APA Group (APA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the APA Group Fiscal Year '23 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Adam Watson, CEO and Managing Director. Please go ahead.

Good morning, everyone, and thank you for joining us on what is an exciting day for APA. Let me start on Slide 3 by acknowledging the Gadigal people of the Eora Nation, traditional custodians of the land on which I'm speaking today. //First Nations people have taken care of our lands and waterways for the past 60,000 years. We acknowledge and pay our respects to their elders past, present and emerging. Today is a significant day in APA's history. The acquisition of Alinta Energy Pilbara opens a new chapter for APA. And we've also delivered another solid financial result with growth in earnings and distributions. Joining me today is APA's acting CFO, Kynwynn Strong, along with Darren Rogers, Group Executive, Energy Solutions, and APA's Investor Relations team. We'll split today's presentation into 3 parts, starting with our FY '23 results, followed by an overview of the Alinta Pilbara acquisition and equity raise, and we'll wrap it up with Q&A. But before I start, as we always do, I'll begin on Slide 4 with a customer share that's a clear demonstration of how our energy infrastructure keeps the lights on and industry thriving. For reasons not related to APA, in January this year, there was a 25% drop in gas supply across Western Australia. Fortunately, APA's customers were able to rely on our Mondarra gas storage facility to provide critical capacity and help bridge the supply gap. The Mondarra facility's total storage capacity is the energy equivalent of about 11,000 Victorian big batteries and was critical to ensuring WA's energy network, kept the lights on during these shortages. And now with the recent opening of our Northern Goldfields Interconnect pipeline, we have established a West Coast grid, further boosting energy security for customers in WA. Now let's get into today's presentation by starting on Slide 6. In FY '23 we delivered another solid result with ongoing EBITDA and distribution growth. We completed a range of infrastructure projects that are critical to delivering reliable and secure energy to our customers and our communities. And we're executing our customer-led strategy. This is clearly evidenced by our recent acquisitions of Basslink and Alinta Pilbara, as well as organic developments with the likes of Tamboran Resources, Empire Energy and Arafura. Slide 7 summarizes our financial results, which Kynwynn will cover in more detail shortly. We continue to grow our revenue, earnings and distributions while at the same time making the necessary investments in capability to ensure we can achieve sustainable growth over the long term. And our confidence in the future is reflected by expectation of ongoing distribution growth in FY '24. As you can see on Slide 8, there have been many milestones this year in operations, in building capability, and with the delivery of critical infrastructure. We've also progressed our sustainability agenda. And you can clearly see we have great momentum with the execution of our strategy, which has been refreshed, as you can see on Slide 9. As you know, our focus is to be the partner of choice in delivering infrastructure solutions for the energy transition. We're focused on asset classes where we have competitive advantages and can create value for our security holders, customers and communities. I'll touch on some case studies later, but make no mistake, we are executing on this. To Slide 10. We're actively working with a range of customers to supply energy to new mines, to unlock new gas basins and to decarbonize industry more broadly. We're also investing in our business to ensure we can deliver growth and meet the increasing requirements of our stakeholders, including our investors. You've heard me talk about this many times before. Investments in areas like technology, net zero, business development, operating systems and sustainability are all critical to our future. There are investments that will drive productivity, create efficiencies, strengthen our social license, and positions us to execute our growth strategy. Moving now to Slide 11. Our distribution guidance of $0.56 per security in FY '24 reflects our confidence in the future. At the same time, it reflects the balance we must maintain between the level of distribution growth and ensure we can also maintain strong investment-grade credit metrics, accommodate key investments in the business and fund our organic growth opportunities. To Slide 12. And to lead the execution of our strategy, we've revitalized our executive leadership team. Over the past year we've welcomed Liz and Vin to the team, and we've also announced the appointment of Petrea and Garrick who will both join APA in the coming weeks. These appointments complement the existing diverse skills and experiences of our ALT. And it's a great thing to have such a strong team in place to lead APA. Moving now to our performance outcomes on Slide 14. When I started as CEO, the executive leadership team set 3 priorities that we've rallied our organization around, our people, operational excellence and creating value. Let me take you through some highlights starting with our people on Slide 16. From a safety perspective, our overall [ trooper ] is around the same level as last year. But within this we've made significant progress with our contractors. We'll continue to focus on improving these results. We've also made strong progress in gender diversity and engagement. Having now achieved over 30% representation of women across our workforce. Representation of women in senior leadership positions has also increased. Our employee engagement scores also improved in the last 12 months, and on Slide 16 we call out some highlights on how we're supporting our people. This includes implementing significant enhancements to our parental leave entitlements and completing a review where we've rectified gender pay equity in like-for-like roles. Something I'm incredibly proud of. Turning now to slide 17. As I mentioned before, we've delivered another solid financial result. EBITDA increased by 2%. This reflects growth in revenue, which was largely driven by CPI escalation. And it also reflects cost growth that is necessary to support long-term revenue growth and strengthen our business resilience. Distributions increased 3.8% in line with guidance. We maintained strong free cash flow. It was down slightly due to a temporary step up in our stay business CapEx. But we anticipate that it will begin to normalize from FY '26. Kynwynn will provide more color on our cost programs later in the presentation. And we maintained our investment-grade credit ratings at the same time as investing in the business, including $845 million on growth CapEx that was all funded through cash or debt facilities. As you can see on slide 18, we've also made strong progress on our sustainability objectives. We've developed APA's first reconciliation action plan. We're increasing our support to communities, we've delivered environment and heritage improvement programs, and we've made good progress with the implementation of our climate transition plan. And today we extend our commitment in this space with a new methane emissions reduction target as outlined on Slide 19. We're targeting a 30% reduction in methane emissions across our natural gas supply chain by 2030. We see this target as a starting point [Audio Gap] such as aerial surveys. There's a lot, lot of detail on Slide 20, but the slide captures our strategy on a page and illustrates the opportunity we have to be the partner of choice for customers in areas where we have a competitive advantage. The infrastructure required to decarbonize Australia's energy system is likely to be in the hundreds of billions of dollars. So it's not an issue of whether the opportunity exists, it's about where we focus. To bring this to life, I'll briefly touch on 4 case studies starting on Slide 21, which captures our resources customer segment. Almost all of our mining customers have made commitments to reduce their own emissions. And transitioning their energy sources will play a big role in helping them meet their targets. The work we've done in Mount Isa in connecting solar with electricity transmission and gas-fired power generators highlights our capability to deliver this. The Alinta Pilbara acquisition announced today further strengthens our capability in this $25 billion market segment. Slide 22 shows the significant opportunities we have in electricity transmission, a $54 billion market segment. With the deep operational and project delivery capability we've established an annual electricity transmission team. We have confidence we can play a meaningful role in this space. The third case study on Slide 23 comes back to our more traditional business of gas transportation. Here we see around $8 billion of opportunities in improving capacity, reliability, and security of supply for our communities. The fourth and final example is on Slide 24. It shows the significant market opportunity for the transportation and storage of future fuels such as hydrogen and CO2. So what does all this mean? It means we're executing our strategy and ensuring our business is sustainable for the long term. We have significant growth opportunities ahead and we have strong momentum behind us. With that, I'm now going to hand you over to Kynwynn to go through the financials before I come back to cover market insights.

Thanks, Adam, and good morning, everyone. To reiterate what Adam said, we are very pleased with our financial performance for FY '23. Starting with our P&L on Slide 26. In FY '23 we have delivered another solid financial performance. Revenue is up 5%. Underlying EBITDA is up 2% or 3.5% excluding Orbost, free cash flow was down slightly with the growth in underlying EBITDA and [Audio Gap] tax offset by a higher stay in business CapEx. I'll cover off this in more detail in a moment. We increased our full year distribution by 4% to $0.55 per security. This is in line with our guidance, representing a payout ratio of 61%. This marks 19 years of growth in distribution for our security holders, something we are very proud of. So we're investing in the business to set ourselves up for the future and we've picked up momentum at the same time. We have commissioned a number of critical infrastructure projects through the year and we've continued to execute our customer-led strategy. Moving on to the next slide, Slide 27, and our revenue bridge. We continue to benefit from the majority of our tariffs being linked to inflation, plus the new access arrangements for the VTS that came into effect in January. FX was a small drag relating to the hedge on the WGP U.S. dollar revenues. Operating revenue increased $23 million driven by our East Coast gas transmission assets, particularly the Roma, Brisbane and Carpentaria gas pipelines, which responded to external market disruptions by providing short-term transportation to affected customers. This highlights the benefits of our interconnected grid and our ability to be able to respond to our customers' needs. If we look at FY '24 revenue now, there are a number of considerations I'd like to highlight. We expect to see inflation-linked tariffs continue. Think will make a full-year contribution. Our East Coast Grid expansion will provide increased capacity during the winter peak. The NGI should continue its gradual ramp up over the coming years with around 10% currently contracted. The NGI should also alleviate some of the congestion on the GGP as it offers an alternative supply route. Moving on to Slide 28 and our costs. As Adam mentioned earlier, we are investing in our capability. And this is reflected in both operating and corporate costs. This should not be a surprise given clear commentary during previous engagements. And it is important to note we are targeted and disciplined in making these necessary investments so we can achieve sustainable long-term growth and create sustainable long-term value for security holders. The FY '24 costs considerations to note a continued investment in our electricity generation and transmission business, given the significant opportunity ahead emissions reduction programs and in corporate, which we will grow at roughly half a rate seen in FY '23 before tapering into FY '25 and stabilizing in FY '26. Moving to Slide 29, which provides more detail on our segment results. EBITDA for the East Coast, excluding Orbost was up 4% with tariffs benefiting from inflation and the new VTS access arrangement and some favorable short-term contracting as I mentioned earlier. Young Lithgow pipeline repairs and costs associated with our emissions reduction program were also recorded. The West Coast performed well with EBITDA up 6%, largely driven by inflation. And the Wallumbilla Gladstone Pipeline increased 7% from inflation with a small FX offset. Our electricity generation and transmission segment was up 15% with a first-time contribution from Basslink of $29 million, a pleasing result. Moving on to Slide 30 where we provide further detail on non-operating items. The key one to call out is our transformation projects. To strengthen our customer and employee experience, we are investing in systems and processes to drive efficiency. This includes new enterprise resource planning system and the technology associated with our secure energy program. You'll also see $12 million for accrued interest and reevaluation gains on Basslink, partly offset by integration costs. The other items, including the WGP hedge unwind that currently runs into late calendar year '25 are non-cash. Looking forward, we expect technology transformation costs to peak in FY '24 at around $100 million, and then moderate in FY '26. This includes the projects mentioned above as well as SaaS implementation costs. Moving on to Slide 31. As I mentioned earlier, there was a small decline in free cash flow in FY '23. You'll see in this waterfall chart the largest movement is a $63 million increase in stay in business CapEx. The increased spend was due to reliability and integrity works, especially on the Moomba-Sydney, Roma-Brisbane and Goldfields Gas Pipelines. The Moomba facility upgrade works on the South West Queensland Pipeline and enhancements to our national customer system. We also saw lower cash tax due to accelerated depreciation allowances on 3 projects, the NGI, the East Coast Grid expansion, and the Dugald River solar farm. I also want to call out the net interest line, which continues to benefit from the refinancing we did in May 2021 with all our drawn debt fully hedged or fixed. On to Slide 32. You can see here the significant investments we made in FY '23. We increased growth CapEx across both regulated and non-regulated assets, including $120 million on the East Coast Grid expansion, $149 million on the Western Outer Ring Main project, $233 million on the NGI pipeline. These investments support our energy security in Australia's energy transition and are key to delivering long-term value for our security holders, customers and communities. We have a number of large maintenance programs underway with a total SIB CapEx expected to peak in FY '24 at around $200 million and then taper over the following 2 years. Foundational CapEx needed to meet our legislative, regulatory and environmental requirements will also grow and is expected to peak in FY '24 at around $150 million. Turning now to our balance sheet on Slide 33. The key callouts I'd like to make are, over the last 3 years we have funded $1.6 billion of organic growth and the acquisition of Basslink from our existing cash flow and debt while maintaining our investment-grade credit rating. We have $2.1 billion of cash and undrawn facilities, the majority of which, $1.6 billion, supports our liquidity requirements. Our average cost of debt is 4.4%, with an average duration of 5.7 years. We have a healthy pipeline of in excess of $1.4 billion in organic growth opportunities. Overall, we are very pleased with our financial performance, and we are well-positioned to create value with the opportunities in front of us, setting us up for growth and value creation in the future. Thank you. And with that, I'll hand you back to Adam.

Thanks, Kynwynn. I'll now share with you some market insights starting on Slide 35. An effective energy transition requires energy that is reliable, affordable and low emissions. Australia has a significant challenge ahead to achieve this. A substantial amount of renewable generation must be developed and gas is going to continue to have a critical role to play is supporting this by firming renewables, powering manufacturing and powering remote grids. Last week, [ BCG ] released a report that found that for every megawatt of new green energy that is brought into the system, the greatest and most efficient emissions reduction impact comes if you use it to replace the use of coal and liquid fuels. Let me talk through a few data points that back this up. Slide 36 confirms that the volume of renewables that we need to bring to market is huge. And if we move to Slide 37, you can see that [ Challenge Australia ] has to reach its target of 82% renewables by 2030. We've shown this slide many times now, but let me call out 3 things. First, that the NIM is heavily reliant on coal, which is our highest emitting source of energy. Second, that those economies in Australia and overseas that have been successfully transitioning to renewables have done so by replacing coal-generation with gas. And third, that with renewables proposed to deliver 82% of our energy by 2030, there is still 18% required from other sources to firm those renewables when the sun goes down and when the wind doesn't blow. Now we all want a lower carbon future, and no one wants the 18% to be coal. So we have a clear choice to make. We can keep using coal or we can build our renewables and firm it with gas. The chart on Slide 38 demonstrates this through the projected future consumption of energy in Western Australia. The orange line on the chart reflects the predicted gas demand in the 2021 Western Australia GSOO. After the release of that report, the WA government announced a plan to accelerate the closure of its state-owned coal-fired power generators. These closures were incorporated in the 2022 GSOO. And you can see the significant spike in predicted gas and demand under this scenario as seen with the dark blue line on this chart. To put it simply, to successfully take coal out, gas must come in. Slide 39 further builds on this with a chart showing how critical gas is to manufacturing and in the mining industry's remote grid systems. To ensure industries have the energy they need to remain viable, they need gas. As a society, or at least politically, we've seen a success with focusing on the household consumption of gas. Important, yes, but it represents only 10% of Australia's domestic gas consumption. The rest of our gas consumption goes into making bricks, cement and steel to build our homes. And it goes into making fertilizer to support agriculture and produce our food. And these industries don't have a viable alternative energy source other than gas. Let's wrap this part of the presentation up on Slide 41 with our key messages. One, we're executing our strategy. Two, we're investing in our business, so we have the platform and resilience to deliver. And three, we believe we can strike the right balance between healthy distributions for our investors and positive outcomes for all of our stakeholders. Now with that, I'd like to close our presentation on the full year results and take you to the next presentation on the acquisition of Alinta Pilbara and the equity raising, which we also released today. All right. Let's start on Slide 6. Now before I start, I want to ensure we comply with U.S. securities law. We're limited to only talking about the basic terms of the equity raise that's referred to in today's acquisition announcement and presentation. We therefore ask that you please keep your questions later on to the basic terms of the equity raising as we are legally restricted from answering questions beyond that on this call. If you open your link to Pilbara acquisition investor presentation, we'll start on Slide 7. This is a significant day in the history of APA as we announced the acquisition of Alinta Pilbara, an energy infrastructure business underpinned by high-quality assets in strategic locations and with a team with a track record of delivering safe and reliable operations as well as delivering growth. It's an established business with long-term contracts, with inflation-linked revenues and a significant development pipeline for future growth. Its assets include solar and gas power generation, battery storage and electricity and gas transmission infrastructure. The acquisition provides APA with a significant growth platform to expand our footprint in remote generation regions. And it complements APA's already strong development operational capability in key resources areas such as Mount Isa and Gruyere. Importantly, the business is expected to be free cash flow accretive in its first full financial year of ownership and it will be value accretive. Our FY '24 distribution guidance of $0.56 per security will remain unchanged despite the additional securities on issue as a result of the equity raising. Moving now to Slide 8, which provides a summary of the transaction. The business has been acquired for an enterprise value of $1.72 billion, subject to certain conditions precedent outlined in the presentation. There's no question that we're buying a business on a strong financial footing. It has a strong record for delivering year-over-year earnings growth. The business' revenue for FY '23 was $235 million and EBITDA $124 million, which means it delivered strong earnings and cash flow from day 1. And most importantly, it's a platform for future growth with a significant renewables development pipeline that will support the decarbonization of its customers and deliver long-term sustainable growth for APA. Moving to Slide 9. We've also announced today an equity raise of $750 million. Kynwynn will provide further details on this later. Again, importantly, we've been able to maintain our FY '24 distribution guidance of $0.56 per security despite having the enlarged capital base following the equity rates. If we turn now to Slide 10. We're buying a strong business with a significant pipeline of growth projects that will support the Pilbara region to decarbonize. We've acquired a 60 megawatt solar farm and a 35 megawatt battery as well as 1 gigawatt development pipeline of wind, solar and battery projects. There's 442 megawatts of operating gas plants as well as a 60 megawatt development pipeline of gas-firming already in the approval planning stage. There's more than 200 kilometers of electricity transmission lines. And the development pipeline has over 600 kilometers of electricity transmission. Plus, we're buying the balance of the APA-operated Goldfields gas transmission pipeline, now making it 100% owned by APA. And if you turn to Slide 11, you can see the size of the footprint of these high-quality assets. There are 2 key takeaways on this slide. The first is that you can see the assets are spread right across the Pilbara in key customer locations. And second, the business has been operating in the region for more than 20 years. And it has long-term relationships established with some of the most prominent and low-cost iron ore miners globally, including BHP, Roy Hill and FMG. Moving now to Slide 12. The acquisition leverages our existing skills in operating large-scale gas, renewables and battery storage infrastructure. And it provides the opportunity to capitalize on the increasing need for reliable, affordable and low emissions energy as our customers continue to be carbonized. The fundamentals of the business are compelling. Predictable earnings and cash flows, which are underpinned by inflation-linked contracts, strong and trusted operating and development credentials, an enviable foundation of blue chip customers and a significant renewables development pipeline with high-quality sites strategically located close to existing infrastructure and customers. And with a $15 billion market opportunity in the region, we know it's also going to position us well to support our climate transition plan commitments. Moving now to Slide 13. As you heard earlier in the FY '23 results presentation, our focus is to be the partner of choice in delivering infrastructure solutions for the energy transition. And there's no question this acquisition is executing on this strategy. And Slide 14 brings this to life. Mining customers across the Pilbara have committed to their own emissions reduction goals. Transitioning their energy sources will play a big role in achieving that. We see an opportunity in the Pilbara to do what we've done in other remote regions like Mount Isa and Gruyere. And that's because we know our mining customers are looking for bundled energy solutions to meet their net-zero commitments and energy that is both reliable and affordable. We've got a competitive advantage in delivering this for our customers in the Pilbara. More broadly, acquiring this business will establish a market-leading position for APA as an independent Australian energy solutions provider in Australia's leading mining geographies. With that, I'll now hand it to Darren to take you through these opportunities in more detail.

Thanks, Adam. As Adam said, we are tremendously excited about this acquisition. It presents a significant opportunity for our business to be the partner of choice in one of the world's leading global mining regions. If we turn to Slide 16, I will set the scene about the region we are investing in. The Pilbara is the world's premier iron ore export region. And quite simply, it is known for the vast low-cost, high-quality iron ore resources with access to high-demand Asian markets. This gives us huge confidence to invest and support these customers with the right energy solutions. Moving to Slide 17. We know the sector can't prosper without reliable, affordable and low emissions energy. But they all have some way to go to meet their emissions targets. By 2030, we're talking about some of the largest miners needing to cut their operational emissions by 30%, 50% and even to net zero. As a trusted partner with a track record of owning operating renewable power generation, electricity transmission, batteries and gas-fired power generation, often in remote locations, we're well-placed to support these companies. And if you turn to Slide 18, you'll see that much of this will be achieved by reducing the reliance on diesel in the region. About 2/3 of the 2050 forecast for electricity demand in the Pilbara primarily results from the transition away from diesel fuel. This will of course drive renewable electricity demand for 2050 and require continued investment in bundled energy solutions to support the resources industry to achieve 3 outcomes: energy that is reliable, affordable and low emissions. Moving to Slide 19. The decarbonization horizon after 2050 is expected to facilitate considerable growth in renewables, backed by gas firming. If you look at the bar chart on this slide, you can see the rapid growth in renewable electricity. To paint a picture, by 2040, we're expecting renewables demand in the Pilbara to grow by 30x the demand you see today. And our forecast see this growing further after 2050. As I touched on earlier, we expect much of this future electricity demand to be underpinned by the decarbonization of heavy haul trucks, machinery and locomotives. As the requirement for new sources of renewable generation, such as solar, wind and batteries grow, we also know it needs to be backed by gas generation. Moving to Slide 20. The 24/7 nature of remote mine operations in the Pilbara means the demand for gas power generation is critical. While we expect batteries and other technologies to play an important firming role in the Pilbara, we still see gas underpinning the region's reliability. That's because it's capable of being turned on in minutes and able to be sustained for days. This gives it a unique ability to deliver energy security when it's needed most. Turning now to Slide 21. As Adam said, we're acquiring a business with strong foundations. The Alinta Pilbara business has a proven track record of operation and development of renewables and transmission assets. And about 70% of its contracted revenues are periodically adjusted for inflation. This puts it in a strong position to pursue the pipeline of growth projects. Moving to Slide 22. The platform is significant. We estimate the total investment in electricity generation infrastructure required to decarbonize the Pilbara to be about $15 billion. And this acquisition alone provides a potential $3 billion pipeline of projects over the longer term. This pipeline already has momentum with strategic sites and approvals secured for key growth projects, which include projects currently under construction, with remaining committed CapEx of approximately $150 million over the next 2 years. It's our big platform for growth. Moving to Slide 23. Pleasingly, its ongoing investment in renewables also supports our medium- and long-term climate transition plan goals and targets. We have revised our emission intensity baseline in line with industry practice. As you can see on this graph on the left, we will remain on track with our 2030 and 2040 energy intensity goals. In relation to our gas infrastructure emissions intensity, the acquisition does not change our gas scope 1 and 2 emissions. And we remain on track with our 2030 and 2050 goal. To Slide 24. In light of the change to APA's total emissions that come from this acquisition, the displacement of diesel in the Pilbara is critical to the overall decarbonization of the region. On to Slide 25. Before I hand over to Kynwynn, I'll quickly recap on 3 key messages. First, we have huge confidence in the region with its low-cost, high-quality iron ore resources. Secondly, the platform for growth is significant, and it already has momentum with projects under construction. And third, APA and the Alinta Pilbara business that we're acquiring is best-positioned to be the leading independent energy provider in the Pilbara. Kynwynn, over to you.

Thanks, Darren. Let's go straight to Slide 27. As Adam said earlier, we believe this transaction is accretive for our security holders. The business has predictable earnings and cash flows with long-term contracts, largely inflation-linked. It is expected to be free cash flow accretive in the first full financial year of ownership and value accretive for our security holders. And our FY '24 distribution guidance remains unchanged on the enlarged capital banks. Importantly, we believe it is appropriately funded, including the equity raise today, demonstrating our disciplined investment approach. Moving now to Slide 28. This slide gives you a financial summary of the business and the split of revenue and EBITDA by asset location. I will make 2 important points. First, this demonstrates the strong growth that Alinta Pilbara has delivered in the recent years as new projects have come online. As you will see in the tables, revenue and EBITDA growth has been strong across FY '22 and FY '23. This has been driven by the Chichester solar farm and the Newman expansion coming online in November 2021 and the first half of FY '23 respectively. The second point is that it provides a solid uplift in APA's revenue and EBITDA base and our pipeline of growth opportunities. On a pro forma basis, FY '23 would be an 8% increase to APA's FY '23 revenue and a 7% uplift in EBITDA. With the successful acquisition of Alinta Pilbara, we also expect to see our pipeline of growth opportunities over FY '24 to FY '26 increase from more than $1.4 billion to over $1.8 billion. So the key message here is that Alinta Pilbara has delivered strong growth in recent years. And with the pipeline of growth projects in front of us, we see opportunity to keep delivering on this growth. Next slide, please. Slide 29, I won't go into detail here. These tables show how this acquisition diversifies our business and increases our exposure to the fast-growing West Australian market. Moving now to Slide 30. This slide shows we are funding the acquisition with the use of equity and debt. While it has been broadly acknowledged that we are in a strong position from a debt perspective, we believe this is an appropriate funding structure to support our growth initiatives and at the same time deliver sustainable growth for our security holders. As we discussed in the full year results presentation earlier, we have a $1.4 billion organic growth pipeline that we need to fund as well as our transformation projects. We've also spent $845 million in FY '23 alone to execute our development pipeline which was funded by cash flow and debt. So what we've done here is to ensure we've got the balance right. We have an appropriate mix of debt and equity to execute on our strategy while delivering long-term sustainable value for our security holders. Moving now to the final 2 slides. I won't go through the next 2 slides in details. However, they provide you with the information around the equity raise as it relates to the structure, price and, importantly, timetable. With that, I will hand you back to Adam to make some final remarks before we get to Q&A.

Great. Thanks, Kynwynn. And look, we acknowledge that there is a significant amount that you have had to digest today. So we do appreciate your patience. So to wrap it up, it's obviously a very big day for us at APA and one that will shape our company for the decades ahead. We appreciate the time you've taken again and look forward to Q&A in a moment. As you can see, we've delivered another solid set of financial results, and we're investing in our business. Today's announcement in the Pilbara is a perfect example of that. We've acquired a business that has predictable cash flows and a strong platform for growth in the Pilbara regions. And it gives us a scaling capability to be the leading provider of energy infrastructure solutions for the remote regions of Australia. This transaction, together with the recent acquisition of Basslink and the numerous organic growth projects we've announced in recent months is demonstration we're building momentum and executing our strategy. Thanks again. What I'll do is hand it to the moderator, and we'll go to Q&A.

[Operator Instructions] Our first question will come from Anthony Moulder of Jefferies.

I wanted to talk more about Alinta than the FY '23 results, if I could. So if I start by asking some of the, I guess, points I'm trying to get to the accretion that you see. If you can start with the sort of sustained business CapEx that you're expecting from Alinta going forward, please?

Yes, sure. Thanks, Anthony, for your question. As we look at the Alinta portfolio and the CapEx outlook there, if I could kind of summarize it to say that on average, on an annual basis, the $25 million to $30 million would be a reasonable number to use.

All right. Perfect. And similarly, the funding would be at the group average of 4.4%. Is that a fair expectation that we should have?

For our debt?

Yes.

You're talking about our debt portfolio? So I think you need to recognize that, that was done at a time when interest rates were at a lower rate. All of our debt is fully hedged that we have today or fixed. But as we go out to secure the funding for this acquisition, you would need to look at the current pricing of debt, taking into account our BBB Baa2 credit rating.

Understood. And similarly, the tax position, how does this change the cash tax paying position of APA going forward, please?

I'll answer that at the, sorry, the APA level. So we described how we've gone back into a tax paying position starting in FY '24. Over the next 12 months, we will work through all of that information, and we'll provide you with that detail.

Okay. So [indiscernible] we shouldn't think about that as being part of a part of a drag on the free cash flow accretion for this deal?

Well, that's absolutely part of the free cash flow calculation. So that's captured in that number. I'm happy to take you through the detail. We can do that in a later call, if you like. But when we're looking at the free cash flow accretion in the first year of financial ownership where we're talking about it being accretive, the tax is absolutely captured as you stay in business CapEx. It's a standard way that we calculate free cash flow in our business, and you'll see it in the footnote there. The other point that I'd like to make there is when you're looking at the free cash flow accretion on a per security basis, we're using the full $750 million. So rather than just using the placement amount, which some companies do, we are taking the full $750 million into the denominator and we're saying it's free cash flow accretive.

Thanks, Anthony. Next question, moderator.

The next question comes from Rob Koh of Morgan Stanley.

I'm not really sure where to start with the congratulations, but maybe with people and with your new appointments and in particular a new CFO who has some big shoes to fill. So congrats on that. Turning to the transaction. Maybe can I just ask on the revenue. You mentioned that 70% of it is CPI-linked. And if you could just give us color on how should we model the other 30%? And I guess I'm presuming that there's no gas commodity risk in that.

I might get Darren Rogers to answer that one, Rob.

Yes. That's right, Rob, any gas commodity risk we look to be passed through or suitable arrangements with a customer where they provide the gas into the [indiscernible] that we haven't been looking at. In terms of the other 30%, more broad guidance would be around just looking at an average rate of return to the asset class that we deliver. And generally, it will be a fixed period for a shorter time.

Okay. I understand it's pretty standard for infrastructure of this kind, I guess, is how I'm hearing.

That's right.

Okay. Yes, cool, cool, cool. And then just if I can ask a more qualitative question on the due diligence that you've no doubt done with the age of these plants, some of them initially commissioned in the '90s. And also, in particular there are some mining companies, none of your customers here, but there are some mining companies with material First Nation disputes. So just if you could comment on age of plant and First Nations' engagement that we've done.

Yes. Rob, look, I'll just tee off and then I'll hand it over to Darren. And it's quite ironic that Darren actually worked on a number of these plants earlier on in his career. So he knows them very well. But we've obviously undertaken a very extensive due diligence process, looking at all sorts of things, including the condition of the plants, and you'd expect us to do that, and it helps for all sorts of things, including our lifecycle maintenance programs and the like. So obviously we're very comfortable with how all of that plays out. When you look at the life of these assets, you're also looking at the life of the mine, and the valuations go to all those sorts of assumptions as well, which, obviously, we're not going to go into any of that sort of detail, but you can understand that we've been through that sort of process. And the other thing I'd say from a First Nations' perspective, I think it's a testament to the Alinta team to -- and Alinta team just generally, it's a really impressive outfit. And from their leadership or through to the people on the ground has been a really impressive group of people who have taken the business from what was quite small in embryonic not that long ago to a really impressive successful business for significant growth opportunities. They brought a number of projects to market. There's a number of agreements, including formal agreements with the main First Nations people in each of those areas. And one of the things that we are very keen to do as part of our program to integrate the business is ensure that we also continue to work with the traditional owners and further strengthen the relationships with the people in the broader communities in those areas. Darren, I might just hand it to you, if you just want to make a few comments on the actual fleet itself.

Yes. Thanks for the question. Probably 2 parts to that question. You asked the diligence question, which is a good question. We had a really comprehensive [indiscernible] simple and based due diligence process that ran prior to the process starting into the process and then leading in the last week or so. A key line of inquiry for us certainly was fleet age. I would describe the fleet age as mixed. There are absolutely older frame machines that do date back some time. Of all of the machines at this age, the GE platform that's there are good machines they have of this age group. There are an aeroderivative machine, which is a little newer than that, sort of the 15 to 20 years benchmark, and then some newer reciprocating engines, which are very efficient and in very good condition. So part of the due diligence, we really looked at that fleet mix, combined with how the renewables will come into the portfolio. We have a view that with more renewables coming in, the older part of the fleet will more likely become more peaking over time. That's obviously driven by customers. But with the climate transition plans and goals and targets of the customer base, both the existing customers and new, we think there'll be strong demand for that firm renewable product that Alinta is providing today and that we think we can grow.

All right. Sounds very comprehensive. Maybe just one final question. You've given us an indication of the average contract life of 7 years for these acquired plants. And what will that do to the weighted average life of the APA Group, up or down?

Yes. Look, Robert, we -- it's something that we sort of moved away from over the years because I think it's a bit misleading to throw out an average number and then everyone just assumes that every -- I think we're still at around 10 years. So everyone just assumes that every contract is 10 year which is actually not the case. So I think the way to describe the region is typically they're longer-term PPAs, they're longer-term contracts. And obviously it's very different to being on the grid where you're providing energy into the market at effectively a spot rate. This is all about critical, reliable supply of energy for our customers. They're trying to wrap solutions across renewable power generation, gas peaking, gas transportation and storage and also batteries. So they are bundled solutions generally long-term contracts. As you go to renew them, often they're not necessarily at 15 years at renewal, you'd be renewing them at sort of around that 3- to 5-year mark. It obviously depends on what the customer is looking for. But no, we're I think over time, this is going to be very consistent with the business profile that you've been accustomed to, which is principally longer-term contracts, particularly with the new developments.

The next question comes from Ian Myles of Macquarie Equities.

Just 1 on the Alinta side. Can you basically highlight, does your internal modeling mean it's EPS-accretive as well? Or is it just cash flow accretive?

Hi, Ian, we're talking to the free cash flow accretion. So we focused on that, given that's what we believe is important to our security holders. And that the FY '25 number that we've really highlighted there.

Okay. Can you tell us which contracts don't have the CPI [indiscernible] you highlighted 30% of the revenue doesn't actually increase the CPI?

No, we're not getting into that level of detail. And obviously we're bound by confidentiality with our customers as well. So even if we wanted to, we couldn't.

Okay. On the MSP, back on the more mundane stuff. It had a really soft second half, is that the implications of the Origin repricing into the contract and should we see that sort of continuation of a soft performance into FY '24 as that rolls forward? Or will the new expansion offset that?

Ian, there is a couple of things going on there. So of course, there's always the weather overlay. But the MSP is the one that we continue to do maintenance works on. So part of the increase in the SIB CapEx that you would have seen coming through in the free cash flow is on the MSP just to keep it in tip-top shape. It's a very important thing for us, to keep our assets safe. And you're right as well, the Origin contract started in January. So that gets thrown into the mix. As you look forward, what we've tried to draw out where we've given you those points on outlook consideration with our expansions coming online too that we're able to sell the capacity during those winter peaks. So you'll need to factor that into your numbers as well.

Yes, that's right. So lastly, does that extra sale of capacity offset the impact of the contract repricing downwards?

Well, our recontracting pricing has held up really well. In fact, our recontracting generally during the period has been really positive. We're seeing longer term contracts come into play. Several weeks ago, only a few weeks ago, we signed a 10-year GTA with a large industrial user in New South Wales. So I think the thing here to understand is the ebbs and flows of the market. And it's been a pretty interesting time for the market and for our customers over the last couple of years. And you know, whether it be through government policy concerns or whatever, its -- we've had to move with our customers. And if they've been looking for shorter-term contracts, then we've been providing them with shorter-term contracts. And as they're building their confidence and as they're building momentum in their own business, we work with them on that, and we're seeing longer-term contracts come through. So I think overarchingly, Ian and for the audience is from a recontracting perspective, we're in a good space. I think the ups and downs that you're seeing and often you'll want to focus on the downs, I think Kynwynn has described as they might be related to, again, MSP integrity works or we'd had a good period in the last one and it's normalized. We, as you know, not a big proportion of our earnings are revenue-based, sorry, volume-based. But we do have some exposure to volume-based earnings and sometimes you're up, sometimes you're down, but over the, through the cycle, we are normally staying fairly consistent in terms of our growth profile.

Okay. Corporate costs, you sort of give that guidance. It's half last year. I just want to make sure I'm comparing the right numbers. This year it went up by sort of 27%. So should we, thinking 13%, 14% is the sort of range that you're sort of suggesting?

Mathematically, that seems to be fairly close, Ian, but if we're --

No, that's just to make sure I'm dealing with the same --

Yes, no, no, no. You've nailed it. No, no. And look, we've been very clear for quite some time now around the investment that we need to make in the business. And we are doing it and we're getting results because of it. And remembering a lot of this is our expectations about communities and our customers as well and the work that we're doing around net zero and sustainability and regulatory. So we are really making sure that we right size the business. The one thing that we're really doing now, and we've tried to provide more clarity here than we've done before and likely to do again is to, A, show you where the costs are coming from and where they're going. And importantly, to give you the confidence that we are trying to right size, but we also know that they've got a reset and rebase at an appropriate level of time. And from a management perspective, we're structuring the business in that way.

That's sort of good segue, Adam, into the maintenance CapEx. It's clearly going to be a focus to investors.

Yes.

Talking with higher number for FY '24, FY '25, what is normalized, and what can you see now in size of your business as a normalized CapEx? It's probably inclusive of that sort of a link to business on that long-run basis.

Yes, look, I'll let Kynwynn sort of give you a more specific answer around sort of numbers. And obviously we don't provide guidance beyond what we've provided. But I think there's a couple of things to note. One is our assets are getting older. And I've said this a long time, but the older we get, the more maintenance we require, whether you're a human being or whether you're a pipeline asset. So we've got some assets that are aging. And for us, reliability and integrity of our assets is absolutely critical. So we work really hard on making sure that we've got strong integrity programs in place to continue to do that. So but MSP as an example, that is a, that will continue for a long time, but it is a very focused effort, if I can put it that way at the moment in terms of the work that we're doing on that space. When you look at some of the kit and some of the assets that we own and you take Alinta Pilbara that we're going into, things like power stations, we are making investments over the coming 12 to 24 months on areas like [indiscernible]. Which goes, again goes to the integrity of our assets, in part because we're bringing renewable power generation into the grid. And that power generation is intermittent, which means your assets need to work harder because they're turning off and on a lot more regularly than, or lot more often than what they used to. So it is certainly going to be a step up. And again, we've been talking about that step up for a long time. But it's, we can't say to you, I think that the days have gone where you could put a number in and it's going to be that number every year. It's going to be a bit lumpier. But Kynwynn, if you want to make any further comments.

Yes, the only bit that I'd add to that is you can see what we've spent in '23, which depending on which number you're looking at, the $193 million includes the technology lifecycle CapEx, as well as our operational SIB. And that number that we've provided, that $200 million in FY '24, that includes both those buckets as well. And then it will start to normalize. And this is something our operations team spend a lot of time looking at and optimizing to make sure that we get the balance right of keeping our assets at the level of reliability that we want, need and expect, as well as being very conscious of making sure that the cash flow is very, very manageable.

The next question comes from Tom Allen of UBS.

Congratulations on the transactions you've announced. I might sneak a question just on the base business before jumping to the transaction if I can. I should say also congratulations on safely commissioning the Northern Goldfields Interconnect recently. I note that the uncontracted capacity outlook on that asset remains only 10% contracted for the next 3 years. So, given including today we're hearing that that APA's outlook will increasingly include a lot of greenfield development, can you share some detail on how APA will manage commercial contracting risk going forward for new assets? Is there a level of underwriting we can expect for new greenfield developments?

Yes, thanks, Tom. Look, firstly on the NGI, just to be crystal clear there, I think, well, I'm actually surprised that it has come as a bit of a surprise because when you go back through the history of our business and our assets, these assets normally take 3, 4, 5 years to ramp up. If you look at the GGP and you go back to the 2000s when we commissioned that, it took, I think 4 to 5 years before it got to, it never gets to, rarely gets to full capacity, but at that high capacity level. So what we're saying with NGI is that it is going to take some time to ramp up. I just want to correct that we we're not saying it's 10% for the next 3 years. We're saying it's around 10% now, and it will slowly ramp up over time. There's lots of interest. And in fact our customers have been announcing discussions that they're having with us around lateral small spurs or, and laterals and those sorts of things. So that'll play into it. But what we've got to do as an infrastructure company is at times build these assets ahead of demand and make sure that we can back ourselves to bring capacity to market. And when you look at the work that we're doing in WA as an example, given NGI, the mining regions where we've got these assets, are going to grow. We have every confidence. We do a lot of work with our advisors to confirm this as well, but we're very confident that will grow over time. Look, I think when you look at where a lot of our growth is going to come from, if I pick two core markets, you've got the work that we're doing in the remote regions. That's really working with both large and smaller resources customers and effectively trying to help them find solutions to decarbonize. And they're probably going to be more underwritten than say a pipeline, you're effectively because they're dependent on the reliability of supply. They want to know that you're there. And then obviously the negotiation there is that we need to get remunerated from that day one. So it is more I guess consistent in terms of the ramp up and the volumes that you generate in that space. If you look at the electricity transmission space, again they're projects which take a fair bit of time to construct, but generally once they constructed, the activity is there because they're providing almost like a base load type level of capacity. And then when you get to the traditional pipeline business, it's going to be a bit of both. When we go out and develop further expansions in East Coast Grid we are definitely taking risk on that one because we're building it effectively for peak periods. And we know that we can generate good returns over those assets over time. The ramp up might be a bit slower than on some of the other assets, but the returns are healthy. And we also know we've got a really important community role to play in that space. We do not want to be an organization that is going to be responsible for energy shortages, in particular when we've got confidence that -- with the demands there. So we're trying to bring it to market ahead of demand and we are confident that over the longer term we'll continue to create value.

Thanks, Adam. I hear your example on the Goldfields Gas Pipeline taking 4 to 5 years to lift capacity, but do you think the new policy environment, the regulatory environment, including for approvals, environmental approvals, planning approvals, do you think that warrants any more caution on the level of underwriting that you'd assume for new gas developments compared to historically? I guess the second part of that is I hear your comment on taking some risk on the East Coast Grid, recognizing you've got some assets there that can play a key role in bringing gas from Queensland down into the tight markets in New South Wales and Victoria. But I mean, there are some material commercial risks, presumably if an LNG import terminal were connected on the East Coast, could that not offset a lot of the demand for that seasonal swing on the investment you're taking on the East Coast Grid?

A couple of things in that, Tom. So firstly working with landholders and First Nations communities and communities more broadly has never been easy. It is getting harder, there is no question. And that's one of the things we're really good at. So we've brought 15,000 kilometers of pipelines to market. We've got very significant renewable power generation and gas peaking plant infrastructure as well as electricity transmission infrastructure that we've brought to market. So we know that we need to continue to work closely with them to ensure that we're doing the right thing. And one of the things that we can do as an independent Australian company is also provide optionality in that regard. So that is priority number one. I'm not saying it's easy. I'm saying that it's just a part of doing business and we'll continue to focus on. Regulatory environments are always interesting. But I'll say two things. If you look at what's happening in Western Australia, I know, and you can read that the support for bringing these assets online and, and they simply don't work if they're regulated because we're effectively providing customers with service. And when you look at these assets over the coming decades become more a provider of support for gas peaking generation, you're going to need more service, not less. So we all struggle to see how a regulatory environment would work with some of those assets in the longer term. So it's not -- I'm not saying it's without risk, but I'm just saying that it certainly makes sense for those assets, and that's our focus, the assets that we deliver to be contracted. So I'm very confident we've got support of the communities. I'm very confident we've got support of our customers. I know it's going to be hard. Everyone wants green energy. Not many people want it in their backyard. And we've got to try and get the balance right. But the one thing we know is to decarbonize our energy system in Australia we need to bring a lot of renewable power generation and gas-fired power generation to market. And we've got to take the coal out. It makes no sense to keep the highest emitting energy source in the system. And in particular when it's being subsidized by mums and dads and tax taxpayers because the governments are subsidizing those coal-fire generators.

If I can just sneak a question on the transaction. I'm just trying to interpret the EBITDA split of the Alinta assets on Slide 28. But can we assume near term that most of the earnings are likely coming from the 2 large gas-fired power stations supporting big industrial mining customers to taking out the 25% contribution from the stake in the Goldfields pipeline?

So Tom, can you ask your question again for me please?

Can we assume near term that most of the earnings, most of the EBITDA in the Alinta assets likely come from the two large gas-fired power stations that support industrial mining?

Yes, correct. Yes.

Yes. And so the implied transaction multiple at 12.9x FY '24, that sounds akin to a pipeline transaction multiple. I'm sort of looking back at when APA acquired the Diamantina Power Station in Queensland, so it's also a gas-fired power station supporting large industrial miners, some growth in the region as well. I understand APA paid about 8 to 9x if I recall correctly. And I'm just thinking about some of the press reports over the last few months relating to the Alinta assets that refer to quite complicated contract arrangements supporting these assets. So considering all that, are you able, Kynwynn, to please outline why these particular assets justify such a strong multiple and how we should think about the value that APA's paid for the development pipeline?

Yes, Tom, look, I might take that one. Look, a couple of things. So firstly, from a customer perspective we are dealing with very large mining companies who need reliable, affordable, and low-emissions energy. So of course they're going to be very commercial in the way that they operate and they negotiate. But if you look at our customer base in the rest of our business, that's who we deal with every day. So I, yes, you can read into whatever you like in terms of the media, but what our job is to do is ensure that we continue to provide them with reliable energy. And that's the critical thing. If you speak to any mining company about what their priority is with their energy needs, they will always tell you reliability and safety is the key priority. And we know that we can do that. In terms of the multiple, I know that it's very topical. And I think you've summarized it reasonably well. I'd love to be able to share with you, I'm not allowed to, but I'd love to be able to share with you what we've seen in the multiples paid for other on-grid transactions recently. And if you look at the multiple that we're paying for this business, we think it is very fair and reasonable and obviously creates value. It's obviously a mix of gas pipelines, electricity transmission gas-fired power generators and renewable power generation. And I think the other thing that you've got to reflect on, and even if you look at APA's multiple and compare it to what we've paid, this business has got a $3 billion organic growth pipeline which you can even contrast that to APA which has got a large pipeline of opportunities, but this has got a significant development pipeline. Now we need to be incredibly disciplined with that. But one of the things that this transaction affords us is that there's going to be no shortage of opportunities. It's about making sure that we work with our customers and we are really disciplined in how we bring it together. And obviously we're going to focus on delivering the customers a solution they want. But equally we need to make sure that we're creating value for our security holders. And, and that's one of the things that we've tried to do and which this transaction does for us, is position us in a way where we can be selective. We want to support our customers being selective in how we grow the business.

The next question comes from Alistair Rankin of RBC.

And congratulations on the transaction. I might just extend on Tom's question there around the gas, the Alinta gas stations. Just looking at the [indiscernible] it looks like it's a slightly lower EBITDA compared to the Diamantina asset on a sort of megawatt like-for-like basis. Is there an opportunity for some growth in EBITDA there from that particular asset? And I guess I'm just trying to understand what the difference there is between those two assets.

Yes, Darren here. Maybe just a couple of things. One is certainly the plant sizes are different, number one. Port Hedland is actually, whilst it looks like one power station, it's actually two. Boodarie and Port Headland. So they are actually physically separated. On the EBITDA question. They are slightly older machines as well, so a little more expensive to maintain than Diamantina. Diamantina is actually a combined cycle plant. So it's gas turbines with a heat recovery steam generator. So it's more efficient. And per megawatt you'll always see lower cost. And the Port machines are a little older.

Okay, that's very clear. I might just ask something about the base business then. It looks like the stage one of East Coast grid expansion is coming to a conclusion. Now, I believe in the past you've guided to about $190 million of revenue accretion over a 3-year period following that completion. Can you just comment on what the expected profile for that $190 million being added might be?

Alistair, can you explain to me where you got the $190 million from?

I think it was maybe an older release from around 2021. It might even still be on your website. Yes, I've got the release from 5th of May '21. There's an initial 3 year gas transmission agreement with incremental revenue of $190 million.

That's not a East Coast Grid expansion. That's the origin contract. Yes, that's separate.

Yes, they're not linked. Yes. Yes. A multi-asset service arrangement that whilst it uses the capacity, it doesn't solely use the capacity.

Right. Understood. Just another question around, there's some focus on micro grids and bundled solutions for customers. I guess since the last time you commented on this, how have you seen customer demand for these particular products evolve over the last 6 months?

Look, the first thing is that they're all different. Customers are looking for different solutions. Some so take -- yes, actually I won't name names, but some customers are looking to bring firm reliable energy to market first, and then they'll bring renewable power generation in. So they might start with a co-generation plan or a gas-fired power generator to start with, and then they'll transition to renewable energy. What we're seeing with the newer mines is that there's a lot less capacity to just start out with diesel fire power generation, like I guess you used to more traditionally in the past just because of the emissions. So we're seeing a mix. We're seeing the existing customers want to decarbonize bring their renewable power generation to market. Often they'll be staging it. You can see what's happening with the Dugald River solar farm in Mount Isa where it's been, it's started out as half -- it started as a 44 megawatt solar farm. It's up to 88 megawatts. And it's being incrementally developed as the customers are getting comfortable with the energy load and how it's working with the gas [indiscernible]. So it is really different. And then there's also different sort of delivery models where some customers want to completely outsource it. Some customers want us to operate it and they want to maintain a level of ownership or a level of interest. And again, one of the things that we're very keen to do is work with our customers at looking at all those type of solutions. And if we can make it work well for both parties, then we can do that.

And if I can just sneak one very quick last one on Basslink. Regulatory process. How's that been progressing? And is there any timeline for that at the moment?

Yes, there is, it's progressing well, but there is not a set timeline on how quickly those things progress. So, but we've done a lot of community consultation and engagement. We're working closely with the regulators. And we're trying to do all the right things as we progress that. In closing, so we've got about 8 minutes, so I know we've got another couple, so we'll try and rapid fire questions and answers this time around.

The next question comes from [ Michael Tomalaris ] of Jarden. Please go ahead.

Just on the East Coast Grid stage 3 expansion, can you please provide an update on the project status, target timing for FID and indicative costs?

Look, we're not going to provide any indicative cost. I might actually get Darren. Darren's all over this as well. So I'll get Darren to answer --

Yes, I'm going to have to answer it's a work in progress. And couple of things I would say. So we have commissioned the first stage and the second stage is well in hand. We are seeing strong demand as anticipated, particularly through the winter period of '24, '25. When we define winter, we are looking to define winter a little more broadly than the 3 months. We are looking to define that a bit more towards 6 months. So we are seeing strong demand in the next couple of years, that's for sure. And so we'll assess that demand against the cost deck that we can put up for the East Coast Grid stage 3. Have a look at the overall supply and demand. And then as we set forward, we'll look to see whether that's a project that works for our customers and then work for us as well.

And just on the Kurri Kurri Lateral Pipeline, has there been any updates to cost estimates there as well and the expected lead time for completion and start-up FID?

No, we're getting close to that. We're making good progress on Kurri Kurri, and we're at that point where we'll be very soon talking about those sorts of things. So it's, moving in the right direction is the key takeaway.

The next question comes from Nathan Lead of Morgans.

First one for me. You've obviously brought 3 sort of key projects online in that fourth quarter of FY '23 to Stage 1 of the East Coast Grid expansion, NGI and also Mount Isa solar just so 2 questions from them. First, did it hit the criteria for getting the immediate expensing of CapEx? And secondly, is there a way that you can provide some maybe some aggregate EBITDA contribution from those 3 projects for FY '24?

I'll answer the second question first. No, sorry, we can't. And on the immediate expansion, it was those 3 projects that I highlighted before, the NGI, the East Coast expansion and the Dugald River, which in just in case people haven't registered this that used to be called the Mica Creek Solar Farm. It's been renamed Dugald River.

Yes. So they've got immediate expensing for tax purposes?

Correct. Yes.

Yes. Great. Second question for me, moving across to the Pilbara business. Can you just talk through the existing assets? Is there, I suppose, latent value, sort of surplus capacity within those assets that haven't been contracted?

Darren?

Yes. Look, that I think the short answer is we think there is. And we think there's some really nice adjacencies working with the Alinta Pilbara team and the APA team, that we can create some value there, yes.

Great. Okay. And then third, just if we go to that Slide 22 of the acquisition pack, can you just talk through that those assets that are under construction that you're going to be bringing into operation, how much more spend is left on those to do that? And can you give us a steer about how much incremental EBITDA they will provide when they come into operation?

I might take the second question first, which is, no, unfortunately, we can't. The first question, though, I think we outlined that there's around $150 million to spend over the next 18 months or so.

There are no further questions at this time. I will now hand the call back to Mr. Watson for closing remarks.

Okay. Well, look, thank you very much for taking the time to stay with us. Look, in summary, I just want to reiterate what I said before. It's a very important day for APA. We're clearly executing our strategy. I think the results are solid. We continue to grow our earnings. Our distribution guidance remains positive. And importantly, we've quite a business here that not only has predictable cash flows and a strong growth platform, but also we'll be able to use a very strong platform for growth in the years and decades to come. So thanks again for your patience. I know it's been a lot to digest and absorb today. I also just want to say a big thank you to the APA team for an enormous amount of work that's always involved in bringing results like this together as well as with the transaction itself. But with that, I will say thank you, and enjoy the rest of your day.

That does conclude our conference for today. Thank you for participating, and you may now disconnect.