APA Group Stapled Securities (APAJF) Q2 2023 Earnings Call Transcript

APA Group Stapled Securities (OTCPK:APAJF) Q2 2023 Earnings Conference Call February 22, 2023 6:00 PM ET

Company Participants

Andrew Gibson - General Manager, Investor Relations

Adam Watson - Chief Executive Officer & Managing Director

Kynwynn Strong - Acting Chief Financial Officer

Conference Call Participants

Tom Allen - UBS

Dale Koenders - Barrenjoey

Peter Wilson - Credit Suisse

Gordon Ramsay - RBC Capital Markets

Rob Koh - MS

Ian Myles - Macquarie

Nathan Lead - Morgan Financial

Andrew Gibson

Good morning. Thank you each for joining nan APA Group First Half 2023 Results Presentation. My sanction is Andrew Gibson, I americium nan General Manager of Investor Relations astatine APA. All participants are successful a listen-only mode. There will beryllium a position followed by a question-and-answer session. [Operator Instructions]

We will commencement pinch a general position by our CEO, Adam Watson; and Acting CFO, Kynwynn Strong. And past we will unfastened it up for questions.

I'd now for illustration to manus nan convention complete to Adam Watson, CEO and Managing Director. Please spell ahead.

Adam Watson

Thank you, Andrew, and bully morning, everyone, and convey you for joining nan call. So fto maine commencement by acknowledging nan Gadigal group of nan Eora Nation, accepted custodians of nan land, connected which I'm speaking today. First Nations group person taken attraction of our lands and waterways for nan past 60,000 years and I nonstop my acknowledgment and appreciation to nan Gadigal group and each First Nations people, and salary my respects to their elders past, coming and emerging.

It's a privilege to subordinate you coming for nan first clip successful my capacity arsenic APA's, CEO and Managing Director. And besides joining maine is APA's Acting CFO, Kynwynn Strong, arsenic good arsenic our Investor Relations team.

A speedy run-through of today's position order. I'll commencement pinch a short summary of our half twelvemonth results. I'll past return you done our capacity outcomes against our cardinal areas of focus. Kynwynn will return you done nan financials earlier I travel backmost to supply immoderate marketplace insights and we’ll past let clip for Q&A earlier ending pinch immoderate closing remarks.

But earlier I start, I want to statesman pinch what we telephone present astatine APA, a information share, and let's move to descent 4. At APA, we commencement each of our meetings pinch a chat connected safety, our customers aliases our behaviors. And nan intent of these discussions is to create an situation and a civilization wherever our group consciousness courageous and safe to stock activities that person gone good aliases astatine times not truthful well, truthful that we tin continuously study and amended nan measurement that we operate.

In November past year, fighting astatine nan Macquarie River successful Bathurst resulted successful a state leak connected our Young-Lithgow pipeline that affected state proviso successful nan Central West of New South Wales. We were connected nan crushed wrong hours, uncovering innovative short-term solutions to present state to nan organization and successful peculiar to nan vulnerable. And complete nan people of nan adjacent fewer days, we brought together an in-house squad of astir 200 group from crossed nan state to reconstruct imperishable state supply.

Now contempt nan immense unit to reconstruct state arsenic quickly arsenic possible, we ne'er mislaid show of safety. And arsenic a result, location were nary mislaid clip injuries. We did person 1 insignificant wounded wherever an worker touched a basking well, and we've taken those learnings from this. The wide outcome, it was a beardown objection of collaboration pinch our customers, pinch emergency services, pinch authorities and pinch nan community. We communicated early and often to present a awesome consequence for our stakeholders, and we did it pinch information astatine nan forefront.

Now let's get into today's position by starting pinch a summary of our half twelvemonth results, which is presented connected descent 5. We've delivered different coagulated financial performance. EBITDA is up 2.5%. Distributions are up 4%. We person reaffirmed distribution guidance of AUD0.55 per information for nan afloat year.

Free rate travel for nan half was down 6%, but that was impacted by nan timing of a ample rate receipt. And Kynwynn will return you done that successful a moment. But without that timing issue, free rate was 2% higher than past year.

And our equilibrium expanse remains beardown pinch nary worldly indebtedness refinancing required until 2025. We've made bully advancement connected our integrated maturation pipeline. And we acquired Basslink which gives america different level to grow our energy transmission business. When we look further forward, our strategy is to beryllium nan partner of prime to present infrastructure solutions for nan power transition. As we spot our customers' decarbonization ambitions proceed to evolve, we're becoming much and much assured astir APA's semipermanent maturation outlook.

To descent six, past twelvemonth -- and precocious past year, I should say, nan executive activity squad and I group up 3 priorities that we want APA to rally around. That's our people, operational excellence and creating value. Across nan organization, we're holding each different to relationship to guarantee these priorities make a affirmative quality for our customers, communities, partners and investors. And I'll measurement you done today's results successful nan discourse of these priorities.

So let's commencement pinch our people. And our attraction present is to guarantee they're safe, good engaged and motivated. And we're making bully progress, arsenic you tin spot connected descent seven. In nan past six months, we achieved a 35% simplification successful our full recordable wounded wave rate, aliases TRIFR, compared pinch nan aforesaid clip past year. And our female information has improved complete nan twelvemonth for nan first clip now exceeding complete 30%. But contempt this progress, we cognize there's overmuch much to do arsenic we strive for continuous improvement.

Creating a pipeline of talented group is captious to our success. And arsenic you tin spot connected descent eight, we've precocious been recognized arsenic a apical employer for graduates, and we classed first successful our manufacture class for this year's Australian Association of Graduate Employers List. As well, we've enhanced our parental time off argumentation to springiness each APA labor adjacent entree to 18 weeks leave. These are conscionable immoderate examples of what we're focusing connected to guarantee our group are engaged and motivated.

Turning now to operational excellence, which starts connected descent nine. Operational excellence is captious to our societal licence and has underpinned today's coagulated group of financial results. As I said successful my opening remarks, we proceed to turn our net astatine nan aforesaid clip arsenic making nan basal investments successful capacity to guarantee we tin execute sustainable semipermanent growth.

Let's move to descent 10. We're proud of our continued beardown operational performances crossed our power infrastructure portfolio. Through nan half, our renewable powerfulness procreation assets were disposable astir 94% of nan time, and we delivered our state transmission nominations, 99.9% of nan time. Both of these are fantabulous results.

We acquired Basslink during nan play and moved quickly to merge nan business and guarantee it was operating safely and reliably. Performance to-date has been pleasing, and we proceed to put successful nan plus to maximize performance. Making judge our customers person their power erstwhile they needed is cardinal to our domiciled successful nan power transition.

We've made bully advancement pinch our sustainability initiatives during nan play arsenic well, arsenic you tin spot connected descent 11. We appointed our first Reconciliation & First Nations Manager and started processing our reconciliation action plan. We enhanced our ESG-related capacity disclosures, and we developed and implemented a responsible procurement strategy. And we proceed to heighten our modern slavery consequence guidance initiatives.

Central to sustainability is nan progression of our Climate Transition Plan. Our advancement for nan half is summarized connected descent 12. We've taken connected committee feedback from investors, aligning our group executive members’ remuneration to climate-related performance. And we've embedded our action scheme crossed nan business.

We're connected way to present our FY 2023 commitments, including nan constitution of a methane target. The advancement of our Climate Transition Plan sends a clear connection to our customers, communities and investors astir our committedness to play a meaningful portion successful a little emissions future.

Moving now to descent 13 and our 3rd attraction area, creating value. This encompasses our maturation strategy. It encompasses operational ratio and it encompasses superior management.

On nan maturation side, we person brought clarity to our strategy. Our attraction is to beryllium a partner of prime successful prime markets wherever we person a competitory advantage. This attack will beryllium underpinned by being proactive and anticipating nan needs of our customers, partnering pinch them, pursuing our solicited proposals and delivering bundled power solutions. And we're making nan finance basal to execute this.

To descent 14. Our strategy to beryllium nan partner of prime will complement nan momentum we're already seeing connected our existing integrated pipeline. We're making bully advancement pinch our projects crossed Australia pinch $465 cardinal invested done nan 2nd half -- sorry, done nan half crossed our prime markets.

We haven't been immune from nan escalation of materials costs, proviso concatenation pressures aliases impacts from weather, but astir of this has been shielded and successfully shielded by nan measurement we procure our materials and contractors.

We commissioned our Gruyere microgrid during nan half and is performing very well. Our Mica Creek Solar Farm is powering ahead, and we've sewage now much than 90% of building complete.

The description of our pipeline routes to Southern markets is good underway and connected way to thief meet highest state request this winter. Pleasingly, this was recognized by nan ACCC who precocious acknowledged that location is now apt to beryllium capable capacity connected cardinal pipelines to carrier state to meet nan projected proviso shortfalls successful nan confederate states successful 2023.

On apical of this, we've besides acquired Basslink further enhancing our energy transmission capacity and giving america vulnerability to caller power markets. We tin now support our customers pinch subsea cablegram expertise. And we've extended our marketplace scope into Tasmania.

In total, we invested astir $1.3 cardinal during nan period, successful a operation of integrated maturation and M&A projects, that we're assured will create semipermanent worth for our investors. We meet customers and nan community.

To descent 15, we person a beardown business pinch beardown foundations and a awesome future. But we besides request to proceed to put successful our business and successful our people. A awesome illustration of this, is nan description of our energy transmission business.

We tin now show that we person nan skills, capacity and acquisition that's, basal to support customers specified arsenic nan New South Wales authorities pinch their renewable power area ambitions, pinch APA being selected arsenic 1 of nan short listed participants successful nan Central West Arana initiative. That's clear grounds of this.

Our caller nationalist state-of-the-art, Integrated Operations Center, aliases IOC, arsenic we telephone it, which you tin spot connected nan descent 16 successful beforehand of you, is simply a awesome illustration of really these investments successful our business will fortify our foundations and create worth complete nan long-term.

Our caller IOC was opened successful November past year. We tin now support our customers and marketplace operators from 1 cardinal location. It's a genuinely awesome capacity that we've developed.

And fto maine stress erstwhile again, its investments for illustration this that will guarantee APA tin support our stakeholders to present safe, reliable and affordable power solutions and alteration APA to beryllium a partner of choice, arsenic Australia's power strategy transitions.

With that, I'll manus you complete to Kynwynn, to talk to our financial performance.

Kynwynn Strong

Thanks, Adam, and bully morning, everyone. It is my pleasance to reside you pinch APA's Acting Chief Financial Officer. To echo Adam, we're pleased pinch our financial capacity for nan first half of FY 2023. I'll jump consecutive into today's results, starting pinch nan descent connected page 18 successful nan P&L. We've delivered different coagulated financial capacity pinch revenue, up 5% and EBITDA up 2.5%.

Our non-operating items are a affirmative $12 cardinal successful full pinch nan 2 main callouts being Basslink pinch liking income, nan revaluation of nan indebtedness and integration costs taken beneath nan line, partially offset by hedging adjustments and our exertion translator projects. These specifications are shown successful nan appendix.

Depreciation and amortization are lower, arsenic this half normalizes for nan higher complaint we saw successful nan first half of FY 2022. Net liking disbursal is lower, arsenic we benefited from higher deposit base. Tax disbursal is higher connected our higher net base. Free rate travel is down 6%, but it is up 2%, if we exclude nan effect of a $41 cardinal receipt that was paid successful early January, I'll travel backmost to this shortly. But arsenic Adam said successful his remarks earlier, I want you to return distant nan number that it's 2% higher.

Our distribution is successful statement pinch our guidance astatine 22 -- sorry, $0.26 per security, up 4%, equating to a payout ratio of 63.3%. In I'm proud to opportunity this is simply a continuation of almost 19 years of maturation successful distributions for our information holders. And location is nary uncertainty our equilibrium expanse is robust and we are successful a beardown position pinch rate and undrawn accommodation of $2.3 billion.

Moving now connected to nan adjacent slide, wherever I will return you done nan gross successful much detail. Payment gross is up 5%. Excluding Orbost, it's up 7%. You tin spot we person intelligibly benefited from nan mostly of our tariffs being linked to inflation. We person besides had immoderate operational improvements successful nan period. About half of nan $20 cardinal you will spot location nether operating gross is from our East Coast assets performing good successful nan period. The different half is from nan non-recurrence of an operating point successful nan West Coast successful nan anterior period.

So overall, it's a coagulated consequence and what you would expect us. We are a highly contracted power infrastructure business pinch inflation-linked revenues.

If we now look astatine our costs connected nan adjacent slide, Slide 20. The biggest point present is our firm costs, which person accrued $16 million. You will callback astatine our Investor Day successful May and our results successful August past year, we were definitive that our costs guidelines would summation arsenic we invested successful our business to guarantee a sustainable future, and this is what you are seeing. You are seeing targeted and financially disciplined finance successful our group to further build retired our capabilities. This is cardinal to ensuring we create worth for our customers, communities and investors arsenic a partner of prime to present infrastructure solutions.

While we will stay financially disciplined, we're making these important investments now to guarantee our business will turn sustainably complete nan longer-term. This includes energy transmission, renewables, powerfulness generation, sustainability and organization technology. It is besides really important to admit nan difficult activity of our teams who proceed to thrust operational ratio improvements.

If I could make a circumstantial telephone retired that operating costs person only accrued $9 cardinal contempt a challenging play pinch floods and an inflationary environment. As Adam said successful his earlier remarks, this goes to nan bosom of our operational excellence.

Moving to Slide 21, which shows EBITDA by segment. I'll telephone retired a fewer highlights. On nan East Coast, EBITDA is up 5%, excluding Orbost. In summation to our tariffs benefiting from inflation, we saw bully capacity from a number of our assets, including nan South West Queensland Pipeline and Roma Brisbane Pipeline pinch caller contracts and a colder winter. It besides captures our consequence to nan Young-Lithgow repair, which Adam touched connected earlier, highlighting our attraction connected information and support for susceptible customers.

The West Coast continues to execute well, up 11% pinch astir half of this summation successful inflationary benefits and nan different half from an operating proviso successful nan erstwhile period. The Wallumbilla Gladstone pipeline is beautiful straightforward pinch a 7% summation owed to nan contracts being ostentation linked pinch a mini FX offset attributable to nan overseas speech contracts we extended this clip past year.

Our energy procreation and transmission, which includes Basslink and our procreation assets, some firming and renewables is up 13% pinch an first $8 cardinal publication from Basslink, excluding Basslink, EBITDA is up 5%.

Moving connected to rate travel connected nan adjacent slide, descent 22. As I mentioned earlier, free rate travel is down 6%, but nan number I want you to return distant is that it's 2% higher. You tin spot successful this waterfall chart, nan largest activity is simply a $41 cardinal summation successful moving superior pinch fixed payments falling into early January arsenic a consequence of nan 31st of December falling connected a Saturday. There is besides a $24 cardinal activity successful moving superior from a fistful of mini items. We person not separated these out, but nan move is similar.

Without this $41 million, our free rate travel accrued 2%, broadly successful statement pinch EBITDA and increases of nan use we proceed to person from nan national government's accelerated depreciation allowance for superior projects. I would besides propulsion your attraction to nan nett liking line, which is only $1 cardinal higher than nan first half of FY 2022 arsenic we proceed to use from nan liability guidance exercise, we executed successful March 2021, pinch each our drawn indebtedness afloat hedged aliases fixed.

Turning now to our equilibrium expanse connected descent 23. This descent intelligibly demonstrates nan beardown foundations of our business, and I will make conscionable 2 points. First, our equilibrium expanse is beardown pinch our mean costs of indebtedness astatine 4.4% and $2.3 cardinal of rate and undrawn accommodation to money maturation and prosecute nan opportunities successful beforehand of us. Second, it highlights that we proceed to person an integrated pipeline of CapEx opportunities still successful excess of $1.4 billion.

Moving connected to descent 24. So to conclude, and earlier I manus backmost to Adam, I want to summarize really we deliberation astir our disciplined superior allocation. First and foremost, we must make judge our group are safe and our assets are safe pinch our aforesaid business CapEx. We're focused connected continuing to amended our technologies, protecting our assets and delivering connected our nett zero commitment.

We person risk-adjusted hurdle rates for some M&A and integrated maturation to guarantee we create semipermanent worth for our securityholders. We cognize our distributions are important to our securityholders, and we ever look to guarantee we person an due equilibrium betwixt increasing our distribution and businesslike backing of our growth. And finally, we're continuing to guarantee we person nan options disposable to america for superior guidance truthful that we tin enactment erstwhile we spot an opportunity to create value.

I look guardant to your questions later. I now manus you backmost to Adam to return you done nan power marketplace dynamics.

Adam Watson

Thank you, Kynwynn. And arsenic Kynwynn conscionable said, I'd for illustration to concisely item immoderate of nan dynamics we're seeing successful nan power marketplace astatine nan moment, earlier we return immoderate questions from nan audience.

So I'll get backmost connected to descent 26. And what's important present is that nan occurrence of nan power manufacture going guardant is, intelligibly going to beryllium judged by our nation's expertise to present reliable and affordable power for our community, manufacture arsenic nan strategy continues to little emissions. And complete nan past year, we've seen what happens erstwhile 1 of these falls retired of balance. Make nary mistake, finance successful renewable powerfulness procreation is critical, and it's really sewage to proceed to accelerate if we're going to execute our nation's nett zero ambitions.

At APA, we're playing our part. We're processing Australia's largest off-grid star workplace successful Mount Isa. We've acquired Basslink and we're supporting authorities to build retired nan energy transmission connections required to support these caller generators. And done nan transition, we cognize that state will proceed to play a cardinal domiciled successful ensuring our NG strategy remains reliable and affordable arsenic we modulation to much and much renewables.

More broadly though, Australia needs to guarantee that nan correct policies and regulatory frameworks are successful spot to guarantee nan power modulation is orderly and to beforehand nan basal finance required to execute our nation's ambitions.

Moving to descent 27. As Australia's semipermanent ember is winding down, we're seeing renewable procreation stepping up arsenic it should be. Part renewables, unfortunately, can't do each nan dense lifting. Right now, ember still represents two-thirds of nan nationalist energy marketplace power mix. AEMO expects astir 60% of nan existent coal-fired capacity to beryllium withdrawn by 2030. That's astir 14 gigawatts of capacity that will not beryllium disposable wrong 7 years. The situation to switch 14 gigawatts of capacity by 2030 is staggering.

And fto maine effort to overgarment a image of this challenge. Snowy 2.0; and Battery of nan Nation are 2 of Australia's largest renewable projects. But erstwhile they yet travel online, they'll only present a fraction of what's needed to switch ember and don't get maine wrong, we request these projects.

Technologies specified arsenic batteries are nary uncertainty required and person a domiciled to play arsenic well. But if you take, for example, nan Victorian large battery, 1 of nan largest successful nan world, it's apt to only supply capable powerfulness for astir 1 cardinal Victorian homes for astir 30 minutes. Yes, exertion is improving astatine gait arsenic it should be, but it's good benignant of what's needed to guarantee our power strategy is unafraid and reliable erstwhile nan sun doesn't radiance aliases erstwhile nan upwind doesn't blow. And that's why renewable power coupled pinch patient state is essential.

On to descent 28, we've seen nan value of state play retired successful South Australia. We've seen a play retired successful Western Australia, and we've seen it play retired successful different progressive regions of nan world.

In nan UK, renewables dress up astir 36% of nan power market, which is successful process. Gas makes up astir 40%, successful nan Netherlands, renewables dress up 3%. Gas makes up 46%, but if we attraction backmost connected Australia, correct now, erstwhile you return South Australia retired of nan nationalist energy market, it runs connected 24% renewables, but conscionable 4% state and 67% coal.

As coal, arsenic we've drawn crossed nan NEM astatine ever-increasing rates, state will beryllium basal to guarantee grid stableness and support nan maturation of renewables. The cardinal to achieving this is ensuring that there's due supplier state successful nan marketplace and importantly, home proviso of state successful nan market.

Let's look astatine descent 29, arsenic an example. The UK is an illustration of what happens erstwhile ambition gets up of reality and due home proviso is it maintained. While nan Russian and Ukraine convention is nary uncertainty materially impacted power prices successful nan UK, prices were already connected nan emergence good earlier nan conflict began.

Before nan Ukraine conflict successful almanac 2021, nan UK state accumulation reduced by 17%. While astatine nan aforesaid time, renewable procreation output really fell 8% owing to mediocre upwind conditions. With ember procreation successful nan UK astatine an all-time debased owed to nan status and home state proviso down, nan UK had to summation its reliance connected state imports to support nan lights connected and family lukewarm [ph]. The results a 189% summation successful UK energy prices complete this period, again, I underline earlier nan Ukraine conflict, which past only made matters worse.

Turning to descent 30. This provides an important instruction for Australia. Reliability and affordability of power is straight linked to home state supply. And we cognize that we request to support power costs, including state affordable for some households and for industry. I deliberation everyone recognizes nan situation progressive erstwhile mounting policies to guarantee power costs are kept low. It is not easy.

But committing to home state proviso is arguably nan azygous astir important inaugural we person astatine our disposal to present a smooth, effective and successful power modulation for Australians. At APA, we're doing everything we tin to make judge that state tin get to wherever it's needed.

We're investing up of demand. Our East Coast chart -- our East Coast grid improvement is simply a clear illustration of this. By processing upstream state resources and caller state suppliers must besides beryllium prioritized.

My cardinal connection for you is this. The power modulation is not a crippled of picking power root winners. We request an orderly modulation if we're going to get this correct for our communities and for industry. Coal is coming out. An finance successful renewable powerfulness procreation is captious and must proceed to accelerate if we're to execute our nation's nett zero ambitions.

We request to link nan caller generators to nan users via caller energy transmission links. But it's besides captious to bring to marketplace caller home state suppliers to complement renewables and accelerated way nan power transition.

With that, I'd for illustration to now manus it complete to nan moderator, who is going to thief america pinch nan questions from nan audience.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] The first mobility comes from Tom Allen astatine UBS.

Tom Allen

Good morning, Adam, Kynwynn and nan broader team. You reported EBITDA maturation crossed some nan East Coast and West Coast networks. You called retired that CPI tariff escalation was a cardinal contributor. So I'm particularly willing successful nan comments astir improved operating activities and caller contracts connected nan East Coast. So, recognizing nan authorities has value caps connected uncontracted wholesale state connected nan East Coast. And tin you perceive whether APA will beryllium a beneficiary of an uptick successful request nan pipeline contracting, arising from those caps.

Adam Watson

Thank you, Tom, and acknowledgment for nan question. It's an absorbing move we're seeing and look, 1 that we deliberation for nan semipermanent is not needfully sustainable. I deliberation you've sewage to deliberation astir it successful 2 different ways successful position of nan guidance of customers and nan upstream players successful nan marketplace because of what's happening from a argumentation and regulatory plan.

Two parts. One is there's evidently -- and I'm not going to speak connected behalf of immoderate of our customers aliases individual customers successful particular. But everyone knows that nan upstream players are concerned astir this, nan uncertainty successful particular.

And we're proceeding from them nan region that's going connected successful position of their caller investments to bring proviso to market. And -- you conscionable heard maine for nan past 5 minutes to talk astir really captious that is. So that is thing that needs to play out. And again, we each cognize what they're looking for. They're looking for certainty and clarity to guarantee that erstwhile they make their investments, they cognize what returns they're generating for their ain investors.

The different portion is conscionable nan day-to-day dynamics of nan customer. And 1 of nan things that we're seeing is not wide crossed nan full portfolio, but we are seeing a batch of customers racing to effort to unafraid supply. The 1 point that we don't want -- and we cognize nan request is there, we cognize request for state is supply, and successful particular, to nan confederate markets. We cognize that we're bringing that proviso to marketplace pinch our investments successful nan East Coast grid. So, it's now astir making judge that you've sewage entree to nan marketplace to beryllium capable to bring proviso to nan customers.

And 1 of nan things that we are seeing is our customers making judge that they're locking successful that short-term supply. So, that's nan affirmative broadside of things. But again, going backmost to my first comment, what we request is that level of stableness and certainty truthful that our customers tin beryllium making much longer-term views astir nan longer-term outlook of state proviso and demand.

Tom Allen

Thanks for that color, Adam. It sounds for illustration there's a affirmative short-term tailwind coming done astatine least. Just a mates of questions connected your maturation projects. The Northern Goldfield Interconnect successful WA, that took FID backmost successful 2020 pinch little than 25% of nan capacity contracted -- is that pipeline connected way for first state this year? Is it wrong nan AUD460 cardinal budget? And also, tin you stock what percent of nan existent pipeline capacity is contracted for first gas?

Adam Watson

Yes. Thank you. So, again, conscionable to punctual everyone, NGI is successful WA. And again, that was 1 of those projects that we brought to marketplace up of having each of nan customer contracts secured. And again, we person backed ourselves and we cognize that nan WA market, successful particular, nan resources assemblage is going to beryllium buoyant and robust for decades to come, conscionable fixed nan needs of nan of nan globe astir nan products are being produced successful that area.

So, wherever they're supporting our customers, bringing power to marketplace truthful that nan customers successful that region tin past person certainty. Again, these companies request to person certainty of things for illustration power proviso earlier they tin spell done their processes to raise nan superior to bring their merchandise to market.

The transportation of nan building task is going well. We person not been immune, arsenic I said before, crossed each of our portfolio, but we haven't been immune to proviso shortages, to costs escalations, to upwind impacts, but we person been capable to incorporate it very good connected that project. So thing worldly that would interest you aliases that has concerned us. And arsenic it relates to nan contracting, again, nan squad astatine APA has done a phenomenal occupation of moving very intimately pinch our customers connected this. But I deliberation it's important to understand a mates of dynamics pinch these sorts of projects and successful particular, that area.

So firstly, it's not immoderate 1 aliases immoderate 2 large customers coming on that conscionable return retired nan afloat proviso of that of that product. It's astir serving a organization and a organization of mostly resources businesses, immoderate existing and well-established and immoderate that are caller pinch a very awesome very awesome tenements, but they request to get their businesses operating.

So we're moving pinch each of our customers to supply that support -- galore number of them are signing up and a number of them are waiting until location is nonstop clarity connected erstwhile our opening day is. We're still connected way to present that successful nan 4th fourth of this financial year, truthful astir nan mediate of nan year. But contempt much certainty connected precisely erstwhile we are bringing that to market. And because there's capacity successful nan asset, they person nan luxury of being capable to return nan clip to beryllium capable to do that.

The different point that we request to beryllium alert of, and we've had this successful different assets that person had a akin portfolio is that nan ramp-up of these type of assets is conscionable slower than you would person had if it was a pipeline that was contracted to conscionable 1 aliases 2 customers that was fresh to spell erstwhile you had commissioned it.

So nan ramp-up should beryllium seen arsenic 1 that takes a longer time, conscionable again fixed nan quality of nan customer profile. Some of our customers person not sewage their projects disconnected nan crushed yet, and that whitethorn return 12 to 18 months to occur. But again, nan takeaway is that we're assured astir nan demand. We're surely very, very assured astir nan longer-term demand. The point that we conscionable request to manage, which was already successful our forecast erstwhile we developed this this task is conscionable nan timing of nan ramp-up and it whitethorn beryllium a spot slower than what you've been accustomed to successful nan past.

Tom Allen

All right. Thanks, Adam. Yes, you're proceeding that we're not going to perpetrate coming to wherever nan patient contracting is, but you're proceeding that and clear that it mightiness beryllium a small slower than you expected a fewer years ago. And last mobility connected growth. Just looking for immoderate colour connected nan suggestive clip framework you expect to perceive nan result of your bid for nan energy transmission activity successful nan New South Wales Central West Arana Renewable Energy Zone. And past if you were unsuccessful successful that process, tin you conscionable talk to nan pipeline of opportunities to bid for akin reservoir on nan Eastern Seaboard and nan suggestive CapEx scope for those types of opportunities?

A – Adam Watson

Yes. Thank you, Tom. And look, firstly, we're evidently down by confidentiality and things for illustration that, that we can't get into nan specifics of nan project. So I cannot springiness you nan timing of erstwhile we would expect to perceive an outcome. What is public, what is good known is that we're 1 of nan shortlisted players to beryllium capable to advancement done nan shape that we're successful now pinch nan New South Wales authorities connected nan Central West Arana.

So is, I think, a very, very beardown awesome that nan New South Wales authorities has sewage safe that we person sewage nan capacity and nan correct to play successful this space. They wouldn't person taken america done each this activity if they didn't deliberation we person nan capacity successful that space. We already, arsenic you know, ain and run interconnectors crossed nan country. We bought Basslink during nan period, which further strengthens our capacity successful that area.

And arsenic I called retired and arsenic Kynwynn called out, we've been very deliberate successful making judge that we are investing upfront successful nan capacity to guarantee that we tin springiness our customers. And successful this case, it's nan New South Wales authorities and nan organization much broadly pinch nan assurance that we've sewage nan capacity to beryllium capable to do that.

If we're successful pinch nan project, we'll proceed to put successful that business. And we'll beryllium working, obviously, very intimately pinch nan authorities and pinch nan marketplace operators, nan regulators to advancement done that. And we person each assurance that if we're fortunate to beryllium nan successful subordinate successful that that we tin do that and move that at-speed.

At-speed comment, I guess, is nan pertinent one, because if you play retired nan script aliases nan mobility that you conscionable asked astir what happens if we don't win, erstwhile you look astatine nan pipeline of opportunities, erstwhile you look astatine what is required crossed nan federation to build our energy transmission is significant. We cognize we've sewage nan capability. We are 1 of nan fewer operators successful this space.

One tin deliberation that it's highly competitive, and it is very competitory amongst nan players successful this space, but we are 1 of nan fewer successful nan space. We are very proudly an Australian company, which I deliberation is simply a differentiator. And I deliberation nan organization will look positively connected nan fact, they were an Australian company, delivering ineligible infrastructure done market. But erstwhile you return – I spell backmost to ember is coming out, location is nary mobility it is coming retired of pace. It's coming retired of gait not conscionable because of ambiance change, it’s coming retired of gait because astir of these coal-fired generators are old, and they costs a batch of money to uptake.

So there's going to beryllium decisions made astir whether aliases not you support investing money erstwhile you've sewage an uncertain early aliases that you transition, and either way, you request to do each of it and renewable powerfulness procreation needs to travel successful astatine monolithic scale, astatine monolithic pace. And we cannot suffer show of nan truth that you can't build a upwind workplace aliases a star workplace somewhere. And Tom, I'm judge you cognize arsenic good arsenic anyone, nan measurement that's been built, you can't build it without connecting it to nan extremity user. And that's wherever energy transmission is going to play. And we, again, are very assured astir nan semipermanent imaginable for america to play successful that abstraction because nan request is surely going to beryllium there.

Tom Allen

All right. Thanks for that additionally color, Adam. Much appreciated.

Adam Watson

Thanks Tom.

Operator

The adjacent mobility comes from Dale Koenders of Barrenjoey.

Dale Koenders

Good morning. Just building connected Tom's questions. Can you supply a spot much colour arsenic to what are nan different cardinal moving pieces to net complete nan adjacent 12 months, and possibly what was nan effect from Lithgow pipeline that won't spell again, station AUD8 cardinal for a mates of months. Is that nan correct tally complaint going guardant firm costs growth, aliases is it much to come, aliases thing other you tin deliberation of?

Adam Watson

Yeah. Dale, I deliberation nan -- if I was successful your shoes, I deliberation a mates of nan things you're going to beryllium focused connected is astir nan costs base, and we've had a batch of questions connected that for a mates of years now arsenic we've been very clear astir our ambition to turn successful nan energy, successful Australia's power modulation and build our capability. And I deliberation you've sewage to recognize, and again, we've been talking astir this for a agelong time. Investor Days, position to nan marketplace that we request to guarantee that we are internally assured and besides that nan organization tin beryllium assured that we've sewage nan correct capability.

Capability tin beryllium defined arsenic things for illustration systems and processes and platforms and IOCs and arsenic good arsenic group that we've sewage nan correct capacity to beryllium capable to present nan infrastructure solutions that nan organization needs and that our customers need. We are leaning into it. We are not shying distant for it. I'm judge there'll beryllium a mates of cynics retired location astir really we're going astir it.

But we cognize and I personally cognize that you request to make those investments to build nan capacity to beryllium capable to beryllium successful and create sustainable semipermanent growth. And we're leaning into it. We're doing it successful a very disciplined way. So please don't misinterpret what I'm saying. We're very focused connected really we spell astir it. We're pacing it appropriately. We're driving operational ratio done nan remainder of our business. Common again called retired erstwhile you look astatine nan guidelines business.

And again, I'd for illustration to convey nan operations squad arsenic good for continually being focused connected operational efficiency. But we request to make nan investments successful nan areas that we request to make nan investments. So we're doing that. So that's, I guess, nan OpEx broadside of things. So short reply to your mobility is we will proceed to invest. But location becomes a constituent successful nan not-too-distant early wherever you build standard and you don't request to do that anymore and you tin thrust ratio from nan systems and processes that you're implementing. So again, it's getting nan equilibrium right.

And nan 2nd 1 you raised, which is nan 2nd point that I would raise suppose successful your shoes is conscionable astir nan CapEx. And again, we've been very transparent astir that. At slightest directionally anyhow complete nan past play of clip astir nan truth that we request to not only put successful integrated growth, which is great, but besides successful immoderate of those foundational platforms. So again, you can't build an integrated operating halfway an -- is nan measurement that we've done and we'd emotion to get you to our installation truthful that you tin spot nan capacity that we build.

You've sewage to walk nan superior to do that. We person a existent competitory advantage going backmost to Tom's mobility connected things for illustration energy transmission, not only being an Australian company, but we cognize that we tin pull talent arsenic a nationalist institution and arsenic an Australian company, we are capable to pull talent, and we've sewage to make judge that we accommodate them successful nan correct places we request to cognize that we request to beryllium competitory successful nan measurement that we tin pull and clasp talent.

We request to put successful their improvement and we request to guarantee that we've sewage nan correct civilization and behaviors successful spot to beryllium capable to make judge that we're an employer of choice. So we are investing successful technology. We're investing successful ERPs and those sorts of things not conscionable because we want to, but because we cognize it's nan correct point for our communities, for our customers, for our investors, successful particular, complete nan long-term.

Dale Koenders

So I conjecture my conclusion past is guidelines earnings, are they level successful nan absence of inflation, but APA is continuing to put money to make money successful group and systems of projects?

A – Adam Watson

I can't springiness guidance connected that. So nan guidance I tin springiness is astir our distribution profile. But what I tin opportunity is again, we've sewage a really coagulated foundation. We've sewage inflation-linked revenues. We're investing successful capability. That's not going to proceed everlastingly successful position of nan step-up that we're making and that will reset astatine nan due time. And we very allied to nan truth that our investors besides for illustration a nice, unchangeable distribution aliases bully unchangeable distribution maturation year-on-year and our occupation to support nan equilibrium right.

Dale Koenders

Okay. Thanks.

Operator

The adjacent mobility comes from Peter Wilson astatine Credit Suisse.

Peter Wilson

Hey, bully morning. If I could inquire a mobility connected nan 2025 indebtedness refinancing. So a important chunk of that arsenic I understand it was associated pinch nan Wallumbilla Gas Pipeline acquisition. I deliberation there's US$1.1 cardinal of indebtedness associated pinch that maturing successful 2025.

Last clip we had nan business successful 2019, that indebtedness was refinanced and nan word extended that I ideate that action mightiness beryllium disconnected nan array this clip fixed that, that plus is typically halfway done its, effective financial life. So conscionable wondering what you intend to do pinch that debt? Do you intend to trim APAs gross indebtedness erstwhile you repay that, aliases do you intend to efficaciously leverage up your different assets to repay that?

Kynwynn Strong

Hi, Peter, it's Kynwynn here. Thanks for your question. So successful position of really we deliberation astir our indebtedness book, I deliberation nan first important constituent to make is it beardown equilibrium sheet, make judge that we've sewage that liking complaint consequence is locked away. So that continuation of ensuring that we've sewage that fixed complaint vulnerability -- successful position of nan existent refi that's coming up successful 2025, we are looking astatine that now, obviously, and we'll look astatine a number of options for us.

We will activity done that, recognizing that associated pinch nan WGP, but that we wrap it into our wide portfolio and deliberation astir nan portfolio arsenic a whole. We want to make judge that we've sewage options truthful that we tin proceed to put and turn our business, but we will do that ensuring that we've sewage finance in installments ratings and we'll ever person them astatine nan forefront of our minds erstwhile we're reasoning about

Peter Wilson

Okay. I mean fixed that plus does I guess, only 12 to 13 years to run. Do you work together that it is due to commencement amortizing nan indebtedness associated pinch that?

Kynwynn Strong

We're good live to nan floor plan of it, and that's 1 of nan considerations that we are looking at, arsenic we deliberation astir our portfolio and our superior guidance strategy, which we look astatine each nan cards. It's not that we do it peculiarly now that we've sewage a peculiar tranche of indebtedness coming up. It's thing that we're ever looking at, ever looking to optimize to guarantee we put ourselves successful nan champion position that we tin truthful that we've sewage nan options to proceed to turn our business successful a sustainable and value-accretive way.

Peter Wilson

Okay. Got it. And Adam, 1 for you connected strategy. On Slide 13, you outlined your attraction markets, early power presume that RCON [ph] is renewable fuels. So conscionable reasoning astir nan magnitude of superior that you mightiness deploy into that complete nan mean term? I cognize you're a partner successful nan Central Queensland hydrogen project, which I judge nan volition was to participate provender successful 2023. So possibly nary existent remark connected hydrogen, really overmuch benignant of superior you intend to perpetrate there? And past an update connected that Central Queensland project?

Adam Watson

Yes. Thank you, Peter. Look, it's nan hydrogen ones are really absorbing 1 because -- and we're evidently leaning into it, and we're making investments and we'll proceed to make investments successful that space. A, because we cognize we've sewage capability, you are transporting molecules, we're bully astatine transporting molecules. So we cognize that we've sewage a domiciled to play successful nan transition. And I deliberation nan truth that we've been capable to partner up pinch specified reliable partners successful things for illustration nan Central Queensland hydrogen task is testament to nan domiciled that we tin play there.

For us, it's astir trying to get nan equilibrium right. And we're precocious to nan truth that hydrogen is simply a viable and should beryllium technologically viable replacement and cleanable replacement substance root complete nan longer-term. The existent situation is nan adjacent word and really that works, some economically and practically pinch definite industries would for illustration to beryllium at, successful particular, immoderate of nan dense manufacture sectors would emotion to beryllium capable to person complete to hydrogen that we each know, and I cognize very good that there's a agelong measurement to spell earlier that plays out. So, we want to proceed to beryllium progressive successful those projects. We will put successful those projects erstwhile location is request for that from a customer perspective. And erstwhile I opportunity invest, I met astatine a dense scale.

And location were immoderate absorbing -- and Central Queensland Hydrogen task is peculiarly absorbing one, perchance because of nan offtake request and nan offtake arrangements that could beryllium successful place. So, it's astir getting nan equilibrium right, but I surely I’m not coming retired and saying, we're doubling down and we're going to spell crazy connected hydrogen projects astatine nan moment. That's not nan intent. It's conscionable making judge that we've sewage that due equilibrium betwixt being crossed it to support our customers, investing astatine nan correct gait to guarantee that we tin support our customers operationally and technically and commercially astatine nan due time, and again, being astatine nan table, truthful that erstwhile they do commercialize, we tin support our customers pinch that.

Peter Wilson

Okay. Good. Thank you, some I'll time off it there.

Adam Watson

Thanks, Peter.

Operator

The adjacent mobility comes from Gordon Ramsay astatine RBC Capital Market.

Gordon Ramsay

Well, convey you, Adam and Kynwynn for your position today. I've sewage immoderate questions conscionable connected your cardinal business operations. I conscionable want to commencement pinch power infrastructure. It looks for illustration your higher replacement nexus gross successful Basslink successful net were cardinal drivers here, benignant of 8% maturation successful revenue. I guess, I'm conscionable trying to get a consciousness for really repeatable that is going forward, assuming nan half twelvemonth period, nan Basslink publication was successful those numbers. Can we look astatine a akin level successful nan 2nd half of nan twelvemonth aliases into FY '24?

Kynwynn Strong

You mean specifically for Basslink, Gordon?

Gordon Ramsay

No, no. Overall, conscionable nan energy procreation transmission contribution, nan gross publication was up 8% for power infrastructure.

Kynwynn Strong

Yes. So fto maine commencement pinch inflation. So, if you deliberation astir really our contracts are structured. So, we are capable to fundamentally person ostentation connected nan immense mostly of our contracts. So, that is return nan ostentation complaint that you see, and you tin use that to nan immense mostly of our gross line. Now, immoderate of them are annual. Some of them are quarterly, and that will travel done nan business. So that benignant of takes attraction of that one.

Outside of that, past you're looking astatine nan contracting position. And arsenic you are astir apt aware, we don't supply nan day-to-day item there, wherever we've sewage caller contracts coming connected and falling off, but nan nett effect from this play is immoderate autumn disconnected and immoderate much came connected and it ended up being rather a bully outcome. And you cognize our squad worked very, very difficult to make judge that nan relationships that we person pinch our customers is simply a bully one, and they tin proceed to person that speech pinch them and make judge our assets are disposable and they're capable to statement pinch nan -- nan Wallumbilla Gladstone Pipeline, that's beautiful straightforward. So nan ostentation coming done for location is simply a 7-and-a-bit percent. That’s up from 1 Jan. So that 1 should beryllium capable to thief you deliberation astir that.

If I look astatine a fewer of nan others, nan plus guidance business is down connected nan pcp. And that's a reflection of a chunk of activity that we've done complete nan past small while, that we're astir apt backmost to a much normalized level there.

I'll telephone retired nan power investments, moreover though it's a mini contribution. The constituent to make location is, we've had a alteration successful -- truthful that's coming from SEAGas. We've had a alteration successful 1 of our contracts there, wherever they had a fixed and a adaptable component, they've conscionable moved to a adaptable component. And so, erstwhile you're reasoning astir that one, I'd beryllium reasoning astir conscionable a adaptable constituent going forward. And Adam's talked to firm costs; we are going to proceed to put successful our firm costs.

Adam Watson

If I tin conscionable add, Gordon, astir apt conscionable 2 things. Basslink, we're really happy with. So, again, it's a business that, arsenic you know, is contracted. We're connected a pathway to regulation. The statement has been group up to somewhat reflector our expectations astir regulation, but that's performing well.

The squad has done a awesome occupation astatine integrating that. We've sewage a fewer much things to integrate, but we've moved very quickly. We're making immoderate investments, arsenic I mentioned earlier, which I cognize our customers been delighted by, and we're doing a awesome occupation successful position of reliability.

The different 1 you asked specifically about, energy generation. The different -- generally, we're doing rather good there. I think, an illustration of that is Diamantina, up successful Mount Isa, it's had a really, really bully half. And a batch of that is operational performance. And, again, we will ever telephone retired our operations squad and hats disconnected for nan squad up location for managing and operating that plus truthful well, arsenic they ever do, that during nan period, capacity has been outstanding.

And we've had a fewer tailwinds pinch immoderate customer demand, which whitethorn not continue. These assets spell up and down complete time. So we've had a very bully half successful that energy transmission -- sorry, energy procreation portion of our business.

Gordon Ramsay

Just 1 different mobility from me. Thank you. On plus management, you had a alteration successful task operation pinch higher costs positive separator projects and little customer publication projects? Can we look astatine that benignant of operation going forward, aliases is that somewhat variable? And what I'm getting astatine is it drove higher gross but little EBITDA. And I'm conscionable trying to benignant of look astatine that going forward.

Kynwynn Strong

Yes. So nan patterns that you're seeing, that's coming done into nan first half, that's nan guidelines that you should look at.

Gordon Ramsay

Okay. That’s good. Thanks, Kynwynn.

Operator

The adjacent mobility comes from Rob Koh astatine MS.

Rob Koh

Hi. Good morning. Thanks for nan presentation. I conscionable wanted to drill a small spot much into really I should beryllium reasoning astir nan tally complaint connected nan Basslink earnings. Is nan $7.7 cardinal EBITDA effective from 20th of October? And is that a tally complaint to deliberation about, aliases should we besides beryllium factoring successful what was antecedently liking income successful that?

Kynwynn Strong

Yes. So we've taken nan liking income beneath nan line, and you'll beryllium capable to spot that location successful nan divided retired of nan non-operating items, Rob. You are correct connected nan date. So that’s 20th of October. If you return that scope and past annualize it for nan 2nd half you will get a number. I'd conscionable promote you to beryllium alert that we are doing immoderate tweaks and a spot of activity connected nan Basslink, Basslink transmission of Basslink task each up arsenic we merge it into our business. So we were doing it. The squad is doing a awesome occupation location to bring it into our business. And that is activity that's being undertaken correct now.

Rob Koh

Great. That's very helpful. And past possibly a somewhat much bigger image question, because you're evidently very focused connected continuity and reliability of state supply. One of your bigger clients person expressed a position that nan 1 nan managements solution for confederate marketplace shortfall should that hap is done your East Coast Grid, but past nan constraint becomes storage. So do you person a position connected retention finance successful nan confederate markets and whether you move up of request connected that peculiar front?

Adam Watson

Yeah. It's a really bully question, Mr. Koh. And you didn't travel Mr. Watson, I'm a spot tense astir that. No, it's -- look, it's an absorbing one. And I ever commencement nan reply to these questions arsenic you request bid to make it activity effectively, but you've sewage to beryllium very observant astir which priorities you take guarantee that you get that equilibrium correct astir security, reliability, affordability and little emissions. I deliberation nan retention has sewage a very important domiciled to play. We saw our Mondarra plus successful nan Northwest play an important domiciled conscionable a fewer weeks ago. And we tin spot that is critical.

I deliberation nan challenging point is whether aliases not things for illustration retention are nan correct solution for semipermanent supply/demand imbalances, truthful typically very bully for short term, but long-term. And you've seen that play retired successful Europe astatine nan infinitesimal wherever there's a batch of interest astir whether aliases not nan storage, which is somewhat opportunity today, astatine slightest cushion nan effect successful Europe during nan winter, are nan concerns is whether aliases not it's going to beryllium capable going forward.

And I support bringing it backmost to what is nan number 1 point we tin do to guarantee that we supply nan astir secure, astir reliable, astir affordable result successful nan power modulation arsenic it relates to state is astir bringing proviso to market. And we cognize that there's -- it's going to beryllium difficult to do that successful Victoria. So you've sewage to look to nan bluish states. And there's an abundance of supply. It's conscionable astir really do we promote nan finance to bring it to market.

Rob Koh

Yeah. Thanks, Mr. Watson. Sorry. I was going to telephone you that. I was a small worried I was going to telephone you Mr. Bevans because I've sewage a spot of today.

Adam Watson

Okay

Rob Koh

Yeah. Thank you very overmuch for nan answer. I admit that. I conscionable want to double cheque nan escalation successful nan Wallumbilla Gladstone Pipeline for this almanac year, is that nan 7% that you're referring to, aliases are you capable to stock what that people is?

Kynwynn Strong

Yeah, 7.5 starting 1 Jan WGP gross goes up 7.5%.

Rob Koh

Excellent. Thank you, Ms. Kynwynn. Thanks again.

Adam Watson

Thanks, Rob.

Operator

The adjacent mobility is from Ian Myles from Macquarie.

Ian Myles

Good morning, guys. Just tin you springiness america immoderate examples of your bundle 1 cardinal solutions that you've been for semipermanent during nan first half of nan year?

Adam Watson

Yeah. Thanks, Ian. So – location has been a number of bids, and I can't get into specifics because arsenic you would expect to get it – you signed NDAs and each those sorts of things. But to overgarment a picture, Gruyere was an illustration of a – we telephone it a micro grid astatine 1 wherever we bundled nan solution arsenic it relates to firming renewable powerfulness procreation and really you bring that together Battery Storage. We've evidently made beardown advancement during nan play successful Mount Isa, supporting our customers there. So we're backing a solution wherever we tin efficaciously supply nan state firming to support nan caller Market Creek star farm.

We spot a batch of opportunities successful nan distant areas wherever – we cognize that our customers are de-carbonizing. You tin look astatine each nan awesome resources companies successful Australia, and they each person nett zero commitments and location – their owned requirements and ambitions to return themselves disconnected coal, aliases diesel, aliases wherever it maybe. And I conjecture that if we usage that arsenic nan example, which is wherever we are spending astir of our clip in, it's – our customers, don't needfully want to person to woody pinch 5 different players.

So they don't want to has to woody pinch personification who's going to supply nan energy – sorry, nan renewable powerfulness procreation and past person to woody pinch personification abstracted who's going to link that bioelectricity transmission and past person personification abstracted who they're going to participate into a state firming arrangement. And past perchance personification different who mightiness do a spot of mill retention aliases immoderate it whitethorn be. The point that we cognize we tin do since we tin supply each that and we tin bundle that work together.

They commencement misinterpret nan customer who is going to push difficult astir making judge it's affordable and each those sorts of things, but we really person a reasonably unsocial competitory advantage successful being capable to bring that bundled solution together knowing that we already person nan infrastructure successful galore of those regions that we already person nan group and nan relationships. So it's those sorts of projects successful – these are not – they're not small projects. So they're not ones that you conscionable denote thing each different week, for illustration you tin do if we were conscionable solely focused connected building mini star farms.

The bundle solutions are reasonably large projects, you're making reasonably bully commitments pinch nan customer you're signing semipermanent contracts typically. So we consciousness assured astir them. We didn't denote thing caller needfully during nan play of scale, but I tin fto you cognize that we're doing a batch of activity pinch our customers successful that abstraction and are emotion assured astir that.

Ian Myles

Okay. That's great. On nan East Coast grid, person we seen nan extremity of statement re-pricing wherever group are reducing of highest contracting and possibly expanding highest contracting, but nan nett progressive having immoderate gross pressure. Have we gone done that rhythm now and past we're now backmost to ostentation connected nan maturation profile?

Adam Watson

Look, it's surely – well, firstly, our customers are ever ensuring that they get nan champion worth and nan champion work retired of us. And it's 1 of nan things I don't deliberation is good appreciated much wide – and we talked pinch government, for example, astir this each nan clip that our customers are really paying for service. The mostly of our assets are not things wherever anyone tin pat into it. And you conscionable -- I'm talking astir state transmission now and wherever you modulate them because everyone is getting nan aforesaid service.

The very quality of our assets and nan very quality of our state transmission business is that nan immense mostly of our customers want service. They want to beryllium capable to person nan state erstwhile and wherever they request it and they want to beryllium capable to travel it from constituent to constituent aliases different locations based connected their ain demand, which changes each nan time. And it's a really important point to understand -- location is nary mobility complete nan past fewer years that nan contracting has go shorter successful position of tenure successful position of length.

And that's again conscionable because nan customers -- and we're really into this, by nan way, nan customers want much elasticity successful position of nan measurement that they procure their services because they request it because their business is becoming much adaptable arsenic well. So we are leaning into that, and we're supporting our customers pinch that. Do not deliberation for a 2nd and that they don't get nan champion value retired of us. We're dealing pinch various blase customers, and we -- and we wouldn't expect thing different. I think, though, that if you look astatine nan play and that's 1 play successful a row.

So it's not -- I wouldn't telephone it existent momentum yet, but nan squad has done a awesome occupation making judge that we tin support our customers during what is simply a reasonably volatile play astatine getting proviso not only successful nan highest periods, but successful nan enarthrosis periods arsenic well. And I deliberation nan enarthrosis periods are becoming much and much adaptable arsenic well. I deliberation they are becoming much and much adaptable arsenic well. So what we're seeing is also, I guess, nan magnitude of nan week of nan enarthrosis play becoming bigger arsenic well.

Ian Myles

And really specifically to nan capacity, Shell drew down a heap of capacity connected nan MSP. Are we astatine a constituent that nan MSP is really afloat contracted complete wintertime now and that there's nary much expertise to waste going – advertisement hoc.

A – Adam Watson

Yes, nan first point we'd opportunity is that we've sewage -- which is genuinely -- we've sewage capacity crossed each of our assets. But 1 of nan things infrastructure. It's each astir moving bottlenecks, right? So thing much elemental to infrastructure than that, that doesn't matter what plus people you're successful arsenic you create it, each you're trying to do is move nan bottleneck to location else.

And 1 of nan things that we activity pinch our customers connected is really do we style our contracts. So that it's adjacent and equitable for everyone and making judge that they've sewage what they request erstwhile they request it and doing things for illustration spreading nan shoulders. So location is nary mobility that immoderate of nan assets are becoming much afloat successful nan highest periods successful nan wintertime periods and others person sewage a adjacent spot of capacity, which efficaciously acts arsenic retention going backmost to Rob's mobility astir storage. Again, I deliberation a batch of group hide nan truth that our pipelines really enactment importantly arsenic retention vessels.

Ian Myles

So that benignant of lends itself to nan adjacent question. We've sewage agelong ft readying to unopen nan – 1 of its state trains, down to 2 trains, which I deliberation [indiscernible] per time retired of Victoria adjacent year. Are we getting to a constituent that nan shutdown aliases nan simplification of Victorian capacity is truthful accelerated that nan pipes can't respond to import tunnel, we conscionable person to go a necessity?

Adam Watson

Again, from a pipeline perspective, we haven't been nan constraint. It's absorbing if location was much proviso coming into nan confederate markets from nan confederate markets, past that is thing that you would person to look at. I deliberation nan difficult point for an investor to do is conscionable nan uncertainty, for illustration it's beautiful difficult to make a large finance successful an area wherever location is awesome uncertainty astir what nan early looks like. we're not trading assets that you get a return connected successful 3 years' time. You're getting nan assets that you get returns connected complete a decade aliases immoderate it whitethorn be.

So, you've sewage to person a level of certainty astir that. It keeps coming backmost to nan value of home supply. And erstwhile you -- we each know, and past caller followers is rather fleas anyone I know. We each cognize nan proviso we've sewage disposable to america successful nan bluish markets. We cognize we've sewage nan capacity to clasp that down into nan confederate markets.

It's astir bringing that to market, which we cognize is going to beryllium nan astir secure, reliable and affordable result for consumers and industry. And I deliberation we've -- it's not ironic that that import terminal -- LNG import terminals and everything person gone quiet because we cognize that they ne'er really made consciousness successful nan first place.

So -- and we're seeing that play retired erstwhile you're relying and limited connected imports. And again, hopefully, I deed nan people erstwhile we showed you those graphs astir what happened successful nan UK erstwhile you limited connected imports. So, again, it's a very important point that we beryllium backmost and we are sensible astir this. And successful our minds, that consciousness starts originates and ends by ensuring we've sewage due home state proviso successful nan market.

Ian Myles

Okay. And past finally, conscionable connected nan instauration CapEx, really overmuch is that going to really move retired to beryllium complete nan adjacent 3 to 4 years? Is it benignant of a caller statement you've surgery retired to telephone it instauration CapEx?

Adam Watson

Yes. We want to telephone it retired for a mates of reasons. And there's things for illustration to get a small method that you're alert of nan accounting modular changes, which intends our SaaS aliases cloud-based exertion projects are now going done nan P&L. And we're trying to thief investors arsenic champion we tin and trying to thief you and nan sell-side organization pinch nan transparency astir that. So, you get an knowing of nan underlying business.

But we've spoken astir it for a while and again, conscionable underlying and you tin conjecture really overmuch it's going to cost. But I guess, successful position of what are immoderate of nan things that we're doing astatine nan moment, successful position of nan media things, successful summation to conscionable making judge that we've sewage nan foundations correct astir capacity and truthful forth. One is our ERPs and we're motoring up connected that.

We request to make judge that our gross systems and our billing systems fits nan intent and are appropriate. So, we're looking astatine investments there. We're looking astatine things, again, -- and that's been incredibly awesome and we've had ministers and we've had customers and we've had truthful galore group look astatine that really important investment.

And past conscionable mini things pinch large things successful our premises, we conscionable astatine that inflection constituent successful our maturity.

And again, nan statement has been a really beardown occurrence communicative and leaders successful nan past did a awesome occupation to get america to wherever we sewage to, and it was wholly due and I don't deliberation we’d it immoderate different. So we sewage we're astatine that earthy ostentation constituent now wherever we request to benignant of spell to that adjacent shape and make investments again. So we tin group ourselves up for nan adjacent shape of growth, which we consciousness really, really affirmative about.

Ian Myles

Okay. That's awesome team.

Adam Watson

Okay.

Operator

The adjacent mobility comes from Nathan Lead of Morgan Financial.

Nathan Lead

Yes. Thanks for your presentation. Just a mates of questions from me. So first up, conscionable a spot of detail, I suppose, successful position of gross quality. Average statement links. It utilized to beryllium astir about 11 years. Where is it sitting astatine nan moment?

Kynwynn Strong

Nathan, look don't supply that number to nan market. So historically, we did, and it included nan WGP. But I deliberation you should attraction connected nan comments that Adam made earlier astir really we're going astir our contracting successful years, it has shortened. And it's ongoing discussions pinch our customers. So we're not specifically going to supply you pinch a number, but you conscionable request to deliberation astir nan conditions that we've been talking about, portion retired nan WGP – that is what it is. And I will conscionable time off it there.

Nathan Lead

Yes. Surely. Okay. Second mobility for me. Quite a large step-up successful your liquidity position. I deliberation it's up 28% aliases so. Just wondering why that is. Obviously, you've sewage a very beardown rate travel procreation model, soul backing exemplary effectively, is evidently a costs of that liquidity. So conscionable -- wanted to conscionable talk done nan strategy there?

Kynwynn Strong

So -- yes. So during nan year, we went to nan market, and we were -- we put successful spot a installation truthful that we had that superior disposable if and erstwhile we needed it. And if I tin benignant of nexus that into talking astir nan superior allocation framework, it very overmuch goes into that is pillar, if you like, making judge that we've sewage nan elasticity that we want truthful that we tin move quickly if we spot an opportunity to create value. So yes, we went to nan markets astir and had nan discussions astir liquidity. There was a batch of interest, which is great. And truthful we've sewage that sitting there. And we will hopefully travel up pinch thing that we each get excited about.

Nathan Lead

Yes. Okay. And conscionable 3rd mobility for maine is nan $1.4 cardinal maturation CapEx pipeline. Can we conscionable talk astir conscionable successful position of erstwhile nan incremental net from that are apt to travel online? I mean, obviously, you've sewage nan regulatory broadside of things pinch nan Victoria web that's travel done successful nan entree arrangement. We've talk done nan NGI erstwhile that's apt to travel on. Just talking done conscionable timing of East Coast grid description and different items wrong that $1.4 billion?

Adam Watson

Yes. Look, it's a spot of a mixed container Nathan. So I deliberation you conscionable called retired a mates of nan media one. So NGI, I deliberation I've already explained. We've sewage things for illustration Mica Creek that will travel online later successful nan year. You've sewage nan East Coast grid. And again, I think, you've sewage to return yourself backmost to Ian's questions earlier astir really that East Coast grid works. So it's not arsenic though you walk $400 cardinal and that you've sewage a afloat portion 100% of nan time, that description was principally astir making judge that we were building due capacity for nan peak, truthful nan floor plan of that mightiness beryllium a small spot different to what we've seen before.

I deliberation you've ever sewage to travel backmost to and I conscionable touched connected it, but you touched connected it, but you sewage to travel backmost to looking astatine done nan lens of an IRR perspective. So for illustration each infrastructure assets, you look astatine these things and make judge that you make a return that's supra hurdle rate, which successful position of your costs of capital. Obviously, rate paybacks are an important point that we're investing successful semipermanent assets, which whitethorn return clip to ramp up arsenic well.

I deliberation nan champion committedness was a large chunk of superior during nan period, and that's a bully 1 because it's an existing asset, and that continues to execute really well. So for us, it's astir getting that equilibrium correct betwixt making nan basal integrated investments to support our customers and acknowledging that, that whitethorn mean that it takes a play of clip earlier you get a return knowing that nan CapEx for funding, and it goes backmost to Colin's constituent astir making judge we've sewage due liquidity is making judge that we've sewage that to support our customers pinch nan investments that they request and they want. And past conscionable nan timing of nan rate flows complete time.

Nathan Lead

Yes. Can I possibly conscionable propulsion successful 1 much question, possibly push backmost here? But conscionable successful position of, I suppose, nan returns versus hurdle rates, really are you reasoning astir that erstwhile you're looking astatine nan transmission investments versus nan state infrastructure investments, conscionable successful position of consequence floor plan and target returns?

Adam Watson

Yes, it's a bully question, Nathan. And you ever push it conscionable a small spot that's good. No, nan much questions are better. It's great. So nan -- I deliberation you've answered my mobility successful position of nan -- it's really down to nan consequence profile. I deliberation 1 of nan things that we're seeing done nan power transition, I bring it backmost to our strategy, and I've been -- we've been very deliberate successful our words astir being a partner of prime successful bundled solutions. There is nary mishap that we've chosen those words. And nan bundled solutions, I think, present is nan important 1 because it's not -- I deliberation nan days person conscionable been nary investments.

Going backmost to your first mobility astir nan ramp-up of nan gross floor plan nan days of building an plus wherever you had 1 aliases 2 customers and you signed a 20-year contract, location is simply a basal regulatory framework. They'll beryllium from time-to-time, but it's not really wherever nan puck is going. It intends that you're taking connected a level of risk, and I don't want to spook anyone, it's surely a debased level of consequence comparative to different markets, different industries. But successful position of benignant of nan infrastructure space, you are going a small spot further on nan consequence curve and you're partnering pinch your customers and nan logic they're partnering pinch you is because you're experts successful this abstraction and because you're consenting to return connected a spot of risk.

And you've seen really good that tin play retired successful different industries, different infrastructure industries, wherever you tin get yourself up nan consequence curve. You request to make judge you get financially rewarded for that. And generally, your customers are okay -- pinch that successful 10 years' time, erstwhile you've done a awesome occupation and you're generating higher returns, it mightiness travel a spot of flat, but that's benignant of portion of nan people that you do that.

So nan energy transmission assets are going to beryllium much on nan benignant of accepted regulatory return space, but adjusted for nan magnitude of consequence that you will return on, which will astir apt alteration connected a project-by-project basis. And knowing that, we're each successful a benignant of a learning shape astatine nan moment. When I opportunity learning, you only person to -- I spent a batch of clip listening to AEMO, fixed their value successful nan marketplace and their knowledge successful nan market.

And perceive to AEMO, you talk astir you tin exemplary these things and engineers tin instrumentality it successful a spreadsheet aliases a state chart, but nan existent applicable transportation of these projects is going to beryllium going to beryllium challenging. And that's why we're building nan capacity to make judge that we tin support our customers pinch these analyzable projects and hopefully return connected a small spot of consequence and hopefully reward our investors pinch a bully return.

Nathan Lead

Thank you.

Adam Watson

All right. So I deliberation we are up pinch questions. So convey you, everyone, for your questions. Thank you, moderator for facilitating that, and if you tin conscionable springiness maine 30 seconds to wrap-up.

And what I'd for illustration to do is conscionable return you to descent 33. The 3 cardinal takeaways from today's presentation: first, we've delivered different coagulated group of results. And again, a reminder, our distributions are successful statement pinch guidance. Our net proceed to grow, arsenic we proceed to put for a sustainable future, and we've sewage a beardown equilibrium sheet.

Secondly, we're assured astir our strategy to nan partner of prime successful nan power modulation delivering bundled solutions. And again, location was a awesome speech astir that during nan Q&A.

And nan 3rd 1 is our relentless attraction connected our 3 priorities areas. That is, again, return you back, our people, operational excellence and creating value. And it really is, I believe, building momentum successful nan organization.

As I said successful December, erstwhile I took complete starring APA, a really beardown privileged infinitesimal for me, but we're a really beardown business pinch beardown foundations and pinch a awesome future, and 1 that's anterior to nan forefront of responsibly transitioning Australia's power systems. So we consciousness very bully astir nan future. And again, we really do admit everyone's support.

And pinch that, I'll bring this to a close. And I'd conscionable for illustration to opportunity convey you very overmuch for your time.

Operator

That does reason nan convention telephone for today. Thank you for participating. You whitethorn now disconnect.