Cleanaway Waste Management Limited (CWY) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Cleanaway strategy session that is focusing on Blueprint -- on its Blueprint 2030 strategy from Victorian Solid Waste Services perspective. [Operator Instructions] I will now hand you over to your host, Mark Schubert, to start the event.

All right. Thank you, and good morning, just for the people in the room, just a couple of housekeeping items [Operator Instructions]. In the unexpected event of an emergency, we don't expect one today. Please just all of us wait here. The wardens will come and get us, then we'll just slowly walk down the stairs and out into the car park area. And they'll show us where the assembly points are. It is great to have you all with us today, both in person here at Perry Road and on the teleconference and webcast from wherever you're joining us around the world. I'd like to begin by acknowledging the traditional owners the Boonwurrung people of the Kulin nation of the lands and waters now named City of Greater Dandenong and pay my respects to the elders past, present and emerging. We have done a lot to cover today, and you'll get an opportunity to hear from a few of the executive team and general managers that many of you probably have not heard from before. I'm not going to introduce them now. I've asked them all to provide a brief introduction as they cover off their agenda items at the start. In terms of the agenda, we're going to step through the HSE and people sections, then we're going to pause for some Q&A for about 10 minutes, and then we're going to continue on and dig a bit deeper into the Victorian Solids business or how we're executing our blueprints across the solid SBUs here, and that's the primary focus of today. Following that, I'll talk a bit more about group performance and financial ambition, and then we can jump into the Q&A. And without further ado, I'm going to pass you over to Deb Peach, who's our EGM for HSE Fleet and Asset Integrity.

Good morning, everyone. It's great to be here with you today. So I was very fortunate to join Cleanaway in September last year. and I'm responsible for HSE Fleet and Asset Integrity. So my 2 prior roles before joining Cleanaway were General Manager for HSEQ for Woodside's Australian Operations and Vice President for Governance, Risk & Compliance at Woodside. My dad was a tradesman and had a devastating workplace safety accident at the age of 25. The chronic pain from this injury meant that he was never able to return to work, which triggered other mental health issues, such as anxiety and severe depression that still affect him to this date. For this reason, I have dedicated my career to helping people, particularly frontline workers and protecting the sensitive environment in which we operate. I feel so fortunate to now be in a role at Cleanaway where I'm dedicated to keeping both our people and the environment safe. So today, I'm very excited to talk you through our new HSE strategy and 5-year improvement roadmap. The strategy is the output of several months of immersion within the business to understand our opportunities and also the current landscape and to reset our path to be an industry leader in health, safety and environment. The program of work will deliver shareholder returns and enable our license to grow. But to build this strategy, we started with a review of our performance. Whilst we have seen improvements over the past few months with a lower TRIFR rate of 3.7 after 11 months to the end of May. A lag in sensitive metrics are still not where we want them to be. Similarly, the change in nature of waste and in particular, lithium-ion batteries is leading to increased fire incidents and risks across our industry. It's pleasing to see good progress on the deployment of our environmental compliance toolkits across our licensed branches. And a recent audit to confirm Cleanaway will be recommended for a transition to the new international ISO standard, 45001 for health and safety. But also to maintain certification to the existing ISO standards for environment and quality. So we also asked our stakeholders for those actually doing the work in the business like the branch managers, frontline supervisors, drivers, operators for their feedback. So what was working well and opportunities to improve to make their workplace safer and more efficient. And here's some of the things they told us. We need to simplify how we work at the branches. Embed a more consistent approach to the management of health, safety and environment. Improve clarity of critical risks and controls and a stronger focus on HSE leadership and capability, and have a targeted approach to process safety and fire risk reduction to name a few. For the case of change is compelling. It's not only the right thing to do to keep our people and the environment safe, it will also benefit the bottom line and deliver shareholder returns through reduced insurance premiums, workers' compensation payments and reduced repair costs which, by way of example, has cost Cleanaway tens upon tens of millions in dollars over the past 3 years alone. Successful delivery of the plan will enhance our reputation and our social license and create a competitive edge to enable our business to grow aligned to Blueprint 2030. So I just want to explore this case to change with you in a little bit more detail. It was important for us to look back before we could -- to give us that clarity on our path forward. So if we start with our approach -- within the past, safety and environment were seen as priorities alongside the financials, and these are now reset as our foundation, which make it simple for our frontline teams because the foundations always come first. We will shift from a reactive and short-term planning horizon to now having a fully resourced strategy and 5-year improvement roadmap to drive progressive and importantly, sustainable change. Our solid approach to risk reduction programs and history of acquisitions, which has led to inconsistency, duplication and additional cost will now be replaced with simple consistent company-wide programs that are easy for our teams to understand and for leaders to assure. If we look now at performance. So as I mentioned earlier, our safety performance has plateaued, with past efforts primarily focused on incident response rather than risk reduction. But we're now redefining our critical risks that will give us confidence that our recent controls are well defined, implemented and verified. Our current HSE management system is quite complex. It makes it difficult for our frontline workers to conform. So we're simplifying our standards and tools, and we're going to make it easy for our workers to do their jobs every day. So a good recent example, we've revised the PPE standards, which used to be 18 pages and it's now 3 pages. So a lot more adjustable. Moving now to people. In the past, leadership training has focused on the financials. We see variability in HSE leadership capability. In addition, our approach to training is resource intensive and not always effective. So we've already started training our leaders. It was a new HSE leadership program. And finally, our assets. So today, we have a very robust fleet maintenance program. And as I know you've heard in previous sessions over the last 18 months, we've also been building our fixed asset register, defining safety critical equipment and planned maintenance routines around these. We're also building our computerized maintenance management systems or what we call [ HSE MMS ]. And with that context, let's move on to the new HSE strategy, which provides clarity on the what, the why and the how. The Cleanaway's operations are very varied and complex as such the strategy is multifaceted with a focus on risk prevention, capability build and cultural transformation. Our new vision, which expands on our previous vision of zero harm is to be an industry leader in health, safety and environment, and this will be enabled by our people, safe reliable assets and an incredible learning culture. We've defined 5 strategic imperatives to deliver on that business. We must first start with getting the basics right for excellence in managing our risk and compliance obligation for compliance as a nonnegotiable. Secondly, we will grow our HSE leadership, capability and culture. This is an imperative focus on embedding strong line ownership of HSE, visible authentic leadership and a culture of care and speaking up. Third, we will deliver safe, reliable and sustainable fleet and fixed assets through design, operation, maintenance and decommissioning phases. Fourth is to drive business resilience and protection. This includes crisis and emergency planning and to ensure a quick response should we have an incident. And finally, but very importantly, embedding an incredible learning culture. where we learn deeply when things go wrong, but also when things go right. So the strategy is supported by a detailed 5-year improvement road map and some of the key focus areas are shown here on the slide. This program of work will simplify how we work to make it easy for our people to get it right every day. So we have applied a risk-based approach to ordering the plan and the good news is that our plan is in execution with robust change management. Now I'll just touch on a few examples. The critical risk review program is in full swing with monthly engagements across the business including simplified standards, tools, hazard hunts and [ high-risk ] diagrams. Like I mentioned earlier, we also now have a HSE leadership development program, we've called this Stronger Together has been deployed nationally to all of our operational leaders. We started in February with positive feedback. Yesterday, I was just down at 2 of our solid sites down in Geelong and the operational leaders board that made and they've been to this program. The first of the 5 modules, which was focused on safety, leadership, culture, mindsets and they said it was extremely valuable so really great feedback. We manage the increasing risk of fire. We're progressively upgrading our facilities with rapid detection and response equipment. We're taking a risk-based approach to deploy our capital efficiently. In the interim, we've implemented capital-light interim controls, including the provision of reportable fire monitors and trained our teams in their deployment. But to wrap up, this is a transformational strategy for Cleanaway, it's core to our purpose and foundational to the successful delivery of Blueprint 2030. We have a new vision, we've got the passion, a clear plan and the right capability and resourcing to successfully execute. For the shareholders it's going to deliver a safer, more reliable and significantly more profitable Cleanaway that's able to deliver today and grow tomorrow. So thank you for your time this morning. I'm now going to hand over to Michele, who's going to talk about reimagining Cleanaway's culture.

Thank you. And good morning, everyone. My name is Michele Mauger, and I'm responsible for leading our people and culture strategy. I joined Cleanaway in March 2022. And prior to that, I worked in the executive roles with Incitec Pivot and Thiess mining services. So I have quite a deep experience in working with workforces with a very similar composition to that of Cleanaway. I'd like to set the scene in terms of what our workforce looks like today. We are currently more than 7,500 employees working out of more than 300 sites across our country. We represent 80 different nationalities and speak over 60 different languages. While we have a way to go in terms of our gender diversity, I think it's fair to say we are already quite a diverse group. More than 4,500 of us are in frontline roles directly servicing our customers on a daily basis. We are united by our purpose of making a sustainable future possible together. In February last year, after refreshing our strategy, we added the word to get us to our purpose in realization that our people and their contribution and how we work together are absolutely the key to our success. At Cleanaway, we understand our work is essential. We are hard-working, chemists, humble and proud of the important work that we do. We care deeply about the contributions we make to our local communities and our role in developing bold, sustainable, circular and low-carbon solutions for our future generations. We have been on a journey to reimagine the culture at Cleanaway. We're doing this to empower -- local ownership through our 300-plus branches where we are building highly capable leaders who think beyond today have a deep sense of care and create strong connections, both inside and outside of our organization. We recognize that care, inclusion, respect and empathy hasn't always been ingrained in the way that we work at Cleanaway, however we are committed to evolving our culture and creating an environment where everyone feels safe, included, respected and confident to bring the unique styles to work every day. We are doing this because we believe that while we are strong individually by working together with 7,500 passionate employees, contractors and partners, we become unstoppable. We are developing our new values that will shape who we are, how we work, how we show up, how we lead and how we treat each other. [indiscernible] we know we will create an environment where our people can thrive and we can achieve amazing things together. What we are doing is taking the very best of what we currently value and then introducing reinforcing behaviors and evolving that to align to where we are going. Naturally, however, and by design, we will leave behind some of the ways in which we have worked in the past that would set for purpose at that stage of our company's evolution, But it's no longer in service of Blueprint 2030. To give you a sense of what that looks like. I'll spend a few minutes describing that journey that we will need to go on and highlight the existing strength that we will take forward and build on. Our hierarchical structure and approach has resulted in a belief that our leaders know best, and we expect them to forge the path ahead. This has led to leaders directing work with limited exploration of alternatives or challenging the status quo by those who are actually doing the work. We want to leverage the ideas and innovation of our people and have our leaders offering guidance and feedback to deliver the very best outcome. Talking more about how we're going to do this and the success that we're currently having with our value-drivers from both Preet and Tracey a little later on. We want our people to think and make decisions. Like owners enabling decision-making actually right at the front line. We will act with urgency and consistently deliver great results for our customers with absolute care and price. We want to have people to be empowered and accountable and know that it is safe to try new things and think differently about the way we work, knowing innovation will absolutely help us win. We have been changing our solid way of working where our inward focus on immediate teams and the outcomes has limited collaboration and learning. While we have a strong outcome orientation and take accountability for commercial results, which we will retain, it can be reactive and short-term focus that can compromise long-term opportunities. As well as delivering results for today, we want our teams to build long-term values for our shareholders. Going forward, collaboration and inclusion will be a daily routine. We will share and learn together, ask for help and offer help. We will be curious learners. We see that is seen as a gift. We are all connected to our purpose, but we have a clear understanding of how, what we do every day contributes to our strategy and creates a sustainable and profitable future. We will be inspired to think of and deploy innovative, cost-effective and sustainable ways to achieve a low-carbon, high-circularity world, enable the success of -- successful execution of Blueprint 2030. We will be designing and embedding a people-first culture that inspires the people to bring their best selves to work every day, where they are empowered and enabled curious learners and as designers and perform highly for our customers, which in turn will deliver great results for all of our shareholders. So I'm sure you're all thinking, well, that sounds wonderful but how you're actually going to do this? The foundation with respect to delivering cultural change, which I know many of you will know is to build trust and engage employees through the change process. Every employee has a distinct set of needs that follows a hierarchy with basic needs of the foundation and growth at the top. Employees feel more or less engaged depending on how well they believe their needs have been met in the workplace. You might also be asking so what are our new values. Well, the answer to that is, we actually want to share the answer to that question with our employees first, but I'm sure that although I've danced around this question a little bit today that there's been a lot of cues and clues in what you have seen and certainly and what I have said. More importantly, we do not want our values to just be words on a wall. We want to truly live our values. And so we have matched a set of company-wide mechanics for the engagement hierarchy. As an example, as we set up around creating ownership, the first step is absolutely to create price. And one way that we currently do that is through open days or family days. Picture a day, normally on a weekend, where families and friends are invited to see where mom and dad or a special friend actually works. Imagine the pride that, that creates and the teams and the platform that creates ownership from our team. That's exactly what you see here on the screens in Port Adelaide in these pictures. As we launch our values shortly, our focus will absolutely be more around the self-reinforcing mechanics that bring them to life every day, then it will be about simply works on a wall. So I'll pause here and perhaps we'll take some questions from the first 2 sessions. Thank you.

All right. So we'll take questions from the floor firstly, Yes, got for it. Just yell it out because we've got like a microphone down the front, and I want to hear what you're saying...

Just a question. You've got KPIs on health and safety. You've now bundled in fire in there. We don't see KPIs in this environment. Should we be using EPA fines or [indiscernible] it takes for the business? And will you disclose that compared to, I guess, going forward?

You want to go at it?

Yes. Yes, that's a good question. So on the slide today, we obviously only showed TRIFR compliance tool kits. We've actually got a whole suite of lead and lag indicators that we've been growing in the background over the last couple of months. We, in fact, just spoke through with the Sustainability Committee on Monday, that whole suite of metrics that we'll start to measure. And certainly, for environment, there's other metrics such as lead and lag metrics such as fines and provision notices, things like that. Our focus is to really try and weave towards lead indicators because they're a much better way of identifying emerging themes to inform focus areas. So things around leadership capability for environment, cultural change. We're implementing a new safety culture framework, but it's focused on health, safety and environment. So capability, culture. So really trying to bring in those lead metrics as well. So the metrics will definitely mature further over time as a stronger focus on lead aspects.

There is an extension that you've mentioned -- you also mentioned in the presentation where the fixed asset was just a safety critical equipment, a more defined maintenance program. What do you think for the impact that, that has on your margins going forward a little more structured program as opposed to unplanned outages and rubbish still coming in and we've got to deal with that. How do we think through -- like, what's the drag was that creating an what benefit you think that has on maintenance and margin expansion we might have in a more structured maintenance project?

Yes. So I think I want to say is it's early days because as Deb said, which is consistent what I said in the past. Firstly, we've build the asset register, then we define safety critical equipment, then we start the productive maintenance for teams which makes sure things like the overhead crane that you'll see out here at Perry Road in safety critical. And we know it's been maintained. And it's on a regular schedule. That's the first step. Once you have the register, of course, then you can do the reliability-centered maintenance, which is your point because you can start to track centrally how that equipment is performing and then you do bad anchor programs over the top of it. So that's what you'll expect to see coming through in the next couple of years as we build out the sort of the pilot fixed maintenance system into the computerized version, the final version, which is going on now into JDE, which we use across the company. I think we have a number on that margin expansion, we don't at the moment because we don't -- we just simply don't track it like that, yes. But it will be part of as we prepare the margin expansion work and in particular, as we put the midterm targets in place, it will be part of the trajectory there.

Sorry, can I ask a question also -- so just on that Slide 13, I appreciate where you want to get to -- so where are you starting. So where do you think the culture is you're seeing on that hierarchy or the mark when we started so we get some sense how the change actually is?

Yes. Look, I think it's a great question. Thank you. I think the thing with our current culture is actually very healthy. And so there's a big part of the work that we've done is to recognize the health of our existing culture and what's really important in terms of carrying forward to our future culture. But by design, what we need to leave behind is no longer in service Blueprint 2030. So we're coming off a really good basis as we stand today. I guess, the aspects that we're looking to switch on were sort of somewhat covered in this presentation as well as my own, really, it's probably more around that care and respect and really driving from a behavioral perspective a different set of aligned behaviors to values in a way that actually we can bring them to last 3 the mechanics that we're going to introduce to the organization. So care and respect collaboration -- cross-company collaboration so that we can learn and grow together will be a big part of the future state culture as well as the thinking beyond today. So really building out a sustainable picture not only for our people, but for all the shareholders, investors more broadly is going to be important in terms of what we touched on in terms of our culture going forward. So there's lots of really good -- great stuff around and normal sense of pride that is as of today a very good sense around keeping each other safe that does exist in our existing culture, a very strong delivery, culture today and also just real case for customers in terms of the way that we're actually delivering our services very much coming off a really strong base. It's really about what do we need to add in service of Blueprint 2030.

A question maybe, Michele, you mentioned moving towards more of a branch led mindset. And Mark spoke in the past that we kind of want to change the thinking towards ROIC and EBIT. Obviously, the capital intensive to increase. How are you thinking about incentivizing those branches thinking about the capital footprint.

That's a good question.

Well, so the branch is now all run on EBIT. That's the first thing. So it's not running on EBITDA, obviously, the D&A part is to have to think about that and have to live in the world of their assets cost something and the cost that called the D&A. Obviously, when they bring investments, they have to think about ROIC, and we're really talking about ROIC accretive investments. The next investment we except are coming off a low base but the next investment needs to pull out in the right direction, not drag it down. And then there's a lot of focus on the things you're going to see that in a second of work with what you've got and make that a lot more efficient. And so the entire focus of almost the bulk majority of the people in Cleanaway is of excellence. It's about doing better with what you've got. And of course, that drops straight through to EBIT because it's the existing assets, and there's an enormous program implies to drive that at the front line through their teams. And that could be just simply things like shift length. You're going to hear all about shift length in a second. I won't front run that. But maybe just have that lens as we go through the next session with Tracey and Preet and Alex around, the vast majority of work is just driving pure as EBIT without the capital investment. If the operator is there, is there any questions from people on the call, please?

[Operator Instructions] Your first question comes from Rob Koh with Morgan Stanley.

Can I maybe ask a question about branch manager incentives. And Mr. Schubert, thanks for the color on investment. But how are you thinking about incentivizing them for collaboration, which is something you've called out that you want more of, so that's my first question. My second question is just if you could give a bit more color on some of your retention activities for your female workers.

Okay. So I'm going to get Tracey who you haven't met who's got 80% of the branches. She might well answer what we're doing on branches. And I'll get -- show you to pick up retention. So Tracey do you want?

Yes. Hi, good morning. So I'll give you a couple of ways that we're incentivizing our branch managers to collaborate. The first is through their bonus so when we came in, each of the branch managers, their EBIT burden was severe a branch and so you can image the sort of activity that drove with someone really thinking in a silo. One of the first things we changed -- which we changed for this year was a bit of the branch that actually your job is also to contribute to the region. And we've done that all the way through the chain as well for general managers, now bonus on actually how is the performance of the entire company going, not just their SBU. The other way, which I'll talk about in a bit. I won't talk about it too much right now is through business team. We were getting the team through the value drivers to collaborate nationally, find out who's doing the best against that metric and drive their performance as well to meet that metric. But we are on that shortly.

Michele?

Yes. So in regards to retention of female employees, there's a few things that we are doing in FY '24. The first is we're doing a relaunch of the behavioral expectations at Cleanaway, which we've titled [ respect at ] Cleanaway. And that's resetting behaviors of our workforce right from a -- right through to our frontline employees for all of us, and they are behaviors that will line up behind our new value. So that's the first piece of work that we're focusing on in the next financial year. Secondly, that will be quickly followed by the launch of the values program. So we will launch the values for [indiscernible] hardwire and the behaviors that we have set. The third piece is that we've started listening sessions and the executive team over the last few months have actually been out visiting our branches, spending time with small teams of people, understanding what's working, what's not working. And a big part of that is really it's sort of informed us that maybe not every site is set up for all genders. And so in the next financial year, we will be looking at doing sort of many audits in our sites to make sure that we're set up for not only female sessions, but also LGTBIQ plus is also very important to our business. Beyond that, obviously, it's just the normal for the hygiene factors that we need to make sure we've got in place for all genders of the organization, but really continuing to engage and listen to our people in terms of what they need to be successful.

I think the only other color I'd add is we talk about resignations as an exec team weekly. The executives are expected to know the females, if any female has resigned, and a GM would be expected to have spoken to any female that's resigned. That's how important it is and try -- and necessarily try to have a saving conversation. Okay. Any other...

One question on the webcast leading on from the female retention and the minority retention more broadly, how is Cleanaway seeking to retain talent in the tight workforce environment.

So a similar question, we believe that, obviously, a lot of people in the business have heard about the values launch that we're about to bring to the organization in line to Blueprint 2030, it's actually been quite a long time coming. And so we're quite excited about -- through that launch and using the employment hierarchy, making sure that the basic needs are met right through to that sort of growth mindset and everything in between. It will be absolutely around the mechanics of how do we connect our people to Blueprint 2030 and gives them hope and obviously a future to actually work with the company. And I think historically that they haven't always had insight to what our strategy is and what it means to them. And they haven't truly understood how the work that they do correlates actually to the end goal for the organization. So this is very much about connecting our workforce to where we're going and actually bring them on the journey with us.

All right. One more, and then we'll get going.

Yes. Maybe your way for us to think about the sort of churn rate in terms of sort of baseline where you were and how this sort of new culture will sort of change will...

Yes. So we do talk about voluntary turnover with you. We do walk through those numbers. I think what we've said is, we've drifted up from which is pre-COVID back in the day. We during COVID got down to 15% sort of number when everybody was just not leaving anywhere. Prior to that, total turnover was up towards almost 30%. We combined it also it's pretty high. It's 1 in 3 per year. After COVID, it came back up to sort of 21%, 22% and now it's drifting back down. But we would expect now given the growth that we're about to kick off around values and that sort of really getting into it as the rubber on the road, but we should try and drive that down. Our target is to bring that back down to sort of that 15% planning point, and then we'll see what a healthy number is around there. As well, voluntary turnover, and we want either -- it was worth it 10% because if we were to set the target, we said we thought we did the peak, and we hit the peak in September. That's the right metric. It's a very difficult one to control.

All Right. What we're going to do, thank you for the questions. I'm going to hand over to Tracey now, and we can always come back to further questions for Deb or Michele.

Okay. Good morning, everyone. So my name is Tracey Boyes, I'm responsible for the Solid Waste Services segment at Cleanaway, which, as you know, represents a pretty substantial portion of the business. I've been with Cleanaway now for close to 18 months. And I honestly feel fortunate every day to turn out and we have such a large cohort of people who are really hard working and really dedicated to Cleanaway and more for our customers. I've had a pretty various career in several roles, several senior executive roles including most recently with 13 years at Origin Energy here in Australia and Contact Energy in New Zealand. My passion is reimagining ways of working and also business models to achieve sustained results that will make some more sense shortly once running through what I've been up to since I have been here. So I'd like to start by setting the same view in terms of our operations here in Victoria and how we think about that within the frame of Blueprint 2030. Victoria is a great case study for us to bring Blueprint 2030 to life here because the core solids business here represents our second biggest SBU just behind New South Wales. So as you can see from the slide, Solid Waste in Victoria here has an expansive footprint. We currently operate out of 54 sites. We've given you an insight into our operations along the top of the slide here. Through our daily operations look something like 1,200 team members delivering services to our customers. And that includes more than 31,000 C&I customers and around 1 million residential homes across the waste value chain. So think about that as from collections through resource recovery, recycling disposal, energy recovery and electricity generation as well. We also have well over 1,000 third-party trucks coming to our transfer stations and tipping at MRL every single day. Now every one of those pieces of activities need to be done well, across every single customer and every one of those 54 sites for solid waste to really perform. And that means that we need 3 key things. One, we have to have great leaders at all levels of the business. And this is where the work that Michele and Deb really comes into play. Two, we have to focus the team on the work that they personally do that turns the dial. And three. we had to have an operational cadence to make sure that all hands together and the wheels keep fitting and the right conversations are happening between the right people at the right time. This, in a nutshell is operational excellence, and I'll bring that to life for you in a bit more detail shortly. So if we look at our strategic infrastructure assets here in Vic, our footprint, as you can see on the map, it represents an efficient network of facilities that have been carefully selected and created over time. It was designed to allow us to take part of net-waste to resources value chain in a vertically integrated way. Why is it important, our ability to internalize the waste and the resources all the way along that value chain means we capture more margin along the way, means we've reduced the risk of impacts from third-party disposal cost increases. And we also drive network level operational efficiencies. When I think about strategic infrastructure growth more generally, our focus is to grow the core business to drive further network efficiency and margin growth, but also to continue to extend and integrate our infrastructure as we seek to deliver on our customer value proposition, service value for money and sustainability which is defined as high-circularity in low carbon. And again, we'll come back to that shortly. Let's go to operational excellence. So we can make a few great decisions about which assets to invest in, when to invest and where to invest. So the thing is, there were so many sites and with such extensive operations [indiscernible] most of our earnings and certainly our margin growth is driven and delivered by thousands of great decisions that are taken every single day by those who are closest to the customer. The operational excellence pillar of Blueprint 2030 is the one that every single person and our team plays a part in. For that reason, we needed to find a way to funnel all of the great work that's coming through operational excellence and focus everyone's attention on improving the important drivers of value that they control. When we get this right, we do harness about 7,500 people who are focused on improving either the specific value driver or set of value drivers that they control -- or sorry, I've just lost my pace -- sorry, we delivered great HSE performance, which supports the strategy we grow the business and we improve our margins. So let me bring this to life for you. Solids is a diverse and a really dynamic business. And so naturally then, each of our lines of business has a different set of value drivers as you can see in the middle of the slide. In the collection business, for example, where a driver might be targeting the number of lifts, they can achieve every hour on a specific run. Their branch manager will be balancing the activity of the day across multiple value drivers, such as fleet availability, labor availability, end of the time and service delivery. Landfill in contrast, an operator who's on the tip face driving a compactor might be targeting the number of passes that they perform over newly placed waste. We are achieving a target waste density is their value driver, whereas the site manager will be balancing that same waste density target against the fuel and the labor cost associated with that additional path that, that driver is doing. So identifying the right value driver in the first place and getting that balance right across each of them, which will sometimes be in competition is absolutely critical. But where the magic is really happening is how we're making those value drivers visible to the team with targets. And this allows them to see what we need them to achieve and how they're going. And when we do this well, those team members come to work every day thinking like owners, they're contributing to identifying solutions and they're thinking about how they can shift their value driver that they're responsible for. And this is where the operational cadences come into play that we have described along the top of the slide there. When I started at Cleanaway, the focus was on a monthly P&L. And I had no idea how solids was going until the end of the month. My GMs were in the same position. There's only 12 opportunities, every year to top down and retrospectively, intervene them and support the business to improve. So if we fast forward to today, we have Visual Management Boards installed across all of our key sites in Solids, and there are daily conversations between the team at their site on the value drivers that matter to their line of business at their sites. And you'll see that here at Perry Road this morning, and Preet will take you through that in a bit more detail. Much of the data on those Visual Management Boards is get from Power BI and the work that Alex and Tim have been doing, and Alex will take you through that in some more detail later. Now the main thing is that the Visual Management Boards at sites won't drop off and be forgotten or unused and the operational disciplines won't stop if there's a change in leadership because we have hardwired this cadence through every level of the organization. And the cadence when we lock it together is self-reinforcing and it creates ownership and accountability. Every single day, those sites call in their key numbers to the regional manager. And they ask the help when they need it, each week, the leadership teams to Solid Vic is actually each of the other states and is used separately work through their vision management Board. We then see how their set of assets and their network is performing through those value drivers. I have a Solid Waste Services Visual Management Board weekly with all the general managers together and the executive team also has a weekly digital management Board with Mark. So the next thing is that in May, we knew our results before we saw the P&L because we're more across the value drivers, the P&L to look after itself. Across Solids, we now have our hands on the steering wheel in a way that we just didn't have before. Now the next logical extension of this, which we have initially installed for our landfills, is in driving performance across the comparable solid lines of business. By installing virtual business teams, for example, 1 for landfills, 1 for MRFs, 1 for C&I collections, we get to make the most of that state-based org structure that looks to optimize performance across the network that they hold, while at the same time, we get to drive best practice and performance across solids nationally. On landfills, for example, every solids team has aligned on the key drivers of value. They've agreed to how often they're measured, where the data comes from and also how it's reported. And from the end of this month, we'll start to see how they're all performing against both value drivers. And you can imagine the conversation and the friendly competition that this will now drive why is the density at MRL so much better than the [ incumbent ]. And if we set the target at the best of the best, and then we support the teams to learn and take best practice from each other and then implement and monitor that implementation through the Visual Management Board and the outcome. You can see just how quickly we can lift performance right across the group leveraging the knowledge that already exists in the team. Okay. Let's jump on to strategic infrastructure growth. You've seen we already have a significant footprint as [ price setter ]. Now at least every quarter, we refresh our view of where we want to grow that footprint. That could be to grow the footprint to align in Blueprint 2030. It could be to meet an emerging customer need or it could be to respond to competitor activity. Broadly and aligned to Blueprint 2030, we consider strategic infrastructure growth with agile focus. Firstly, on the left of the slide, we consider existing assets and how we expand, preserve spots with them and here are some examples. Firstly, growth through expansion of existing facilities the Southeast organic depackaging facility will double in capacity early next year from 30 tonnes per day to 60 tonnes per day to support growth in our national customer base. Secondly, growth through increasing our ability to accept new waste plants. In [ Mildura ] in FY '23, we added 11 new waste codes meaning we can now access waste like [indiscernible] and trade of walk. And finally, by switching the assets we already have, such as increasing our landfill gas capture collection at MRL from 5.3 million to 6.3 million cubic meters so far in FY '23 through installation of the 158 new gas [indiscernible]. This enables us to reduce our green greenhouse gas footprint by destroying the methane that we captured and it also underpins the business case for an additional 2 gas-fired electricity generators at MRL. The second way we think about strategic infrastructure on the right-hand side of the slide, is growing our footprint of revenue-generating assets through step-out expansions. And importantly, as we do this, we make a conscious decision on where we have the competitive advantage and we go it alone or we were stronger at this part of a partnership. For example, we're comfortable taking the lead on new organic facilities in regional and metro locations and on energy-from-waste whereas we partnered with is plastic pelletization and container deposit schemes. These partnerships are a recognition of what we can bring to the table. But also an acknowledgment that there are others out there who can bring expertise in other parts of the value chain and where we can be stronger together. I'm going to hand you over to Preet now, who is going to describe in a bit more detail some of the operational excellence tools that are helping us to deliver for today and improve for tomorrow.

Thank you, Tracey. Good morning, everyone. So my name is Preet Brar. I'm responsible for the core Solid Waste Services business in Victoria. I've been with Cleanaway for about 6 months now. But I've been in the waste and recycling sector over 20 years with most recent roles at Veolia, as CEO for India and CFO of Australia and New Zealand with Veolia as well. For those of you who have joined the strategy session in November, last year. Alex described some of the work we were undertaking in terms of digitizing the workshop. Perry Road branch, where we are today, is one of the first branches to start that digitizing process. Currently, our workshops use a lot of paper. Across Cleanaway, we completed over 400,000 work orders for fleet maintenance every year. Each annual work order has multiple pages attached to it, resulting in over 4 million pages of paper that we generate to complete maintenance for our fleet. Each work order is manually completed as well. So mechanics are writing the details of the work performed by hand and then passing it on to our admin team who'll then import it into our operational systems. Often, these work orders have information missing, and that requires further clarification before they can input. All of this results in an increase in nonproductive time. We've embarked on a program to digitize our work orders, which means deploying tablets into each of our workshops to replace the current paper in end report. We will see significant productivity gains from the workshop and I have maintained the time saved, especially for our team of mechanics means that we can internalize more fleet maintenance. Digitizing our work orders also reduces the number of errors that are made and improve compliance through real-time updates to our operational system. The program commenced in April this year, and we now have 86 tablets deployed across 21 workshops, including here at Perry Road. You'll be able to get a firsthand look at the digitized process when we go for a tool later this morning. We expect this rollout which starts here, but which will change how we work at all our workshops across the country, and we are utilizing off-the-shelf solutions that will cost around [ 400,000 ]. To ensure a successful uptake and limit reversion to current processes, we are undertaking a hands-on change management process. One of the most immediate benefits is our medium-term target of 5% increased mechanic productivity, which leads to more tool time and reduces the amount of work we need to divot to external mechanics at 3x the cost. The current focus of the digitization program is limited to corrective maintenance work orders. However, there is scope to include additional functionalities such as preventative maintenance, parts inventory automation and time sheet automation as well. As we capture more accurate information across our national fleet, we will be able to mine that data to find common failure points and time lines for each of our makes and models and build that into our preventative maintenance routines and fleet [ digitization ]. This will, in time, improve fleet uptime which has a direct benefit to the number of services performed which means more revenue, lower cost, higher service levels for customers and less churn. Since the start of April, over 3,300 tablets -- tablet work orders have been completed versus 42,000 pieces of paper over the same period. In the next 18 to 24 months, tablet work orders are expected to take -- to make a majority of our work orders. I think that's on the digitization program, and we'll move on to the Visual Management Board. And how we are implementing and utilizing our VMBs. The concept of Visual Management Board is not new. A commonly used tool in lean management and continuous improvement practices. There are typically physical workforce or displays that provide real-time information on the status of the project, process of team's performance. They're designed to make important information easy to access, understand and act upon. So that as a team, we see together, know together and act together. That's exactly what we're using them for. As Tracey mentioned earlier, value drivers are a critical way of driving performance in our business. It is through these VMBs that we track those value drivers. As you see in this picture on the slide, we use a combination of text, chart, graph and other visual aids. By providing a visual representation of key metrics and data, Visual Management Boards help our teams to quickly identify issues, prioritize their actions and make data-driven decisions. [indiscernible] we will discuss performance in real time and take actions today that will impact tomorrow. Importantly, they also help us to increase transparency and accountability and improve communication and collaboration among team members. The transparency also creates ownership, just like Michele mentioned earlier. Let me go downstairs later today for a Slide 2, you will see that Visual Management Boards that our teams are used to drive performance. It comes together every day to ensure their delivery plan for the day is aligned with achieving key metrics, and they take real-time decisions. At Perry Road, we service 9 municipal contracts and around 4,700 commercial and industrial customers with the support of 180 drivers and operators, 24 mechanics -- 18 mechanics, sorry, and 24 customer service and admin team members. All those teams need to be working in unison to deliver 2.5 million collection services from this side. On some of the key metrics, you'll see on the Visual Management Boards include safety and environmental compliance, team availability, fleet availability, missed services and route productivity. Now let's take a deeper look at route productivity, as an example. The underlying drivers for route productivity, route density and the time taken to complete a route. Our operational teams have the ability to control both these metrics. A branch manager can impact density by moving jobs across routes or to another day and thus rebalancing the load for optimum density. A regional manager working closely with sales can target specific routes for an infill campaign to improve density. Time to complete a route can vary depending on driver efficiency and the route load. Our operational team leaders know that the sweet spot for our duration is around 10 hours. This is because the cost associated with the additional 2 hours as double time outweigh any productivity benefits as the driver needs to be -- as the driver needs to take a mandatory 30-minute break once they hit the 10-hour mark. And she also needs to be back at the depot under 12 hours to meet fatigue regulations. That equates to anywhere between 30 to 45 minutes of productive time while costing us the equivalent of 240 minutes. For shifts greater than 10 hours is a metric that we monitor globally on a daily basis. The proof is in the outcome of this approach delivered. Over the last 6 months, our C&I team here at Perry Road has reduced overtime as a percentage of normal time from 33.6% in January this year, down to 28.4% in June, improved a lift per hour metric as well from 5.4 in January to 6 in June, and improved our SIFOT which is our service in full and on time from 98.4% to 98.9% in June. The next slide here is additional illustration of VMB, the typical metrics of value drivers that we track. As you will note, there is no revenue or EBIT target. It's purely the metrics that each team member has a direct and tangible impact on. If you went to our other site across Victoria, you'll see something similar. The drumbeat around our VM base means that as a management team, we have line of sight of our key leading indicators. And what that really means is that we can jump in immediately to help support our teams when we notice the problem. As an example, the big solid leadership team has a weekly VMB where resignation per branch is measured and reported on weekly. At a recent VMB, we noted that 3 drivers had resigned at a particular branch within 1 week. This line of sight allowed us an opportunity to immediately address the situation help that branch get back on track. That's all I have for now. Alex is going to provide you an update on some of the data and analytics program -- progress that we've been making, which has been feeding the Visual Management Board.

Thanks, Preet. Nice to hear with everyone again. For those of you that I haven't met before, my name is Alex Smith, I'm the General Manager of Commercial. I've been with Cleanaway now for about 6.5 years, and look after a number of functions, data analytics is being one of them. When we last got in November, I introduced data and analytics and the fleet optimization blueprint. Not only analytics blueprint fits underneath our operational excellence thought and is focused on 3 key things. The first is enabling our teams to make better decisions in near real time by improving our data quality, utilizing the wealth of data points we collect on our customers and delivering actionable insights. The second is improving productivity and engagement by working smarter with less manual manipulation and it allows our teams to focus on the value add. Third, utilizing insights to drive efficiency gains and operational improvements, which lead to margin expansion. Importantly, this blueprint is well planned and established in delivering tangible financial benefits and it requires minimal capital. . Data analytics blueprint has 4 key programs of work. First is the data infrastructure and governance. That's the blue box at the bottom of the slide. Since we spoke last in November, we've continued work on ingesting our source systems. And given some of the challenges in the labor market, we've been particularly focused on payroll, human resources at our time attendance system. Second, reporting and business intelligence. We continued working on creating dashboards for our operational teams. These dashboards of the data and calculation sitting behind the value drivers and Visual Management Boards that Preet and Tracey have spoken about. Third is our insight delivery. We've developed 2 delivery models for our margin-accretive analytics program, national initiatives that can be implemented at scale, such as our customer profitability tool, which is now enrolled into our price adjustments. And our targeted branch performance program, which brings together data analytics, Visual Management Boards and our value drivers, and we'll take your example later in the presentation. Lastly is the advanced analytics. So we've made really good progress since November investing in our data science team and exploring our first machine learning models. As we previously advised is the focus for FY '24 and FY '25. So as you've just heard, we've rolled out a set of value drivers and Visual Management Boards to all of our Solid Waste Services branches. The data analytics function has played a critical role in supporting this program by providing our teams with the information they need in near real time. 12 months ago, getting the information to display a value driver lift per hour of this length would have taken hours as it would have required multiple people, access to multiple systems, let alone all of the e-mails and [indiscernible] needs to pull that together. Today, it's available to our operational teams on their laptops, their phones or their tablets updated daily. So let's take a look at one of our labor management tools, which is a onscreen at the moment. The picture to the right is a screen shot of our shift effectiveness dashboard for one of our Victorian collections branches. It provides our teams with a daily view of the total shift length for their branch. Dashboard particularly highlights shifts that are greater than 10 hours. It also gives the branch manager the ability to click on those blue buys, which gives them the detail of all the shifts and all the employees that make up that particular days and hours. This Victorian branch is focused on improving our Monday shifts over May and June. So the value driver shifts greater than 10 hours is put up on the Visual Management Board. So it's visible to the entire team and daily targets assessed. The value drivers they discussed with each driver are the drivers debrief and the team as a whole in a daily huddle, we are focused on what the team could do tomorrow to improve that driver. On the 22nd of May 2023, so you can see the dots we put around that particular date. The average shift length was 11.6 hours, and there were 44 shifts over 10 hours. The focus on this value driver, you can see that the average shift length reduces to 10.21 hours with 21 shifts greater than 10 hours. The reduction in average shift length of 1.39 hours is all overtime, which is paid at double time. Our teams are able to reduce the overtime without compromising its service to our customers, and they do this by problem solving for excessive overtime at their daily huddles. The daily huddle brings together the scheduling teams, drivers, customer service for workshop and sales and the interaction and communication between the front line and support teams results in a really quick decision-making, feedback and solutions to service our customers. Branch performance program was started in back end of FY '22 with the purpose of bringing together subject matter experts from pricing, logistics, sales and finance together to help branch managers lift the performance of their branch. The program uses the data analytics tool to complete a diagnosis of the branch, identify opportunities and then implement them. We support the team by implementing cadence, which ties in really neatly into their Visual Management Boards and their daily huddles. This type of program is targeted at some of our branches who had a change in leadership, material changes in their operations, such as a new customer, a large national coming in or a term customer going out. All branches have had a sustained period of underperformance, it runs parallel to our national rollout of data analytics initiatives. The types of initiatives that we tend to focus on in these programs are customer profitability and revenue leakage through our bin and customer profitability tools, route optimization by scheduling changes, resequencing and targeted business development, reviews of our labor mix through subcontractors, owner drivers and company drivers and renegotiation of disposal rates in our regional locations. So playbook has been developed as part of our national rollout -- initiatives rollout that provides operational teams with the tools and instructions to implement these initiatives without needing a central team on site. We've had some really great wins in New South Wales, and we're looking to come to Victoria in FY '24. So I'll just touch on an example to bring this to life. So the branch performance team has worked with the Branch Manager and operations team in one of our New South Wales branches to firstly understand the competitive landscape and some of the challenges that the team were facing on the ground. We ran our diagnostic tools over the profit and loss and to identify some of the key initiatives to then implement. Firstly, with a renegotiation of their disposal rates at one of their regional landfill. Secondly, a reroute of front lift services which resulted in 2 assets being freed up. And thirdly, we flew in sales reps for a targeted business development campaign focused on improving the density on 3 of our runs. Financial result was an EBIT margin of 4.5x greater than when the team went in, not only was it a great financial outcome, but the engagement at the brands improved dramatically. The team were able to see the improvement in the branch daily through the value drivers and digital management boards, and there was a huge sense of pride about the turnaround. And then I lost within a data and analytics. We discussed some of the successes in our routing and targeted business development programs. Since then, we've scaled our routing tools and deployed dedicated network performance managers within our Solid's SBUs, tasks at completing large customer implementations, managing our routes to targeted lift per hour metrics, which is what Preet touched on before and supporting our branch and regional managers with network and logistics reviews. As Preet mentioned in ensuring we have the right density on our routes is critical for collections businesses. It helps with managing labor costs and it drives operational leverage. The example on the slide really highlights this so the map shows -- the top map shows the before and the bottom maps shows faster, impacts of optimizing our network in one of the Melbourne collections businesses. The top map shows 3 rearlift recycling runs with each colored dot representing a particular customer or a pickup. In this example, our runs are actually overcapacity. So what that really means is our drivers are unable to complete their run because the truck is full and they need to go back to the disposal location. As a result, customers are being missed and are being rescheduled onto other days or other drivers were being diverted to service these customers. This meant a poor customer experience and additional labor costs, which will likely add overtime rates. Using our route visualization tools and working with the Melbourne Metro team, we recut the area to get a fourth run. So that run in there with the green servicing the customers in the green dots. We then used our targeted business development tool to identify all the businesses in the area that Cleanaway isn't currently servicing and create opportunities in sales force for our sales team to go and then target. The result is improved SIFOT, lower labor and truck running costs, which has resulted in a lower cost per list for all of our customers in the area and an expansion of margin for the branch. So what we talked about today is what we are already doing. Let's talk about where we can take this. We're building the platform. We are building capabilities and with the implementation of CustomerConnect, we're starting to explore working with AI and machine learning in 2 key areas. Firstly, extending the customer lifetime value to remodel such as our propensity to churn, and one that I'm really excited about, which is our machine learning recommendations and journey. So let's look at an example of where this could go in the future for our drivers. So Sam is a driver and completed his scheduled general waste run after 8 hours. So Sam's had about half an hour of overtime. Sam's truck is 85% full and Sam is 3 kilometers away from a competitor's landfill and 17 kilometers away from a Cleanaway landfill. If Sam goes to Cleanaway's landfill, Sam can pick up another 7 jobs on the way. What should Sam do? Does the answer change if Sam worked 6 hours or 8 hours. If it's 2:00 p.m. or 5:00 p.m.? What about if it's raining? Here's what happens next. Sam's in the truck and has pulled over and the rain hits and gets quite heavy. The data and analytics framework processes data from a live Bureau of Meteorology weather API, which identifies the expected length of the rain event. It runs statistical analysis over the historical run data of Sam's route, predicting the additional volume from the 7 extra jobs and the likely time of intake. It then overlays the labor and truck running costs and uses AI and machine learning to predict the route profitability under the different scenarios. The data and analytics framework then messages the in-cab technology in Sam's truck with the conclusion that it's best to get back to the depot. The result is improved profitability for Cleanaway and a safer journey home for Sam. This where we will take the data and analytics program in the future. However, we need to build the foundations progressively, which is where we've been focused. I'll now hand over to Paul to give an update on energy from waste in Victoria. Thank you.

Thanks, Alex. Good morning, everyone. So the first slide is really the high-level summary of the case strategy from waste and where we're up to in that journey. We know that energy from waste is critical when it comes to achieving landfill diversion. We also know that the technology that we're proposing to use is well established and that has been used in multiple facilities around the world. What is less certain is the timing of the transition to energy from waste across different states in Australia. The current Melbourne merchant waste market is quite challenging for energy from waste project economics. So when I say merchant, I mean those C&I volumes seeking the lowest cost disposal solution. There are several factors, however, that I'll discuss shortly that will progressively drive transition from putrescible landfills to energy from waste facilities. During our current planning phase, we're continuing to undertake for long lead time and capital-light activities on a 100% equity basis, thereby creating option value for Cleanaway shareholders. Our final equity position will seek to maximize shareholder value and will be dependent on an array of factors that I'll discuss in the next few slides. So competition for volume in Melbourne means the landfill market is really quite sensitive at the moment. But at the same time, we're also seeing significant inflation for materials, for labor and evolving environmental protection requirements, all of which is driving up landfill cell construction costs and remediation costs as well. Furthermore, given the Victorian State Government's diversion policy, it's likely that the landfill levy will increase further over time. And as a consequence, we're expecting gate rates in Victoria to trend up over the medium term as the market transitions to energy from waste. We expect the first wave of energy from waste investment to be driven by customers seeking landfill diversion and sustainable outcomes and those that have a longer-term perspective. By way of example, we're already responding to muni tenders that request a response in relation to energy from waste, albeit highly conditional. Given the length of the typical muni contracts between 7 to 12 years, councils recognize that energy from waste is likely to be an important part of the post-collection landscape during the term of the contract and are responding accordingly. As the drivers of the transition have an increasing impact on landfill disposal costs, we expect the customer mix to change, and this will vary by region and change over time, reflecting the rate of change of key transition drivers such as levy, government policy and attitudes towards sustainability. Hence, progressing planning approvals now will position Cleanaway to be at the forefront of the transition and maximizes optionality for shareholders. So as Australia's leading and largest waste management company, Cleanaway is well positioned to capitalize on the opportunity energy from waste brings to meet Australia's landfill diversion targets. We've spent considerable time and effort on assessing the strategic fit of these projects as part of our broader portfolio. The capital investment to date has been relatively modest and focused on creating the option value to execute on these projects when the returns are attractive. We have been, and we continue to be, very disciplined in our approach to capital allocation and will only deploy capital with a clear path to an appropriate rate of return. Our excitement for the energy from waste opportunity stems from Cleanaway's competitive edge and its delivery by leveraging the vertical integration that Tracey described from our strong municipal customer relationships. So this is coupled with our supporting infrastructure and logistics and the ambition to provide sustainable waste solutions to our customers. So, hence in Victoria, we're progressing the long lead time development approvals with 2 key applications lodged recently, these being the development license and the planning permit. The next step in the process is to secure an allocation under the cap, and we're preparing our submission in anticipation of the requests for proposals shortly. However, we're also aware that the economic conditions have also changed in recent times. We have higher capital costs and higher interest rates on one side. And on the other side, higher energy prices also prevailing in the market. This obviously influences our near-term thinking, but it doesn't change our belief in the long-term strategic opportunity that energy from waste can ultimately deliver. The returns that we can generate from these projects and the material infrastructure-like earnings contribution once they come online. During the planning phase, the benefit of being a 100% equity owner of the project today is that we can build the option value within each of the projects by advancing their development and getting them to a point where there is the potential to make a value-led, returns-led final investment decision timed to market conditions. At every stage, we will look to how best maximize value for our shareholders across the projects. There is a number of levers available that we're considering around project financing. That includes sequencing and timing of the projects to smooth the impact on leverage during the development and construction phase, the nature of the debt, so, corporate debt or project finance. And also, we may consider bringing in an equity partner at final investment decision or at practical completion and potentially using that equity release to fund equity in the next project as well. Each scenario or permutation may result in a different capital structure for the project. And in that regard, we've been sharpening our focus on our preferred and optimal capital structures with a commitment to maintain an investment-grade credit profile. So as you can see, there are a number of variables that we're working through, and we'll share more details as we progress each project. Thank you, Tracey.

It's me again. Thanks, Paul. As Mark shared at a recent Macquarie conference, the TOMRA Cleanaway joint venture, of which Cleanaway is a 50% owner, was appointed network operator for Zones 1 and 4 of Vic CDS, which is the orange region that you can see here on the map. The scheme commences on 1 November this year, and we are responsible for a network of return points, including reverse vending machines, and there's one just outside this meeting room that you can have a look at. We also operate over-the-counter drop-offs and automated depots. Zones 1 and 4 represent a population of around 2 million Victorians, and we expect to collect 500,000 containers per annum through our network. We're investing up to $40 million to get this off the ground. And this is a project with really attractive return profile based on a progressive ramp-up, and it achieves high circularity outcomes. We're leveraging our extensive New South Wales CDS experience to build a network of over 170 collection points designed for consumer convenience. And we fully expect to see material volumes of CDS Vic resources processed through the Circular Plastics Australia facilities. In terms of project delivery, the key milestones include the following 6 factors: putting the tender tick; two, procuring the fleet. There are 31 rearlifts and 6 hook lifts required. All orders have been placed with staggered delivery by October; three, establish our bulk up and sorting facilities. We've identified our site at Ballarat and we're finalizing lease arrangements. And Tottenham, which is our metro site, was secured pre-announcement to derisk our schedule; number four, set up over 170 collection points, 80% of those are due by 1 November and 100% by April 24; five, established the team, and that's including through our women's driver academy; and six, develop a digital platform for continuous improvement of our network logistics that's underway. As network operator, one of our priorities is to build redemption rates as the proportion of containers sold that are redeemed through the scheme. And this is where our partnership with technology led and internationally experienced TOMRA is a significant advantage. TOMRA technology emphasizes consumer experience through ease of return, being able to donate the proceeds and also supports optimized network locations. We are always focused on improvements and opportunities to minimize capital and improve our return on investment. So one example here is that we're going to be using our existing Laverton facility to sort and process eligible plastic containers, drink cartons and juice boxes for at least the first 12 months. As we look outside of Vic, in addition to Vic, we have a strong national footprint when it comes to container deposit schemes. As you can see on the slide, we have a presence across most of Australia. In aggregate, when we include the Vic scheme, the schemes contribute about $120 million in revenue to Cleanaway, so it is a substantial part of our business. We've recently secured a 5-year contract renewal for metro Queensland processing, which represents close to 40% of the scheme in Queensland. And we expect glass volumes by weight to increase by 15% to 25% with the introduction of wine and spirits bottles in Queensland from 1 November this year. We're also currently participating in the Tasmanian scheme tender as part of our joint venture with TOMRA Cleanaway. Although volumes are relatively small compared to Victoria and New South Wales, it's a great opportunity to bring our platforms and expertise to enhance the Tasmanian consumer's container deposit scheme experience. As you've already heard, strategic infrastructure growth and innovation are really core to our Blueprint 2030. And so by working collaboratively with scheme regulators, scheme coordinators and our partners, the CDS team brings quality resources through that value chain. Our aspiration is to position Cleanaway as the partner of choice for current and emerging solid product stewardship schemes. Now before I hand to hand back to Mark, I'd like you to invite you to test the reverse vending machine during the lunch break to get a feel for how easy it would be to return your eligible containers at a TOMRA Cleanaway automated collection point.

All right. Thank you, Tracey. We're on the home run, in case if you are wondering. So I'll be the last speaker and then we'll get into the questions. So, the next slide is the same -- is largely the same as the one we used back in May at the Macquarie conference. On the left-hand side are the drivers of recent margin evolution, and that's the same stuff I covered in detail back then. In terms of the margin recovery story, we are continuing to make really pleasing progress in resolving our key headwinds, and as I said back in early May, those plans should deliver our business-as-usual EBIT margins to around 12% on a group basis. Labor from a vacancy and productivity perspective is continuing to trend in the right direction. The Health Services business recovery is underway. Virtually just down the road or just across the road behind me, the new autoclaves are being put through their paces as the team ramps up to full capacity. Once we are comfortable that we can operate at that capacity consistently, we will unwind the contingencies that we have in place for any unplanned outages or downtime. And then it really will be game on in terms of restoring that business to its pre-COVID profitability. Finally, I'm pleased to say the Queensland solids business recovery is progressing well. Unfortunately, as you're probably aware, the decision of the Planning and Environment court in relation to the height extension did not go our way yesterday. We'll review that decision in detail and determine the best course of action. We have been setting the Queensland business up to operate effectively without New Chum. So effectively, it's business as usual for now. Full recovery on labor, on health and on Queensland is anticipated to occur over the coming 24 months with some immediate contributions in FY '24. Now like I said at Macquarie, with good progress being made in stabilizing the business and with the capability in place to deliver the blueprints and the associated Blueprint progress to date, we do intend to provide investors with our FY '26 financial ambition and scorecard aligned to Blueprint 2030, and we will do that at our full year results in August. You might say why that timing. And the answer is we think it's a logical time to do it as the starting point for all the key metrics will be known. We also want this to be an ambition that is owned by our SBU leaders with each leader and business crystal clear on the must achieves that will be delivered. To recap, this will be presented as a 3-year EBIT CAGR with incremental improvement in return on invested capital as a key performance marker of success. ROIC will be adjusted for any material nonproductive capital, and we intend to roll forward with the ambition each year as we deliver on the strategy and have better line of sight to significant new investments. You also notice on the slide that our guidance for FY '23 with 9 days to run is reaffirmed. All right. On this slide -- next slide, I've outlined some of the initiatives that during FY '24 will contribute to delivering this midterm ambition. Hopefully, as you're reading that list behind me, you should note that we've been talking -- taking you on the journey on these items through these strategy sessions. The initiatives will be further expanded and form part of our midterm ambition scorecard, which we'll present in August at the results. As Tracey said earlier, with respect to the Victorian Solids SBUs, driving the performance of this business and delivering the financial outcomes that we're seeking is about making thousands of great decisions every day. So many of the initiatives, therefore, naturally contribute incrementally over time as we make better and better decisions and continuously improve our value drivers. I hope you would expect how I'm going to end. We're going to end by recapping the 5 key messages from today. So you're going to get the last hour and 24 minutes in 30 seconds. Okay. So firstly, from an HSE perspective, Deb and the team have developed a transformational strategy for Cleanaway. It is one that is core to our purpose and foundational to the successful delivery of Blueprint 2030. We have a new vision, the passion, the clear plan and the right capability and resourcing to successfully execute. Importantly, for shareholders, what this means is a safer, a more reliable, a more focused and a significantly more profitable Cleanaway that's able to deliver today and grow for tomorrow. On people and culture, the key message from Michele was that to maximize the opportunity that is Blueprint 2030, we are designing and embedding a culture that inspires our 7,500 strong team to bring their best every day where they're empowered and enabled to improve; are curious learners; act as owners and perform highly for our customers. Our shared values will be launched soon and more importantly, the corresponding self-reinforcing behaviors will be the key to our success. The third item is while we used the Victorian Solids business to showcase the -- how the blueprints hit the ground from a business unit perspective, you will have no doubt taken away from today how we're thinking about this across each of our SBUs. As Tracey and Preet illustrated, the scale and span of our operations gives rise to hundreds and thousands of actions each and every day. And it's the hundreds of small great decisions that we make each day and that contribute incrementally over time that will move the performance needle. We know things don't go to plan every day, and so by openly connecting our teams with our value drivers and key information, we know, in close to real time, if things are going wrong and we are there to support one another in the problem solving. I'm excited about the momentum we have now and the massive opportunity ahead of us as team Cleanaway systematically goes after the performance of our existing business using value drivers like we've never done before. On energy from waste, what Paul said is we see a real opportunity to create value from a future transition to energy from waste. And so we're doing what you would expect us to do, the long lead time, capital light, pre-FID work to ensure we're well ready to capture the opportunity when the investment conditions are right and customers want to make that transition with us. Finally, on CDS, what Tracey said, this is -- she said this is a great example of the strategic infrastructure growth as we leverage our capabilities from the New South Wales CDS into the Western zone of the Victorian CDS. So in conclusion, today was about demonstrating both the opportunity and the progress we've made in Blueprint 2030 from a Vic solids perspective with similar activity happening across our other SBUs nationally. I hope you are as excited as I'm about the road ahead in the base business and also some of the new opportunities ahead of us, and I'm really looking forward to bringing that trajectory to you in August as we share our midterm financial ambition. That's all I had. Now, what are we going to do, Richie?

We're going to take the questions on the floor first, and I can ask people to speak up. It is a little bit quiet on the microphone [indiscernible].

Macquarie.

Just in relation to the timing of energy from waste, it does -- I tend to think [indiscernible] we are a little bit further out and in the context of the [indiscernible] decision yesterday, can you give us a sense of where Vic and Queensland are now lining up for '22. And perhaps as a follow-on to that, what regulatory interventions could you potentially see that change that time out?

Yes. So I think [indiscernible]. So I think what we're saying is that the earliest that Vic would be ready in the sense of all the approvals and stuff would be sort of September 2024. That would be the earliest. In fact, that's what Paul said in his voiceover. We think that Queensland, the earliest it could be ready would be 6 to 12 months behind that. Okay? So that's earliest date. That is not me saying or Paul saying. We're doing it on those days. Then your question goes to what is some of the regulatory stuff that could move things around? Well, 2 things. One, I mean the government has a diversion policy in place. The diversion policy says basically by 2030, this is Victoria, it needs to be 80% diversion. Currently, it's sitting at sort of 69% or 70% diversion. And so the handles -- the tools which I have in the tool kit albeit might be slightly unpopular given the economic conditions would be to start to increase levies to try and drive that diversion across would be one way. And then the other way, of course, is customers saying -- sort of taking a view that over the next 10 years of my muni contract, I want to have the option or I firmly want to move across to energy from waste in that time frame. And we have seen that in Victoria with certain councils coming out, as Paul said, I'd like a price for landfill and I'd like a price for -- a conditional price for energy from waste starting to think through that. But of course, the problem is if we're going to get one price, it's not very competitive. So that tends to then go back to landfill. Anything you'd add?

I think that's -- it's a pretty good summary. And I think other key things to focus on clearly and kind of I touched on the landfill. In Queensland, we have a clear trajectory as to where that will land in the next 3 to 4 years. So we have a degree of certainty in terms of where that probably [indiscernible] best scenario. I think the other consideration that we will sort of factor into the economics side is if we can't get it to crank just yet. You can see a situation where in Queensland, we can't -- we don't have a landfill. So that clearly, again, changes those economics a little bit as well. So I think there's a number of deals that we're not trying to be evasive. We're trying to literally put out there a view that there are a number of variables out there that basically have the potential to change our thinking. And it's our job as a management team to basically make sure that those projects are progressing in a capital-light manner so we can respond when those conditions are right.

My question really was around this commercial environment looks like a little bit worse. Maybe that's an overemphasis, but whether or not that [indiscernible] with timing.

You mean like capital costs and those sort of things?

Well, not so much the capital costs because I think that will be dealt with finance [indiscernible], but the competitiveness in the landfill environment whether or not that pushes you further away from making [ Melbourne ] decision.

Yes. Well and can do. I think just remember, it probably won't be the marginal customer into a landfill that will drive it. It will be a group of councils who want to go and have decided they're going because they want to lead it out. But I'd agree with you. I mean what you see in other places is walks towards -- some landfill operators will sit there and start dropping their price because they'll be trying to make sure they get the [indiscernible] full before energy from waste comes on. That actually almost prolonged with that period as well. . But like Paul said, so what we want to do is have a situation where we've got these projects, we've got them on the shelf. We're waiting for the economics to work. And when the economics work, we can execute them in the most appropriate way for shareholders, but we're not trying to do 3 years' work in 5 minutes, which is all the work that we're doing at the moment because that's just -- it's just simply not possible. [indiscernible]

[indiscernible] real time. Just a really quick question on this around investment-grade credit profile. What would be your expectations around how rating agencies will view the debt associated with energy from waste plants versus operating business? Do you think there's a differentiation? Or will it be -- part of your balance sheet is your balance sheet is.

Yes, look, suffice to say, we don't have a rating. We have engaged with the agencies and a number of our lenders in terms of putting some hypothetic [indiscernible]. I think there is a clear view and a very consistent view that it would not be effective for us to use our balance sheet and finance in terms of trying to sort of get leverage down using quite rightly the agencies and landing with the same. These projects are intrinsically linked to your core business, and you wouldn't walk away from [indiscernible] circumstances, which would be absolutely true. So the most likely sort of model that you would expect if we continue to earn 100% would be that it would be on balance sheet corporate debt. The extent to which we then progress through our thinking, it could well be at some point that you sell down, and that would naturally then take you into a project finance and off-balance sheet type of treatment.

Yes, sure. Another energy question. Can you give us a ballpark estimate for what the remaining life is on your current landfill assets? And what it would look like if you put 2 EfW facilities in 350, 500 [indiscernible]. How much expansion would you get in your landfill?

Yes. I mean the lifetime MRL was decades and decades and decades. And so -- and then would it reduce it? Would it extend the life? Yes, it would by doing energy from waste. I mean the obvious next question is, does doing energy from waste steel volume from MRL? And the way you need to think about that is customers who are going to energy from waste are going regardless of either Cleanaway participates or we lose that volume in any case. You know what I mean. That transition will occur and we want to be ready to go when it's necessary because we want to have that solution to offer a customer the suite just like we've got today.

And just the capital-light approach that you're talking about selling down for the equity. I understand that some of this has got a near-term cash flow benefits. But I mean realistically, how many EfW facilities each state really had?

Yes, yes. A number.

In the very long term, you would probably want to remain vertically integrated.

Just to clarify, when we talk about capital-light, we aren't talking about selling down, we're talking about the development work that we have to get these projects to approval requires very minimal capital, but long lead time. So we'll get cracking on that now. We don't spend much money and we keep ahead of the pack. And that gives us and our shareholders the option in the event that market economics work and we push the trigger and go.

But as far as selling down some of the equity in one of these facilities, I mean, wouldn't you be sacrificing some vertical integration then?

We might be sacrificing some earnings. But obviously, you need to look at that versus the returns. So..

And it comes down to the timing of when you sell down. So if you sell down right up front before you actually lock in those projects, then you're sort of in a situation whereby you're negotiating with the potential JV partners to how key contracts are provided. That's our intention, and this is why we're taking this approach, is to remain 100% owned, and therefore, we can actually determine what's best for Cleanaway. If we then end up with a sell-down at some later point, we're giving them a completely documented package that we can say, okay, if you're going to buy into this, you buy on this basis.

It also gives you complete control of the timing. That's very important. You have been dragged into something you don't want to do, which is a classic once you're in a JV.

If I can ask the question on operational excellence and obviously you've highlighted in your management [indiscernible] diversion, data and analysis. I think in the last presentation, you quantified [indiscernible]. I haven't seen that number in this presentation. So has anything changed [indiscernible]

That absolutely hasn't changed. It's probably an omission in the sense that it probably should have been there. But from our perspective, nothing has changed on that. But as we march our way through this journey, we find more and more opportunities. I don't think we have anything changed.

I think you'll see us -- once we put the midterm ambition out there, sort of that target will supercede those previous ones as we paint quite a glide path trajectory for you to think through and all that will be wrapped into that clothing. What you should have heard today from the team was, yes, there's data and analytics and operational excellence, but the way that comes together as one where the visual management boards becomes the delivery pathway for the data and analytics for the team to engage with. That's where the magic happens, and I think it will far exceed those numbers.

And that data [indiscernible]

At the time being, we're putting out targets for the group in terms of midterm ambition. That will be figures for the group. So we're not going to sort of talk in terms of the individual.

And just remember, so that slide that we had up there is an the EBIT, the group EBIT BAU number. What we're going to give you in August is an EBIT CAGR, an absolute EBIT CAGR, not an EBIT margin CAGR. Yes. Okay. Cool. Yes.

[indiscernible] going with capital structure environmental stuff. What you're doing about your actual capability to operate these things? [indiscernible] there are no funds operating in Australia [indiscernible] is different, the rubbish service is different, the operational performance of each one is different. Where are you going to get the staff to run those things because the last thing that we want to say is you can come out [indiscernible] and we've done [indiscernible], sorry, 12 months in, is not performing the way we thought it was going to perform relative to the specs and we've got a problem.

Yes. So probably 2 answers to that. One, the way the contracts will be structured, it will generally be -- and the way you start up a lot of plants, either energy from waste or an oil and gas as you bring in a contract start-up team that then works with your team for like a year or more. As you develop the expertise to be able to run it, [indiscernible]. Second, we are in the process of hiring individuals that look like my day job over in the U.K. So British sort of type people who have started up 50 or 60 of these. That's their day job and they would come in as the operations manager as part of the team in the next couple of months. So that's the sort of people that are available who want to come to Australia and work with Cleanaway and make this happen. So you bring in some really serious owners team expertise that will help refine and remove all the c*** out of the design that doesn't work, but we will put in there, put in the stuff that does work and then be part of starting it up as well. And those people exist, and we've had them out in the last couple of months visiting and looking around Melbourne and places to live...

And we'll get a better cricket team as well. So...

Another question on [ energy waste. ] Two questions. Firstly, just on new CapEx, excluding entry rate on new CapEx, what's the, I guess, internal return on capital, as you guys invest in growth CapEx. Second question is on trade. I get you new to the SWS business model. In the past, Cleanaway, I'm behind about how the landfill integrated all outside the separate teams. I just know you're managing that in regards to growing the business going forward, you have third-party volumes or internalization and cross-operate [indiscernible].

Yes.

Okay, Paul.

So on the CapEx side, our CapEx price is unchanged. And I think one of the big differences that we've seen over the last 12 months is the opportunities. The amount obviously is coming through the pipeline, whether it be something like a big CDS, whether it be some mini contracts, whatever. There's a lot of opportunity coming our way right now. And that's allowing us to basically lift the bar. So we'll take a very thoughtful approach to it. So for example, it's like an existing unit contract and a bit of a C&I business has been built around that. They will often say to predate team, we are willing to get a lower rate of return. If it's a new contract, then often, we'll be pushing the teams to really put in prices that if we win it. We're going to be extremely pleased because it's a great return. And if we lose it, it's kind of a no regret because Frank could be got plenty of other ways to apply CapEx.

And what is that number?

Basically, I have a benchmark number and we work around that benchmark depending on the attractiveness of the opportunity.

And now what would the benchmark number...

No, I'm not going to give you that until...

Any other things we don't want to give it because shortly the all stand -- sitting on the phone or, open with [indiscernible] going or things like that. So that's not where we're at.

Yes. Okay. And I'll answer your second question. So I think the logical question they have taught about this a bit since I joined, is are we organized in the best way to really make this business thing. The obvious choice, so we have the state base model at the moment where we have the networks to hand together. The other choice would be to go like some of our competitors, which is fully national vertical. I think the thing there is that actually neither business model is perfect because when you go fully national vertical, you start creating different ports and silos, and we can create a network that doesn't work in the States. Whereas if you look at our business,you can think we don't get to share best practice. And so what I've chosen to do, in my preferred way instead of completely up reaching the entire business, which would honestly make a standstill for a good 6 to 12 months is to lead the business as it is and then just as that layer costs through the business teams to let the best practice drive that through the visual management boards and just get the same benefits anyway. I think part of your question is also on transfer pricing. So we have a very clear transfer of pricing in place -- in place between our different assets, it's not cross-subsidizing, but they are good rates as it were because there was not a point in having a network if you can't get good rates of an internal company. Each part of our business is standstill, has the stand-alone, and we'll continue to drive that.

All right. I'll try to got to repeat the question. So keeping short so I can remember them. All right. So operator, do we have any other questions on the line, please?

[Operator Instructions] Your first question comes from Rob Koh with Morgan Stanley.

May I ask 2 questions. Just firstly, in relation to the optimization of EBIT margins of different branches through digital and you put up the 2 case studies there. Could you maybe give us a sense how many branches look like that? And how many branches do you need to get performance like that to get to your 12%.

Yes, sure. So obviously, we have sort of over 300 branches devoted out there. So it's a portfolio of both businesses and naturally any portfolio you've got overperforming and underperforming ones. So as I said in the presentation, they tend to be, underperforming branches tend to be underperforming so a couple of reasons, and it's the -- we've had turnover in staff or we've had a major operational change that happened. So we do have some underperforming branches out there. And the work we doing is the data analytics side of things, is flowing through into our FY '23 results, which we released in August and then flowing into our midterm ambitions as well, which we'll be releasing in the August results. So I'm not going to give a number of -- the number of branches that are underperforming, but I guess, take away from this comment that we are working on them, and those benefits will be flowing into our mid-term vision.

Yes. I'd also add that Alex and Tim has built fantastic tools, these great digitalizations. They've also built us the playbook that he was talking about before. And what that allows us to do is to get scale with the work that they've done. So if we have an underperforming branch anywhere in the network, we now have the playbook that we'll be able to install at that branch. It tells them what tracks to go well for, which reports to use, then we can get that branch to create a set of initiatives. Queensland as a state, for example, had, I think, at the peak 277 initiatives that they were driving every single day. and we track and drive that through visual management Board. So we have the tools now. We've got the infrastructure to really drive performance, and so we can get in there and just start hitting each of these branches now.

Second one, Rob?

Yes. Thanks for those answers. That sounds very, very encouraging. I wish you all the best with it. Second question is just around energy from wages [indiscernible] you've highlighted the cost escalation. So I think the escalated total CapEx per project, you're looking at like $800 million to $1 billion is the new-ish numbers we should be -- or new range we should be thinking about, have you considered a new concept select maybe building a smaller plant like instead of 300,000 to 500,000 tonnes a year, maybe start with 100 because I understand that there are modular solutions out there. Just any thoughts on that, please?

Yes. So -- and we have. The way we look at it, though, we find there is a sweet spot at around that sort of high 300,000 tonnes per day. And that provides efficiency of the design, but also allows us to scale to 500. If that's the way to decided to do, just by simply knocking a wall down, so the way the site will be designed as it will be designed for sort of that 380 type level, but those got layout will clearly show that you've got sort of a laydown area, which could easily then be converted into the extra train, which gives you the 500. We don't think 100 really works economically. And we think that given also the supply of waste, we think sort of starting at a number like 350, 380 type number works well. I think what we've also said to you in the past is you might say, what you just go straight to 500 given your scale and that would be quite logical. The issue is in Victoria with the cap at 1 million tonnes. Didn't want to hold the cap. And so it ought to be easier to get an approval when you're taking like 1/3 of it than it would be if you're going on a 1/2. Okay. Any other questions on the line, operator?

Your next question comes from Nathan Lead with Morgans Financial.

Just wanted to throw 3 questions to you, if you don't mind. The first one is, I suppose I look at Slide 34, and you're saying you're targeting post-tax equity IRRs of high single to low double-digit. Obviously, we've got an interest rate environment, which has really seen the cost of capital push up. Just interested in like whether you see that really as being quite a value-creating return for shareholders at that level or how you came to that sort of decision?

Paul?

Yes. So to work in that space. We certainly have had, again, a good look at wack in the context of increasing interest rates. And yes, it has moved up by sort of probably about 300 basis points on my [indiscernible] and. I think we've -- in terms of looking at what is the appropriate return, we have to recognize, too, that success we need to be competitive. We know there are going to be others in this space, so we're going to have potentially lower cost of capital. And therefore, we've got to basically pitch this at a level where we believe that we can get an acceptable return for our shareholders, which is above our -- absolutely about that way. But so, we have a project which is [indiscernible] sense. And we can get these economic returns out of it. So it is very much a balancing act. And as we've said today, right now, we don't think the economics work quite yet. Will be -- we see there is a pathway that to change over time potentially quite rapidly. We're going to be patient.

Second question is, you've obviously talked today health. The focus is very much on sweating, the existing assets. We're also in a high inflation environment. So I'm just wondering whether you can make a comment on the outlook for your D&A charge, depreciation and amortization charge over the coming years. Is there anything that's going to materially move that upwards or downwards?

I think -- if you look at this year, obviously and I went up, strictly memory here, probably we reached $30 million or so I'll say. I would expect that to continue of that sort of ilk. To recognize a significant component of our D&A charge obviously is a which is related to landfill volumes that we bring in and also landfill construction costs that, isn't, just your straight sort of fixed plant asset as well. It's a combination of those 2.

Yes. And just the final one for me. I know we haven't talked about capital management today, but if you've got this looming potential investment in energy from waste, where do you want to bring your net debt to EBITDA down to before that occurs?

Well, I think we've sort of given a few hints that we're currently working, obviously, with a broad group of both credit providers and agencies. And the key guardrails that we are considering in terms of all of these discussions around the economics and around capital structure is optimizing shareholder value. and maintaining investment-grade credit profile. So those are the 2 key guardrails that every decision we make, we keep coming back to those basically make sure we making the right color on it.

All right. Any other questions, operator?

Your next question comes from Paul Butler with Credit Suisse.

I just wanted to ask if you can give a bit more color about the opportunity with higher female retention within the business. What's the voluntary turnover running at? I mean you particularly flagged it's high during the first 12 months. And can you give us a sort of sense of how much avoidable cost there is related to retention in general, I mean both female and other genders.

All right.

Yes. So we're sitting at around about 21.8% turnover, heart for the organization. We do have a turnover figure, which is probably our biggest area of focus connection within the first 12 months of employment. So we're sitting at total turnover there of around about 17% of that is in boundary. So I cut that back to around about 30% on travel. I think in terms of the activities that we're doing to slow our turnover down. That plays back to a little bit to what we were talking about earlier on today, really around the launch of [ pet ] at Cleanaway. We're getting our behaviors right to create an environment which is all about reflecting and then very quickly followed by the values and the introduction of the values and the reinforcing mechanics that are going to be important for most July. So I think we're not where we want to be in terms of turnover. And it's certainly something that we perhaps haven't given as much focus too as we have with the vacancy to FY '24 will be very much about turning our mindset to retention and how do we actually achieve that across all of our employees, not just been asked?

Yes. And I think what I'd add is just remember, we've talked about this in the past, if you got high vacancies and then the lift experience or the next person who comes in isn't as good as it would be if there was a few vacancies. And so that's leading that excitement effect really [indiscernible] more people leaving, which is exactly what Michele has talked about. So of course, we go for vacancies first and now with vacancy is kind of declining. And I think Rick talk to numbers in Victoria are like quite low in Europe...

Maybe sometime from 220 to 78 now.

Yes. So I think 220 to 78, which is massive. And of course, then you can start to talk about the live experience, and that's when turnover starts to drop as people enjoy being here more because there's someone to welcome them that sort of thing. I think on the cost question, Mike, is significant, right? Because a new person comes in, is unproductive at the start, of course, that is to be trained, often need to come up to speed and we need to hire them. And so we think that number is many tens of thousands of dollars per employee, and you think about the fact that this year, we've hired more than 2,000 people, start to do those maths and this is a big price. And it's the reason why from the scorecard, and we're talking about it with you openly because we see there a big game to get on with, it's just kind like hidden in the numbers. The washes across everywhere.

I think just to build on that too, Mark. I think the other area that we're looking at is in terms of our actual recruitment practices. So I think what the reality of having very low unemployment in Australia, in many cases, we're actually having [indiscernible]. And so that doesn't always equal a good cultural fit. So as a consequence, we're getting turnover in that space. So there's a huge opportunity to actually really relook at our employee value proposition aligned to our new values and make sure that we actually use that as a foundation in terms of the conversations we have with potential employees. So we're actually bringing in people that are far, far greater culture fit starting position and then building on that from there. So there is a great opportunity in the space. And I think Mark play your comment earlier, the cost of -- cost of turnover. Many people will know that in this room that research would suggest a 7x per [indiscernible] so it's a very costly exercise for organizations as we can't get our retention right, so there's an excellent focus for FY '23. It's foundational for us and by FY -- sorry, FY '24 and by FY '25, we have been on a far, far better position.

Could I ask a follow-on?

Yes, sure...

Who is the -- like when you're targeting staff hiring, what are the other types of businesses that you're competing against for the sort of staff that you're looking for?

Yes, it's a great question. Look, I think it depends on where you're talking in Australia. So if you talk about Australia West at the moment, with mining picking up again, we've got a huge competition in that based around competing with some of the big mining houses which effectively as many people will know, are paying a far, far bigger salaries today than perhaps what the waste sector is. And so we're looking to leverage flexibility in those areas. And they well know it's coming from Western Australia and coming out of wood side. One of the things that's really important today is making sure that people can go home at the end of every day rather than be in a sort of hi-fi type environment. So it really depends on the demographic and where we're talking in Australia as to where we generally search and saying that, 2 things. One, we use a whole range of different mechanisms through things like save LinkedIn to actually target our workforce. And we also have a partnership in place with [ Hays ], who actually are professionals and their day job, which is what they do. and they know very, very well how to target different organizations in terms of attraction to Cleanaway. I think it would be fair to say, again, with loss unemployment. We haven't been able to necessarily be too specific about where we call our people from rather, we're quite open in terms of where we bring people from to organization. even looking at through criminal justice systems and people that may have served time and sort of low security prison environment. So we are very wide ranging in terms of where we attract our people from at this point in time.

Two questions on the webcast. The first is our lagging performance drivers and divisional management dashboards elevated to the management level. when are they elevated? And can you give examples of how when severity for when they may be elevated.

[indiscernible]

Yes, Okay. So the -- they are lagging into[indiscernible] indicators, a lot of them. They report through the site, look at them every day, regional managers, those key steps look at every day. Weekly, the state-based leadership team will look at it. So prep leadership team will look at those metrics and weekly I will, too. By the time it sort of comes to me and I'll let it rip talk about by the time it comes to me, they're fairly aggregated if that makes sense. So for example, if I look at over time as a percentage of direct labor, over looking at how each of the states are doing against the best month ever in the last 6 months. They will beat it, by the way, in May. or and looking at some of our key facilities. So I'll know every week, how much volume has gone into MRL since all of our major landfills across the country. And so it kind of depends, it's either by key facility or at an aggregated level so that I can see where the hotspots arm where we need to close support. yes, I just build on that a little bit. So to give an example, all the time, it's a great month. So it flows through to the VMs in lead it together as a weak leadership team every Monday it's generally virtual. You'll have the drivers there for each regional manager. So each P&L owner will have their overtime as a percentage of their labor. And you can see how everyone is tracking. And that -- it is a lag indicator, but you've also got that ability to jump in that straight in that way to say, what happened? Why have we gone above? How are we tracking how do we support whether it as cross over from another area. And I guess a couple of other really good indicators for us as well. We have been able to jump a give the example of that resignation phase. We've started to really track quite closely. That's how we brought the 2, 220 now down to is to go on the retention piece, but as well as the latencies as to control, we all tracking that and then jumping in really quickly to work with HR, put something in place for that specific project, it requires the broader metrics that we discuss with tradename it sounds like there's probably an initiative we need to take statewide or even somebody that's right across the country. It really helps to brand target initiatives, which is the driver that we attracting.

I think the only other thing I'd add is just at the exec team VMs a Tuesday afternoon, the segment leaders bring the SBU EBIT forecast for the month. Yes. So basically, they've got -- they know a number they've got to hit, and they're telling us whether they're going to hit that number. And if they're not, why and what we need to do to get a back up or if we're over rate lock it in, bank it on the next bit. And so there is a lag book, but there is also that leading thing is the whole theory thing. We need to be able to forecast this number accurately. And if we can't, we need to lean why. And so if we go into at the end of a month, we find we get a number at a certain SBU like in April, in [indiscernible] Australia Tasmania. We didn't do a good job forecasting at Easter. We didn't approach Easter. Labor management in the way that we should have. We should've traded like [indiscernible] like it's Christmas holidays and roster everybody off, didn't. And so we took that learning and we'll; built back into next April. And so it was very important to get that lesson. Yes, it's not right that we get that, but that's okay. Now we might have to begin. Anything else?

Your second question, let me ask and answer. To what extent is the EBIT margin improvement to 12% dependent on retention of SRN plus the earlier volumes within SRN. We're expected to move out to the network at the time of the SRN acquisition. The answer is basically, when we get that bridge to you, the EBIT margin that we showed today include those volumes. And then the 12% EBIT margin is basically a resolution of the headwinds that we called out lever in line business. So both scenarios are included, but the assumed to be in there, but the dependence is a different thing to say 24 months -- 24 months to resolve each of those things [indiscernible]...

Yes. Okay. Let it on the call. I have one more on -- Just one more on the [indiscernible]. Operator, there is another one on the call.

Your next question comes from Rob Koh with Morgan Stanley.

Really shame, I couldn't be there. All your presenters sounded really engaging with a really different set of backgrounds maybe a question directed to the waste management veterans in the team. You've got a whole bunch of oil and gas people who come into the company. maybe point to some of the learnings or benefits of that mixed environment.

Was coming...

Until that coming to me. Yes, look, absolutely, I can have been here 6 months now. And I think the first thing that jumps to mind is that and you think it's a real answer but not really what's really brought to life is the operational excellence piece that we talked about. I think that really is driven from that culture, and it's very much needed in this sector and this industry. And I think we can really drive so much better performance for our business if we can get this right, and we're certainly on the right trajectory. I believe that's excellent. And I think the other thing I'd point out is the discipline that we now [indiscernible] I observed, I guess, my 6 months across decisions, whether they are regional basis or state level or investment that we're taking, that is a disciplined framework around those, whether it comes through in terms of where you land, what the forward outlook would be from those decisions and also the governance around it is pretty strong. I think from our perspective, I'd say change is always good. And I think it's definitely brought a new lens to the sector that I talk about.

Any other final questions in the room, It's going to be your last opportunity. It's going to be 2 groups, some are going to have on one and some are going to go down to just workshop team. And...

I got a quick questions.

Yes, sure.

Could you please status update on New South Wales energy from waste. And what you're thinking about potential projects in that market?

Yes. So I mean New South Wales status update is, firstly, the economics in New South Wales is quite strong because of just where landfill levies are and what customers are prepared to pay is not, which is one of the reasons why you think back to what was going on certainly before my time, that project -- those projects were alive and well. That made sense because Cleanaway didn't have a landfill and landfill levies were increasing. So those 2 things really work. Remember then, we had the project in Western Sydney. The government came out and said no energy from waste projects in the Sydney Basin, and it's not an environmental decision. It's a political decision, and that was because the election was coming and they didn't have an [ indiscernible ] as a litmus test item in Western Sydney, given differential or except and that's fine. And then came out with 4 locations that you could do it. They were -- casino, which is sort of big bar and bay. Obviously, there's [indiscernible], which is the [indiscernible] facility, and there was [indiscernible] with go West Wesco, and there was a which is a long way west. So we think the economics don't work in parks or in casino. There's be moderate reimbursement. That's how far away it is. The government also drew maps. So they drew maps around physical facilities. So for example, in [indiscernible] it's okay it's the only facility but not okay [indiscernible] next door. And so the problem with that is what's the environmental difference between the 2. We don't understand that fiscal can't be explained. So we've pivoted and we had a look at LEGO. We like the LEGO location because you trying surveil across the Blue Mountains. And we've been looking at this [indiscernible]. The issue is Mount Piper power station is out. Energy Australia said what happened there. The other opportunity there is the green spot facility, which is the global [indiscernible]. And I think investors know, we've been had conversations with Greenscott and green spot, you'll see articles there some of the work that we've done in the past around that location. So that's the latest for [indiscernible] power station to work the government would need to update the map. So at the moment, what the reg says it says West go, but there is no map. The Westover, has no location because they talk Mount Piper out in the latest version of the exit energy Australia roles, we're not doing it. And now there's Westwood cap there's no location to do it. To get that reinstated by the current government of this year. Okay. Good, we might call it there, Richard. So thanks to everybody who is listening on the call. We really appreciate your support. Obviously, we're going to go into the close period through and through -- sorry, July into August, and then we'll chat to you at the results. So looking forward... Thank you so .

That does conclude our conference for today. Thank you for participating. You may now disconnect.