Channel Infrastructure NZ (NZX:CHI) Q2 2026 Earnings Call

0:00 Thank you for standing by and welcome to the Channel Infrastructure Half Year Result 2026 call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Rob Buchanan, Chief Executive. Please go ahead.

0:28 Good morning, everyone, and thank you for joining us. I'm here today with our Chief Financial Officer, Alexa Preston, and we'll speak to the presentation disclosed on the NZX and ASX earlier this morning. There's a lot of detail in the presentation pack, but Channel's story is actually pretty straightforward. Our business continues to perform well. We're delivering the projects we said we would safely, on time, and on budget. And we're finding new ways to put the infrastructure we already own to work. That is delivering growth for channel and increasingly helping strengthen New Zealand's fuel supply chain resilience. The past six months have been another fantastic demonstration of what this business can do.

1:13 If you have the presentation pack in front of you, I'll start on slide three. I'm not going to take you through every line on this slide. There are really three things I'd like you to take away. First, we continue to see strong performance from the business. We continue to operate our assets at world-class levels. Fuel volumes have held up well despite global fuel supply disruptions. And financially, we've delivered another strong result. Second, we continue to execute with excellence. We delivered 93 million litres of diesel storage for the government in just nine weeks. We completed Z Energy's jet fuel storage project six months ahead of the original schedule. and within budget. The Higgins Bitumen Terminal is on track to complete late in the fourth quarter of this year. And just this morning, we announced the significant new jet and diesel storage project with our valued customer BP that will generate a further $130 million of revenue over 15 years.

2:14 Third, the delivery of projects is now translating into earnings growth. We've created good commercial outcomes for shareholders, while solving a genuine infrastructure need for the country. That's a combination we like, and we'll keep doing as we move forward. Moving to slide four, you'll see the key financial highlights for the half. Alexa will take you through the numbers in detail, but I'll just highlight, revenue is up, EBITDA is up, and the board has declared a 7.25 cent per share interim dividend. This is up an impressive 16%, reflecting our strong free cash flow generation and successful execution of growth. Normalized free cash flow and free cash flow conversion are down slightly, a reflection of the phasing of maintenance capex.

3:03 And we're investing considerably more into growth. That is growth with a contracted revenue stream and above WAC returns, which is exactly how we want to grow this business. Disciplined capital, contracted earnings, and assets we know how to operate at world-class levels. On slide five, we turn to safety and operational performance. There is a lot more activity happening at Marston Point right now. More projects, more contractors, and a lot more moving parts. So maintaining our operating standards through that increased level of activity is massively important to our world-class aspiration. It's also critically important at a time when skilled supply chains are under pressure that New Zealanders know they can rely on us to keep our facilities working safely and reliably.

3:52 Pipeline and tank availability remained at 99% in the period. We handled 30 shifts during the half, with a larger number reflecting smaller fuel parcels coming in during the fuel crisis. We also continued our strong process safety track record with no Tier 1 or Tier 2 process safety events. We did have two recordable injuries and were not satisfied with that, noting the significant construction activity on our site. Our expectation remains very simple, to get everybody home safely every day. But overall, the team has done an excellent job managing a very high standard of operational performance while delivering a much larger program of work.

4:37 Turning to slide six, this looks specifically at jet volumes where we saw some good growth across Q1 prior to the start of the Middle East conflict. First half throughput was broadly where we expected, and the strong quarter reflects growth of international services at Auckland Airport. As you would expect, Q2 was affected by high fuel prices and reduced schedules, particularly from some Middle Eastern carriers. But those services were already beginning to return towards the end of the quarter. As you know, Air New Zealand has had a number of their aircraft grounded over the past few years due to engine availability issues, which has impacted jet volumes over this period. So it's pleasing to see the early return to service of Air New Zealand's full wide-body fleet in June.

5:23 This will support international capacity and growth in jet demand going forward. And finally for now, slide seven covers petrol and diesel volumes, which have remained stable. This is broadly in line with the advisory outlook. Given where fuel prices have been, that's worth highlighting, as it reflects the resilience and cost efficiencies associated with our Marsdenport import terminal supply chain system. Clearly, transport will change over time, but the transition won't happen overnight, and New Zealand will continue to require reliable fuels infrastructure for a very, very long time yet, as demonstrated by the fact that diesel and petrol fleet has remained stable since 2017.

6:08 Our advantage is that the assets we have in operation today can continue to evolve as that demand changes, and we are focused on building out contracted revenues that are independent of fuel throughput. That is exactly what we are doing with the Marsden Point Energy Precinct, which I'll touch on a little bit later on. I'll now hand over to Alexa to take you through the financials before we come back to the precinct and our wider growth plans.

6:33 Thanks, Rob, and good morning, everyone. As Rob has outlined, this has been another strong half for Channel. Starting on slide 9 with the profit and loss. Revenue for the half was $72.9 million, up 4% on the prior period. EBITDA was $48.8 million, up 1% on HY25, and our EBITDA margin was 67%. On an underlying basis, excluding the impact of the legacy weary lease, Revenue was up 5% and EBITDA up 3% on HY25. So overall, another strong and stable result that provides a good base for the additional contracted revenue coming through in the second half from the Z Energy Jet Storage project and government diesel storage.

7:24 Turning to slide 10 and looking more closely at revenue. Variable terminal fees increased 5% reflecting PPI indexation and higher wharfage revenue with 30 import vessels received during the hearth. Contracted storage revenue increased 15% due to PPI indexation and the first revenue contribution from the government diesel storage contract. Other operating revenue increased and includes the revenue contribution from the Somerton Pipeline joint venture. These increases more than offset the loss of the legacy we release and the contracted reduction in fixed terminal fees. We are seeing the benefit of the investment we've been making in building out new contracted revenue streams.

8:10 Moving to slide 11, operating costs increased 11% to $24.1 million. However, excluding the addition of the summit and joint venture expenses, underlying costs increased by around 6%. That reflects cost inflation across the board, with efficiencies in admin and the in the admin and other cost line offset by significant increases in energy and utility costs and increases in materials and labour expenses where we filled vacancies and added capability to deliver world-class resilient operations. We remain very focused on cost discipline across our controllable cost base as the business grows whilst ensuring a resilient supply chain for New Zealand which includes world-class asset availability and reliability.

8:59 On slide 12, you can see the increased level of investment going into the business. Total capital expenditure was $41.5 million for the half, compared with $19.1 million in HY25. Maintenance capex includes investment in terminal control systems, scheduled jetty and pipeline upgrades, and statutory tank inspections. For the full year, we remain on track for maintenance capex of between 8% and 10% of revenue. Project, the Government Diesel Storage Conversion, and the Higgins Bitumen Terminal. We are investing in the resilience of the existing asset base, while also investing in projects that grow contracted revenue.

9:44 Turning to slide 13, the business continues to generate strong operating cash flow, supporting stable and growing dividends. Normalised free cash flow from operations was $33.6 million. representing an EBITDA to free cash flow conversion of 69%. That was slightly below HY25, largely reflecting the phasing of maintenance capex during the half. The board is pleased to have declared an interim dividend of 7.25 cents per share, a significant increase of 16% on HY25, reflecting their commitment to a stable and growing dividend for shareholders. Moving to slide 14, Our balance sheet remains strong. Net debt at the end of June was $346 million, with $93 million of liquidity headroom.

10:35 Leverage was 3.8 times net debt to EBITDA, which remains within our target credit metrics consistent with a shadow BBB flat to BBB plus credit rating, and comfortably within our bank and bond covenant requirements. Interest cover remains strong at 5.7 times. We are also reviewing options for refinancing the $100 million retail bond ahead of its maturity in May 2027. We retain balance sheet capacity to fund the growth opportunities ahead of us, while remaining disciplined around our target credit metrics. Finally, on slide 15, as you will recall, we upgraded our guidance in May at the annual shareholders meeting to $97 to $105 million of ESDA.

11:22 With the benefit of eight months of trading behind us and greater certainty around fuel throughput volume, we have further upgraded that guidance today to $103 to $108 million of EBITDA. In addition to greater certainty around fuel volumes, the upgraded results also reflect the successful on-time delivery of the government diesel storage contract and the earlier than planned completion of the Z-energy jet storage project. Maintenance CapEx and normalised free cash flow conversion guidance remain unchanged. In wrapping up, we've delivered another strong result, continued to generate good cash flow and maintained a strong balance sheet while increasing our investment in contracted growth. Importantly, a number of our investments are now moving from capital spend into revenue.

12:10 2027 will benefit from a full year contribution from the Z Energy Jet Storage and Higgins Bitumen as well as a full year contribution from the government diesel storage contract. Inflation continues to be a feature of the New Zealand economy and this will likely be reflected in the PPI indexation factor that applies to our revenues next year. Over the last three months, Channel has increased the in-service contracted storage volume at Marsden Point by 40%. Reflecting this significant expansion, the material new BP contract we have just announced and acknowledging the significant pipeline of potential growth opportunities ahead of the business. Channel will invest an additional $700,000 to $900,000 per annum in operating expenditure to support resilient import terminal operations and the execution of our growth pipeline.

13:04 I'll now hand back to Rob to take you through the growth opportunities in more detail.

13:09 Thanks, Alexa. I want to spend the next few minutes talking about growth. You've seen slide 17 before, but let me remind you of the three key areas of growth we're focused on. The first is Marsden Point with the energy precinct. With the BP deal today, another great example of what we can do there. The second is opportunities along our existing supply chain, particularly around Auckland Airport. And the third is selective acquisitions in New Zealand and Australia. We're very focused on growth, but selective and disciplined growth. It needs the right customer proposition, the right risk allocation, and the right return for our shareholders. Where we have an advantage is that we bring genuine operating capability to the table.

13:55 We understand high hazard fuels infrastructure. We know our customers, and we have a demonstrated ability to get projects delivered. That gives us a strong platform to grow from. The next slide is probably my favorite slide in the deck. because it shows just how much optionality and opportunity there is at Marsden Point. There is operating infrastructure here today, there are assets being repurposed right now, and there are projects under construction. There is land available for even more new development, opportunities in fuel security, future fuels, and other energy infrastructure. The deep water port access, pipeline, tanks, land, and operating and development expertise already exists. This is very difficult to replicate and it provides significant opportunity for us to create further value for shareholders and New Zealand.

14:47 I'll just take a moment to point out some of the key changes to this slide, since you saw it last. Firstly, you can see how much room we will create from the sale and removal of the CCR platformer, which forms critical enabling works for the biorefinery. Secondly, you can see we have identified 45 million hectares of land available for greenfields fuel storage. We've now completed a scoping study into the feasibility of conversion of existing tanks and construction of new greenfields tanks, reflecting increased opportunity for strategic storage in New Zealand. Thirdly, we have added 123 million litres of diesel and jet storage in just the last three months, significantly increasing the total in-service capacity of our site.

15:33 And just today, we announced another new and material contract with BP to deliver significant new jet and diesel storage. Slide 19 is probably the best evidence of what six months of delivery looks like for our business. Z Energy identified supply chain efficiencies in improving the volume of jet storage on our site. To meet this need, we converted existing infrastructure and delivered it for them six months ahead of schedule. The government needed additional diesel storage at incredibly short notice following the outbreak of the Middle East conflict. We identified a solution in three weeks and delivered 93 million litres of storage, nine days of New Zealand's diesel demand, just nine weeks later.

16:19 This was the only option in New Zealand that could be provided at such short timeframe due to Marsden Point's existing assets and capabilities and our connection with the existing fuel supply chain. This project highlighted our proven infrastructure turnaround capability and how we are well positioned to respond quickly to unplanned conversion opportunities. Our team have some unique skills and capabilities for delivering complex projects at pace, and I'm incredibly proud of the way they rallied together to provide this resilience for New Zealand at a critical time of need. In relation to Higgins, they needed a more resilient bitumen import terminal solution. That project is on track and in fact has been expanded. Taken together, these projects show the progress we have made towards the Marsden Point energy precinct. Find the customer problem, use our infrastructure advantage, contract the revenue, and deliver the solution.

17:15 That has become the formula for what we do best here at Channel. And importantly, we still have plenty more to come, as you can see on slide 20. There remains more than 350 million litres of existing storage capacity potentially available for repurposing. We have also identified 45 hectares of land available for new greenfield storage development. There are opportunities around SAF and biofuels. One exciting development is the memorandum understanding we have signed with Lanzajet, who are a US-based sustainable fuels technology company focused on producing sustainable aviation fuel from ethanol. They are at very early stages of considering an alcohol to jet facility at Marsden Point.

18:00 Then there are further energy security opportunities and potentially other infrastructure uses. I often get asked, will every one of these things happen? And the short answer is no, and they don't need to. One of the benefits of having a large opportunity set like we do is that we can choose the projects that make sense strategically and commercially at the right time for us and our shareholders. and that discipline is important to us. Moving to slide 21 and the potential biorefinery. At over a billion dollars of proposed investment, this would be a significant project for Northland and for New Zealand, producing 400 million litres of biofuels annually. The proposed project has been expanded and is now expected to include biodiesel, sustainable aviation fuel and fertiliser production.

18:50 Channel's role remains to provide the consortium with the site and the infrastructure, operating as the landlord and infrastructure services provider. The sale of the decommissioned CCR platformer enables the redevelopment of that part of the site. You would have seen that indicated on the earlier precinct image slide. The consortium's equity-raised process is taking a bit longer than originally anticipated. It's an incredibly complex process, but credible potential equity providers remain actively engaged and due diligence has very well progressed. At this stage, we continue to see the proposed biorefinery as the highest and best use of the decommissioned hydrocracker assets. That said, the equity raise is a key condition precedent to the final investment decision.

19:36 And our current assessment is the completion of that process will likely delay the final investment decision into 2027. But if it proceeds, The benefits extend well beyond channel. It has the potential to bring substantial investment into Northland, create skilled employment opportunities, support lower carbon fuels, and importantly, strengthen domestic supply chains. And in times of crisis or a constrained fuel supply, it would provide an important backup source of fuel for the domestic market. And of course, it would provide another productive long-term use for Marsden Point's infrastructure. By any measure, that would be a fantastic outcome. Slide 22 is about accountability. We set ourselves targets at the beginning of each year, and this is how we're tracking against them in 2026.

20:26 I won't read the table out, but there are two numbers that are important. We've added around $22 million of incremental contracted revenue from the government diesel storage announced in the first half of this year, and today announced the new BP contract. and we have upgraded FY26 EBITDA guidance again. Those are good outcomes for shareholders. So let me finish with some closing remarks on slide 23. We've delivered a strong operational and financial performance in the first half alongside continued progress on project development and delivery. The contracted revenue associated with the jet and diesel storage projects we've now completed will support revenue growth in the second half of 26 and Nz27.

21:14 At the same time, we're continuing to monitor the impact of high fuel prices on demand. The broader backdrop remains one of geopolitical uncertainty and pressure on global supply chains, which continues to highlight the importance of the infrastructure we operate. We're seeing renewable fuels projects, including the Marsden Point biorefinery, increasingly viewed through a security of supply lens as well as a sustainability lens. And we continue to evaluate both organic and acquisition opportunities in New Zealand and Australia. We believe Channel is really well positioned for continued growth, while playing an important role in strengthening New Zealand's energy resilience. And with that, we'll take some questions that you may have.

22:00 Thank you. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Andrew Harvey Green with Forsyth Bar.

22:21 Please go ahead. Good morning, Rob and Alexa. Great results and good to see another contract being signed. A couple of questions from me. I guess I'm not quite sure how to phrase this, to be honest, but it is probably around the biorefinery. I guess just given your past sort of experiences, Rob, with these sorts of processes, is there anything in there we should be getting concerned about with the equity-raised process? Or do you think it's just a function, very much a function of, I guess, the increased scope and complexity, and we shouldn't be particularly concerned about the financial side of the project?

23:06 Yeah, very much the latter, Andrew. So again, having seen the returns on offer, we think it's a financially attractive proposition for folks to invest in. I can't speak to names, but there are some very large and significant international investors that are doing a comprehensive diligence on that project. So far, that validated everything that we've seen in it, which is Great. But we don't control the timing of when they get there on that. So ultimately, we're signaling that risk that the FID moves into 27 on the basis that those guys will need to take the time they take to get to close.

23:50 Yeah. Yeah. OK. No, that's good. Thanks. Um next question I just had is I guess I know following on from the Iran conflict and there isn't particularly seeing what's happened in Australia and expectation I guess that MSO obligations may step up. Is there anything going on any sort of initial discussions around that or should we specifically expect this to be parked until post election?

24:18 Look, I think we've all seen what the Australian government has done around fuel security and fuel resilience, and that's significantly lift minimum stockholding obligations as well as looking to put in place a strategic reserve. I think we've maintained a watching brief on that here in New Zealand. We are going into an election. I know it's something that's on the mind of ministers and the government, but I probably won't speak to it much more than that.

24:47 Okay, all good. Next question I just had was just around the capex side of things, stay in business capex and are comfortable with what's going on there. Growth capex, I guess, was a little bit lower than what I was expecting in the first half. Is there more to come? I guess, is there going to be weighted more second half? Or I'm just sort of wondering if you can give us a little bit more color about what we should expect on the growth capex side of things.

25:15 So, Andrea, the growth capex actually includes the conclusion of the Z energy growth capex, so all of that's in the first half. Vitamins progressing as planned, and so that should all conclude in the second half. And otherwise, it's largely government diesel storage. So, you know, from our perspective, it's as signaled.

25:42 Yeah, okay, okay. Last question I just had was just thinking about sort of optics going forward. You just signaled a little bit of an increase coming through. It kind of looks like if we think about probably FY27 new contracts coming in, circa $50 million. Is that a reasonable sort of ballpark to be working with as sort of underlying optics going forward?

26:05 I've probably got three things, three pieces of colour to add to the OPEX. One is we're continuing to see those cost lines where we don't have any control like our transmission and distribution charges experience significant inflationary pressure. The cost increases that we've signalled today is really the magic of the model that they're running here. You know, we've added $130 million today of contracted revenue over the contracted term and increased the storage capacity of the site by 40% in the last three months. And that's a very modest increase in our cost base that we've signaled today. And you'll recall also that when we announced the bitumen terminal, we indicated that would come with some direct OPEX as well, the $200,000.

26:55 Again, very modest. So those are sort of the three trends that we're seeing that add to the cost base. We do continue to be incredibly disciplined on the cost lines that we do have control over though.

27:08 Probably just the other element I'd add to that in terms of colour Andrew, you know, you'll see we completed a scoping study this year or this half which indicates, you know, five to seven hundred million litres of greenfield storage capacity on the site. and obviously we've got the existing brownfield conversion opportunity. And as you've seen with the BP contract today and the government contracts, which frankly we didn't expect to be doing when we started this year, there is a pretty significant opportunity ahead of us and we need to make sure that we've got the ability to execute on that. And so we're running the total business with a little over 100 heads and we're seeing significant growth come at us and delivering projects really well, but we need to be able to continue to do that.

28:05 Great. Okay, thanks for that, Caleb. That's all from me. Your next question comes from Wade Gardner with Craig's Investment Partners. Please go ahead.

28:15 Hi there. Just a few questions first up on the BP contract. What's the split between jet and diesel? And is the diesel essentially, we should view that as that lift in the MSO from 21 to 28 days? And how many days would that add?

28:38 Yeah, look, I think one of the things that's important that we do, given we've got three highly competitive customers, is that we protect their confidential information. So that information is, frankly, sensitive to them. It's a combination of jet and diesel. My suspicion is there's a portion of it to help that customer's MSO requirements. But ultimately, that's a matter for them.

29:10 So you'd still expect potential MSO deals to be done. This doesn't necessarily change that outlook?

29:21 Well, I think... Every six months at the results I get the question about whether there's going to be MSO deals and we talk to the fact that actually the commercial opportunity is as significant as the MSO opportunity and we've kind of highlighted it again actually on the last page of our investor presentation where we've said in writing we continue to see a strong pipeline of storage opportunities. Yep, there's MSO opportunity, but there's also commercial and strategic opportunity, and I think it's important to not lose the context of the other two, because if you think about the jet storage we've delivered for Z, and obviously the BP deal includes jet storage as well, that's commercial opportunity.

30:09 Yeah. Are there any rights of extension on this beyond the 15 years?

30:18 Yep. Yes, there are.

30:23 Can you provide colour on that?

30:26 No, no further colour on that, but on the same terms.

30:33 Okay. And I notice on your capex numbers on page 12, was it? Your guidance was that you didn't have anything in there for the BP contract, I don't think.

30:54 No, that's right. So in terms of the outlook for CapEx, is that your question?

31:02 Yeah, you say growth CapEx includes Z, New Government, Diesel and Higgins, but I assume there is some, given that you're kicking it off in September, there will be some in there for BP as well?

31:11 There will, going forward, that's right, the growth capex that we've reported year-to-date doesn't include costs associated with... No, no, I'm more talking second half. Second half, yes. We're kicking that project off straightaway. Absolutely, yeah.

31:27 How much should we assume in the second half?

31:30 Well, there's only sort of three or four months in which to really get after that project. And so it will be a very small portion of the overall cost with... the largest component of that capex for BP being spent next year.

31:50 Okay. Can you give some colour on the Somerton contribution?

32:00 Yeah, so again, this is one that we have to be a little bit careful about exactly what we disclose because we've got counterparties there and we're kind of one part of a joint venture. What I'd say is the business has performed as we would expect it to. The only point is that Melbourne Airport is quite exposed to the Middle Eastern routes, and so throughputs and volumes during the second quarter in particular were a little bit off where we had thought they would be, largely attributable to those Middle Eastern carriers. But I think, you know, importantly, again, that's a 50-year asset. So, you know, from our perspective, we're pretty relaxed about that, given what we've also seen at Auckland Airport.

32:54 Okay. Yeah, that's all for me. Thanks. Your next question comes from Cameron McDonald with E&P. Please go ahead. Cameron McDonald, your line is live. Please proceed with your question. We'll move on to Vignesh Nair with UBS. Please go ahead.

33:21 Good morning, Robin. Can you hear me? Yes, absolutely. Amazing. Congrats on the strong results. Two follow-ons for me. First on the BP contract, Just wanted to get some, you know, understanding of the exact work required, I suppose, on site to facilitate the longer term deal. And also the follow on to that, you know, if you're starting works immediately and you do end up completing a touch ahead of schedule, will that mean that sort of the customer in terms of BP would be willing to sort of start that contract ahead of time before Q3 2018?

34:01 Yeah, thanks for your questions. So the nature of that work will be brownfields conversion. So exactly along the lines of what we've done before across a range of tanks. And so we feel really comfortable with scope of work. We've got a contractor that's performed really well on our site and delivered well for us and it's work that we know well and understand and we obviously have a really good understanding of the assets. So that's probably the first part of the question. I think the second part is, you know, like I think from your perspective, the market's perspective, you should be expecting this one sort of on budget and on schedule rather than ahead of schedule. You know, we've got to manage some tank outages and contracted terms in some of these tanks.

34:47 And so I see that project being delivered, you know, on budget and on time rather than ahead of schedule.

34:55 Okay, it's helpful. And I suppose just loosely following on from that, I think historically you've mentioned one of the operators were previously using, you know, 50 megalitre MR tankers instead of the larger LRs. Are discussions with that operator still ongoing or have they now concluded?

35:16 Oh, look, again, I won't speak to the kind of commercial rationale behind the storage opportunities that we deliver. Like, that's a matter for our

35:24 for our customers and we keep those discussions confidential so I'll probably leave it at that Okay and just one more I suppose just on you know the news around Exxon exiting New Zealand I suppose just wanted to get some colour on sort of you know potential interest in the worry terminal and some more sort of details around potential timing if sort of the deal does sort of go through if you've got any comments

35:55 Well, I think the important place to look is slide 17 on our deck. And basically, if it's on that page, we'll be doing it. And if it's not on that page, we won't be doing it. I won't speak to specific acquisition opportunities because you can understand that I can't and wouldn't do that. But I think that page gives you a pretty good guidance of the things we're looking at and where we would look to deploy capital in M&A.

36:23 That's helpful. Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone. We will now pause momentarily to allow any final questions to register. You have another question from Cameron McDonald with E&P. Please go ahead.

36:45 Hi, guys. Sorry, I was trying to get off mute before. Just in terms of that BP contract, can I just confirm the slight nuance in that? The $130 million is prior to PPI indexation. So if we roughly take $8.7 million in the first year, that will then be increased with PPI every year after that. So the nominal value is actually a lot more than the $130 million.

37:20 That's exactly right, Kim. Yeah.

37:22 Okay, thank you. And Alexa, just in terms of, well, and even for Rob actually, talking about the decision on the dividend, but you haven't actually increased the dividend payout ratio as a percentage of the normalised free cash flow. the normalised free cash flow for the period was actually slightly down on the PCP and yet the dividend is up 16%. How do we feel about or think about the dividend payout going forward with that change that's occurred in this period?

38:06 So the board stated dividend policy is very clear and it's to pay 76%. 70 to 90% of normalised free cash flow and to provide shareholders with a stable and growing dividend. I think what you're seeing there is an acknowledgement from the board that 2027 has a material uplift in contracted earnings that we know will come. The Zen Energy storage contract is now in service and that year we'll see a full year contribution from that. government storage, et cetera. And then obviously we've announced BP today. So the long term contracted revenue profile is growing materially. The free cash flow results for the first half is associated with the phasing of maintenance capex.

38:56 And so I think you can read through from that to full year cash flow.

39:03 I think probably the other bit to add to that, Cam, is if you think about the balance of the year, You know, we were doing the work to complete the jet storage project and the diesel storage project. Both those things are done and now we've got the revenue to benefit from it for the rest of the half and the full year of it next year.

39:25 Okay, thank you. That's great. Your next question comes from Nathan Leed with Morgans. Please go ahead.

39:33 G'day team, just two or three for me if you don't mind. So on the biorefinery you were talking about how the equity raising is taking a bit longer than expected but can you just talk about the debt funding, is that secured or are we still waiting for that to be locked down?

39:51 So look I think the way I would articulate that is if the equity funding gets in place the debt funding will follow and so like it's it will be there, presuming that the equity gets there, if that's the right way to answer it. I'll help you with that.

40:10 Yep, okay, great. Second question is, on the government storage contract, is that capacity available for release elsewhere post Dec 27, or is there some sort of contract tie-up that means it's always got to sort of remain available if needed?

40:29 No, so the reason that the tenor of that contract is the December 27 is because there was some work that we needed to do on those assets to extend the life beyond December 27, so compliance-based work. And so to answer your question, yes, they are available in the future for releasing or, you know, recontracting to others, but noting that Whatever contract we put in place would need to cover the costs that we would incur to extend the service life of those assets Okay, and then third question for me, I suppose I'm just interested in the continuation of the DRP.

41:13 I mean you've Cranking up the dividend a lot Why not retain more cash flow and not have the DRP and dilute share on issue?

41:24 So the DRP was introduced by the board just over a year ago now from memory and is seen as an important lever for or an important acknowledgement of the large retail base that we have. They are very partial to a DRP. The discount is very modest at only 1% and the option with each dividend payment is to retain the DRP for that payment or not.

41:51 Okay, great. Thank you. Thank you. There are no further questions at this time and that does conclude our conference for today. Thank you for participating. You may now disconnect.