WEBVTT - How much runway does Infratil have? 0:00:01.960 --> 0:00:04.800 Jodder and welcome to Shared Lunch, brought to you by Chasea's. 0:00:05.080 --> 0:00:08.840 I'm Helen Madison and today we're at Wellington Airport, which 0:00:08.880 --> 0:00:12.160 is one of the oldest assets for infrastructure investment company 0:00:12.320 --> 0:00:16.439 infratil now Vertill is super popular on Cheza's And in 0:00:16.480 --> 0:00:19.360 a moment I'll be speak with Jason Boys, the CEO, 0:00:19.640 --> 0:00:23.040 about the full year results, the challenges and the outlook. 0:00:23.560 --> 0:00:27.200 Well also look at what's happening to Wellington Airport now 0:00:27.400 --> 0:00:28.360 the eagles have gone. 0:00:28.560 --> 0:00:31.159 Investing involves a risk you might lose the money you 0:00:31.200 --> 0:00:34.479 start with. We recommend talking to a licensed financial advisor. 0:00:35.200 --> 0:00:39.040 We also recommend reading product disclosure documents before deciding to invest. 0:00:39.280 --> 0:00:40.320 Everything you're about. 0:00:40.120 --> 0:00:42.519 To see and here is current at the time of recording. 0:00:42.720 --> 0:00:45.720 Hi Jason, thank you for having us here at Wellington. 0:00:45.920 --> 0:00:47.720 Thanks you for coming Now. 0:00:47.760 --> 0:00:53.600 Wellington Airport is an iconic infrastructure piece for Wellington. That said, 0:00:53.640 --> 0:00:57.600 poor old Wellington hasn't had the easiest time public service 0:00:58.080 --> 0:01:01.200 cuts and the like, and yeah, it's been an adulgen 0:01:01.360 --> 0:01:05.440 So what hecet does Wellington Airport play in that recovery? 0:01:05.680 --> 0:01:09.880 Yeah, yeah, I agree with both. Live in Wellington, we 0:01:09.880 --> 0:01:12.560 we feel how the city has changed over the last 0:01:12.640 --> 0:01:16.160 year or so. From our perspective in Wellington Airports, this 0:01:16.200 --> 0:01:18.520 is the front door to the city and we take 0:01:18.560 --> 0:01:21.520 that really seriously. And even though we've got a lot 0:01:21.520 --> 0:01:23.000 of construction going on, which we'll go and have a 0:01:23.040 --> 0:01:26.080 look at in a second, you know, we do stuff 0:01:26.120 --> 0:01:28.959 like this to make it feel like, you know, this 0:01:29.040 --> 0:01:31.280 is you've arrived in Wellington. I think we're going to 0:01:31.360 --> 0:01:33.399 keep investing though. One thing that has been quite good. 0:01:33.440 --> 0:01:35.840 I know domestic has been tough with what's been going 0:01:35.920 --> 0:01:38.120 on with the government, but actually international has been an 0:01:38.160 --> 0:01:41.360 incredible success story over the last years. So the team's 0:01:41.360 --> 0:01:44.240 done incredibly well and there's more good stuff there to come, 0:01:45.160 --> 0:01:48.240 and so we're continuing to invest to give us the 0:01:48.240 --> 0:01:51.200 best of options for international growth, which we can talk 0:01:51.200 --> 0:01:53.480 about in a minute and sort of get ready for 0:01:53.520 --> 0:01:55.120 when domestic returns. 0:01:55.560 --> 0:02:00.200 So quantus they decided they will increase their three you're 0:02:00.240 --> 0:02:01.960 like thirty one percent for summer. 0:02:02.040 --> 0:02:04.560 Yeah, so that will be quite a boon for the airport. 0:02:04.760 --> 0:02:06.520 Pretty exciting. So at the moment, if you want to 0:02:06.560 --> 0:02:08.640 fly to Sydney from here, right, everybody's got up at 0:02:08.680 --> 0:02:10.520 three thirty in the morning and slipped their way down 0:02:10.560 --> 0:02:12.919 here and all that sort of stuff. But now they 0:02:13.080 --> 0:02:15.040 are talking about putting on or they are going to 0:02:15.040 --> 0:02:16.799 put on one that I think they live around nine 0:02:16.880 --> 0:02:19.480 or something in the morning, like much more civilized and 0:02:19.600 --> 0:02:21.880 civilized times. And you can fly back in the afternoon 0:02:21.919 --> 0:02:23.359 from Sydney as well. I think you leave at one 0:02:23.360 --> 0:02:24.239 and you'll get back at. 0:02:24.160 --> 0:02:26.720 Six or something like that, not the midnight. 0:02:26.400 --> 0:02:28.280 Not even the midnight one if you don't want to 0:02:28.520 --> 0:02:30.840 so or you know, come back on the morning flight. 0:02:30.880 --> 0:02:33.680 But your whole day's gone, yes as well. So that's 0:02:33.720 --> 0:02:35.680 pretty exciting I think for the city. 0:02:36.600 --> 0:02:39.440 In terms of Lloyd Morrison's vision that he was the 0:02:39.520 --> 0:02:42.720 founder of Infantil and way back thirty plus years ago 0:02:43.080 --> 0:02:47.000 he always liked the es sat but although it was 0:02:47.040 --> 0:02:49.400 always not the Crown and the Jewel, but it was 0:02:50.560 --> 0:02:54.800 kind of nostalgic. It was one that he couldn't see selling. 0:02:55.400 --> 0:02:59.200 Things have changed though, the world is different. Where does 0:02:59.280 --> 0:03:03.919 in patrol position Wellington Airport longer term? 0:03:04.520 --> 0:03:07.560 So airports are a great asset to own and it's 0:03:07.639 --> 0:03:10.320 in the stable cashlow generating part of our portfolio that 0:03:10.440 --> 0:03:13.720 we talk about and does a great job. So if 0:03:13.760 --> 0:03:16.320 we could have more airports and good value. You know, 0:03:16.360 --> 0:03:17.840 I think there would be a great place to be 0:03:17.919 --> 0:03:21.840 putting all our money frankly. But also we talked to 0:03:21.919 --> 0:03:24.760 the full year results a couple of weeks ago about 0:03:24.760 --> 0:03:27.040 the fact that as the portfolio grows, the cash flow 0:03:27.080 --> 0:03:29.280 generating parts of the portfolio need to grow with it. 0:03:29.400 --> 0:03:32.359 So that would need to happen in around the airport 0:03:32.400 --> 0:03:34.120 and we have a few ideas about how that can happen. 0:03:34.440 --> 0:03:37.160 But eventually you can sort of outgrow some of the 0:03:37.200 --> 0:03:40.080 assets over time. It's not the case for Wellington Airport today, 0:03:40.120 --> 0:03:41.520 but it could be in the future. Agree. 0:03:41.960 --> 0:03:43.640 One thing a lot of people want to know though, 0:03:43.760 --> 0:03:46.600 is that Eagles are gone, small is still here? 0:03:48.040 --> 0:03:49.200 Is there anything else coming? 0:03:49.360 --> 0:03:52.720 There is and it's pretty exciting actually, but Macluk CEO 0:03:52.800 --> 0:03:55.880 has swam media secrecy, so can't tell you just now. 0:03:58.320 --> 0:04:02.080 So, Jason, the airport has a five hundred million dollar 0:04:02.280 --> 0:04:06.480 five year infrastructure project that's underway. Can you tell us 0:04:06.480 --> 0:04:09.680 a bit about what that means, particularly for the runway 0:04:09.720 --> 0:04:13.200 that was always a bit of bone of contention because 0:04:13.240 --> 0:04:17.400 it wasn't long enough and it did prevent some overseas 0:04:18.240 --> 0:04:19.160 carriers coming. 0:04:20.640 --> 0:04:23.320 It was pretty exciting actually of that five hundred, the 0:04:23.400 --> 0:04:26.920 team has already invested over one hundred of that in 0:04:27.040 --> 0:04:32.400 just the last year. The big bulk of the capital 0:04:32.480 --> 0:04:36.440 program is kind of getting Wellington Airport set for that 0:04:36.480 --> 0:04:39.679 future international growth that you mentioned. So the first stuff 0:04:39.720 --> 0:04:41.719 that's happened a little bit boring is the car parks 0:04:41.760 --> 0:04:44.800 been moved across the back, which then creates room for 0:04:45.000 --> 0:04:48.279 the taxiway where the planes are to move wider, and 0:04:48.320 --> 0:04:51.960 that means we can move more domestic round that way 0:04:52.040 --> 0:04:55.240 and international in the future. And then there's a big 0:04:55.279 --> 0:04:59.320 baggage facility investment that needs to happen in our baggage 0:04:59.320 --> 0:05:04.480 belt sometimes break down sadly, so finally having the opportunity 0:05:04.520 --> 0:05:06.680 to get that in the plan and replaced with our 0:05:07.320 --> 0:05:09.960 airline partners who ultimately end up paying for all of this, 0:05:10.000 --> 0:05:12.000 which is what we've agreed is a fantastic I think 0:05:12.000 --> 0:05:14.880 development for the city. And then the last pieces you 0:05:14.920 --> 0:05:19.200 mentioned is the runway length and that was a big 0:05:19.240 --> 0:05:23.240 project and what the team are installing is what is 0:05:23.279 --> 0:05:26.760 called EMASS, which is a way of slowing down planes 0:05:26.800 --> 0:05:29.679 if they need to be slowed down in the runoff 0:05:29.720 --> 0:05:32.760 areas of the runway, and that means you actually get 0:05:32.760 --> 0:05:34.760 more operating link out of the runway than we currently have, 0:05:35.400 --> 0:05:39.360 but also that you effectively get more operating length for 0:05:39.600 --> 0:05:42.880 these long range aircraft. So I think when it's done, 0:05:42.920 --> 0:05:44.920 we'll be able to take aircraft, some of the new 0:05:44.960 --> 0:05:47.800 aircraft that can fly from Asia or even from the 0:05:47.839 --> 0:05:51.360 States and land and depart fully loaded from here, which 0:05:51.360 --> 0:05:53.640 will be finally kind of the vision for the airport 0:05:53.680 --> 0:05:56.360 really with a lot less investment and a lot less 0:05:56.360 --> 0:05:57.520 intrusive on the bay of. 0:05:57.560 --> 0:06:02.000 Listening in terms of the actual land around the airport 0:06:02.160 --> 0:06:05.400 that's also in development. I know that the city council 0:06:05.480 --> 0:06:09.400 have sold you for properties on the Lyle Bay Parade 0:06:09.400 --> 0:06:11.920 if you like, near the surf beach. 0:06:11.720 --> 0:06:12.880 And there's all sorts of things. 0:06:13.040 --> 0:06:17.719 I think it's a surfing hub, other recreational aspects, hospitality, 0:06:17.920 --> 0:06:18.479 you name it. 0:06:18.960 --> 0:06:22.640 How does that work in with what fatils vision. It's 0:06:22.839 --> 0:06:23.679 for the airport. 0:06:24.640 --> 0:06:27.359 So within the airport, and this goes back to Lloyd, 0:06:27.360 --> 0:06:30.160 our founder and his philosophy around the airport's. His idea 0:06:30.279 --> 0:06:33.719 really was that as the airport owner, we're the best 0:06:33.720 --> 0:06:36.719 developer of the land around it. And that is both 0:06:36.839 --> 0:06:39.000 in terms of things that serve the airport, but also 0:06:40.560 --> 0:06:43.320 building in flexibility so if the airport needs to expand 0:06:43.320 --> 0:06:45.400 like we're doing now, you can have that land bag 0:06:45.480 --> 0:06:48.800 later on. So that's not unusue for us to invest 0:06:48.800 --> 0:06:50.880 in the land around the airport, be the developer, but 0:06:50.920 --> 0:06:52.680 do it in a way that we know is not 0:06:52.680 --> 0:06:55.159 going to affect the airport's operations, but enables us that 0:06:55.200 --> 0:06:56.440 flexibility later on. 0:06:56.839 --> 0:06:59.159 That's a nice sad way into thinking about the full 0:06:59.200 --> 0:07:00.920 year results which came out, you know. 0:07:01.120 --> 0:07:02.880 A few days ago. 0:07:04.480 --> 0:07:06.760 From one I could see it was quite a challenging 0:07:06.800 --> 0:07:11.440 time optically and particularly for the understanding of retail investors, 0:07:11.840 --> 0:07:14.240 which is our audience, and that you know, there was 0:07:14.280 --> 0:07:19.760 a net loss, there was a big management fee, there 0:07:19.840 --> 0:07:23.760 was a concern about cash flow, a number of things 0:07:23.880 --> 0:07:27.760 which even though underlying earnings you know, were quite a robust, 0:07:28.640 --> 0:07:32.040 that's quite a hard story to tell. So what was 0:07:32.120 --> 0:07:33.560 your sort of strategy with that. 0:07:34.400 --> 0:07:36.040 We always look at it in two ways. One is 0:07:36.080 --> 0:07:38.960 the underlying operating performance of the businesses, which always needs 0:07:38.960 --> 0:07:42.800 to be strong, and then there's this strategic kind of 0:07:42.800 --> 0:07:45.120 initiatives around the portfolio, how it's made up and what 0:07:45.160 --> 0:07:47.760 you're doing with the bits and pieces. So always on 0:07:47.800 --> 0:07:51.160 the first part, you're looking to see that underlying earnings 0:07:51.200 --> 0:07:55.240 grow on the basis that we calculated, on the basis 0:07:55.240 --> 0:07:57.679 that people use it to value those businesses. And actually 0:07:57.720 --> 0:07:59.600 over the period, as you say, the performance was pretty 0:07:59.640 --> 0:08:03.520 good across the business. I think pretty much everyone got 0:08:03.520 --> 0:08:05.600 on guide and succept Manawa, who was tied up in 0:08:05.640 --> 0:08:09.520 a transaction. So I think I think most people that 0:08:09.600 --> 0:08:13.000 I've talked to anyway since then thought that actually, when 0:08:13.040 --> 0:08:15.920 you look around the economy, a lot of double digit 0:08:16.000 --> 0:08:18.800 growth in the portfolio on an underlying earning spasis was 0:08:18.800 --> 0:08:21.000 a pretty good outcome. So that was the first part. 0:08:21.440 --> 0:08:23.520 Then a lot of strategic indisties that we talked about 0:08:23.520 --> 0:08:25.800 which was showing good progress in the portfolio. 0:08:26.680 --> 0:08:29.480 If we look at the loss, though, that's an accounting loss, 0:08:29.960 --> 0:08:32.840 so how does that But I mean, are we going 0:08:32.880 --> 0:08:34.719 to see more of those or is it just one 0:08:34.760 --> 0:08:36.439 of those things with business. 0:08:37.120 --> 0:08:41.520 For us all the way down to the bottom the 0:08:41.600 --> 0:08:44.720 net profit or loss that's often influenced now by whether 0:08:44.800 --> 0:08:48.000 or not you're selling something in a given year, and 0:08:49.280 --> 0:08:51.079 that is what was the case, I think two or 0:08:51.080 --> 0:08:53.880 three years in a row beforehand, there really wasn't something 0:08:53.920 --> 0:08:58.280 turning up there. I think as we get the operating 0:08:58.320 --> 0:09:00.920 cash flow back end balance, which is what we've talked about, 0:09:00.960 --> 0:09:04.240 you should see that more naturally even out I think 0:09:04.240 --> 0:09:06.199 over time, and that sort of goes to that strategic 0:09:06.200 --> 0:09:08.079 initiatives I mentioned just on. 0:09:08.080 --> 0:09:10.520 That cash flow, because that has been a concern that 0:09:10.600 --> 0:09:14.240 has been talked about. At the moment, you're unable to 0:09:14.480 --> 0:09:20.160 maybe fulfill the dividend promise and other things too, and 0:09:20.240 --> 0:09:24.480 cash flow is pretty important. Yeah, So it's out of 0:09:24.559 --> 0:09:26.640 kilter at the moment. You're not being able to live 0:09:26.679 --> 0:09:29.800 within your means if you like, how long before you 0:09:29.880 --> 0:09:31.160 can get it back in balance. 0:09:31.640 --> 0:09:33.520 So we've said a ticket for that of the next 0:09:33.600 --> 0:09:35.960 two or three years in a medium term, we have 0:09:36.000 --> 0:09:38.040 pretty strong set of plans in order to get that 0:09:38.160 --> 0:09:41.600 in place. Actually, we could have done that in multiple 0:09:41.640 --> 0:09:43.840 times in my time here. Anyway. I don't think the 0:09:44.040 --> 0:09:48.360 operating cash flow has covered the dividend. Certainly wasn't covering 0:09:48.400 --> 0:09:51.280 it when I became the CEOs. Really, since we invested 0:09:51.320 --> 0:09:54.280 in one end Z, I think that we've been finding 0:09:54.320 --> 0:09:57.719 our way back to that position. Really, we've kind of 0:09:57.800 --> 0:09:59.760 drawn a lot in the sand this year saying actually 0:10:00.040 --> 0:10:02.520 are going to do this. What you effectively do is 0:10:02.520 --> 0:10:06.440 you trade off reinvesting that cash for future growth versus 0:10:07.960 --> 0:10:10.920 something like making sure you're covering your dividend on an 0:10:10.960 --> 0:10:14.600 annual basis out of your operating earning. So we've been 0:10:14.640 --> 0:10:17.319 able to do it a number of ways over my time, 0:10:17.360 --> 0:10:19.120 and we've just sort of drawn along the sound saying 0:10:19.320 --> 0:10:21.360 let's do that. We will forego a little bit of 0:10:21.400 --> 0:10:24.200 future earnings. But I don't think future growth is really 0:10:24.280 --> 0:10:27.080 our problem where the portfolio is configured. I think it's 0:10:27.160 --> 0:10:31.000 more making it more sustainable and more kind of this 0:10:31.120 --> 0:10:33.480 long term growth engine, which is where we've made our 0:10:33.559 --> 0:10:34.959 kind of best returns over time. 0:10:35.320 --> 0:10:41.400 So what is the longer term or the dividend approach 0:10:41.559 --> 0:10:44.320 then for we used to come is it? Will we 0:10:44.400 --> 0:10:47.160 have a difference next year? I mean, how we'll retail 0:10:47.200 --> 0:10:49.320 investors sort of be guided in that. 0:10:49.760 --> 0:10:52.240 Yeah, I think they should take a lot of comfort 0:10:52.240 --> 0:10:54.600 from the fact that we're openly saying now that we 0:10:54.679 --> 0:10:57.680 believe the dividend is important for the business going into 0:10:57.679 --> 0:11:01.320 the future. We think we tell shareholders for whom that 0:11:01.400 --> 0:11:03.880 is most valuable, are an important mix in our shareholder 0:11:03.920 --> 0:11:08.880 base as we continue to grow. So reaffirming that commitment 0:11:08.880 --> 0:11:13.200 to the dividend. You should see it continue to at 0:11:13.280 --> 0:11:16.679 least cover inflation, I would say, in terms of its 0:11:16.720 --> 0:11:19.480 growth in the years ahead, and then we'll get it 0:11:19.520 --> 0:11:21.000 back in balance and we can kind of give some 0:11:21.040 --> 0:11:21.959 more messages from there. 0:11:22.000 --> 0:11:25.240 I think so this year we had I think you 0:11:25.280 --> 0:11:29.600 announced fifteen point five cents was the interim, and then 0:11:29.880 --> 0:11:31.600 the full year's twenty five plus. 0:11:31.760 --> 0:11:32.319 Is that mar right? 0:11:32.480 --> 0:11:34.040 So it's slightly up, yeah, exactly. 0:11:34.080 --> 0:11:36.000 I think it's about two percent. I think it's sort 0:11:36.000 --> 0:11:38.800 of what we're trying to aim for to at least 0:11:38.800 --> 0:11:42.760 give an inflation coverage, which investing in infrastructure asset should 0:11:42.760 --> 0:11:44.960 give you. Yes, but we're not trying to get the 0:11:45.000 --> 0:11:47.880 percentage yield on the share price, for example, back into 0:11:47.880 --> 0:11:50.080 a range. That's not something we were aiming to do. 0:11:50.559 --> 0:11:54.440 The good old share price every CEOs read when somebody 0:11:54.520 --> 0:11:57.240 asks them. It's fair to say that it had a 0:11:57.240 --> 0:12:01.720 bit of a beating when you did release your consolidated earnings. 0:12:02.440 --> 0:12:05.440 I think it was down nearly six percent on the day. 0:12:05.480 --> 0:12:08.920 I think it's recovered somewhat since. If we do look 0:12:08.960 --> 0:12:11.800 at that, though, the shareholder return is minus two point 0:12:11.920 --> 0:12:12.520 six percent. 0:12:12.600 --> 0:12:15.560 I think is what I saw. I think it was 0:12:15.600 --> 0:12:16.760 in the annual report. 0:12:17.120 --> 0:12:18.880 I think was the twelve months to thirty or March. 0:12:19.160 --> 0:12:23.200 Yeah, Now that does seem to be a discount, and 0:12:23.240 --> 0:12:25.640 you do talk about this in the annual report, between 0:12:25.679 --> 0:12:31.400 the share price and the assets values. What can be 0:12:31.440 --> 0:12:32.120 done about that. 0:12:33.800 --> 0:12:37.079 Discount? And there is an interesting topic I'd talk to 0:12:37.880 --> 0:12:39.520 at least a third of people I'd talk to. So 0:12:39.600 --> 0:12:41.920 there's no discount because the market's always rome, which there's 0:12:41.960 --> 0:12:44.960 some truth to that rome. And there's definitely a difference 0:12:44.960 --> 0:12:49.439 between the value for one share today versus a majority 0:12:49.600 --> 0:12:52.840 or the whole business in five years time. Really the 0:12:52.880 --> 0:12:56.120 listed price is the price today for any given volume 0:12:56.160 --> 0:12:58.600 of shares, right, So it's not really the long term 0:12:58.679 --> 0:13:00.400 value of the assets, and it's the different between that 0:13:00.440 --> 0:13:03.800 long term value and the current value that people talk 0:13:03.840 --> 0:13:07.440 about the discount. For us, it's really a signal for 0:13:07.559 --> 0:13:10.840 us to think about, is there something about our business 0:13:10.840 --> 0:13:15.199 that's not understood well and should we therefore be issuing 0:13:15.200 --> 0:13:18.720 some communications or bringing people into c our assets so 0:13:18.760 --> 0:13:21.640 that we can take that stuff off the table and over. 0:13:22.200 --> 0:13:24.040 I think the start of this year there was a 0:13:24.080 --> 0:13:26.920 lot of worries about AI and deep seek and the 0:13:26.920 --> 0:13:31.000 implications for CDC, which we thought was what was going 0:13:31.040 --> 0:13:33.280 on with a number of share prices in our sector 0:13:33.320 --> 0:13:35.679 at the time, and so through April we had a 0:13:35.800 --> 0:13:39.280 number of we had to site visit to our big 0:13:39.320 --> 0:13:42.719 development in Melbourne for CDC and a few other communications 0:13:42.720 --> 0:13:45.719 with the team to try and make sure people understood 0:13:46.280 --> 0:13:49.280 how CDC was placed and actually you saw actually I 0:13:49.280 --> 0:13:52.640 think the market react quite nicely to that and the 0:13:52.679 --> 0:13:54.680 share pers kind of move up. So really it is 0:13:54.760 --> 0:13:56.959 for us it's where we should focus our communications and 0:13:57.040 --> 0:13:59.720 tensions where we first go to. Obviously, every day, like 0:13:59.760 --> 0:14:01.920 any normal human, you re examine every decision you made 0:14:01.920 --> 0:14:04.920 the day before, so you do a bit of that 0:14:04.960 --> 0:14:08.040 as well, but mostly it's for communications. 0:14:07.600 --> 0:14:10.960 Thinking of a CDC, though I did think endless this 0:14:11.120 --> 0:14:15.080 time with the release of the four year results, we're 0:14:15.120 --> 0:14:17.920 a little bit worried about the RePhase praising of the 0:14:20.200 --> 0:14:23.920 contracts and the revenue coming in it not being linear, 0:14:24.120 --> 0:14:25.960 I think is what some of them had expected, and 0:14:26.000 --> 0:14:27.480 there was a bit of disappointment there. 0:14:28.120 --> 0:14:29.160 What do you say to that. 0:14:29.840 --> 0:14:32.240 I think we've been pretty clear even actually since the 0:14:32.280 --> 0:14:36.960 half year last year so November that customer demand for 0:14:37.040 --> 0:14:43.200 these particularly AI related workloads was changing very quickly day 0:14:43.240 --> 0:14:45.560 to day, month to month, and a lot of it 0:14:45.640 --> 0:14:50.480 was to do with how the customers were kind of 0:14:50.480 --> 0:14:53.520 equipping themselves and growing to understand the new technology and 0:14:53.520 --> 0:14:56.160 how the infrastructure needed to be built around it. And 0:14:56.200 --> 0:15:02.080 so the result that we we released last week really 0:15:02.120 --> 0:15:05.160 just was a continuation of the same message from November. 0:15:05.440 --> 0:15:07.440 And I can understand it. As an investor, You'd hope 0:15:07.480 --> 0:15:10.760 that had changed in the meantime, but I'm here telling 0:15:10.760 --> 0:15:13.960 everybody now, no, it hasn't changed. We've made some really 0:15:14.000 --> 0:15:17.720 good progress. We signed like a ton of contracts in January, 0:15:17.760 --> 0:15:21.560 which no one else in the market has sign on 0:15:21.560 --> 0:15:24.800 one hundred megawats of contracts in January like we have, 0:15:25.560 --> 0:15:28.920 and all the messages that we were trying to get 0:15:28.960 --> 0:15:31.520 out earlier this year and in the last week around 0:15:31.520 --> 0:15:35.640 CDC's point of difference, it's very strong position in the 0:15:35.640 --> 0:15:39.600 Australian market and being really well placed to when I 0:15:39.640 --> 0:15:41.800 would say more than it's fair share of contracts when 0:15:41.840 --> 0:15:45.360 our customers decide they need them, is actually still very strong. 0:15:45.480 --> 0:15:50.280 So everybody wants their Christmas presents opened earlier, don't they, 0:15:50.960 --> 0:15:53.000 But it's always better if you wait a bit, I think. 0:15:53.040 --> 0:15:54.760 So we're in that mode at the moment. 0:15:54.680 --> 0:15:57.240 Right and see kind of thing day Well, CDC is 0:15:57.320 --> 0:16:00.000 now forty percent of the portfolio. 0:16:00.720 --> 0:16:02.320 Is a concentration risk. 0:16:03.360 --> 0:16:05.760 It is a big part of the portfolio. We've had 0:16:05.800 --> 0:16:08.440 assets that have been a bigger proportion in the past. 0:16:08.480 --> 0:16:11.640 So TrustPower is over fifty percent for a lot of 0:16:11.840 --> 0:16:15.440 the early history of fort till I would say it's 0:16:15.440 --> 0:16:18.120 about as big as you'd want it to be. If 0:16:18.120 --> 0:16:20.560 you stood back over a long term period of time 0:16:21.080 --> 0:16:24.000 we talked about the results. We try and manage the 0:16:24.000 --> 0:16:27.280 stuff over you know, the medium term, rather than really 0:16:27.280 --> 0:16:30.680 reacting really quickly to these things. And what we do 0:16:30.760 --> 0:16:34.600 see is other opportunities within the business growing, having the 0:16:34.640 --> 0:16:36.680 potential to grow quite quickly I think over the next 0:16:36.720 --> 0:16:41.520 two or three years, which should balance CDC's weight in 0:16:41.560 --> 0:16:44.080 the portfolio, if you like. But if I stand back, 0:16:45.160 --> 0:16:48.120 you know, having a big proportion of your portfolio and 0:16:49.040 --> 0:16:51.680 literally the most exciting investment sector in the world at 0:16:51.680 --> 0:16:55.080 the moment is actually a pretty good place to be. 0:16:56.000 --> 0:16:58.920 And you know, you just have to ask yourself, is 0:16:58.960 --> 0:17:01.080 there going to be more or less AI tomorrow? And 0:17:01.120 --> 0:17:03.760 you kind of know the answer right, And so I 0:17:03.760 --> 0:17:06.119 think being right there in a business which, as I 0:17:06.119 --> 0:17:08.520 said before, is incredibly well placed to just pick up 0:17:08.560 --> 0:17:12.480 these contracts as and when they come, I'd still do 0:17:12.560 --> 0:17:14.000 it every day of the week. 0:17:14.280 --> 0:17:19.600 But I is volatile and risky and rapidly changing, as 0:17:19.640 --> 0:17:23.040 you know, So there are surely there are risks there, 0:17:23.119 --> 0:17:25.920 but it's what you're prepared to trade off. 0:17:26.160 --> 0:17:29.000 Yeah, I think the risk is more timing, and even 0:17:29.040 --> 0:17:32.240 then the risk is not very high, and that we 0:17:32.359 --> 0:17:34.879 know where capacity is at with our clients. We know 0:17:34.960 --> 0:17:40.440 that demand is growing incredibly strongly. Therefore there will be contracts, 0:17:40.560 --> 0:17:43.520 and so really the question for us is we're doing 0:17:43.560 --> 0:17:47.000 my weather contracts today, end of the year, early next year. No, 0:17:47.119 --> 0:17:49.439 if you put that in a thirty year valuation model, 0:17:49.760 --> 0:17:53.080 that it moves the valuation literally not at all. So as 0:17:53.080 --> 0:17:55.840 long as you fundamentally believe AI is going to be 0:17:55.880 --> 0:17:58.679 a thing and that CDC will pick up more thanutes 0:17:58.720 --> 0:18:01.959 for his share, we're in an incredibly great spot. You know, 0:18:02.359 --> 0:18:03.800 I would be patient personally. 0:18:04.760 --> 0:18:08.000 That brings me to the Morrison fee, which did create 0:18:08.040 --> 0:18:11.040 a little bit of a flutter four hundred and fifty 0:18:11.040 --> 0:18:17.359 six million, which actually is larger than the net loss. 0:18:18.920 --> 0:18:20.800 It seems a little bit unfortunate that it came out 0:18:20.840 --> 0:18:22.919 when it did, but it is what it is, and 0:18:22.960 --> 0:18:28.040 it was due to CDC having a greater valuation. What 0:18:28.119 --> 0:18:30.760 do you say to retail investors trying to get their 0:18:30.760 --> 0:18:31.359 head around that? 0:18:32.200 --> 0:18:34.560 Yeah, so your four hundred and fifty six million, I 0:18:34.600 --> 0:18:36.840 think is the three hundred and fifty million that was 0:18:36.880 --> 0:18:40.600 accrued in performance fees, which is paid over three years, 0:18:41.240 --> 0:18:43.399 and the one hundred of base fees, I'm guessing is 0:18:43.440 --> 0:18:45.480 how you get that? MAT's. Yeah, So the base fees 0:18:45.520 --> 0:18:48.520 are payable every quarter and that's for running the show. 0:18:49.320 --> 0:18:52.960 The performance fees is really only due to good performance, 0:18:53.000 --> 0:18:58.080 so we have to beat twelve percent returns in order 0:18:58.119 --> 0:19:01.080 to get paid any incentive fee, and it's paid in 0:19:01.119 --> 0:19:05.159 three installments, so that you can't earn fees for a 0:19:05.160 --> 0:19:09.280 blip because if the valuation went up one year and 0:19:09.280 --> 0:19:12.000 you got paid a fee a third of the fee, 0:19:12.320 --> 0:19:16.520 it's very unlikely to stay there for three years, And 0:19:16.640 --> 0:19:18.800 assuming it then came off the year after or the 0:19:18.880 --> 0:19:21.800 year after that, the second two charges would never become 0:19:21.840 --> 0:19:27.439 payable effectively. So the mechanism has a bunch of different safeguards. 0:19:27.440 --> 0:19:30.520 And to make sure that for shareholders that Morrison's only 0:19:30.520 --> 0:19:33.040 getting paid for performance that actually sticks around and turns 0:19:33.119 --> 0:19:37.639 up in the portfolio. So we're only getting paid for performance. 0:19:37.720 --> 0:19:40.040 And there are a number of structural elements to the 0:19:40.080 --> 0:19:42.320 way the fee is paid to ensure it's only paid 0:19:42.320 --> 0:19:43.200 for enduring value. 0:19:43.240 --> 0:19:47.639 If you like, let's look at future growth beyond the 0:19:47.640 --> 0:19:51.960 current portfolio, if you like all the exciting stuff. Your 0:19:52.000 --> 0:19:55.639 guidance was just over a billion, I think, and a 0:19:55.640 --> 0:20:01.320 little bit more. Yeah, I know, exciting. What are we 0:20:01.359 --> 0:20:04.960 looking at in terms of potential and what jurisdictions. 0:20:05.200 --> 0:20:07.320 So the one we're most excited about in the near 0:20:07.480 --> 0:20:11.200 term is a business called guron Energy, which we established 0:20:11.280 --> 0:20:14.920 in Southeast Asia. Singapore is the head office two or 0:20:14.920 --> 0:20:17.960 three years ago. They have this huge project that they're 0:20:18.000 --> 0:20:24.959 working on to export solar power effectively from Indonesia and 0:20:25.119 --> 0:20:28.360 imported to Singapore. And what the Singapore government has done 0:20:28.480 --> 0:20:31.520 is they've looked at their power system, which is all 0:20:31.600 --> 0:20:35.240 based on gas that they import and burn, and they're 0:20:35.280 --> 0:20:38.480 trying to support ways for more renewable power to get 0:20:38.480 --> 0:20:42.560 into Singapore. They're incredibly land constrained, so they've asked for 0:20:42.720 --> 0:20:46.560 people to effectively pitch these projects from Indonesia and other 0:20:46.600 --> 0:20:49.520 countries to input power into Singapore. And we are one 0:20:49.560 --> 0:20:54.080