Welcome, ladies and gentlemen, to the 2025 Annual General Meeting of Cleanaway Waste Management Ltd. My name's Philippe Etienne, and I'll be chairing the meeting today. As there's a quorum present, I declare the meeting open. Before we begin the proceedings, I'd like to acknowledge the Jagera and Turrbal peoples as the traditional custodians of Meanjin , the lands on which we meet today. We pay our respects to their elders, past and present, and acknowledge their continued connection to the land, water, and culture of this area. We also extend our respects to any Aboriginal and Torres Strait Island people joining us today. Before we start, I'd like to make everyone aware of the safety exits. In case of emergency, the exit is located at the back of the room, the door through which you entered.
Take the stairs that will be on your right as you exit the room, walk down to the ground floor foyer, and exit via the annexed street doors. Please meet at the assembly point, which is the King George Square deck above the Pig N Whistle Pub. The notice of meeting dated 19 September 2025 was made available to all shareholders. I propose to take the notice of meeting as read. I'd like now to introduce you to my fellow directors, the General Counsel and Company Secretary, and the CFO. On my right, we have, in the following order, Mark Schubert, Chief Executive Officer and Managing Director; Dan Last, General Counsel and Company Secretary; and in the front row, our Non-Executive Directors, Ingrid Player, Michael Kelly, Clive Stiff, Samantha Hogg, and Jackie McArthur, and our CFO, Paul Binfield.
I would also like to introduce the company's auditor, Ernst & Young, which is represented by Ashley Butler, a partner of the firm. Today's meeting is being held in person and virtually via the Computershare platform, where attendees can listen to a live webcast of the meeting and shareholders and proxies can ask questions and submit votes online. To provide you with sufficient time to vote, I now declare voting open on the items of business 2, 3, 4, and 5. A significant number of shareholders have already voted and appointed proxies ahead of this meeting, and we thank them for doing so. I'll start today's meeting by walking you through a few procedural guidelines for voting and question submission for those in person and online.
I'll deliver my address and then pass to Mark Schubert, our Chief Executive Officer and Managing Director, who will provide an update on the company's business activities and a trading update. Finally, we'll turn to the formal business of the meeting. By joining our hybrid annual meeting today, you, as a Cleanaway Waste Management Ltd shareholder or your appointed proxy, will have the opportunity to ask questions and submit votes if you haven't already done so. Voting today will be conducted by way of poll on the items of business, and Computershare will act as the independent returning officer. For those attending the meeting online and who are eligible to vote, as the poll is open, a voting icon is available on your screen. Selecting this icon will bring up a list of Resolutions and present you with voting options.
For those voting online, you are free to submit your votes at any time. To cast your vote, simply select one of the options. There's no need to hit submit as the vote is automatically recorded. Please ensure you cast a vote for items 2, 3, 4, and 5. You will receive a vote confirmation notification on your screen. To change or cancel your vote, click the link that says, "Click here to change your vote" at any time until the poll is closed. Votes may be changed up to the time I declare voting is closed. For shareholders, proxies, and corporate representatives here in person, I'll ask you to vote once we've gone through all items of business today by completing the blue voting card that was provided to you upon admission. White cards are for visitors only who cannot vote or ask questions today.
Shareholders with a yellow card are not entitled to vote on the items of business. I will provide a warning before I move to close voting at the end of the meeting. Questions will be aggregated and addressed at the end of all the items of business. It is my duty as Chairman to ensure that shareholders have the opportunity to ask questions and discuss the items of business during the meeting. We ask that all questions and comments be concise, be confined to the particular item being discussed, and to matters relevant to shareholders as a whole, and be informative and respectful. Given this is a hybrid meeting, I'll first take questions received in advance of the meeting, then questions from those physically present at the meeting, and then followed by written and audio questions from participants who have joined us online.
If you're attending the meeting in person, only shareholders, validly appointed proxies, and corporate representatives who are given a blue or yellow voting card upon entry are entitled to ask questions. When I call for questions, please raise your blue or yellow card and state your name or the organization you represent before asking your question. For those attending the meeting online who wish to submit a written question, you may do so at any time during the meeting via the speech bubble icon on your screen. Type your question in the chat box on the right of the screen and then select send. Confirmation that your message has been received will appear above. Instructions on how to ask a verbal question are shown below the broadcast window on the online platform. If you're asking a verbal question, please state your full name before asking your question.
Please limit your questions to only one or two questions at a time and then rejoin the queue to allow others to ask questions. Please note that while you can submit written questions from now on, I'll not address them until the end of all the items of business. We will ensure that there's a reasonable opportunity for shareholders to ask questions and make comments at this meeting. However, there may not be time this morning to answer every question or comment received. Questions will be moderated to avoid repetition, and if questions are particularly lengthy, we may need to summarize them in the interest of time. Questions should relate to the items of business under consideration at today's meeting. I'll now address the meeting with an update on Cleanaway's financial and strategic progress in financial year 2025.
Again, good morning and thank you for joining us, either online or in person here in Brisbane. We greatly appreciate your participation. It has been a year that has given us cause for confidence, but also for deep reflection on what matters most. Hence, before I speak to our performance and outlook, I want to begin with what weighs most heavily on the board, the executive, and our people this year. Our safety outcomes in the past year were poor, and both your board and management accept full responsibility for that. Tragically, in financial year 2025, three people lost their lives while working within our operations. Each life lost is a tragedy. Each is unacceptable, and each compels us to confront with clarity and determination the responsibility we hold for the safety of our people and everyone who places their trust in us.
We extend our deepest and most sincere condolences to the families, colleagues, and communities affected. These events have been felt deeply across the company, and they reinforce that safety is not simply a priority that changes with circumstances. It is the foundation of who we are and why we are committed to transforming Cleanaway's safety culture, processes, and policies, a journey we began in mid-2023. That makes sharing with you that we've had a fatality in recent weeks simply heartbreaking. On the 19th of September, a contract driver of a third-party logistics provider suffered fatal injuries after being struck by an excavator at our Coolaroo Materials Recovery Facility in Victoria. We are devastated by this incident and extend our deepest sympathies to all family, friends, and colleagues impacted. We are supporting the family of the deceased in every way we can.
This tragic event has been felt deeply by the executive and the board. Our immediate focus has been on the safety and wellbeing of the Coolaroo team and of every person working across Cleanaway. An internal investigation is underway to understand the causes of the Coolaroo incident and identify recommended actions. In parallel, the board has commissioned an independent external review that will bring fresh eyes to our HSE strategy and its implementation, helping us identify further opportunities for improvement. It will build on our existing assurance processes and the internal review completed towards the end of financial year 2025, which identified several areas to accelerate implementation, including the major investment in in-cab vehicle monitoring systems that will continue through financial year 2026 to enhance our visibility of driver behavior and fatigue risk.
While remaining steadfast in our commitment to prevent such events from occurring, we will provide more timely communication of fatal incidents, evolving from the periodic disclosure approach we've taken previously. The board and executives are united in their commitment to strengthen our safety across our business. This commitment is grounded in our values and in the responsibility we share for the safety and wellbeing of everyone associated with our business. That commitment was reflected in the financial year 2025 remuneration outcomes. The board assessed the STI scorecard outcome did not fully reflect the year's safety performance or the scale of underlying adjustments, particularly the financial impact of the fire at the Christie Street liquid waste facility. This was despite strong underlying EBIT growth of 14.6% and stretch achievement across environmental, people, and culture measures.
As a result, the board applied a 30% downward adjustment to the executive short-term incentive outcomes, in addition to the 10% safety component that was forfeited when the gateway condition of no fatalities was not met. The board believes this outcome achieves the right balance between recognizing management's delivery of strategic and financial results and meeting broader stakeholder expectations. However, despite this downward discretion, this year's vote on the 2025 remuneration report has resulted in a strike. The feedback from shareholders and proxy advisors has been clear. There is concern about our safety performance during the financial year 2025 and the additional fatality that occurred early in financial year 2026. We understand and accept that message. These events are unacceptable. They have had a profound impact on our people and on the confidence of our shareholders, and they rightly influence how leadership accountability and outcomes are assessed.
For financial year 2026, the weighting of the safety component in the short-term incentive scorecard has been doubled to 20%, while maintaining zero fatalities as a gateway condition. Following the fatality at Coolaroo , that gateway will not be met, and no payment will be made under the safety component for financial year 2026. While these tragedies show there's more to do, it's important to recognize the progress Cleanaway has made since we began our five-year HSE strategy in mid-2023. This strategy and its supporting action plan are transforming safety at Cleanaway from being part of the job to being foundational to who we are and how we work.
Two years in, we have made meaningful progress in strengthening our culture, systems, and processes, contributing to a significantly improved safety performance in the second half of financial year 2025, which has continued into financial year 2026, and Mark Schubert will take you through this in his address. Through our meaningful progress, we're building the foundations for sustained change, which support the Board and Executives' confidence that we are transforming safety at Cleanaway for the benefit of our employees, customers, and broader stakeholder groups. While our financial year 2025's safety performance rightly gave us reason to reflect, equally, the financial performance and strategic progress gave us reason to be confident about the future. Underlying NPAT grew by 16.2% to $196.4 million, showing the strength of our diversified business.
Statutory NPAT was largely flat on year, reflecting the impact of a number of one-off costs, the largest of which was the $23.2 million as a result of the fire at our Christie Street liquid waste facility in St. Mary's, New South Wales. The Board is confident that strengthening Cleanaway's safety and environmental foundations, continued investment in technology, and our focus on operational excellence are not only improving financial performance but also reducing the likelihood of future incidents and the associated one-off costs. Return on invested capital also strengthened to 6%, continuing a steady climb from 4.5% in financial year 2022, as we maintain disciplined capital allocation and operational focus.
Reflecting the Board's confidence in Cleanaway's ability to deliver earnings growth and improved cash flow generation, the Board declared total dividends per share of $0.06, up 20% on financial year 2024, and representing a payout of 68% of underlying profit after tax, which is at the upper end of the 50% - 75% target payout ratio. Our approach to acquisitions is deliberate and disciplined. It supports our strategy and is only undertaken when it allows us to secure assets that cannot be replicated organically or that accelerate our long-term growth ambition. Over the past 18 months, we've made two key transactions that reflect this strategy. The acquisition of Citywide Services waste and recycling assets for $110 million included the strategically located Dynon Road transfer station.
This asset strengthens our Melbourne network and is expected to contribute to medium-term earnings once we have redeveloped it into a modern, efficient, and larger transfer station, which we are doing alongside co-investment from the City of Melbourne. We also invested $377 million to acquire Contract Resources, a leading provider of specialist production critical services to major oil and gas customers. This business brings an attractive earnings profile and deep technical capability that supports safe, reliable operations for its customers. To realize their full potential, our existing industrial services business is being integrated with Contract Resources under the name Contract Resources, proudly part of Cleanaway. Together, they form a market-leading brand with the expertise, reputation, and customer relationships to accelerate our decommissioning, decontamination, and remediation strategy, establishing a strong platform for sustained growth.
Our board carefully considered these acquisitions and is confident that they will generate attractive returns for our shareholders over time. Both transactions were completed in the first month of financial year 2026 and were funded through debt. We approached this from a position of strength with a leverage ratio of 1.85 x at the end of financial year 2025. After these acquisitions, our leverage remains comfortable at around 2.4 x, and we continue to maintain a strong balance sheet with a clear plan for further deleveraging. Taking into account the consistent progress in our performance, improvements in returns on invested capital, and the disciplined execution of Blueprint 2030 reflected in our expanding EBIT margin, along with recent acquisitions that support our strategic goals, your board maintains an optimistic outlook for the future.
When combined with our ongoing commitment to delivering improved safety outcomes, this positions Cleanaway to continue delivering sustainable value for our shareholders. Thank you for your ongoing support, and I'll hand over to Mark.
All right, good morning everyone, and thanks Philippe for the address. Following the Chairman's address, I also want to acknowledge the fatality at our Coolaroo Materials Recovery Facility and the three fatalities that occurred in FY 2025. As CEO, I carry responsibility for the safety and wellbeing of our people every day, and each tragedy strengthens my determination and that of the leadership team to make safety truly foundational to who we are and how we work. Before I move on to talk about our HSE strategy, financial performance, and the longer-term outlook, I would like to spend a few moments to reflect on the past few weeks inside Cleanaway following the Coolaroo fatality. As Philippe mentioned, our first priority was the safety and wellbeing of our people and supporting the family, friends, and colleagues of those most affected. Operations at the site stopped immediately.
Support was provided to the family of the deceased worker, to the Coolaroo team, and to people across the network. Our internal investigation began. Operations resumed days later, only once a comprehensive safety assessment had been completed across all aspects of the site. To enable all learnings and additional controls to be embedded slowly and carefully, we restricted throughput to around 50% of normal. On the Tuesday following the incident, we held a company-wide stop for safety, where we walked through the incident together. Each of our sites then committed to immediately stop and review their mobile plant and pedestrian interaction controls, and with the benefit of the understanding from the Coolaroo incident, to challenge themselves to strengthen them further through both interim controls and, where possible, permanent controls.
We then followed up a week later with an all-leaders call to review the action that had been taken, to share the learnings, and to support consistent adoption of leading safety practices across the network. At a corporate level, we've elevated the pilot using technology to improve separation of pedestrians and mobile plant in high-risk areas into a dedicated project across all yellow gear, and accelerated its timeline to include an interim approach and a permanent controls approach. When I look back at what we did in those days and weeks, it reflects about how far we have come in our safety transformation. Launched in mid-2023, our HSE strategy draws on leading practices from oil and gas and logistics industries and is guided by a five-year plan to strengthen systems, leadership, and accountability for safety across Cleanaway.
Our HSE strategy is built on five pillars that define our commitment to a safer and more resilient organization. We focus first on the basics. That simply means strengthening risk management, compliance, and assurance across the business. Our critical risk program continues to be embedded at our sites and will be further strengthened as we stitch it together at a task level with the Safe Control of Work program that's being piloted now. Second, we're investing in HSE leadership, capability, and culture because leadership is the key ingredient of lasting change. Safety now sits at the heart of our two guiding principles, which are keep each other safe and show genuine care. They guide how we lead, how we make decisions, and how we look after one another. Third, we're focused on safe and reliable and sustainable assets.
Over the past two years, we've invested $30 million in hard controls, like fire infrastructure and rapid detection and suppression systems, contributing to a significant reduction in medium and large fires and a 60% reduction in material process safety events. Fourth, we're building resilience and protection. Our number one risk in Cleanaway is land transport. We have our Land Transport Action Plan, which is all about strengthening and hardening controls to improve safety, and we're making progress. We plan to invest $130 million this year on new fleet, and this will continue for years to come. Our in-vehicle monitoring system project is on track with installation across our entire fleet, expected to be completed in calendar 2026. We have a new chain of responsibility training and driver simulation programs. Finally, we're embedding a learning culture. Through human and organizational performance principles, we're supporting frontline problem solving and shared learning.
Following the redesign of our HSE representative program, we've seen the number of employees involved triple, as they've been supported with structured onboarding, monthly learning sessions, national town halls, all strengthening connection and capability across the branches. I believe the progress that we're making in strengthening our controls, leadership, and culture have contributed significantly to improved underlying safety performance in the second half of FY 2025. Our serious injury frequency rate, otherwise known as SIFR, was 0.4 in the second half of FY 2025, which was a significant decrease from 1 in the first half of FY 2025. Encouragingly, the safety performance has been sustained into the first quarter, with SIFR now sitting at 0.45. Our total recordable injury frequency rate, or TRIFR, dropped to 4.3 in the second half of FY 2025, down from 5.4 in the first half. In the first quarter of FY 2026, TRIFR further decreased to 3.2.
The trends are encouraging, but let me be really clear, lasting cultural and significant change takes time. While we know we're making progress, we also know there's a lot more to do. If we shift to financial performance now, in FY 2025, we delivered strong financial results that reflect the disciplined execution of our Blueprint 2030 strategy. Underlying EBIT increased 14.6% to $411.8 million, supported by a 130 basis point improvement in group EBIT margin to a record 12.5%. This outcome demonstrates the strength of our recurring revenue base and the benefits of our operational excellence programs across the business. Our solid waste services segment was a major contributor to this result. As our largest business, accounting for two-thirds of group revenue, it's the foundation to Cleanaway's earnings strength.
Solids delivered revenue growth of 6% and an almost 13% increase in underlying EBIT to $371 million, and a 100 basis point increase in EBIT margin to 15.8%. This was driven by disciplined price management, stable collection volumes, and growth in our landfill and container deposit scheme operations. The continued rollout of the branch-led operating model and fleet transformation programs lifted productivity and lowered our cost to serve, while new infrastructure, such as the Western Sydney MRF, the Eastern Creek FOGO facility, and the launch of the Tasmanian CDS scheme, extended our post-collections and recycling capacity. While Solids remains the backbone of our performance, our broader environmental and technical solutions, or ETS segments, are also important contributors to performance today and into the future.
The first of our ETS segments, which is called Oils and Technical Services and Health Services, delivered revenue of $684 million, broadly in line with previous years. However, reflecting the benefit of higher margin project work in the OTS business and an increase in health services profitability, the segment delivered EBIT of $84 million, which was 24% up on the prior year. FY 2025 represented a milestone year for health, as it delivered ahead of its $15 million EBIT target for the period and completed its three-year transformation. The business has been rebuilt through the embedding of data-driven decision-making, stronger accountability, and the rollout of the branch-led operating model that has both lifted reliability and service quality. The second segment, or second ETS segment, industrial services, faced challenging market conditions in FY 2025. We saw customers delay projects, and our management chose to exit several unprofitable management contracts or metropolitan contracts.
As a result, revenue declined 6.5% to $378 million, and underlying EBIT fell 10% to $24 million. The business was reshaped during the year, consolidating operations from three regions to two, simplifying the metropolitan network, and reducing fleet and overhead costs. This delivered $7 million in savings, equivalent to $10 million on a full-year basis, and supported stronger second-half profitability. As we move into FY 2026, industrial services is more focused, particularly in WA, and well-placed to capture opportunities from its integration into Contract Resources. Before I provide the trading update, I do want to take a step back and provide an update on how we're creating long-term value for shareholders. As Australia's leading waste management company, we have the country's largest fully integrated network of collections, recycling, and resource recovery assets, and we hold leading positions in every segment we operate in.
Our scale and breadth of our customer base gives us strong recurring revenue, one that delivers predictable, growing earnings through different market cycles. As Australia grows, so too does the volume and the complexity of waste that needs to be safely managed. The overwhelming long-term trend sees governments at every level tightening policy settings to support higher recovery rates and greater national self-sufficiency. In the community, expectations are rising as well, as people want better, more sustainable ways to deal with their waste. We are modernizing the way our business operates. This will not only improve our operating efficiency, but also allow us to harness our scale and turn it into an advantage and support continued EBIT margin over the next few years. Our modernization began with the establishment of data analytics capability, which is now helping us make smarter and faster decisions across the business.
It continues through company-wide initiatives such as CustomerConnect, which is transforming our call-to-cash cycle, making it easier for our people to serve our customers, and more importantly, our customers to work with us. Our fleet transformation program is changing how we manage and deploy our vehicles, giving us safer, more efficient logistics at a lower cost to serve. Through our branch-led operating model, we're building culture, capability, and consistency across the country, lifting performance branch by branch. We've also strengthened our approach to capital management, which is central to our focus on delivering continued and sustainable increases in ROIC in the medium to long term. We've shifted our focus from EBITDA to EBIT, and that's sharpened the accountability for returns. We've centralized capital approvals, improved project delivery discipline, and embedded risk-adjusted returns so that every dollar of investment is working hard for shareholders.
The results are showing up in better cost, schedule, and safety outcomes. When it comes to growth, we're deliberate and disciplined. We pursue acquisitions only when they accelerate strategic priorities or give us access to assets that can't be replicated organically. At the same time, we're using capital light models like our landfill gas joint venture with LMS that creates flexibility to preserve capital and enhance returns. Together, these actions are building a stronger, more resilient Cleanaway , one that can deliver sustainable growth in earnings and cash flows, as well as improving returns into the future. Now I'm going to turn to an update on FY 2026 earnings. First and foremost, we remain on track to deliver FY 2026 underlying EBIT within our previously stated range of $470 million - $500 million. The September quarter reflected subdued trading conditions.
Notably, new churn volumes have been lower than expected as it transitions to closure in November this year, and weakness in the industrial services metro markets has continued. We expect EBIT delivery to be weighted more heavily to the second half of FY 2026 than the typical half-on-half split of previous years. As expected, the second half will benefit from the timing of operational excellence initiatives and the acquisition synergies coming through. The second half will also benefit from an indirect cost reduction program as we evolve from a period of installing foundations to now being able to build on them. The indirect cost reduction program will reduce our indirect costs to create a leaner, more efficient business, to sharpen our focus on customer experience, and to drive earnings to cash. We have further work to complete and will provide more details of this strategic program in February.
The integration of Contract Resources and Citywide is progressing well, with both businesses performing in line with expectations and on track to deliver EBIT of approximately $30 million in FY 2026. In conclusion, while trading conditions in the September quarter were subdued, we know what needs to be done, and we're confident in our ability to deliver our FY 2026 earnings guidance. Thanks for your attention.
Thank you, Mark. Transcripts of both my address and that of the CEO and 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 the meeting. As I mentioned earlier, voting is being conducted by way of a poll at the end of the meeting. You may vote at any time. I will introduce each item of business and then take questions together at the end of the business, at the end of all items today. Prior to commencement of today's meeting, valid proxy votes have been received, totaling 1,871,592,406 shares, which represents approximately 83.57% of Cleanaway Waste Management Ltd's issued capital. Proxy votes received prior to the meeting will be displayed on screen for each resolution.
Where the Chair of the meeting has been nominated as a shareholder's proxy, all open and available proxies will be voted in favor of items two, three, four, and five. There are voting restrictions on some resolutions, as outlined in the notice of meeting, which apply to those who have an interest in the resolutions and certain of their related parties or associates. As you are aware from the notice of meeting, items two, three, four, and five require a vote. Finally, I appoint Jessie Yerma of Computers hare Investor Services as the returning officer. I'll 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 the year ending 30th June 2025, and the Directors' Report and the Auditor's Report, which are now before the meeting. Please note there's no vote on this item of business.
Ashley Butler, a partner at Ernst & Young, Cleanaway's auditors, is also present to address any questions you may have in relation to the conduct of the 2025 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 the financial statements, and the independence of the auditor in relation to the conduct of the audit. Item two on the agenda is to consider the company's Remuneration Report for the year end 30 June 2025, as it appears in the 2025 Annual Report, and to pass a non-binding resolution to accept the report. You will see from the screen the numbers of proxies received for the resolution.
In accordance with the Corporations Act, the company will disregard any votes cast on this resolution by any key management personnel of the company, including the directors and closely related parties of these persons. Item 3A and 3B relate to the election and re-election of directors. A separate resolution will be put for each director. Item 3A relates to the re-election of Jackie McArthur as a director. Jackie has served as an independent non-executive director since September 2022, bringing more than 20 years of senior leadership experience across supply chain, logistics, operations, and manufacturing. Her practical understanding of how complex network businesses like ours operate safely and efficiently, together with her thought leadership in these areas, has made her an effective Chair of the Sustainability Committee, a role she assumed in September 2023.
Under her leadership, the Board has strengthened its oversight of Cleanaway's safety performance, emissions reduction initiatives, and environmental outcomes. Jackie retires in accordance with the company's constitution and, being eligible, offers herself for re-election. The Board, in the absence of Jackie, unanimously supports her re-election. A number of proxies, the number of proxies received for this resolution, is displayed on the screen. I now invite Jackie to address the meeting.
Thank you, Chair. I am Jackie McArthur, and I present myself for re-election today to our shareholders. As Philippe said, I joined the board in 2022, and in 2023, I was made Chair of the Sustainability Committee, which also has the remit of safety for Cleanaway. The tragic fatalities that we have had are unacceptable, and I think often of the families, friends, and colleagues of those that have been impacted. In my executive career, I've managed large and complex supply chains with all of the associated transport, logistics, warehousing, and manufacturing that sits alongside, and that was over ANZ as well as internationally. In my non-executive career, I've tended to gravitate towards the same sorts of organizations that either move or make things.
I have deep expertise in transport and logistics, operations, safety management systems, and in my first term on this board, I've been a strong contributor in these areas. Moving forward, management and the board will take the outcomes and learnings of both the internal and external safety reviews currently in progress and move decisively to improve safety for everyone. I look forward to your support to be re-elected as a Non-Executive Director of the board and believe I have the skills and experience to help continue to build shareholder value in a company that I have a great passion for. Thank you.
Thank you, Jackie. Item 3B relates to the re-election of Michael Kelly as a Director. Michael joined the Cleanaway board in December 2021 and brings more than 30 years of Senior Executive experience across Finance, Strategy, and Operations, including as Chief Financial Officer of Albright. As Chair of the Audit and Risk Committee since financial year 2024, his disciplined and independent approach has ensured strong oversight of financial reporting, internal controls, and risk management. Michael retires in accordance with the company's constitution and, being eligible, offers himself for re-election. The board, in the absence of Michael, unanimously supports his re-election. The number of proxies received for this resolution is displayed on the screen, and I now invite Michael to address the meeting.
Good morning, shareholders. I'm honored and delighted to offer myself for re-election as a Non-Executive Director of Cleanaway. As Philippe said, I joined Cleanaway in December 2021, and I have actively contributed to the board during that time, as well as the Audit and Risk Committee, which I now chair, and the Sustainability Committee over the last couple of years as well. I also serve as the Chairman of Bombo Group, and as Philippe said, I was Chief Financial Officer at Albright for eight years, and I've held various other senior executive positions throughout my career, adding to more than 30 years' experience across finance, corporate strategy, operations, a lot of focus around strategy and acquisitions in my working life, and have covered a broad range of heavy industrial businesses, mainly construction materials, building products, resources, and media.
During that time, I've worked quite a bit in Australia and also quite a bit internationally. I hold a Bachelor of Commerce, and I'm a Certified Practicing Accountant. I believe that I will continue to make a strong contribution to the Cleanaway board, and I look forward to working on behalf of shareholders. We want to continue the company's development, and my lens is a deep focus on delivery of shareholder value in a sustainable and over the longer term. I thank you for your support.
Thank you, Michael. The next item of business relates to the granting of rights and restricted shares to the CEO and Managing Director, Mark Schubert. Item 4(a) of the notice of meeting seeks approval for the granting of 754,461 performance rights to Mark Schubert under the terms and conditions of Cleanaway's long-term incentive plan, as set out in the explanatory statement to the notice of meeting. Item 4(b) of the notice of meeting seeks approval for the granting of 147,581 restricted shares to Mark Schubert under the terms and conditions of Cleanaway's deferred equity plan, as set out in the explanatory statement to the notice of meeting. The number of proxies received for Resolutions 4(a) and 4(b) are displayed on the screen. The next item of business relates to financial assistance in connection with the Contract Resources acquisition.
This final item is a special resolution to approve the giving of financial assistance by Contract Resources entities. The reason for giving the financial assistance is to enable the company to comply with its obligations under the company's syndicated facilities agreement. The number of proxies received for Resolution 5 are displayed on the screen. I'll now take questions on each of the items of business. As noted earlier, I'll first take questions received in advance of the meeting, then questions from those physically present at the meeting, and then followed by written and audio questions from participants who have joined us online. For those shareholders present in person today, if you wish to ask a question, please move to a microphone and show your blue or yellow admissions card to the microphone attendant, who will note your name and introduce you when it is your turn to speak.
Please limit yourself to one question at a time to give other shareholders a chance to ask questions. For those attending the meeting online who wish to submit a written question but have not yet done so, please submit your question now via the speech bubble icon on the screen. I'll now ask Roger Chong, Deputy Company Secretary, if we have any questions from shareholders who submitted questions in advance of the meeting today.
No, there aren't any.
Thank you, Roger. Are there any questions from the floor? Please.
Good afternoon. My name is Meredith Clark, and I'm a volunteer for the Australian Shareholders Association. Today, the ASA holds proxies for 40 shareholders and ASA members, which relates to over 840,000 company shares. To begin with, I'd like to express the ASA's appreciation to Cleanaway, apologies, for holding a hybrid meeting as this allows for the maximum participation of shareholders. Not all companies are doing it, so we really applaud you for doing so. Thank you. I'd also like to thank you for addressing the shareholding of non-executive directors, which I raised at last year's meeting, and including it in the annual report, including the guidelines that show that specifically non-executive directors have five years, rather the date of appointment or 1 July 2021, to do this, and that now all directors are in the position that they own the equivalent number of shares to one year.
We thank you for your attention to that matter. The only question I would actually ask at the moment, oh, sorry, there's one more. Regarding the REM report, on behalf of the ASA, we'd like to say we appreciate your use of discretion and the removal of the 30% of payments and applaud you for doing so in the circumstances.
We also note the weighting of the safety component was increased, as you mentioned before, from 10%- 20%, and acknowledge the commitment to improving the safety levels within the company. Mike, I have one more question, one question actually. Mr. Etienne, you didn't comment in your presentation, but I understand that you may be considering retiring from the board in the next year or so. Could you please address that and what the board is doing to do for your replacement? Thank you.
Thank you, Meredith. I just want to thank you for acknowledging those matters that you have. That's very much appreciated. I joined this board in 2014, and at next year's AGM, I will have finished my fourth three-year term. It is our practice for directors to not serve longer than four three-year terms. Yes, you're quite right. My intention is to step down at next year's AGM. The board is in the throes of doing a med search to bring in another director. You'll remember that Rob Cole left the board earlier this year for personal health reasons, and we quite possibly will add a further director to the one that we're currently looking for. Those med searches, part of the search criteria is to increase the chair optionality that the board currently has.
Thank you, Mr. Chairman. George Bombo, Director of Faircase, Shareholder. I'd just like to first compliment you on the annual report. I always think it's a good annual report when the financials are on the first few pages of a report, not buried in page 169, so that people don't get to read them. I would also like to say that it's very nice to see a young person on the board like Jackie. It's nice to see these people that can have an investment in the company and go forward. My question to you, where do you see future growth? I see that you've got a couple of things that you've purchased and bring on. I see that a lot of the councils these days are doing their own pickups, etc. Is that an avenue where Cleanaway could come in?
Oftentimes, you might operate the first couple of years and not make any money, but once they've disposed of their fleet and you've got the business going, it could be quite a profitable thing for you. You need to look at ways that you can keep growing the business, and I didn't know what you had in mind. Thank you.
I think I might ask our CEO to answer that question, but thank you, Joe.
Thank you, and I've been looking forward to that question. Here we go. I think the way I think about it is there's three sort of sources of growth. The first source of growth is organic growth. Like I said in the speech before, as Australia grows, Cleanaway grows just because the population grows, businesses grow, and we grow with them. You should think about that growth coming through as sort of like GDP plus a little bit. That obviously comes through as revenue, but it also drops through because of operating leverage. The second source of growth is this long runway that we're seeing from modernizing Cleanaway. This is all about margin expansion. This is earning more from each available dollar. The things that will really benefit Cleanaway: branch operating model, making our 350-odd branches really efficient, data analytics, CustomerConnect, renewing the fleet.
The fleet, renewing each truck at the moment, is probably one of our most profitable investments because every time we bring on a new truck, we dispose of an old one, 15% fuel saving, maintenance savings, et cetera. That's a long runway of operational excellence. For investors in Cleanaway, you need to think that's a long period of time. That's not like next couple of years. That's many, many years to come. The third is from the growth from investments that we've made. Obviously, Contract Resources has joined with us. We all understand this opportunity that comes with decommissioning and remediation of onshore and offshore oil and gas in Australia. Contract Resources is poised for that growth. Citywide, the acquisition of the Dynon Road transfer station, will redevelop that. That will then grow.
The Western Sydney MRF that we built for $40 million, it's in ramp-up phase, so that will grow. GRL, we've turned that into a FOGO facility, so that will grow. I think that the message I'd just leave our investors with is that we are really at this mode now where we're switching from investment in hard assets to optimizing existing assets. We're switching from installing foundations to building on the foundations that we've installed. The good news there is you should see us really at that switching point where we go for cash conversion and cash flow in coming years. We will see that earnings growth translate down through to cash conversion. Thanks for your question.
Are there any other questions? Okay.
I actually do have two more questions for the Board.
Please.
One is we'd like to raise the question of the board's skills matrix. Currently, this is included in the corporate governance statement. We'd encourage you to consider including it in the annual report rather than the corporate governance statement, because the annual report is the main communication document and source of reference for the retail shareholder. Apologies for not being quite clear. We're asking if the board would consider changing that from just being in the corporate governance statement to also including it in the annual report.
I think that's a sensible suggestion, and we will definitely retain it in the governance statement. I see no reason why we wouldn't add it to the annual report document as well, Meredith. We'll do that next year.
Again, using the ASA guidelines, we've noticed that the company has had the same audit firm, Ernst & Young, for, according to my records, 17 years from what I picked up from the document. We acknowledge that the lead auditor is, and the firm is, rotated. However, we would raise this as a potential area of concern. Extended relationships with the same audit firm can potentially compromise the audit independence. This is particularly relevant given recent events with other ASX companies, for example, Corporate Travel, which changed auditors at the end of last year. This year, significant discrepancies were uncovered that had previously gone unnoticed. Will Cleanaway consider issuing a competitive tender next year?
Thank you for the question. We're mindful of this matter. We apply the AICD auditor independence checklist process. We also, as you mentioned, rotate audit partners in a timely fashion. The board also, from time to time, conducts its own investigations to assure that our audit arrangements are commercially competitive. We did such a deep dive into that question last year. We think those matters are covered by those processes. Any other questions from the floor? If there are none, Roger, that takes us to online written questions. Do we have any written questions?
Yes, we do, Chair. I will read them in turn. We have a number of questions from shareholder Stephen Main. I will start with the first one. The question is, the stock is down 5% today, and you've had a 40% remuneration first strike. Given this, you should be following the agenda and dealing with each item of business sequentially and not abandon the agenda. Please return to the agenda in next year's AGM. The effect of taking questions as one is to reduce the focus on remuneration, which should be discussed separately and in detail given the size of today's strike. What caused the strike and which advisors recommended against?
Thank you, Stephen, for the question. I mean, we structure the meeting as we choose to structure the meeting. I think the suggestion that was done to somehow deprioritize safety, I would completely reject. The reason for the strike is that that's the way shareholders chose to vote based on the information before them, and we respect that vote. I think that's about all I'll say on those items. Thank you.
The next question from Mr. Main is the following. It's a shame you did not disclose the proxy votes to the ASX along with the address, as many companies now do. However, at least you've displayed them in a timely manner before the questions commence today. Normally, remuneration and LTI against votes are similar, but in your case, there was a 16% LTI grant against vote and a 40% proxy protest vote against the remuneration report. Could the Remuneration Committee Chair please summarize what has driven this voting and how the company intends to respond? Please don't say proxy advisor recommendations are confidential. It is standard for companies to be across this detail and inform shareholders where relevant.
I think I'll take that question unless Jackie feels she'd like to answer it. Despite the request, the reality is that proxy advisors are commercial enterprises. They produce their reports as paid products to clients who pay the fees. We are not at liberty to then go and reproduce that information and share it as being suggested. In fact, to do so would be a breach of copyright. It's just not something we're prepared to do. Anything you'd want to add, Jackie? Sorry, Samantha. Anything you'd want to add, Samantha?
Thank you, Chair. The next question from Mr. Main is, what proportion of the Citywide business did we buy, and did any of the staff or management have the option of choosing whether to come across to Cleanaway or stay under City of Melbourne ownership? Was the CEO surprised that the ACCC process took so long and that we weren't required to make any meaningful undertakings? What was the point of the exercise?
I'll ask our CEO to answer that question.
I think when you buy the Citywide business, you buy the people and the assets. The people involved in the waste management part of the business came across as usual. People aren't given the option whether to come or not. They come across, and then we kind of sort it out from there. Was I surprised the ACCC process took so long? I think the ACCC did a thorough process, as you would expect. Obviously, they received a lot of submissions. We provided our own, and we were in a really meaningful dialogue with the ACCC to make sure they understood our point of view as well as everybody else's. The point of the exercise, Stephen, is to ensure that competition is maintained, which we believe it has been.
Thanks, Mark. Roger.
We have one last question from Mr. Main. It's a short question. When was the last full tender for the external audit role conducted, and when will the next one be conducted?
Yeah. I think in my notes, the last full tender was 15 years ago. As I previously said, we have a number of processes that don't require a tender to both assure us that audit independence is maintained and that the commercial arrangements are competitive.
We have one question from Mr. Adam Gourvet. That's quite a lengthy question. I'll read that now. Are you aware of the multiple risks in relation to the continued push to diversify into large-scale incinerators, in particular with the safety and environmental issues that are inherent in moving great proposals, the same type of incinerators which have all shut down in California in 2024? People of Melbourne's North, who are very concerned about the initial Wollert proposal, less than 10 kilometers from the Coolaroo site, are now more resolute in opposing the Wollert plan.
The prospect of a huge incinerator at 850 degrees and the resultant fly ash in the midst of a growing young population, which has felt ignored so far in the planning process, has added to the opposition. The community has been backed in their concerns by their federal and state MPs as well as local organizations and councillors. There are risks in the moving regulatory framework with state parliamentary inquiries into the industry in both Victoria and New South Wales. Remember the lost investment in the incinerator plan for Western Sydney, which could not proceed due to changed government conditions. Will Cleanaway act on the commitment to safety and strengthen their current operations rather than diversify into the risky business of burning tonnes of mixed rubbish amongst young emerging communities, which could negatively impact the business as a whole?
I think I might ask Mark to address that.
All right. Thanks for the question. I think, you know, at a headline level, I think Cleanaway is very aware of the risks. We're very aware of the controls as well. I think what the government's put in place is world-leading regulations, particularly around emissions controls. The second thing I'd say is Cleanaway wouldn't be sort of proposing projects like this if we didn't think it could be done safely in the locations that we've chosen. The third point would be, we intend to both strengthen existing operations and ensure the right controls are in place at these facilities. I guess what I'd really ask, you know, whoever's asked that question, you know, very keen that our team has the opportunity to sit down with you and we can actually go through any concerns that you do have in a lot of detail.
If you want to write your contact details into the question, I'll make sure that the team contacts you and can sit down face to face and go through any concerns you do have in a real order of detail.
Thank you, Mark. Roger, do we have any more questions?
No more questions, Chair.
Okay. There are no further questions. That concludes our discussion on the items of business. I really want to thank you for your questions. As indicated at the start of the meeting, a poll will be taken on all resolutions. Cleanaway's Constitution requires that proxies must be lodged at least 48 hours before the meeting. Proxies lodged after that time are not valid. If anyone is here under power of attorney, you may only vote if the power was lodged with the company at least 48 hours before the meeting. Anybody holding a power of attorney in respect of shares in the company that has not previously been lodged may not vote using it. The poll will be conducted by our share register, a Registry Computer share Investor Services. Jessie Yerma for Computer share will act as returning officer.
We will announce the results of the poll and advise the ASX as soon as the results are determined. In-person attendees entitled to vote would have been issued with a blue voting paper at registration. The process for in-person shareholders and for proxy holders and attorneys who have received a blue card is as follows. Firstly, shareholders, if you wish to vote for a resolution, please mark the for box next to the corresponding resolution. If you wish to vote against, mark the against box next to the resolution. If you wish to abstain from voting, mark the abstain box next to the resolution. Secondly, if you are a proxy holder or attorney, you must comply with any specific voting direction of the shareholder if you wish to lodge a valid vote. The voting direction is shown on the schedule attached to the voting card you have received.
If you have any questions, please ask one of the Computershare representatives before lodging your voting card in the poll boxes. Please now complete your voting cards and place them in the poll boxes being carried throughout the room by Computers hare. If the voting cards have all been collected, I now declare the poll closed. The results of these votes will be released to the stock exchange and on Cleanaway's website later today. Ladies and gentlemen, that completes the business of today's meeting. I now declare the meeting closed, and I thank you for your attendance.