Thank you. Good morning.

Welcome to Dalrymple Bay Infrastructure's results for the six months ended 30 June 2024, or the first half of 2024 for us. I'm Michael Riches, CEO, and with me today is Stephanie Commons, our CFO.

Today we'll be providing an update on our financial performance for the first half of 2024, updating the market on the status of our NECAP and organic growth programs, and confirming our strategic priorities for the remainder of 2024. In the first half of the year we have continued to improve our financial performance and grow distributions to securityholders.

EBITDA was $150.5 million, a 4.7% increase on the first half of FY23. Funds from operations, or FFO, was $92.7 million, up 10.2% on the first half of FY23.

We continued to invest back in the growth of our business with approximately $370.6 million of approved capital projects still to be added to the NECAP asset base. We placed $350 million in the Australian medium-term note market to further diversify our debt funding sources at an attractive margin.

Our strong financial performance resulted in a distribution of 13.5 cents per security being returned to securityholders referable to the first half of 2024, a 14.9% increase on the prior corresponding period, and in line with our guidance. Importantly, we continue to operate in a safe and environmentally responsible manner, with zero incidents that cause serious injury.

DBI has a stable and predictable revenue stream, underpinned by our key contract terms with customers that include 100% take-or-pay, revenue socialization, pass-through of terminal operating costs, and strong force majeure protection. DBI receives terminal infrastructure charge, or TIC revenue, on every ton of contracted capacity through the terminal, which is 84.2 million tons per annum.

During the first half, we announced that the TIC applicable for TIC year 2024-2025, which runs from 1 July '24 to 30 June '25, was $4.02 per ton, up approximately 8.1% versus TIC year '23-'24. The uplift in TIC, which commenced on 1 July 2024, will drive a further uplift in our revenue for the second half of the year.

Under our pricing arrangements secured with our customers through to 2031, the TIC is adjusted each year and comprises a base TIC that is indexed annually in line with the March to March all Australia groups consumer price index, a NECAP charge that reflects a return on and a return of the NECAP asset base, and the QCA fees, which are a pass-through of the Queensland Competition Authority's costs. The inflation-adjusted TIC, coupled with our continued investment in significant NECAP projects, delivers a predictable and growing stream of cash flows.

As a reminder, our contract terms with customers, including take-or-pay contracts and the operational cost pass-through, provides an exceptionally low-risk business model for DBI. Today we announced a Q2 24 distribution of 6.75 cents per security in line with guidance.

The payment takes our first half of '24 distributions to 13.5 cents per security. Our payout ratio for the first half of '24 was 72.2% of FFO.

Our TIC year 24-25 guidance for distribution remains unchanged at 28.62 cents per security, up 8.5% on the prior year. We continue to target a distribution of 60% to 80% of FFO and 3% to 7% per annum growth in distributions for the foreseeable future, subject to business developments and market conditions.

DBI has a range of growth opportunities that are expected to underpin a continued uplift in revenue, ultimately driving improved FFO to support growing distributions. We continue to deliver organic revenue growth through pursuing new revenue initiatives, such as capacity optimization and revised security arrangement initiatives.

These initiatives involve no capital deployment and nominal additional costs, consequently delivering additional cash flow at high margins. On capacity optimization, we have recently presented to our customers a capacity pooling mechanism and will consult with customers over the next couple of months on this opportunity.

Our NECAP program has been and will continue to be a source of organic growth and uplift in our TIC, and I will provide more detail on this in the following slides. DBT itself retains significant expansion optionality to accommodate metallurgical coal exports from the Bowen Basin.

As a reminder, the 8X project is expected to deliver up to 14.9 million tons per annum of additional capacity, with the option of delivering that capacity incrementally via a phased approach. DBI's access Q has grown to approximately 33 million tons per annum of demand for capacity, comprising a combination of near-term capacity requirements and longer-term needs as mine developments progress.

Underpinned by growing demand from India and Southeast Asia for high-quality hard coking coal, we expect demand for seaborne metallurgical coal to continue to grow steadily through the 2030s and 2040s. The growth in our access Q, the value of recent M&A activity for metallurgical coal mines, and recent announcements from metallurgical coal miners would indicate that there is a strong view that the central Bowen Basin, with its high-quality met coal, is uniquely positioned to capture this future global demand.

DBT and the well-developed 8X project is strongly positioned to expand to meet this inevitable demand, particularly as the 8X expansion can be undertaken in stages to respond incrementally to demand signals. This continues to represent a significant opportunity for DBI, Queensland, and Australia.

It will be important that all stakeholders work together to deliver the right policy settings to encourage the necessary investment. Finally, as we focus on generating total securityholder value, we will naturally explore opportunities to grow our business in alignment with our current risk profile.

Our competitive advantages will be key guides in the opportunities we consider, and in doing so we remain mindful of the key attributes of our existing business and any opportunities pursued will consider those factors. Now I'd like to talk about our key organic growth opportunity, which is our non-expansion capital expenditure.

Our NECAP program has been and will continue to be a source of key organic growth and uplift in our revenue. As amounts are spent on NECAP, interest during construction, or IDC, accrues at an agreed rate until the expenditure is added to the NECAP asset base.

This compensates DBI for the cost of debt funding and provides a return on equity during the period of construction. Once added to the NECAP asset base, the expenditure earns a return on invested capital set at the 10-year Australian government bond rate, which is reset annually, plus a margin, and a return of the invested capital in the form of a depreciation allowance.

NECAP spend includes both regular and major project expenditure. Outside of major asset replacements, like SL1 and RL4, spend on regular NECAP projects is typically between $30 to $50 million per annum.

Capital spent on a project is added to the NECAP asset base on 1 July, the year after the project is commissioned, with the return on and of that capital delivering an uplift in the TIC. $97.8 million, comprising $91.3 million of project costs and $6.5 million of IDC, was added to the NECAP asset base on 1 July 2024, resulting in a 15 cents per ton increase in our TIC.

At 1 July 2024, the current NECAP program had a total of $370.6 million in projects underway, which are still to be added to the NECAP asset base, and that excludes IDC. We anticipate approximately $300 million of project costs to be added to the NECAP asset base on 1 July 2025, which, combined with the expected IDC on this spend, should deliver an uplift in TIC of approximately 53 cents per ton from 1 July 2025.

As a reminder, our TIC for the current year is $4.02 per ton, and we will then, on 1 July 2025, add the 53 cents if all things continue to progress as expected, together with the inflation uplift on the base TIC component. A new $38.5 million regular NECAP program, which we call NECAP Series Z, was unanimously approved by customers on 13 July 2024.

Turning to a couple of our key replacement projects. Shiploader 1 replacement involves the replacement of Shiploader 1 with a new shiploader, and that commenced in April 2023 under a design-built bid and build model.

The SL1 replacement program is approximately 90% complete, with the shiploader having completed its commissioning in Western Australia, where it was built, and is awaiting shipment to Dalrymple Bay Terminal. The transit is scheduled for September and early October, with the handover to the operator expected by year end, once on-site commissioning is completed.

Project cost is on budget at $165.4 million, which does not include interest during construction. $4.5 million of those project costs were added to the NECAP asset base on 1 July 2024, as we commissioned some changes to the berths at the terminal, with the remaining amount of just over $160 million plus IDC expected to be added to the NECAP asset base on 1 July 2025.

The successful completion of Shiploader 1A will provide a blueprint for future shipload- shiploader replacement projects. The other major NECAP program is the replacement of stacker reclaimer SR2 with a new reclaimer, which is called RL4.

The budgeted project cost is $115.6 million, and the project remains on budget and on schedule. A large proportion of that $115.6 million, being an amount in excess of $100 million plus IDC, is expected to be added to the NECAP asset base on 1 July 2025.

A small amount of the project costs associated with the final elements of the deconstruction of SR2 will likely be added to the NECAP asset base on 1 July 2026, as that work will be completed in the second half of 2025. Overall progress sorry, second half of 2024, my apologies.

The overall progress on RL4 is 87%, with the assembly at the terminal progressing well and commissioning and handover into operation expected to be completed in December '24. Deconstruction and removal of SR2, as I mentioned, is expected to be completed predominantly in the first half of 2025, but potentially some of it into the later part of 2025.

All current NECAP works have been recommended by the operator and approved by all customers, demonstrating a strong alignment of interests in efficient investment in DBT. As I mentioned before, it's currently anticipated that the addition of these major projects, together with completed projects within our existing regular NECAP series, will deliver an increase to the NECAP charge component of the TIC by a further 53 cents per ton at 1 July 2025.

It's worth noting that every 10% 10 cents per ton increase in TIC delivers approximately $8.5 million of incremental revenue, reinforcing the role NECAP plays in being a significant contributor to our growth profile. Importantly, DBI has identified NECAP projects of similar capital spend to existing committed projects, which we anticipate to be committed and commenced over the next 3 to 4 years, supporting longer-term growth in our terminal infrastructure charge.

I'll now hand over to Steph to talk through our financial results in more detail.

Thanks. Excuse me.

Thanks, Michael, and good morning, everyone. Uh, so, just on slide 16 of our investor deck.

Uh so, DBI maintains an investment grade balance sheet, with the S&P credit rating of BBB flat, reaffirmed during the first half of 2024, and it remains with a stable outlook. We continue to maintain strong performance against all our key coverage metrics, and we have substantial headroom to debt service, our leverage covenants, and the rating agency criteria.

Our strong credit metrics was evidenced by our highly successful, inaugural-ish, debt issue into the Australian medium-term note market in March this year, where we issued 350 million of five-year fixed-rate notes, with a coupon of 6.234% per annum and a maturity date of 24th of March, 2029. That issue was more than 2.5 times oversubscribed, and the bonds have continued to trade very well in the secondary market.

Opening up this market is a further demonstration of our strong focus on capital management and our strategic priority to diversify our funding sources. We had $2.35 billion of total debt facilities at 30 June 2024, of which $216 million was undrawn.

Together with cash, that provides us with $261 million of liquidity at 30 June. Our drawn debt has a weighted average tenor of 6.3 years, and as at 30 June 2024, our all-in interest rate was approximately 7%.

In the appendix we are providing further reconciliations of our borrowings that are disclosed in our financial statements to our drawn debt. Moving on to our profit and loss.

Our first-half revenue and EBITDA were both up on the first half of the prior year, demonstrating the resilience of our business model, the focus on incremental revenue creation, and our disciplined approach to costs. TIC revenue for first half '24 increased by 3.6% on H1 '23, in line with the increase in the TIC per ton, applicable from 1 July of each year.

The increase in TIC revenue reflects the annual adjustment for inflation and the ongoing contribution of commissioned NECAP to the NECAP charge component of the TIC. H1 '24 EBITDA was up 4.7% on H1 '23, with the EBITDA margin remaining consistent with prior comparative period.

As a reminder, our handling costs represent the amount charged by DBI by the third-party operator, noting that the operator is owned by a subset of our terminal customers. Those handling costs that are charged to DBI are then fully recharged to all customers of the terminal, as can be seen in the matching handling revenue line.

Accordingly, these costs and any cost inflation have no impact on DBI's EBITDA. The table at the bottom right of that slide provides a reconciliation of the components of DBI's net finance costs, and in addition, in the appendix, there are reconciliations of net finance costs and income tax, and how those amounts flow through into our FFO.

Moving on to the statement of our cash flows. Our capital expenditure comprises the spend on our NECAP project projects, and progress on the two major NECAP projects is the principal factor in the increased CapEx during H1 '24 as compared to the prior period.

Further detail is provided in the appendix, reconciling our NECAP spend and our uncommissioned NECAP, and there is also detail on the buildup of the NECAP asset base since its inception. Favorable movement in net working capital during H1 '24 of $42.9 million primarily relates to an over-collection of handling charges from customers, which, since 31 December '23, was $14.9 million, together with a net increase in the amounts owing to the terminal operator of $23.2 million.

All those handling charges will be trued up by the end of August. Moving on to our interest rate and our hedge profile.

100% of all of our foreign currency debt is swapped back to AUD, there is no FX risk on either our principal or interest payments. Interest rate risk is managed by a mix of fixed-rate debt issuances and interest rate swaps.

Based on our current debt levels, DBI is over 90% hedged until mid-2025, over 80% hedged until mid-2026, and over 70% hedged until mid-2028. Maintaining a highly-hedged interest rate position remains a priority for the business.

DBI's weighted average all-in interest rate for its debt book is 7% as at 30 June 2024, and it's expected to remain at approximately this level for the next 24 months, assuming our future debt drawdowns utilize the available available liquidity. I'll now hand back to Michael.

Thanks, Steph. Finally, just to reiterate our strategic priorities for the remainder of FY24.

With our take-or-pay contracts and future earnings profile, DBI is well positioned to continue to deliver long-term growth in total securityholder returns. Our priorities over the remainder of FY24 include delivering organic revenue growth through new revenue initiatives and the inclusion of the cost of completed NECAP projects in the NECAP asset base, completion of Shiploader 1A and Reclaimer 4 NECAP projects on time and on budget.

We will continue to progress opportunities to capture long-term Bowen Basin metallurgical coal production via continued review of the use of terminal capacity, including optimization of existing capacity, and our economic assessments of the 8X project. Further assessment of refinancing opportunities will continue to improve our balance sheet flexibility, reduce refinancing exposure, and access other sources of debt capital to reduce interest costs over the long term, while whilst maintaining an investment grade rating.

We will seek to identify opportunities for diversification through acquisition of assets that have a similar risk profile to the existing DBI business and which enable value to be created through our competitive advantages. We will continue to explore and assess opportunities for alternative uses of DBT, while delivering whole-of-terminal ESG and sustainability initiatives.

Thank you very much for your attention. I'll now hand back to the operator and very happy to take any questions.

Oh, thank you. Good morning.

Um I just had a question on the access queue. It looks to have increased slightly over the past year, just hoping if you could give us some color on the conversations that you're having with your customers at the moment, and how they're feeling about the volume outlook.

Sure, Matt. Um I think yeah, the access queue's grown by probably 3 or 4 million tons over the last sort of six to to nine months.

Uh that's principally associated with new capacity uh that customers are seeking, I'd say in the in the near term, probably the next 1 to 2 years, principally arising from, customers who have um I guess acquired new mines, part of the M&A activity that that's happened, and those new owners of those assets looking to drive further value in those assets and looking for additional capacity um as a result. Uh so that's the the principal reason uh for the increase in the access queue.

Um I would say that the longer-term uh investment in new mine development still remains at uh the level it's been at for a a period of time, as customers continue to look at those investment key investment decisions. Um but where there is capital that has already been investment invested in existing mines um we're certainly seeing a drive towards increased efficiency and uh additional throughput to um bring down their ultimately their fixed cost of production uh per unit down and uh obviously improve their their own profitability.

That's really driving the access queue.

That's helpful. Just um, I guess the frequency of conversations around 8X, how would you sort of rate that at the moment?

Perhaps relative to Uh. the conversations in the past?

I think um on the As I said, on the longer-term, larger, new mine developments um conversations continue, but again, probably at a uh uh at a level where there's no real, meaningful commitments by those customers at the moment. I think it's been well-expressed um by many of them as to the challenges um around particularly around royalties at the moment, which are probably inhibiting those investment decisions.

In terms of, smaller, more near-term capacity, the actual discussions uh we've certainly had more uh frequent and more uh I guess real discussions with customers around the progress of uh potentially a a phase of 8X to meet those, future customer requirements that are more more near-term. I think we can see the potential for um at least a a phase of 8X in the nearer term, uh potentially uh longer term.

I think we continue to see that more fulsome completion of 8X across, potentially up to 15 million tons um being a a a longer-term um uh in- increase in in capacity at the terminal un- until some of those investment decisions are made by customers with new mine developments.

Thanks, Michael. Appreciate it.

No problem, Matt.

Good morning, all. If If I can just follow on from that, it sounds like you've got 33 million tons of people, or people that want access to 33 million tons, but 8X is being pushed out.

How do How How should we think about those two factors? I would have thought that 8X was still thought about in near, not near a term, but the next few years as opposed to sounds like it's more of a longer-term consideration from today.

I think, Anthony, when I say longer-term, I mean we've we've been working with customers since 2023 on uh uh 8X, when we completed our our feasibility study. All of that, is is done.

There obviously needed to be some updates to that. I think um as I said, there's definitely capacity.

When I talk about the near term, I'm really talking 1 to 2 years uh for 8X, and we're looking at options with customers about how we could deliver that capacity requirement within 1 to 2 years. Uh the longer-term I think, really becomes a question a more complete um uh construction of 8X would take us, 3 to 4 years.

Um if you assume that, customer decisions around 15 million tons of capacity, which would really depend on major new mine developments progressing, like Whitehaven's Winchester South, like Stanmore's Eagle Downs. Um if they were to make those decisions within the next 12 months, we could see 8X completed within 5 years, call it by 2029, 2030.

Um but yeah, they've been looking at those projects for a number of years. I think last year coal prices uh were certainly a key factor, as were royalties.

Um and I think, as you can appreciate and the industry has clearly indicated, yeah, the royalty regime is um a a challenge for existing mines, but we certainly see where capital has already been invested, there is the potential to look to work that capital harder, increase throughput, and therefore require additional capacity. Where it's new capital, um it becomes much harder, it appears, for those miners to justify the investment in new mine developments.

That is making the 8X decision on a full completion of 8X um I guess, a longer-term prospect. Yeah.

Um our our view is that there will be demand as we approach the global demand for metallurgical coal from the seaborne export market um through the late 2020s into the 2030s. Um key question for policy settings in Australia will be: we're the best place to capture that demand, uh both from the quality of the coal we have, um our proximity to the locations where that demand is is going to arise, and key will be getting the policy settings right to encourage investment in in new supply um to in order to meet that demand.

We think it will happen. We've thought it will happen for a number of years.

Um it's really just getting those key policy settings right, and I think when we do, there's certainly indications from the miners that they're they have capital that they're willing to invest, but it needs to um meet obviously their return return hurdles.

Of course. Any conversations with the owners of the Hay Point terminal is another way to deliver that kind of capacity growth?

Uh we

I think the owners of the Hay Point terminal, being for those who don't know it, um BHP and Mitsubishi through their uh bits BHP Mitsubishi Alliance joint venture. Um that terminal is been owned by those two counterparties for 50 years.

Um I think they still see significant value in the um supply chain, logistics, and and operational uh strategic value uh in their ownership of of that terminal. Um it has never been open to open access um during their ownership, despite at various points in time they've production being lower than the capacity of that terminal.

I suspect they will continue to look at it as a strategic asset uh for utilization by by uh BMA.

That's a shame. Um last question if I had, the optimization benefits during the half, how are you thinking about whether or not that's fully scaled to what you hope to deliver from optimization benefits in the terminal, please?

I think uh largely. Other revenue for the half was $2.9 million.

I think we've indicated that um at the end of last year that we expected, the run rate to be $5 million. We're a little bit ahead of that.

I think um there's probably a little bit more that we can capture over the the second half of of the year. We're continuing to pursue initiatives.

As I mentioned, we've, um uh we are looking at a number of options with customers to, create win-win opportunities for ourselves. Um so, I I would think, in the second half we will should be more than 2.9 um if we take it through for the the full full year, 5.8 in in total.

Um probably not materially more, but again, as we introduce these initiatives in the second half and they start to create value, we'll see additional value come through in um in FY25.

Very good. Thank you.

Thank you. Good morning.

Um just following on from the the conversation about the demand in the Queensland coal market. I guess one of the themes that we learned from the Aurizon results a week ago was a tendency for for some customers to scale back what they were willing to commit in in terms of take-or-pay and maybe even taking some risks in the in the spot market.

That's, that's for the haulage part of it. Have you seen any feedback um or or or, um have you had conversations with your customers about that willingness to commit to certain levels of capacity?

Um no,

no, we haven't. Uh it haven't had any discussions with customers where there's been an indication of scale back of capacity.

In fact, as the 8X Q has grown, or access Q has grown, you'll see there's more demand for permanent capacity at at the terminal. Uh we have haven't seen any uh material uh transfers on a temporary basis of capacity where customers are, looking to transfer capacity because they don't uh utilize it.

Obviously there has been a period of that uh with the Moranbah North and Grosvenor closures at various points in time. Um we think, with the Dilkemar acquisition of those mines, we see there's an intention to get both of those mines operating at at full capacity going forward.

Whilst I think from the Aurizon perspective, as I understand it, um it's more around above-rail um uh contracting and not contracting as much above-rail capacity on a take-or-pay basis, due to the increased competition and the capacity in the above-rail market. Uh we haven't seen that translated in any way to uh any relinquishments, not that they can relinquish capacity, but any changes in people's the customers' demand for capacity at at the terminal.

Um and we wouldn't expect uh I think to see that. Um as I said, I think we're we're seeing the potential for greater throughput uh through the terminal over the near to longer term rather than, reduced throughput.

I think if you look at uh Aurizon Network's um forecast for tonnage through the Goonyella system in '24-'25, it's actually gone up from their forecast for tonnage uh in '23-'24. The network is actually expecting, greater tonnage uh through the Goonyella system, and obviously it's the system with uh the primary um the the premium hard coking coal.

Um and we expect to see that increased tonnage resulting in that or we are seeing it resulting in that in that additional demand for capacity.

Sure. Um uh and then uh I think you made reference to um let's say, completion of um Shiploader 1, um uh the replacement, and and what you learned from that um before moving to what Shiploader 2 and and possibly 3 replacements look like.

Just wondering if you could share any updates on the the feasibility work you've done on on those opportunities and um what the timeline might look like for them.

I think um Shiploader 2 will be the next shiploader replacement. We're working with the operator at the moment around potential timing of that.

Um and whether it's a replacement or a refurbishment, how we look at the requirements and the whole-of-life cost. Um I think as we indicated, we expect NECAP projects over the course of the remainder of uh the 2020s to be that equivalent sort of $400-odd million to current NECAP projects.

Um Shiploader 2 will be part of that. Um we expect it would be um the the proposal to customers would happen probably over the course of the next, 1 to 2 years.

It's still a little bit up in the air at the moment because we're just trying to work through what is the life, what can we do around maintenance of that asset um over the near term to, potentially delay capital spend. Um I think you will see over the course of the next, 12 to 24 months decisions around what we do on uh Shiploader 2.

Shiploader 3 will not be long after that, given it obviously is, for those who've been to the terminal, it services two berths, and therefore the volume of coal that's gone through Shiploader 3 is al- almost the same as as what's uh Shiploader 2 has delivered, although it's um uh about a 10-year younger asset. It will need replacement in the reasonable uh within the next, 4 to 5 years as well, we expect.

Okay. Then just one more if you don't mind, um and and probably one for Steph.

Um uh just wondering if you could help bridge the um the guidance on um the all-in interest rate, which six months ago you were sort of um indicating would be more around 6.5% from mid-year. Um now, it's around 7%.

Uh to to what extent is that just the prevailing moves in the base rates at the time that you um rolled your hedges?

Sure. Um quite a bit of that is on the unhedged component um of those base rates.

That's contributed that's they've obviously sat a lot higher than expected. The um AMTN that we did in March, we did leave half of that at a fixed rate, which was clearly substantially higher than what we had at the time.

If you keep in mind, up until sort of mid-June, we were sitting at um the about 1.2 um billion of our hedges were sitting at around 89 basis points, um and then the base rate on the fixed component of that AMTN was more like 4.6%, so that certainly contributed to the much higher step-up. Um and then probably the remainder is um to do with the repayment on the um the USPP, just repaying that out, and there were certainly um savings in terms of the margins, but some of the other margins that were entered into um as part of that refinance and um were various as some of them were on the 5-year debt and some of them were on sort of shorter 2-year notes, and so to the extent that some of that debt was drawn on the 5-year debt, the margins were a little bit higher than um what the all-in was at the time.

As we were drawing debt on that, it was probably at the more expensive end.

Okay. Thank you very much.

Thanks.

Hey, good day, guys. Um quick one on your NECAP spend.

You've got approval from customers at sort of 71.4 for 1H '24. Um that was on slide 10.

I'm just sort of trying to get my mind around, are we seeing probably a structural uplift of NECAP spend on a month on a yearly basis now it's moving into, I don't know, 60 $50 or $60 million per annum?

I think that's uh thanks, Ian, for the question. I think that's likely to be the case over the course of the next few years.

Our two uh key approvals for NECAP that have happened in the last sort of 3 or 4 months, one was NECAP Z, which I mentioned, which was $38 million, which is a regular series of uh a variety of different projects. Um and as I think I've mentioned, we we would see um regular sort of sustaining capital at that $30 to $50 million per year.

Over the course of the next few years, and the other key component to make up that sort of $70 million that you mentioned, Ian, is uh our gallery wrapping project, uh which this year we will start. Um the first component of that is $32 million.

That project probably has uh sort of 5 to 6 years uh to be completed because we have to, wrap the uh steelwork across the three outloading galleries on 3.8 km of jetty, together with uh some of the steelwork on the berths as well. It will be a long-term project.

Um the initial uh project of $32 million is really going to give us an indication of what the long-term costs will look like, it's not to say that it will be $32 million each year for the next 5 to 6 years. As we complete this project, um start getting an under a better understanding of access, the costs of access, um how access um is undertaken in line with operations, we'll get a better feel for the annual spend on gallery wrapping.

Then when we go to customers at the end of uh probably this time next year, uh or maybe a little bit earlier, we'll be able to put the next phase of gallery wrapping up, and that will be probably more aligned to an annual spend over the course of the next 5 years. Think you should expect regular spend of that $30 to $50 million, and then a gallery wrapping project um on top of that.

Um it's hard to know exactly what that will be each year, um and we'll get some better clarity of that as we work through the projects. Um hopefully that gives you a bit of a sense of what um NECAP, as we said, is going to look like in just regular NECAP without major asset replacement over the next 4 to 5 years.

Is it fair to assume that gallery wrapping is probably bigger than $100 million now as a total project? Because I think you probably suggested previously it was around 100, but it must looks like it might be a bit larger.

It It could be a bit larger than $100 million, yes. Yeah.

Okay. Um that's fine.

In terms of your debt book, you've always had the option to, or potential to go and re-look at some of your USPPs and repurchase, again, some of those PPs. What do you need to sort of see in the debt markets to maybe make that factor or bring that decision forward than what uh in the next couple of years?

Thanks, Ian. The The debt markets at the moment for refinance are actually very favorable, um as you've seen both from our refinance in December last year and also the um AMTN market that we accessed this year.

I think the debt markets themselves are very favorable. It's more around the cost of repaying those notes um and particularly the cross-currency interest rate swaps that sit over the top of that.

The notes themselves, at the time they were issued in '21, had quite low coupons, the make-wholes on those are quite low, but because they were swapped back um to Aussie dollars um and on a uh float rate, though the float rate's gone up substantially and the uh foreign currency is also uh a lot higher, what we've got now is both of those working against us, we would need to see the treasuries and the base rates in the Australian market substantially come down, um so that the make-wholes on those um cross-currency interest rate swaps were a lot lower. We're running the numbers each month at the moment on that, and it still doesn't make a lot of sense.

It's still in the kind of tens of hundreds of millions of tens of millions of dollars. Yeah.

I think I think NPV-wise, it still doesn't Stack up. stack up.

Um as Steph said, if we saw Australian base rates come down, and US treasuries stay a little bit higher, the make-wholes still on the notes themselves were relatively low, but the um costs on the um cross-currency interest rate swaps were lower, um that would start to make sense. That's probably the key thing that we'd, would be a a trigger for us um potentially uh refinancing.

To the extent that, we see further margin compression um across uh bank and capital market uh markets, then that is of assistance as well. It's not something that we as Steph said, we look at it every month, because it's if things move in the right direction, um it's something that we could move relatively quickly on, but it's still not uh an NPV-positive outcome at at the moment.

Okay. Can I just simplify that?

Do you need to see the current the A-dollar U.S.-dollar currency move down? A lower currency with the set the same prevailing rates would be an ideal scenario?

Uh

it doesn't really help us a lot, Ian, just because we've, we have to refinance the notes in US dollars and we've got the cross-currency interest rate swaps that brought the US dollars back to AUD. It effectively wherever the rates move, that might help us a little bit, but it doesn't actually make a material difference to the to the math.

Okay. All right.

Thank you.

Good morning. Just a question around your contracted capacity, um current contracts out to June 2028.

Um can I just ask um about the recontracting um process? Have you just started your discussions with your existing um customers, and how do you see that playing out?

Are are you going to end up with a I guess a continuation of the the status quo, or um do do you expect that particular customers may break ranks from what the current status quo is? Uh yeah, no,

thanks, Owen. All all of our contracts, remember, are evergreen uh contracts with uh options for renewal um that are in the customer's favor.

The requirement for contracts that expire on 30 June 2028 um is that customers need to make a decision by 30 June 2027 as to whether they're going to renew. When we look at the mines that support the contracts that are renewing on 30 June 2028, um we, at this stage, and in discussions with those customers that own those mines, expect that there would be recontracting, or those customers would agree to renew those contracts post uh yes, at or at 30 June 2027.

Um so there's not really a renewal discussion. Obviously from a pricing perspective, pricing is in place till 2031, we don't have to have any concern around that.

It's really customers' decisions as to whether they would, reduce capacity um uh at that point in time. As I said, in terms of the mines that support the contracts expiring in 30 June 2028, there's nothing at the present state which that indicates that those contracts wouldn't be renewed.

Under the evergreen structure, um can we presume that the 100% take-or-pay is going to continue beyond that um June '28 point?

Absolutely. Yeah.

There's no no changes in other the only thing at June 2028 that happens is customers either renew on the current terms, or they don't renew. Um and you So, do they have

do they have the option of reducing volumes at that point?

They They do have the option of reducing, volumes if they're um and so to the extent, of course, any capacity becomes uncontracted at that point in time, we obviously will be then going to our 33 million ton access Q, offering that capacity to that Q for consideration as to whether any of those customers want to take it up, or those access seekers. To the extent it's not taken up by access seekers, then obviously we would socialize the uncontracted capacity.

Um so, but at this stage, in our discussions with customers, I mean they've still got effectively close enough to 12 months to make that decision, but nothing would indicate that customers are either looking to not renew or to reduce uh the extent of capacity.

Can I ask when if they do choose to renew, does that just sound like Does that shift to a rolling basis, or does that renew for a period of time, um so we end up with another sort of 10-year period, for example?

It renews for 5 years. They're they're 5-year renewal rights.

Yeah. It's not on a rolling basis.

It's just contracts that expire at 30 June '28, if they're renewed, they'll now expire at 30 June 2033.

Okay. Um, and just a second question for me just on, I know uh Anthony asked a question around any discussion potential discussions around Hay Point, uh wouldn't mind just asking whether you've had a consideration looking at Port of Newcastle as a similar um port-style asset.

Is that is that an asset that you would see yourself being comfortably able to operate?

I think, Port of Newcastle, obviously we're well aware that Macquarie Asset Management have appointed Goldman Sachs to consider a sale of their 50% interest. Um I think, the the Port of Newcastle slightly different to us.

Obviously it's um has other elements to the port than than just coal, although coal is the predominant part. I think what we will do is, look and consider what Macquarie are looking to do with that asset, and ultimately what maybe China Merchants are contemplating doing, what the sale process looks like, um and consider those options when, it uh it does actually come to market.

good morning. Um two questions for Steph, if I can, please.

Just going back to the um to the interest uh line, with with that step-up in the first half, are we still expecting a second-half step-up, um or or how do we think about the net interest costs for the full year relative to the first half?

Sure. Uh thanks, Cameron.

Uh the first-half interest rate, if you calculate it, is more around the 4.7% all-in rate, and then it is stepping up to the 7% from for pretty much 30 June. I think in December FY23, at that time the all-in interest rate was 4.63%, and it has crept up a little bit over the um sort of the that next period of time.

As we've done some of those refinances um with the AMTN, and as the base rates have grown, that's where that step-up up to the 7% is happening, and that will take place from effectively about mid-June um through until the end of the year. There is still a step-up happening, but that's the sort of step-up that's happening between the two periods.

I would think of that 7% um guidance as being applying for the second half.

Great. Then, just on the cash flows, the the movement in working capital has been pretty violent over the last three half-year periods.

Positive 34 million in first half '23, negative 12.5 in uh last first half '23, and then positive 42.9 in in this period. Can we Can you just explain what's driving that volatility, please?

It's um So, working capital's It's primarily around the operator and what's been happening with their invoicing. If you think about it, two things have occurred.

The first one is um the operator has underspent its uh budget, and they work on a 1 July to 30 June period. They have underspent their budget for that 12-month period, and so if you take a 31 December snapshot, you get a particular position, and at 30 June, you get another position.

That that underspend is about 20 $21, $23 million uh for the year, we will be refunding that to customers um around uh end of August, I think, or yeah, around the end of August we'll be refunding that. The second thing that's happened is, as at 31 December, the amount we owed to the operator was very, very low.

The way probably appreciate it, the way working capital works is if we are actually not paying as much to the operator as we were in previous years, then that actually gives us a working capital benefit. We only owed the operator in their December um quarter invoice about 12 or $13 million, cuz there was a big refund that had come through with some of the works that they that we are undertaking for them, there was a big credit that had gone through in that period.

If you're just looking at these points in time, you see these big working capital movements. We expect a lot of that to flush out by this August, and then it should return to a more normalized rate that you would have seen probably since listing.

Um but there will always be some movement depending on where the operator is sitting in terms of their over- or underspend, and that can go either way.

Thank you.

Thanks, um and morning, all. Appreciate you taking my questions.

Just a quick one on the distribution. You guide for the next kind of tick year is 8.5 versus, I guess, your long-term target, 3 to 7.

Looking forward, you should see, quite a material step up in revenue. Your interest effectively looks fixed now, and your CapEx is stepping down.

Just wondering how we should think about when you're happy to go outside that target range for distributions, and and what are the moving factors there, particularly around the 27, 28 tick year? Thank you.

Thanks, Sam, for the question. I think um yeah, as we progress during this year and we have obviously the certainty of SL1A being commissioned and completed, RL4 uh being commissioned and and completed, and we fully expect the addition of uh those two major assets to the NECAP asset base on 1 July '25, um we obviously now have a clear view, as Steph has indicated, on interest costs over the course of the next literally a couple of years, um uh given we're substantially hedged and assuming, base rates don't materially increase going forward.

Um as I mentioned, one of the key things will be understanding the CapEx profile on things like SL2, Shiploader 2 replacement, and the gallery wrapping to understand what our CapEx requirements are going to be there. Again, we should have a handle on those within the next call it 6 to 12 to 8 18 months.

Think that'll then enable us to have a re-assessment of the profile of the cash flows coming through, how our what our FFO looks like, and what our CapEx requirements look like, and then make an assessment, as we have done effectively on a six-monthly basis over the last 24 months, around whether we uh continue to increase the distributions and whether they go above 3% to 7%. Obviously, from a management perspective, we're focused on on getting the most out of uh our our distributions and paying out what we think is appropriate, um and that has been, obviously, the the high end of that range, um and we'll look at it on an ongoing basis.

I think um the only other thing uh to keep in mind is that a lot of our interest costs at the moment are being capitalized because we have that circa 260, $270 million of NECAP works underway, and so under the um the way that accounting standards work, we capitalize we assume 100% of that is debt funded at our prevailing interest rate. When you look at a FFO payout ratio, once as soon as those amounts get um added to the asset base on 1 July next year, all of that will move into uh interest expense, which will um then flow through into our FFO.

Obviously, the in amount of interest we're paying doesn't change, um it's just really the categorization. When you're looking at your FFO payout ratio, it still will be sitting at the sort of high 70%s.

Um so, it's just that's probably just something to keep in mind in terms of some of this step-up that's happening in 1 July '25, to a certain extent, is offsetting or is absorbed by just that step-up in interest that is happening from this year.

Got it. That's That's helpful.

Maybe just a follow-up from that. Roughly, it still looks like you can stay within your payout ratio target and and go above the the the kind of 3% to 7% range.

Just remind me again, as we're thinking about this, with the stapled security and loan notes structure, does that preclude you from doing buybacks?

Is

that something that is potentially on the radar if, you do have excess kind of FFO? No.

Uh I

I think, when we, look at uh capital allocation across the business and where we would best invest that, um certainly, share buybacks are one option. Um I think it's not something that we would not consider.

We We would always consider all of those options, um whether it's something we would introduce. I think one of the challenges, Sam, is given the profile of our cash position and the amount of of FFO, um particularly when we're putting, as Steph said, close to, the high 70%s if you factor in that capitalized interest component, you were to factor it in, um there's not a lot of cash, actually left to then do a material share buyback.

It's important, we think about, okay, what's the value of of these things overall, um and how should we position it, whether it be a share buyback, whether it should be, increased distributions. All of those things definitely will be taken into account.

Um and then, obviously people have mentioned other, potential acquisition opportunities, and we obviously have to take those into account as well if, they were to be something that we would look to pursue. We, as we have done over the course of the last couple of years, every we're we will be constantly looking at our capital allocation and reassessing, what are the right distribution levels.

As we said, we've increased the FFO payout ratio. We think that's appropriate, given the capital allocation review we did last year.

Um and we'll continue to assess whether that 3% to 7% is is the right target on an ongoing basis. It's Remember that's, just to be clear, our guidance is what is is on the distributions.

We have a target of 3% to 7%, and we always, as a management team, look to exceed that target, um but we also appreciate that it's important that that target represents what we will think we can deliver on a on a go-forward basis.

Got it. That's helpful.

Thanks for that.

G'day, Michael. G'day, Steph.

Um just uh two questions for me, and maybe they're a little bit nested, but I hope you don't mind that. Slide 14, you've got your um your sort of illustrative um roll out, I suppose, of of revenue over time.

Can you just talk about how that profile has changed since you last presented that? Because I suppose it looks like '27, '28's a little bit less.

There's a bit more of a step-up in '28, '29, and it looks like maybe the additional NECAP coming through from like uncommitted opportunities is a bit more back-ended, and I I suppose that sort of does very much tie into slide 11 to do with the NECAP um roll out. If you could just talk us through that, that'd be great, please.

Sure. I think a couple of things probably where things have changed.

I think, firstly, what we added to the NECAP asset base in 2024 to 1 July 2024 was probably more than we expected. We pushed hard on some projects to get as much in there as we could, recognizing that it delivers tick uplift straight away.

Some of what would have previously been in the sort of '27-'28 period has actually been brought forward into '26-'27. That's one thing to to mention.

Where you see '27-'28 potentially not being quite as high, and we've indicated it's sort of 53 cents. I think previous days gone by, I might have mentioned, more like 55 cents.

Um that that's part of that reason is um uh the bring-forward of some of that NECAP into the asset base. Um in terms of going forward, uh we certainly see, gallery wrapping up until probably, 3 to 6 months ago was a project that we were very focused on doing.

We didn't have approvals for it. We knew there would have to be some expenditure, but it wasn't very clear what that looked like.

Some of that step-up into '28-'29 will be a reflection of what we think um is going to be some of the uh gallery wrapping um uh NECAP that that comes through. Um as I said, gallery wrapping is a year-by-year project.

It's not a long-term project, some of the gallery wrapping that will happen, will definitely we believe will happen in future years, is built into the gray component rather than the darker teal component for periods like '28, '20 or '29, '30 and and '30, '31. Then, of the large projects that we expect to happen towards the back end of the decade, like uh Shiploader 2, potentially Shiploader 3, um essentially, if they were to be committed, let's just pick a time period sometime in in FY uh 28, or if late FY27, they're not going to be completed until '30 or '31.

Again, whilst we don't have any real, clear commitments or understanding of the timing of that, we haven't built that we've deliberately haven't built that into the expected tick uplift in, say, '29, '30 or '30, '31. If SL2 was to get approved and committed in '27, then you might see, in 12 months' time uh this chart change, and we'd have a big gray bar sitting in '30, '30 2030, 2031.

That's really the the the reason for it, Nathan. It's a little bit of shifting of some of the um costs forward and some of them a little bit a little bit back.

Um, but it's not to say that, and this is why it's, funnily enough, illustrative, is yeah, until we get clear understanding of the absolute timing on these things, we um, yeah, we don't want to um be indicating that, uncommitted, particularly uncommitted projects will come into the NECAP asset base on particular dates. We certainly expect there will be that NECAP required over the course of the next 3 to 4 years and it will become committed.

Okay. Great.

Thank you. Um second question is just to do with this franking, I suppose.

That ties in with your your tax payments over coming periods. Can you just give us an update about when you expect to resume um full franking, or not full franking, but back to normal run rate on the franking of the distribution, and and what that actually means for your tax payments that are going to impact the FFO over coming periods?

Sure. Um first of all, we uh we expect to be paying unfranked distributions unfranked dividends for the remainder of this year, um and we do uh fore forecast, or hope, that we will be paying partly franked dividends from the beginning of next year.

That would be the Q4 '24 distribution that we would look to um pay in Q1 of '25. Uh so, that's obviously subject to board approvals.

Uh in terms of the FFO, just for clarity, the FFO does work off a current tax number rather than a cash tax number. The current tax relates to this year.

Whenever we look at FFO, what we try and whenever we look at distributions referable to a quarter, we do try to make sure everything in the FFO relates to the quarter or to the period that we're talking about. When we're talking about revenue, or cost, or interest, or tax, it's referable to that quarter or to that to that year.

When we're talking about FFO, we're talking about the tax referable to our So, if we're talking about tax for this year, it's referable to 2024 rather than a refund we might be getting in relation to the um 2023 um tax return year.

Okay. You've got to tax receivable sitting there on your balance sheet.

Um, what is the actual tax paid likely to be in um the next 12 months?

Our effective tax rate is sort of sitting at around um Well, based on a net profit before tax, um the effective tax rate is sitting between that 15% to 20%. It's probably sitting probably about the midpoint of that 15% to 20% when you're looking at the net profit um before tax.

If you then take that as what we would be paying for this year, then um obviously we've got a refund for this year in relation to last year, but in relation to this tax year, then that's about the way to think about it.

Yep. Okay.

Thanks, Steph. Thank you, Michael.

Thanks.

Thanks, everyone, uh for your attendance and thank you very much for the the questions. Um we continue to see lots of uh value generation for securityholders over time within the business and and certainly significant opportunities.

I think, across the industry, there's uh no doubt consideration of uh of, certain headwinds that are impacting it. Uh I think, for us, as a business, importantly, um given where we sit within the Central Queensland Coal Network, the strength of our customer base um and the quality of the mines um that they have within the Goonyella system, um and our view on long-term metallurgical coal demand and the recent uplift we've seen in prices, we still see a significant opportunity for the business going forward.

Um and I think, both through our NECAP program and other organic revenue initiatives, we'll continue to focus on driving that longer-term securityholder value. Um but thank you very much for for all the questions and and for your attention today.