WEBVTT - How has Infratil sustained double digit growth? 0:00:06.040 --> 0:00:09.080 Kyoda. Welcome to Sheard Lunch, brought to you by Chas's 0:00:09.160 --> 0:00:12.320 with Business Desk. My name is Helen Madison and on 0:00:12.400 --> 0:00:15.560 the program today I'll be talking to Jason Boys, who's 0:00:15.600 --> 0:00:19.560 the CEO of Infrastructure Investment Company in fortil. 0:00:20.280 --> 0:00:24.040 Investing involves risk you might lose the money you start with. 0:00:24.480 --> 0:00:28.280 We recommend talking to a licensed financial advisor. We also 0:00:28.320 --> 0:00:32.200 recommend reading product of sclosure documents before deciding to invest. 0:00:32.760 --> 0:00:35.640 Everything you're about to see and here is current at 0:00:35.640 --> 0:00:36.639 the time of recording. 0:00:37.240 --> 0:00:40.720 Welcome Jason, thanks for hosting us at the Infantile HQ 0:00:40.880 --> 0:00:45.120 here in Wellington. Welcome now, Infatile. You are actually in 0:00:45.159 --> 0:00:48.519 the midst of your retail investor road show around the country. 0:00:48.520 --> 0:00:50.440 So how's that been going good? 0:00:50.479 --> 0:00:52.800 I think the team are in total on and today, 0:00:52.960 --> 0:00:54.760 so I haven't had a report back on how that's gone. 0:00:54.800 --> 0:00:58.440 But last week we had our first roadshow meeting ever 0:00:58.560 --> 0:01:02.320 in Fun Today. Over one hundred people turned up. Our 0:01:02.480 --> 0:01:06.160 chair Allison Gary is from Fun Today, so she presented 0:01:06.160 --> 0:01:08.920 at that so I think it was a I mean, 0:01:08.920 --> 0:01:11.680 are over one hundred people was a fantastic outcome. Hopefully 0:01:12.000 --> 0:01:13.920 everybody attended got something out of it. 0:01:13.840 --> 0:01:15.560 And then you've got a number of others around the 0:01:15.560 --> 0:01:16.280 country coming out. 0:01:16.520 --> 0:01:19.120 Yeah, I think we do ten or twelve around the country. 0:01:20.319 --> 0:01:23.080 I am doing Wellington and Auckland and we sort of 0:01:23.080 --> 0:01:24.959 split it between the team who are be going through 0:01:24.959 --> 0:01:27.039 the South londond I think next week, I expect. 0:01:27.440 --> 0:01:30.319 And I'm quite excited because actually there'll be one for 0:01:30.400 --> 0:01:33.160 Cheesy's investors this year, I'm told in July. 0:01:33.240 --> 0:01:35.759 Said so, no questions today, but questions in July are 0:01:35.760 --> 0:01:37.920 so bitter. Be on my toes for that. You better happy, 0:01:37.959 --> 0:01:39.040 too happy too. 0:01:39.720 --> 0:01:43.640 Now thirty years since and for twol became about, which 0:01:43.760 --> 0:01:46.960 is quite a milestone really for the company. There's been 0:01:47.000 --> 0:01:48.920 a number of people at the Helm and now you're 0:01:48.960 --> 0:01:52.360 at the helm. What would you say you've learned? But 0:01:52.400 --> 0:01:55.240 also what lessons you've learned from them in that time? 0:01:55.440 --> 0:01:58.800 Yeah? Thirty is is amazing, isn't it. We've had three 0:01:58.880 --> 0:02:06.960 CEOs obviously, Marco are now me. I think what have 0:02:07.000 --> 0:02:09.560 we learned? I mean a million things right, and a 0:02:09.600 --> 0:02:11.280 lot of we don't have a lot of turnover here 0:02:11.280 --> 0:02:14.040 at Morrison as well, so it's pretty hard to boil 0:02:14.080 --> 0:02:16.640 it all down into one or two things. I think, 0:02:17.440 --> 0:02:20.120 you know, the main lesson is it's never one or 0:02:20.120 --> 0:02:24.839 two things. It's actually always a million things that come 0:02:24.880 --> 0:02:28.440 together to make an investment either successful or unsuccessful, because 0:02:28.440 --> 0:02:32.600 we've had those as well. And really, I think the 0:02:32.600 --> 0:02:38.200 magic of the model really has been to have a 0:02:38.240 --> 0:02:42.239 team who's not, you know, embroiled in the day to 0:02:42.320 --> 0:02:45.320 day hand to hand combat of running an airport or 0:02:46.520 --> 0:02:49.600 selling mobile phone plans. You can sit above that and 0:02:49.720 --> 0:02:52.800 try and understand what are the what are the bigger 0:02:52.880 --> 0:02:55.799 things to be thinking about here, either now or for 0:02:55.840 --> 0:03:00.280 the future, and then trying to use our levers because 0:03:00.320 --> 0:03:02.560 we tend to control the businesses that we invest in, 0:03:03.560 --> 0:03:06.840 to position them well for those things over time. It 0:03:06.919 --> 0:03:09.240 is probably when I look back at the successes what 0:03:09.360 --> 0:03:11.799 really makes them stand out, and then when I think 0:03:11.840 --> 0:03:16.160 about the things that haven't gone so well, almost always 0:03:17.360 --> 0:03:19.120 I think if this as the cardinal rule now is 0:03:19.160 --> 0:03:21.960 to not fall in love with your assets to the 0:03:22.000 --> 0:03:25.320 extent that you hold on for too long. And everybody 0:03:25.360 --> 0:03:27.400 loves all of our assets. They're like your children in 0:03:27.400 --> 0:03:31.760 some ways. You know there's no favorites, but yeah, don't 0:03:31.800 --> 0:03:35.400 hold for too long. It's like the cardinal rule I think. 0:03:35.320 --> 0:03:40.800 Now Morrison Group actually managers or is the manager. Now 0:03:40.840 --> 0:03:43.160 that for a lot of people seems a bit strange. 0:03:43.280 --> 0:03:46.000 Can you can you unpack what that model is and 0:03:46.200 --> 0:03:47.200 then how common is that? 0:03:47.480 --> 0:03:49.120 So, yeah, it's not as common in this part of 0:03:49.160 --> 0:03:50.560 the world as it used to be. There was kind 0:03:50.560 --> 0:03:52.360 of a spata than when in for Too was put 0:03:52.400 --> 0:03:54.800 in place. It still is me common in property investing. 0:03:55.680 --> 0:03:58.160 So the model is if people don't know there is 0:03:58.200 --> 0:04:00.600 a company with an independent board of direct is that 0:04:01.160 --> 0:04:04.280 if you're an Infratil shaholder, you'll own shares in. But 0:04:04.760 --> 0:04:07.600 there's no employees of Infratill like there would be of 0:04:07.720 --> 0:04:11.560 fishrom Pocal Healthcare or some of these overreat companies. The 0:04:11.600 --> 0:04:14.760 employees are all employed by Morrison, which is a privately 0:04:14.800 --> 0:04:18.279 owned investment manager. It's owned by the staff and largely 0:04:18.279 --> 0:04:24.039 Alloyd's of State actually, and we work for Morrison, and 0:04:24.080 --> 0:04:28.400 we essentially provide the sort of executive team functions of Prattle, 0:04:29.160 --> 0:04:31.000 which is overseen by the board on a day to 0:04:31.080 --> 0:04:33.480 day basis actually around the board table and when we're 0:04:33.480 --> 0:04:36.280 thinking about budgeting. It all would all look very familiar, 0:04:36.360 --> 0:04:40.960 but essentially the management team sits outside the company. The 0:04:41.360 --> 0:04:44.280 main difference really is that Morrison can have other clients, 0:04:44.600 --> 0:04:47.360 whereas you know, if you're this CEO of one in 0:04:47.480 --> 0:04:49.560 z if you're docent Paris, you reallyantly work for one 0:04:49.560 --> 0:04:53.000 in zed C and I hope. So whereas with Morrison, 0:04:53.680 --> 0:04:58.000 we have worked with New Zealand Supernovation Fund, Australia's Future Fund, 0:04:58.800 --> 0:05:01.560 a number of other clients who've ended up being great 0:05:01.600 --> 0:05:05.760 partners for infantele and investing. But that's really the difference. 0:05:06.120 --> 0:05:08.159 That's not so common here anymore. But actually it's pretty 0:05:08.160 --> 0:05:10.840 common in the UK. There is a class of investments 0:05:10.839 --> 0:05:12.960 called investment trusts, which were all more or less structured 0:05:12.960 --> 0:05:14.760 this way, and it was kind of that model that 0:05:14.880 --> 0:05:17.640 Lloyd imported into New Zealand and for various tax reasons, 0:05:17.680 --> 0:05:22.039 actually ended up in a company format. But yeah, so 0:05:22.320 --> 0:05:26.560 not unique, but certainly not as common here as it is, 0:05:26.600 --> 0:05:27.320 say in the UK. 0:05:27.920 --> 0:05:30.800 They've mentioned Lloyd Morrison a few times. He's the late 0:05:30.880 --> 0:05:34.480 Lloyd Morrison, and he did actually set up infratill way 0:05:34.480 --> 0:05:38.000 back in the day. Would you say his aspirations have 0:05:38.120 --> 0:05:38.920 been realized? 0:05:41.320 --> 0:05:43.960 I don't know. He's quite ambitious guy, right, So that 0:05:44.160 --> 0:05:48.840 I suspect that's a pretty high bar that we're all 0:05:48.839 --> 0:05:53.160 continually trying to live up to he He described it 0:05:54.480 --> 0:05:58.000 what he hoped for Infantoo before he passed away, as 0:05:58.600 --> 0:06:01.560 as creating a great New Zealand company is what he said, 0:06:01.560 --> 0:06:04.960 which leaves quite a bit of room for interpretation. But 0:06:05.040 --> 0:06:07.600 I think what he is capturing there is, you know 0:06:07.760 --> 0:06:11.599 there are it's more than a fund where you sort 0:06:11.600 --> 0:06:13.400 of pop in a few investments, like if you're doing 0:06:13.400 --> 0:06:15.520 your own investing and you sort of mix a match 0:06:15.560 --> 0:06:17.599 and you come out with a financial return and that's happy. 0:06:17.920 --> 0:06:21.320 His aspirations for Intole were much higher than that. A 0:06:21.400 --> 0:06:24.279 company that and you sort of saw this when he 0:06:24.360 --> 0:06:28.240 was alive, you know, was relevant to New Zealand and 0:06:28.480 --> 0:06:32.480 other markets if possible. When he advocated for the stock 0:06:32.520 --> 0:06:35.960 exchange not to be sold for various things that were 0:06:36.000 --> 0:06:38.480 going on with airlines and the flag, those were the 0:06:38.560 --> 0:06:41.359 levels of his aspirations for a tool. And I think 0:06:41.600 --> 0:06:44.040 we're sort of still working I think on that part 0:06:44.080 --> 0:06:47.839 of his vision. How can you have kind of a 0:06:47.880 --> 0:06:51.800 broader place in people's hearts and minds than just like 0:06:51.839 --> 0:06:52.520 a spreadsheet. 0:06:54.000 --> 0:06:57.040 And also, I mean eighty percent of the business is Australasian. 0:06:57.200 --> 0:07:01.520 Still you call yourselves a global and structure investment company, 0:07:01.560 --> 0:07:04.680 but actually a lot of it still is based here. 0:07:05.200 --> 0:07:07.960 But I suppose is that always? Is that always what 0:07:08.000 --> 0:07:09.040 you're hoping to have. 0:07:09.160 --> 0:07:12.440 Or I think that's more just where we've come from, 0:07:12.480 --> 0:07:15.480 which is a strength. So the more mature businesses will 0:07:15.480 --> 0:07:17.920 be at home, the things where we're willing to take 0:07:17.920 --> 0:07:21.880 more risk will tend to still be at home. First. Really, 0:07:21.880 --> 0:07:25.920 where we want to take the investment portfolio is a 0:07:26.000 --> 0:07:28.280 kind of a more global version of what you see today. 0:07:28.440 --> 0:07:31.560 So could we have larger data seend the businesses offshore. 0:07:31.600 --> 0:07:33.920 I think that would be interesting from an investment perspective, 0:07:34.040 --> 0:07:37.040 And certainly we have every right, I think, given what 0:07:37.040 --> 0:07:39.120 we've achieved so far and this part of the world, 0:07:39.280 --> 0:07:40.680 to try to do that. And you can sort of 0:07:40.680 --> 0:07:44.480 see that in renewables as well. Right, we've had huge 0:07:44.520 --> 0:07:48.320 history with our words TrustPower now monor energy tilt that 0:07:48.400 --> 0:07:51.160 came out of it definitely earned the rider. I think 0:07:51.160 --> 0:07:53.760 to try that offshore and long Road in the US 0:07:53.840 --> 0:07:56.200 is the early sort of signs that maybe we can 0:07:56.240 --> 0:07:58.080 translate off that offshore, and we've got a few other 0:07:58.080 --> 0:08:01.160 ways to try and integrate that model to other jurisdictions 0:08:01.200 --> 0:08:01.600 as well. 0:08:02.480 --> 0:08:04.680 Jason, we'll talk about some of the successes you've had 0:08:04.680 --> 0:08:07.200 with the impressive results that came out a couple of 0:08:07.200 --> 0:08:09.680 weeks ago, but I think it would be quite good 0:08:09.720 --> 0:08:12.200 to kind of set the scene. I mean, what has 0:08:12.280 --> 0:08:16.320 been achieved has been in a climate or a world 0:08:16.360 --> 0:08:20.120 that is quite volatile. What are some of the challenges 0:08:20.720 --> 0:08:23.520 that you've faced and had to sort of get through 0:08:23.560 --> 0:08:25.280 in order to, you know, have the results you have. 0:08:28.440 --> 0:08:33.960 It's definitely been I think we say whippy in certain areas. 0:08:34.400 --> 0:08:38.760 The definitely volatile interest rates has been incredibly challenging for 0:08:38.880 --> 0:08:42.760 all sorts of investments, and because infrastructure is quite capital 0:08:42.840 --> 0:08:46.600 intensive and uses a lot of debt if you can 0:08:46.840 --> 0:08:51.280 set it up correctly, the quick changes and interest rates 0:08:51.679 --> 0:08:58.000 really through COVID and after has been incredibly challenging for 0:08:58.040 --> 0:09:03.040 the businesses, and by large, teams have navigated that incredibly well. 0:09:03.080 --> 0:09:06.000 But it's always hard to really lean in with confidence 0:09:06.559 --> 0:09:08.960 to grow businesses you think have every right to grow 0:09:09.000 --> 0:09:13.320 when they're facing challenging cost increases. So you know, for example, 0:09:13.400 --> 0:09:17.120 if you're building a solar farm in the US, almost 0:09:18.040 --> 0:09:22.040 a third of the cost is interest, right, so if 0:09:22.040 --> 0:09:26.200 that's doubled overnight, You've got a lot of work that 0:09:26.280 --> 0:09:30.480 needs to happen on the power price effectively in order 0:09:30.600 --> 0:09:34.760 for the maths to still work. So that has no 0:09:34.840 --> 0:09:37.400 doubt been challenging. And now really the big debate is 0:09:37.440 --> 0:09:39.280 what is the new two percent rod? What is the 0:09:39.360 --> 0:09:41.400 new long term interest rate? Is it two or three? 0:09:41.480 --> 0:09:44.840 Is at four? And we have no better view on 0:09:44.880 --> 0:09:46.880 that than anyone, So it sort of plan for the 0:09:46.920 --> 0:09:49.080 worst and hope for the best, I think is the 0:09:49.120 --> 0:09:51.920 most sensible way to approach that in your investment pieces. 0:09:52.240 --> 0:09:55.000 But a constant juggle and obviously you're doing your modeling 0:09:55.440 --> 0:09:56.240 as you always have. 0:09:57.360 --> 0:09:59.640 And try and be conservative in terms of hedging will 0:09:59.640 --> 0:10:03.040 conserve I think then a lot of people although a 0:10:03.040 --> 0:10:04.560 lot of people there are a number of people who 0:10:04.600 --> 0:10:06.400 could say you could take more edging, but yeah, try 0:10:06.400 --> 0:10:09.360 and head you downside as much as you can where 0:10:09.360 --> 0:10:11.560 the cost justifies it. So that's always a bit of 0:10:11.640 --> 0:10:17.839 an equation. And then really the other part is are 0:10:17.840 --> 0:10:21.920 you in markets where either your business has pricing power 0:10:22.000 --> 0:10:24.520 or the industry as a whole that you're in has power. 0:10:25.080 --> 0:10:28.200 To say, in that electricity example I gave before, you 0:10:28.200 --> 0:10:30.680 can go back to whoever's buying your power and say well, 0:10:31.120 --> 0:10:33.480 do you want the project? Yes, well, then really the 0:10:33.520 --> 0:10:36.440 price has to change, and that's always very uncertain until 0:10:36.440 --> 0:10:38.160 you're right in those moments. You can do all the 0:10:38.200 --> 0:10:41.439 work that you like on that and get convinced that 0:10:41.440 --> 0:10:43.920 that ability is there, but until I actually achieve it, 0:10:43.920 --> 0:10:48.840 it's all very much uncertain. And I think the benefit 0:10:48.920 --> 0:10:50.800 of getting through times like this that we have is 0:10:51.400 --> 0:10:54.280 that has proven now, particularly in the US renewables market, 0:10:54.320 --> 0:10:57.240 the power price is quite rational. Everybody seems to have 0:10:57.280 --> 0:10:59.439 more or less the same cost to capital, which means 0:10:59.520 --> 0:11:02.600 that when something like interest rate happens that affects everyone, 0:11:04.080 --> 0:11:06.319 the power price is able to be adjusted. And I 0:11:06.360 --> 0:11:09.520 think we've been happily. You know, data seen has been 0:11:09.559 --> 0:11:11.520 a little bit of a different story. I would say, 0:11:11.520 --> 0:11:14.920 what's really happened there is you've had the same sort 0:11:14.920 --> 0:11:16.960 of dynamic in terms of interest rates, but there's just 0:11:16.960 --> 0:11:20.520 been this huge explosion of demand which has helped balance 0:11:20.559 --> 0:11:23.800 everything in that in that industry. 0:11:26.600 --> 0:11:31.080 Just looking briefly at the numbers for the full year result, 0:11:31.320 --> 0:11:34.160 I think earnings is probably what we'll focus on. And 0:11:34.640 --> 0:11:37.599 ebitt Dath is that lovely acronym which basically means that 0:11:37.840 --> 0:11:41.040 before all the expenses come in. That was up sixty 0:11:41.040 --> 0:11:43.080 three percent. I think it was eight hundred and sixty 0:11:43.080 --> 0:11:46.160 four million. That said, one New Zealand had a fairly 0:11:46.240 --> 0:11:48.720 big impact on that. So if you extrapolate that out, 0:11:49.080 --> 0:11:50.679 what'll be looking at Yeah. 0:11:50.520 --> 0:11:52.720 So that's the parent at surplus and so that was 0:11:54.400 --> 0:11:57.160 that would have been reflecting the revaluation of one through 0:11:57.320 --> 0:12:00.000 the transaction that we executed last year. Think we spoke 0:12:00.040 --> 0:12:04.079 about that last time. The well, well, the way we 0:12:04.120 --> 0:12:07.760 look at it is if you want to understand how 0:12:07.840 --> 0:12:12.240 the operations of the underlying businesses are performing, we use 0:12:12.320 --> 0:12:16.880 this metric called proportionate EBITDAV. So we would take so 0:12:16.960 --> 0:12:18.959 if we own fifty percent of CDCAT it's actually a 0:12:18.960 --> 0:12:20.880 little bit less, but say fifty percent, you would take 0:12:20.920 --> 0:12:24.920 fifty percent of their earnings through, thirty seven percent of 0:12:25.080 --> 0:12:27.560 Long Road take thirty seven percent through. So take that 0:12:27.640 --> 0:12:31.000 through across the portfolio and then compare that to the 0:12:31.040 --> 0:12:33.640 same period last year and say how have the underlying 0:12:33.679 --> 0:12:37.600 operations gone. So at that level we grow grew at 0:12:37.600 --> 0:12:40.360 about it was eleven percent, I think I want to 0:12:40.360 --> 0:12:43.960 say last year, so above we hit a number that 0:12:44.040 --> 0:12:47.080 was above our guidance, which was nice, and then we 0:12:47.080 --> 0:12:48.880 were growing at that kind of double digit rate that 0:12:48.920 --> 0:12:50.959 we like to see given that we're investing a lot 0:12:51.000 --> 0:12:55.079 in our businesses to generate that going forward. 0:12:54.880 --> 0:12:58.400 Down that that growth and that double digit growth is there. 0:12:58.480 --> 0:13:00.679 It has been with imperature for a long timement. If 0:13:00.679 --> 0:13:03.800 you look back ten years in even thirty, there's always 0:13:03.800 --> 0:13:06.360 been double digits and the last ten twenty two percent, 0:13:06.400 --> 0:13:10.559 which is pretty phenomenal. That said, the market wasn't that 0:13:10.880 --> 0:13:14.160 and those were the results? Were they just expecting it 0:13:14.200 --> 0:13:16.560 to be even better? I mean, how do you win? 0:13:17.000 --> 0:13:19.760 Yeah, I think there were a few things going on 0:13:19.760 --> 0:13:21.880 on the day, So I think the print for the 0:13:21.960 --> 0:13:25.120 year everybody was happy with because nobody expected us to 0:13:25.120 --> 0:13:27.040 be above guidence. Everybody at as below it, so that 0:13:27.120 --> 0:13:29.680 was fine. They were more thinking about the outlook. So 0:13:29.720 --> 0:13:33.760 then we provided one which we've always done, even through COVID, 0:13:33.760 --> 0:13:37.640 one year forward view of that proportionate eve deaf metric 0:13:37.720 --> 0:13:39.800 that I talked about before, and that was still up 0:13:39.800 --> 0:13:44.760 double digits. But two of them they were disappointed, and 0:13:44.800 --> 0:13:48.480 I think I would say one was one inzet which 0:13:48.520 --> 0:13:51.000 we had as actually flat. So although at an aggregate 0:13:51.080 --> 0:13:52.920 level we were showing this double digit growth. We had 0:13:52.920 --> 0:13:55.840 one in zet As flat, which is really, as we 0:13:55.880 --> 0:13:59.040 explained on the call, as a result of what Sparker 0:13:59.120 --> 0:14:02.200 also seeing this market, which is the enterprises, which in 0:14:02.240 --> 0:14:05.280 New Zealand means a lot of government as well definitely 0:14:05.280 --> 0:14:07.760 holding back and pulling back in terms of spending on 0:14:08.480 --> 0:14:11.160 all their needs, including the ones that we provide as well. 0:14:11.240 --> 0:14:14.320 So I think the market was prepared for that. There 0:14:14.400 --> 0:14:17.360 was also a little bit of confusion between some normalizations 0:14:17.400 --> 0:14:19.960 we'd shown in June when we did the rays and 0:14:20.000 --> 0:14:21.480 what we were showing on the day, which we were 0:14:21.520 --> 0:14:23.360 able to clean up during the day, I think, which 0:14:23.400 --> 0:14:25.280 tied it up to normalizations. But that was a little 0:14:25.280 --> 0:14:28.680 bit messy on the call, so apologies if you had 0:14:28.720 --> 0:14:32.800 to listen through that slightly painful conversation. So I think 0:14:32.800 --> 0:14:36.000 people have got their head around that, and our message 0:14:36.040 --> 0:14:39.800 on one really is we're soft because the market is 0:14:39.840 --> 0:14:42.320 soft on that side of things. Nothing particularly wrong with 0:14:42.360 --> 0:14:45.400 our investment, and we're still actually really positive about the 0:14:45.480 --> 0:14:48.720 leavers we have within that business to continue to achieve 0:14:48.960 --> 0:14:53.280 good growth over time. Particularly remember one end Z is 0:14:53.320 --> 0:14:57.800 still really becoming a standalone telco having been owned by 0:14:57.920 --> 0:15:00.000 Vodafone for all those years, so we've got plenty of 0:15:00.040 --> 0:15:03.680 simplification we can do, which Spark's already done the good 0:15:03.680 --> 0:15:05.800 work on, but we still have to do it to 0:15:05.880 --> 0:15:09.520 generate above market growth we think in earnings once that 0:15:09.560 --> 0:15:12.440 program completes over the next two or three years. So 0:15:12.800 --> 0:15:14.680 we're still quite positive about that and people will be 0:15:14.720 --> 0:15:16.920 waiting to see us execute. But we've executed well on 0:15:17.000 --> 0:15:19.600 that before, so I don't think people should expect us 0:15:19.640 --> 0:15:22.400 not to over the next two or three years. And 0:15:22.440 --> 0:15:24.120 then there was another little bit of confusion on the 0:15:24.160 --> 0:15:27.840 day because we had presented Long Roads operating earnings on 0:15:27.880 --> 0:15:30.360 a slightly different way than the way the team the 0:15:30.400 --> 0:15:34.560 Long Road team had shown it in March, which even 0:15:34.600 --> 0:15:37.840 though it was actually labeorly labeled correctly in March, people 0:15:37.840 --> 0:15:40.200 had taken to mean something else. So once we tied 0:15:40.280 --> 0:15:42.600 it up that message, I think people have reset their 0:15:42.640 --> 0:15:46.040 expectations on what Long Roads earnings should be. But the 0:15:46.080 --> 0:15:48.640 overall message there which I gave on the day was well, 0:15:48.640 --> 0:15:52.160 it's the same projects at the same really attractive marginal 0:15:52.160 --> 0:15:54.360 economics that we've already been talking about. This is really 0:15:54.400 --> 0:15:56.800 just how you present the earnings as to win their turn. 0:15:56.680 --> 0:16:01.360 Up, and the share prices recovered pretty much, you think, 0:16:01.520 --> 0:16:02.600 I think so. 0:16:02.720 --> 0:16:05.640 We had run quite a bit leading into the result. Actually, 0:16:05.680 --> 0:16:08.640 just on that last day, which is an unusual actually, 0:16:08.640 --> 0:16:10.480 people like to just in case you're going to run 0:16:10.480 --> 0:16:15.280 ount something bombastic, buy a few more shares, so it 0:16:15.280 --> 0:16:16.840 would be normal for it to trade back. You can 0:16:16.880 --> 0:16:18.840 never really win on that, and I think we are 0:16:18.920 --> 0:16:21.920 pretty much back to kind of the normalized share price 0:16:21.960 --> 0:16:23.560 from what the team are telling me this morning. 0:16:24.920 --> 0:16:28.040 Looking at the portfolio, it's always good to see what 0:16:28.080 --> 0:16:30.240 the waitings are, how it might have changed from year 0:16:30.280 --> 0:16:33.800 to year. What appeared to me that digital infrastructure really 0:16:34.000 --> 0:16:37.280 is the one leading the charge renewables right up there too, 0:16:37.920 --> 0:16:42.920 but as the waiting changing somewhat with the airport's the healthcare. 0:16:42.760 --> 0:16:46.520 Digital, yeah, I think we was trying to give ourselves 0:16:46.560 --> 0:16:50.760 the option to up or downweight sectors over time. So 0:16:50.800 --> 0:16:52.840 you definitely think of healthcare as one of the newer 0:16:52.880 --> 0:16:59.360 ideas that could increase assuming our thesis plays out as 0:16:59.360 --> 0:17:02.240 we hoped or just well, even if we didn't expect 0:17:02.240 --> 0:17:04.199 it to go well in the particular way it chooses to. 0:17:04.320 --> 0:17:08.399 So that's one for the future. The airport is the airport. 0:17:08.440 --> 0:17:10.200 It's very hard for us to buy another airport. 0:17:10.440 --> 0:17:12.320 I'm going to say you've got airports, but actually we 0:17:12.359 --> 0:17:16.760 have won airport and it's Wellington add Wellington. The city 0:17:16.800 --> 0:17:19.120 council are wanting to sell these shares. Does that mean 0:17:19.200 --> 0:17:20.200 you are going to buy? 0:17:20.359 --> 0:17:21.879 And that's all they voted that last week. Well, I 0:17:21.880 --> 0:17:24.600 don't know exactly what they're going to do. I think 0:17:24.680 --> 0:17:27.200 infratil shiholders, she would expect us to take a look 0:17:27.200 --> 0:17:29.240 if that was actually what they want to do. People 0:17:29.320 --> 0:17:30.080 like that investment. 0:17:30.240 --> 0:17:31.080 Is that something you'd like? 0:17:32.040 --> 0:17:33.879 I don't know until I see it really. Actually, I 0:17:33.920 --> 0:17:36.120 think there's a price for everything, right, There's a price 0:17:36.119 --> 0:17:38.680 at which I would sell the airport too, so I know. 0:17:39.680 --> 0:17:43.000 So it's all it's all dependent on what people want 0:17:43.040 --> 0:17:44.760 for things, I think. But I think as it from 0:17:44.760 --> 0:17:47.480 a portfolio strategy perspective, it's not off base at all. 0:17:48.040 --> 0:17:52.400 Yeah, And the runway extension is always the other thing 0:17:52.440 --> 0:17:54.120 that people investors always. 0:17:53.920 --> 0:17:56.560 Want to know about think about. Yeah. I think in 0:17:56.720 --> 0:17:59.919 Matt Clark, our CEO there, spoke about it at our 0:18:00.160 --> 0:18:03.840 vest day March. I think what he was saying there 0:18:03.880 --> 0:18:06.360 really is that there are a number of other technological 0:18:06.400 --> 0:18:08.960 ways of achieving a similar outcome. He was talking about 0:18:08.960 --> 0:18:12.800 a new plane stopping distances, some technology the team have 0:18:12.880 --> 0:18:15.960 put in on the runway itself. It's got grooves and 0:18:16.000 --> 0:18:20.360 a few other things that they're thinking about. We don't 0:18:20.359 --> 0:18:22.000 need a runway extension. If we don't need one, we 0:18:22.080 --> 0:18:25.600 just want to able to fly slightly further afield directly 0:18:25.680 --> 0:18:27.360 rather than having the lovely walk. 0:18:27.160 --> 0:18:29.679 In Auckland because it was Surfey's. I think are worried 0:18:29.760 --> 0:18:32.920 and Wellington that you might change many things, I mean 0:18:32.960 --> 0:18:33.920 fear but at stake. 0:18:33.800 --> 0:18:37.320 Yeah, yeah, exactly. It's very important, no doubt. I mean 0:18:37.320 --> 0:18:40.000 it's interesting, isn't it. Adam per TONI along that what 0:18:40.040 --> 0:18:42.280 they're doing there with that big sea wall. I wonder 0:18:42.280 --> 0:18:44.159 if they'll learn anything from that. That'll be interesting. But 0:18:44.560 --> 0:18:46.240 have a lot of heck full of stone. 0:18:46.560 --> 0:18:50.960 Yeah, that's interesting. Double digit growth, that's something, as we 0:18:51.160 --> 0:18:55.800 discussed before, that you've been able to achieve. How long 0:18:55.800 --> 0:18:57.880 can it keep going eleven to fifteen percent? I think 0:18:57.960 --> 0:19:01.199 is what you're saying to shareholders. How confident are you 0:19:01.240 --> 0:19:04.560 that that will keep coming? And can you better that? 0:19:05.720 --> 0:19:07.720 I think we have bettered that, haven't we in the 0:19:07.800 --> 0:19:11.720 last few years I think, I mean, you never know, 0:19:12.040 --> 0:19:14.320 of course on these things, but we feel like the 0:19:14.320 --> 0:19:17.479 portfolio is set up and the right way to give 0:19:17.520 --> 0:19:20.679 us the best chance of achieving that. And mostly that's 0:19:20.720 --> 0:19:26.360 through having your high single digit return underwritten by Wellington 0:19:26.400 --> 0:19:29.560 Airport and something like one which in most cycles will 0:19:29.600 --> 0:19:33.120 generate that return and that's a good chunk of for two. 0:19:33.520 --> 0:19:36.520 But then also having these platforms like CDC and Long 0:19:36.600 --> 0:19:39.440 Road who have this ability to build a new data 0:19:39.480 --> 0:19:42.720 center or a new solar farm for fifteen plus percent 0:19:43.160 --> 0:19:47.040 type returns if you model it. But that asset out 0:19:47.040 --> 0:19:49.280 to its end of life. Of course, if you sell 0:19:49.320 --> 0:19:50.920 it earlier, you bring a lot of that return forward 0:19:50.920 --> 0:19:53.680 so you can earn even more. So to me, that 0:19:53.800 --> 0:19:56.720 balance is that's always the critical one. And it feels 0:19:56.760 --> 0:19:59.000 like we're in a good spot now and really the 0:19:59.080 --> 0:20:02.480 task is to make sure those proportions stand the right 0:20:02.520 --> 0:20:04.879 balance to produce the right outcome. 0:20:05.320 --> 0:20:08.199 So that you've got cash cows if you like, with 0:20:08.280 --> 0:20:13.280 one New Zealand the airport's those sorts, yeah, and then 0:20:13.359 --> 0:20:17.680 you've got the other development prospects and also obviously that's 0:20:17.720 --> 0:20:19.280 where a lot more capital we'll have to go up 0:20:19.280 --> 0:20:19.720 as well. 0:20:19.720 --> 0:20:21.720 That's right, that's right. So it's that balance of how 0:20:21.800 --> 0:20:24.920 much you've got invested in those high single digital cash 0:20:24.960 --> 0:20:28.399 car whatever you want to call them as sets, and 0:20:28.440 --> 0:20:30.879 then how much can you how much do you need 0:20:30.920 --> 0:20:33.600 to put in fifteen plus to keep the kind of 0:20:33.640 --> 0:20:36.600 returns in the right range. The other important component if 0:20:36.600 --> 0:20:38.840 you look back over our history of the returns is 0:20:40.119 --> 0:20:43.680 some of those ones for the future maturing. So in 0:20:43.800 --> 0:20:46.919 the past that's been SA Long Road and now you 0:20:47.000 --> 0:20:49.320 have sort of gur and maybe as the one to 0:20:49.359 --> 0:20:53.480