the first half, and what's the expectation for the second, the Eastern Creek Organics investment, and then, you know, the ramp-up in that, and then the West, the Western Sydney MRF, please, and then the Tasmanian CDS?
Yeah. I mean, I think we're not necessarily commenting specifically on the profitability of sort of individual contracts. I'll talk around them. I mean, I think the defense contract is well established now. We obviously had the, you know, the large.
Talisman Sabre.
Talisman Sabre exercise. I think, you know, there's lots more opportunities to expand our offering with the defense contract, and obviously we're working actively through that. Eco, which is the old GRL for sort of long-time listeners, that's the, that's going well. You're definitely seeing us win muni contracts and the organic stream. That's the tailwind that I talked about, you know, where there's two things going on. The government has mandated, you know, the shift to FOGO. That comes through muni, where all councils need to have a FOGO offering by 2030. We call it the COFO mandate, which is Commercial Food Organics. That basically is July this year, that large customers need to offer their or need to provide a food organics solution. That's all...
What that means, that's all good for us because we've got the infrastructure to process that, so we'll continue filling up Eco with those sorts of contracts and volumes. Western Sydney MRF's going really well. You know, the expectation was, you know, we would slowly build contracts into that. As you guys all know, that's a really well-located plant there, and can intercept volume that would otherwise find its way coming further closer to town. We've been successful there, winning a couple of council contracts. Tas CDS is still in the ramp-up phase. Just remember that CDS schemes take about 18 months to ramp. Volumes there have been ahead of what we would have expected. You know, obviously that program started up really strongly.
There was a lot of pent-up, I think, storage of containers that, you know, surged through, and then we've seen the summer surge as well, so it's just really pleasing to see.
Okay, thank you. Just, is there any update on, potential license and/or height extension in New South Wales on your landfills, please?
Look, I mean, the, I guess the news there is we continue to work through the extension. Is it extension or expansion? I can never remember. Extension. The Lucas Heights Extension, which is the extension of the landfill to the area where the sort of the Gun Club has... Was previously. That is a really active project. There's lots of work going on around the environmental approvals of that, and that's obviously a key project for, you know, for Sydney and for New South Wales in terms of landfill airspace. I would say that is on track at the moment. I think in terms of other landfills, obviously there's, you know, we're looking at the Eastern Creek... I'm sorry, the Kemps Creek. I guess that's the expansion.
Of course, there's some work underway at Erskine Park in terms of height raise. You know, there's lots of sort of extension activities, all which I would classify as, you know, on track and in hand.
What would be the expectation around timing at this stage on getting approvals or some sort of decision out of... I mean, I get, you know, it's difficult with dealing with government, but best guess?
Yeah. I think, what I would say there is, you know, we have, you know, significant airspace in Sydney until, you know, the early 2030s type timeframe. What this project is trying to do is extend that forward for a long period of time and bridge into obviously energy from waste, that which then even extends it further. I think, you know, it's not something where we need approvals in some sort of rush, and we're just working through the long lead time type stuff and stepping that forward. Again, you know, it's on track. The idea with these is to do a, you know, cost-driven project as opposed to a schedule-driven one, and we're on the cost-driven track at the moment.
Okay, great. Thank you.
Thank you. The next question comes from Rob Koh from Morgan Stanley. Please go ahead.
Thank you. Good morning. First question is on HDPE, which I think you said that the small impairment on Circular Plastics was due to policy not being where you wanted. Could I maybe just ask what was the policy that you would have liked-
Mm-hmm.
What did we end up with?
I mean, just to recap for people, in Circular Plastics Australia, there's joint ventures, there's 3 plants. The easy way to remember it is the ones that start with A, which is Altona and Albury, they are the PET ones. They're performing well, as Paul said before, you know, that's because the plant's performing well, then the offtake is strong. The offtake goes to, in Albury's case, to Asahi, in and to Altona's case, to Coke, the joint venture there is the 4-way joint venture between Asahi, Coke, Pact, and us. The challenge that we've had is at the Laverton plant, which is the HDPE or PP plant. If you remember, what is that? That's milk bottles, ice cream containers, shampoo bottles, that sort of thing. This is the joint venture between Cleanaway and Pact.
The good news is the plant itself is performing really well. The issue is that the federal government hasn't introduced a minimum domestic recycled content in milk bottles. What that means is that dairies are unwilling to pay the extra price associated with recycled material. That'd be like less than AUD 0.01 per milk bottle. Instead, they're importing virgin material to make those milk bottles. I think at a headline level, this is the right plant at the wrong time. Hence, with that sort of policy setting, we've taken the decision to write down the investment.
Yeah. Okay. Thank you very much for the extra color there. Appreciate that. Just moving over to DD&R, just congrats on very encouraging early results there. Can you talk to any of the regulatory developments that are coming up in that space that might help or hinder you? You've got a Victorian parliamentary inquiry, are we anticipating that NOPSEMA issues any more directions or anything like that?
I think we're not really relying on, you know, sort of regulatory drivers. I mean, what you see when you look at CRs, you know, top eight customers are the number one oil and gas companies in the country. They're at such a maturity level with those customers that they're virtually embedded into their operations, and they become the natural go-to to help out with that work and help plan it and then execute it. That's what we see happening. Like I said before, Rob, like, you know, surprisingly, the CRs team doesn't even talk about DD&R. They just talk about it as work, as the natural work that follows on from being the incumbent.
I think, you know, I know there's things like, you know, will they have to pull out the, you know, the subsidy pipelines and stuff like that. We don't really worry about that because there's enough work to do, even if that's excluded, and we'll still be involved in the work of cleaning those pipelines before they get abandoned in any case, regardless of whether they come out of the ocean or not.
Okay, that sounds good. Final question from me. I'm just trying to think about this more than AUD 35 million annual, annualized cost saving that you're talking to. Is that incremental to the previously guided Customer Connect benefit, which I, from memory, was about AUD 5 million in FY27, or is Customer Connect part of this 35 plus?
No, it's incremental. Rob Koh, good question. The way you should think about that, just to go back over the numbers so everybody listening can follow on. We're saying it's AUD 15 million in the second half of this year. That converts to more than AUD 35 million in FY27. It's mainly labor. You know, it's around 250 FTEs. It represents about 10% of our indirect labor force, and it's mostly done. What we've said, when you say it'll be greater than AUD 35 million, you should think that what that means is that there's further non-labor opportunities that we've talked about, and we've listed them out in the voiceover. You know, that seems like, you know, procurement, efficiency, further overheads, rationalization.
When we talk about procurement, we're talking about both upstream and downstream procurement, where we've got a laser focus on some opportunities there.
Okay, great. Thank you very much. Sounds good.
Cool.
Thank you. The next question comes from Nathan Lead from Morgans. Please go ahead.
G'day, Mark and Paul. Just interested in your comments there about the capital intensity and the declining trajectory. Can you put a bit more around that? It's obviously quite a capital-intensive business, if you can get the CapEx flat to declining, it's particularly strong value driver. Just how are you defining capital intensity, and where do you think that could end up?
Well, I guess we're defining it as CapEx divided by net revenue. That's how we're defining it. Hopefully that's right. Yeah, I think you should think about the fact that, like over the last period of time, or, you know, in the whole history of Cleanaway's been evolving this fantastic network. Over the last 3 or 4 or 5 years, we've been trying to complete that network. We actually when we've looked at the strategy work, the next phase of the strategy, we look back and we go, "You know what? The network looks pretty good." It's basically complete. The only sort of outlier there is, you know, obviously we will upgrade Dynon Road in 2028. You guys all know the numbers there.
Therefore, the investment shifts towards, you know, smaller investments, rather than the larger investments that we've been doing in the past. An easy example there is fleet replacement, which, you know, has a very certain return. Obviously, you know, we're really excited about, you know, modernizing the fleet. When we look at CapEx as a percentage of net revenue, we see that number dropping. We see it has dropped, and it will continue to drop as we look forward. That's kind of what we mean. Hopefully, that's the color you were looking for.
Yep, that's great. Second question is, just in terms of the landfill remediation spend that goes through that cash flows, can you give us a bit of an idea about what that looks like over the next three to five years?
I'm not gonna go out 3-5 years, you know, but certainly, I think we can give you some indication that you should expect a slightly higher spend in the second half, and into 2027, you should also expect to see it step- up a little bit in 2027 and 2028 as well. Importantly, you would have seen us obviously close the New Chum landfill, and there's obviously a requirement for us to get on with the capping process there. That'll drive some of that remediation spend. And we've got some remediation activity, so capping activity, at MRL and Dardanup as well.
Again, you should expect to see the remediation spend a little higher in the second half, and 27 and 28, a little bit higher than 26 as well.
Okay, great. Thank you very much.
Thank you. The next question comes from Nicole Penny from Rimor Equity Research. Please go ahead.
Good morning, and thank you for taking my question. Referring to slide 10 and the Solid Waste business splits, could you provide some guidance on which of the business lines see the greatest opportunity over the 3-5-year timeframe, please?
I'm just having a look at slide 10. Okay. Interesting question. I think, I mean, My reaction to that initially would be, I don't, I don't sort of look at one of these sort of national verticals and think that any particular one has something special. Each has significant growth and improvement opportunities within it. You know, if you go back to what we're saying, you know, I alluded to in the sort of strategy refresh sort of teaser. You know, there's a significant opportunity on margin expansion and efficiency that we have been setting up for in the first half of the strategy.
That now with the digitization layer coming in now, will then be further enabled by just improving the way we work and also, you know, improving, you know, how we optimize the hard assets. I think, if I look at, you know, we'll reduce the volume, you know, will obviously drive, you know, drive the equation. One of the things there that you saw us talk about through the customer value proposition discussion also was, you know, we're not our plan is not to really add to the network. Our aim is to really drive the network like it's, you know, never been driven before in a really positive way and get increased internalization, increased utilization, and those sorts of things.
You know, there's definitely, you know, tailwinds as well. There's tailwinds through the FOGO transition that we talked about before. There's tailwinds through, you know, the data analytics work into eventually AI and stuff like that. That will drive, you know, volume and price through this network.
Thank you, Mark.
No worries.
Thank you. The next question comes from Amit Kanwatia from Jefferies. Please go ahead.
Hi. Morning, team. Well done on the guidance increase, congrats. Just a couple of quick questions similar to Cam's. If I unpick the second half EBIT a bit more, at the midpoint, it's AUD 460. It's, sorry, AUD 262 million at the midpoint in second half, that's implied. If I think about the contribution from acquisitions, I mean, you've got LMS coming in, you've got the cost savings as well coming in. I'm just more interested in kind of understanding the growth in the base business into second half versus first half.
We, we, I mean, we're not gonna quite break it in that detail. I think what you should be thinking about is, you know, the base business is performing strongly. You can see that in the guidance upgrade that you just mentioned. You know, you should be thinking that CRs and Citywide, you know, will deliver that number around sort of AUD 35. Obviously the base, the base business, the rest, that's obviously after some of those first half headwinds that we talked about, you know, probably like around the AGM time, things like New Chum and stuff like that. You know, really the underlying business is looking robust.
I think it's back to kind of that bridge where, you know, you break it into Solids, ETS, and sort of indirect cost review benefits. You know, in Solids, it's the price volume coming through. It's that second half skew, driven by particularly CDS and carbon. In the ETS, it's the project outlooks. In OTS, it's health recovering, it's the OTS integration benefits and the CR synergies. At the group level, it's the indirect cost review, which is the sort of the AUD 15 million. You know, I think, you know, if you wanna, if you wanna get to the one, which is like, well, what do you need to believe to get to the top of the range? Well, you just need to believe lots of small things.
There's no one big thing that drives it to the top of the range. That's the great thing about Cleanaway. Cleanaway is just the sum of lots of smaller moving parts, therefore, it's quite resilient.
Sure. Yeah, I think fair to say that second half growth be more than first half. I mean, if I can just move on to the capital allocation and then, I mean…
Yeah
... given the context of, capital intensity. How are you thinking about capital allocation, given your comments today, over the next, few years?
I think on capital allocation, you're seeing a few things. You saw us talk about the fact that we are, you know, what we're doing on construction and demolition, we're strategically allocating capital to parts of the business that we think we can get the right returns for the risk that sits within them. In the case of C&D, we don't see that because the resource recovery activities move to the demolition site, we'll participate in that at the landfills and clip the tickets there. That's absolutely fine. I think in terms of, you know, the capital allocation, you're seeing us be very thoughtful about, say, our muni, where we've allocated capital to the Cairns contract.
We see Cairns as a great location, regional location, where we can create a strong position there. That's very consistent with the muni, the sort of the muni strategy. You can see us in Industrial Services reducing our capital allocation towards high margin, but low, or ad hoc, metro work, and instead shifting to contracted work using the sort of the CR's operating model. Then at a more macro level, you can see us saying: "You know, listen, the network looks pretty good now in terms of completeness, so therefore, you should expect us therefore to require less overall capital as a result, and our strong focus will be to fleet renewal and then just really driving our volume through our network using the advantage that we've built over the last 80 years.
Sure. I mean, looks like the free cash flow seems to be improving, earning strong. I mean, obviously, leverage is there. Is there a case for payout ratio to go up in the next couple of years, given what you've said today, do you think?
We're talking about payout ratio, Paul?
Payout ratio. It's not something we've given too much thought to at this stage, Amit. We think the ratio of 60-75 feels pretty sensible. We're obviously at the top end of that range. Obviously, we have significant franking credits, that sort of encourages to be paying out perhaps more than less. At this stage, we are focused on making sure that we get that balance right between capital and dividend and maintaining that deleveraging profile as well.
Okay. Just final one, maybe just a strategy around waste to energy in New South Wales, and maybe if you can touch in the Victorian market as well?
I mean, in New South Wales, I guess the sort of, the statements that we sort of shared around that, which we haven't talked about in these calls, but it's been sort of announced by others. We've signed the JDA for the Parkes Energy from Waste with Tribe and Tadweer. That is just the capital light originator model playing out. We end up with a 35% interest and the waste supply for the C&I tranche, so that's the low cost access for customers that we've been driving for. We prefer the Parkes location now over Willawarrin, and that's just due to planning uncertainty and that Parkes has sort of more support from, you know, locationally from the government and from various stakeholders. That's the sort of progress there.
There's a long way to go with these sorts of projects. There's nothing really much in the near term there in terms of investments. I think in terms of Melbourne, again, is just in long term, you know, sort of progressing capital light approvals. That's, that's the status there. I guess the main update was the one that Paul walked through on Parkes.
Okay. Thank you.
Cool.
Thank you. At this time, we're showing no further questions. That does conclude our conference for today. Thank you for participating. You may now disconnect.