BlueScope Steel Limited (BSL) Earnings Call Transcript & Summary

Good morning, and welcome to the BlueScope FY '21 Financial Results Presentation. My name is Mark Vassella, and here with me today is Tania Archibald, our CFO. It's my pleasure to talk you through a set of results today that we are very proud of. For more than 10 years, we've been working hard to set up our business to be resilient through the cycle. These results reflect a strong macro environment, successful growth strategies and provide us with the opportunity to set up the business for the future. I'll run you through the highlights, Tania will then address segment and balance sheet performance, and we'll then take your questions. But firstly, the safety and a reality check, where our performance on the lag indicators has further deteriorated. Whilst conditions through the year from COVID-19 disruptions and strong demand added complexity to the way we work, this is no excuse, and we must do better. Our injury profile continues to be dominated by sprains, strains and lacerations, and the only positive I take from our performance is that, this year, we saw a material reduction in severity, with less than 1% of these injuries having the potential to be permanently life changing. As we've said over the last year, we're substantially evolving our approach to safety, and I'm convinced that the new strategies that we have in place will improve performance over time. We're pursuing a lasting change in our performance, which requires a large-scale cultural shift rather than a temporary Band-Aid solution to manage a number on a page. This approach will take perseverance and is not yet reflected in our lagging indicators. These lag indicators are important as they add context to our lead indicators, which allow us to understand the effectiveness of our controls and to better focus our efforts. Over the last year, we've had over 1,000 leaders from across the company, including all of the Board and the ELT attend our refreshed HSE risk program, which places emphasis on practical applications and learning activities. This is a core enabler for the cultural shift we're seeking. In line with the evolution in our approach, we've seen encouraging increases in the capacity with which we manage health and safety across BlueScope. We've also focused on a team-based risk control projects, of which we've completed over 400 this year. These projects, along with a range of other activities, have focused our efforts where they're needed most and leverage the knowledge of our people across all of our businesses in designing more effective controls. Going forward, we'll continue the rollout of our evolved approach alongside global experts, industry bodies and our value chain partners. We'll also remain steadfast in our focus on managing COVID-19-related risks, and we'll shift our focus to supporting our employees to get vaccinated to play our part protecting our businesses and our people and supporting the progressive reopening of the economies in which we operate. FY '21 has been an incredible year for BlueScope. We've demonstrated the value that our high-quality portfolio of assets across Australia, the U.S. and Asia are capable of generating. And coupled with our strong cash flow and robust balance sheet, we're well positioned to capture value from key industry and end-use demand trends. Our financial strength provides us with the unique opportunity to simultaneously invest in the long-term future of the business and to deliver solid shareholders' returns. Firstly, we're positioning the business for a low-carbon world, announcing today our goal of net zero greenhouse gas emissions by 2050. This goal will complement our nearer-term 2030 emissions intensity targets. Delivering on the 2050 goal will be highly dependent on several enablers, including the development and commercialization of emerging and breakthrough technologies, the availability of affordable and reliable renewable energy and green hydrogen, the availability of quality raw materials and appropriate policy settings. On an indicative basis, we anticipate the capital requirements of an estimated $300 million to $400 million over the next 10 years to deliver on our 2030 emissions intensity targets and to progress our longer-term goal to 2050. To that end, the company has made an initial allocation of up to $150 million over the next 5 years to help deliver on its midterm commitments and to make progress on its longer-term decarbonization journey. Secondly, we're ramping up investment in key growth projects. The current North Star expansion is not far from completion. And in recognition of the positive structural changes that are occurring in the U.S. steel industry, we'll shortly commence preparations to take full advantage of the 500,000 tonnes of additional melt capacity that the current expansion phase has created. As a very broad indication this project has an indicative cost of $100 million. We'll firm this number up as we get into the work, which will start in earnest once we're commissioning the current expansion. In Australia, with the success of the residential steel framing and coated and painted products more broadly, we're investigating the construction of an additional metal coating line to unpin our domestic supply capabilities. The broad estimated cost of the expansion is $250 million, which will be refined as we get into the concept and pre-feasibility assessments. And we're expanding our very successful BlueScope Properties Group in the U.S. To date, we've had around USD 100 million invested in this business. Going forward, we're ramping this up to a maximum of $300 million, whilst not straying from our sweet spot of Class A industrial properties. And finally, we're increasing shareholder returns, reflecting our confidence in the strength of our business, announcing both a meaningful increase in our annual ordinary dividends to $0.50 per share per annum and an on-market buyback of up to $500 million. We'll be taking a nuanced approach to the buyback, which is intended to be executed over the next 12 months. Given our strong cash flow and robust balance sheet, we're taking advantage of this opportunity and will retain the capacity to future fund our growth and low-carbon future. The financial scorecard tells a very positive story. Underlying EBIT of $1.72 billion being 3x higher than last year. Return on invested capital was 24.8%, up from 7.6% last year. And reported NPAT was up $1.1 billion to $1.19 billion. Cash flow was very strong at around $900 million, notwithstanding the ongoing investment in the North Star expansion project. Net cash was $798 million at 30 June, well up from $79 million 12 months ago and from $305 million at 31 December. And the Board has approved a final ordinary dividend of $0.25 per share, along with a special dividend of $0.19 per share to take the total dividend in FY '21 to $0.50 per share, reflecting the annual ordinary dividend level that we will target going forward. In addition to this, the Board has approved a $500 million on-market buyback to be conducted over the next 12 months. These results are a credit to the entire BlueScope team and with a significant portion of our people now on profit share plans, it's great that we're all able to share in the success of the group performance. As I look around the footprint, Tania will take you through the segment details in just a moment. But in short, all operating segments delivered significantly better results this year with a common threat of buoyant demand and higher steel spreads driving stronger performances across ASP, North Star, the Building Products segment and in New Zealand. I particularly note North Star generated over $600 million of underlying EBIT in the second half of '21 on stronger spreads with the team doing an excellent job to dispatch every possible tonne they could amidst the challenges of the pandemic and all the work being done on the expansion project. In ASP, domestic sales volumes reached 2.5 million tonnes, with over 1.3 million tonnes in the second half, with significant gains in metal coated and painted categories. This strength in demand is the result of our successful strategy and robust activity levels. The Asia and North American Building Products segment had a very strong year, driven by robust U.S. steel prices and demand as well as continued strong performance across our Asian businesses. Buildings North America delivered a fantastic result, primarily driven by the Properties Group, and Tania will talk to you more about the upscaling we're undertaking of this business. And New Zealand and the Pacific Islands, with stronger macro conditions and the benefit of the implementation of a number of transformation initiatives, including the elimination of loss-making products, bounced back from an FY '20 loss to produce $130 million of underlying EBIT. You'll be familiar with our purpose and strategy, which continue to guide where and how we operate and our investment decisions. There's no denying that BlueScope has been the beneficiary of some macroeconomic and industry tailwinds over the last year. But I'd also like to highlight that over the last few years, we've seen our strategy at work as we continue to deploy our financial strength to transform our business to pursue exciting growth opportunities and to deliver returns to shareholders. Over the last 12 months, we've focused heavily on building and executing our growth, making meaningful progress on the delivery of our climate action program and driving the digital transformation of our operations. We've also sought to further embed our purpose into the organization. This has resonated very strongly with our teams with particular emphasis on our local communities, many of which have been severely impacted over the last 12 months as the COVID pandemic has challenged traditional support structures. Our strategy has held us in very good stead, positioning us well to leverage key industry and end-use demand trends across our footprint. On the supply side, a step change in rationalization and consolidation has occurred in the U.S. steel industry. And China's efforts to reduce exports and limit overproduction are major structural positives. The combination of stimulus, low interest rates and recovery in consumer sentiment is driving robust construction demand across our key markets. Moreover, the accessibility and imperative of remote working is accelerating the shift towards lower density and regional residential housing. All of this is in the sweet spot for BlueScope's flat steel products and plays to the more readily transportable nature of steel compared to other building products. It's with these trends in mind that we have the confidence to explore options to increase metal coating capacity in Australia, which is currently a bottleneck. The digital economy and the need for supporting logistics infrastructure continue to grow, creating demand for warehouses, distribution centers and data centers. This trend has driven demand growth for low-rise commercial buildings across North America, underpinning the success of the Buildings business, including the BlueScope Properties Group. Government infrastructure programs are expected to drive demand for steel-intensive products across the coming decade. And more broadly, steel will play a critical role in the transition to a clean energy future, including wind turbines, solar power and transmission infrastructure. A key part of our strategy is the North Star expansion project, which I'm pleased to report is well progressed. The melt shop commissioning is well underway with the first heat expected in August. Installation of key equipment is progressing with the first coil expected to roll off the line in early of the second half FY '22. We expect an 18-month ramp-up to full run rate. We now expect the cost of the project to be around 5% to 10% above the USD 700 million initial estimate. This reflects the work done in bringing forward commissioning to as soon as possible and some inflationary pressures seen across the economy. Again, it's a credit to the entire project team how they've managed to progress the work, all the while managing the COVID and brownfield expansion risks. The U.S. is a great place to make and sell flat steel products. The structural industry changes from consolidation and rationalization of capacity have led to the strength we've seen over the last year. The outlook for the industry is bright with the normalization of supply/demand balance likely to occur as slated capacity expansions come online, and a much greater level of supply-side discipline. And it's with this backdrop that we're turning our minds to how to make the most out of the 500,000 tonnes of extra melt capacity the current expansion project will deliver. The team will begin to assess this opportunity as we progress through the ramp-up period of the current expansion project. Turning to the feasibility work being done on the Port Kembla blast furnace reline. As announced in February, BlueScope is exploring options for the future configuration of the Port Kembla Steelworks once blast furnace #5 comes to the end of its current operating campaign, which is expected to occur sometime between 2026 and 2030. The initial focus is on the option to reline the currently mothballed #6 blast furnace being the most technically feasible and economically viable option, while longer-term breakthrough, low-emission technologies are developed. As part of the reline assessment, the latest technologies available to reduce greenhouse gas emissions intensity will be integral to the project. This aligns with our climate strategy and technology pathway, which I'll talk about in a moment. The strong earnings and cash flow generation of our Australian Steel Products business provides significant flexibility and optionality to adopt new technologies and iron-making configurations as and when they're technically and commercially viable. The pre-feasibility assessment is well progressed as part of our rigorous multistage capital investment evaluation process, and we'll provide further updates later this year. Now to sustainability. Pleasingly, we've continued to make progress on gender diversity, with female workforce participation rising to 22%. While travel restrictions slowed our progress with on-site audits, we have now successfully completed 230 Priority 1 and 2 supplier assessments as part of our supply chain sustainability program, exceeding our FY '21 target of 220 assessments. Appropriately in the last year, we've had a strong community focus around the impacts of the pandemic in the form of supply of medical and protective equipment, contribution to food banks and donations. We're also looking forward to completing the responsible steel site accreditation of the Port Kembla Steelworks in the near term, marking a major milestone for BlueScope in establishing and operating under this comprehensive industry sustainability initiative. We're incredibly proud of our role in this important organization, which is the key industry body on sustainability for the global steel industry. And on climate change, we've had a very busy 6 months. Gretta Stephens, in her role as Chief Executive Climate Change, now has a team of 6 subject matter experts working with her. We've been heavily focused on building out our decarbonization plans and pathways, and we'll be releasing our initial stand-alone climate action report in September. As part of that program of work, I'm pleased today to be announcing a range of initiatives that broaden our greenhouse gas reduction ambitions. You'll already be familiar with our medium-term steelmaking emissions intensity reduction target of 12% by 2030 against the 2018 baseline, which broadly translates to a 1% year-on-year improvement. I'm pleased to report that we met that target this year. We're now introducing a secondary target of a 30% improvement in non-steelmaking greenhouse gas emissions intensity by 2030, which brings total coverage of our targets to 98% of total group Scope 1 and 2 emissions. Significantly, we have now set ourselves the goal of net zero greenhouse gas emissions across all of our operations by 2050. Still being a hard-to-abate sector, this is a significant challenge. As flagged in our midyear results update, there's exciting work being undertaken around the globe to explore breakthrough green steel iron-making technologies. These range from the injection of hydrogen into existing blast furnace operations to the more radical replacement of front-end iron making with green hydrogen DRI. Hydrogen DRI is being explored in Europe with several pilot projects underway or recently announced. These projects are generally in early stages, with the technologies requiring further development and refinement and commercial viability challenged by niche availability of green hydrogen, high CapEx costs and the limited availability of suitable ores for DRI grade pellets. So whilst we seek to be ambitious, we clearly recognize that achieving the 2050 net zero goal will be dependent on the commerciality of emerging and breakthrough technologies, the availability of affordable and reliable renewable energy and hydrogen, the availability of quality raw materials and appropriate public policy settings. We see a strong future for steel in a low-carbon world and have set an initial view on the decarbonization pathways to deliver on our carbon reduction ambitions. In the near to medium term, we do not see a viable pathway to scrap-based EAF steelmaking in Australia given high electricity costs and insufficient availability of the prime or ex-manufacturing scrap required for flat steel production grades. Natural gas-based DRI is also not a viable near-term option given the relatively high cost of natural gas on the East Coast of Australia, and the lack of cost-effective DRI grade pellets. Accordingly, our immediate focus is on optimizing our current operating assets, whilst progressing development of emerging technologies. A range of projects are either underway or will commence shortly to reduce emissions intensity, including process efficiencies, pursuit of low-carbon energy sources and the increased use of scrap. A number of technologies are also being investigated as part of the reline project, such as the hydrogen injection into the blast furnace and a top recovery turbine, which utilizes the pressure and thermal energy of the blast furnace gas to produce electricity. Longer term, green hydrogen iron-making options are emerging as an interesting potential pathway, and we'll continue to monitor those closely through a strategy of partnerships and collaborations with industry and research bodies. And we'll participate in projects where it makes sense for us to do so. On an indicative basis, we anticipate capital requirements of an estimated $300 million to $400 million over the next 10 years to deliver on our 2030 emissions intensity targets and to progress our longer-term goal to 2050. To that end, we've made an initial allocation of up to $150 million over the next 5 years. This will address 3 key areas: firstly, optimizing our current operating assets, preparing for emerging technologies by progressing various concept studies such as a pilot hydrogen electrolyzer for blast furnace injection, biochar coal replacement, collection of BOS off gases and options to significantly increase scrap usage and by participating in the search for breakthrough technologies by way of industry partnerships and collaborations. We have funding in place to progress research and development into emerging and breakthrough technologies. Investment to support our decarbonization pathway has now been built into our capital allocation framework. I would like to stress though that climate-related investments must have an appropriate commercial overlay to ensure that we're optimizing our investment portfolio for long-term sustainable growth and returns. In short, we have put in place the people, structures and resources and will retain the financial capability and flexibility to carbon proof our business. I'll now hand over to Tania, who will take you through the performance of our business segments and our financial position.

Thanks, Mark. The Australian business had an outstanding year, delivering underlying EBIT of $674 million and ROIC of over 23%, thanks to stronger spreads and record domestic demand, particularly in the construction, distribution and manufacturing segments. Underlying EBIT in 2 half '21 was $415 million, an increase of 60% on the first half. Almost all product categories saw growth in volumes, including COLORBOND and TRUECORE. In 2 half '21, sales of TRUECORE grew by 34% on the first half, continuing the double-digit annual growth rate seen since 2015 when we launched a light gauge steel framing growth plan. Realized spreads were up on the first half '21 on stronger steel prices, which more than offset higher raw material costs. We also saw an improved contribution from export coke sales, up $38 million on 1 half '21. This elevated performance on export coke reflects the strong cyclical demand for coke and relatively lower input costs in the half. Given recent escalations in coal costs, we don't expect this level of margin contribution to repeat in 1 half '22. Cost and productivity performance remained strong through the half. The uptick in conversion costs largely reflects the constrained spend environment early in 1 half and the impact of employee profit share plans, which naturally increase in line with higher levels of profitability. For reporting purposes, we classify these costs as escalation, but they naturally wind up and down in direct proportion to varying levels of profitability. Looking at the specific segments for ASP. Sales in the Building and Construction segments reached record levels for both the year and the second half, driven by a combination of our specific product initiatives and general industry demand growth. In the residential sector, with continued improvement in sentiment and credit availability and the support of the homebuilder program, we saw strong demand for new detached residential housing. Home improvement activities were also strong, supported by rising house prices, redirected discretionary spend and the homebuilder program. Sales into the residential segment were also supported by ongoing reconstruction activity following storm and flood events. In terms of nonresidential construction, the commercial and industrial subsegment had high levels of approvals activity prior to the pandemic, with the pipeline of work carrying over and combining with the faster-than-expected recovery in private sector confidence to support strong demand in 2 half '21. The social and institutional subsegment had also been particularly strong, supported by government investment in health, education and defense. Sales into the engineering sector increased on government infrastructure spending, which supported activity in roads and rail. Sales into mining also increased on higher consumables due to the strong commodity cycle. Manufacturing sector demand improved on increased activity within residential construction. Favorable government policy supported instant tax write-offs of new investments has also spurred a rise in orders for manufactured goods. And demand in the agriculture segment improved, supported by the rebuild program following last year's bushfires and improved growing conditions more broadly. I'd like to take a moment to talk about the strength and demand that we've seen across our value-add branded products, particularly those in the metal coated and painted categories. Demand for both coated and painted products such as COLORBOND and TRUECORE have shown steady growth on both end-use demand strength and into material growth. We're now looking at our production footprint to ensure that we have sufficient capacity to support the continued growth in demand for these products. As such, we're in the very early stages of assessing additional metal coating capacity of indicatively around 200,000 tonnes per annum with a highly preliminary capital estimate of $250 million. This will, of course, be subject to our rigorous capital evaluation processes, and we'll keep you updated as we progress the assessment. Looking at the macro indicators of the Australian building and construction industry, we see a strong pipeline of activity. Detached house approvals have continued to break records well above the 90,000 to 130,000 annual range, with builders generally experiencing strong order books and longer lead times. Underlying demand remains robust, notwithstanding the end of the homebuilder program in March, with private new home sales in Q4 remaining at strong levels. Alterations and additions approvals also continue to break new levels, with homebound consumers continuing to redirect discretionary funds towards renovations, supported by low funding costs and improved economic sentiment. The strength in approvals should be supportive for dispatches through at least the current half, with trade availability and near-term lockdown impacts in various states likely to create a longer-than-usual backlog tail on current demand levels. For residential construction more broadly, we're seeing the trend towards regional areas and lower density living, which are traditionally areas of strength for our flat steel products. In the nonresidential space, approvals remain at very good levels and the government's focus on fiscal support in health, education and defense projects, along with its current major infrastructure program, is likely to underpin demand in the medium term. Turning to North Star. This business produced an underlying EBIT of $677 million in FY '21 and ROIC of just under 32%. This very strong result was driven by the record high spread environment in the U.S. particularly in the second half, in which the business made underlying EBIT of $608 million. Realized spreads increased materially in the half. This reflected both robust demand and a positive supply side dynamic driven by recent major industry rationalization and consolidation in the U.S. The mill operated at full utilization through the half, with almost no impact from the brownfield construction project, and the shortage of semiconductors for the auto industry has not meaningfully impacted demand for North Star's products, although we continue to monitor this closely. There was a modest uptick in conversion costs and other costs in the half. This principally reflects the constrained spend environment early in 1 half '21 and the impact of the profit share plan, which naturally increases in line with high levels of profitability. The result was also impacted by unfavorable FX translation with the stronger Australian dollar. Looking at North Star's end market segments, we can see that the recovery from the COVID-19 impacts on activity levels has continued across the automotive, construction and manufacturing areas. The automotive market has remained robust throughout the year with strong underlying demand and a continued shift towards higher steel-intensive light trucks and SUVs. The recent drop off in sales is essentially driven by vehicle inventory shortages stemming from the semiconductor shortage. Underlying demand is still strong. Nonresidential construction has recovered from the depths of its COVID-19 dip and remains stable, supported by strong confidence levels and government stimulus programs. The manufacturing sector remains robust, supported by strong consumer demand and government stimulus activity. Whilst some supply side challenges have arisen from disruptions to supply chains, this has not derail growth, instead extending the pipeline of work. Building Products Asia and North America delivered a significantly improved result of $334 million EBIT and ROIC of 25%. Underlying EBIT in the second half '21 was $183 million or around 20% higher than the first half result. Our North American West Coast business saw a significant increase in margins and was the key driver of the stronger performance relative to the first half. The North American results were driven by the rising steel price environment in the U.S. against relatively lower steel feed costs and strong demand across all segments. FY '21 performance in the Southeast Asian businesses doubled that of FY '20, with all countries contributing to the strong result. In the second half, the Thailand business, which is the largest of the 4 Southeast Asian businesses, continued its strong performance. We also saw outperformance in Indonesia with the benefit of cyclical margin expansion driven by relatively lower steel feed costs in a rising price environment. Performance was more subdued in Malaysia and Vietnam for the half. Continued disruptions due to COVID-19 remained throughout the half, with government-mandated shots in Malaysia and consumer confidence negatively impacted in Vietnam. In particular, at the back end of the second half, we saw escalating impacts from a resurgence of COVID infections, resulting in disruption to supply chains and operations and weakening near-term demand, particularly in Malaysia and Indonesia. Notwithstanding these near-term headwinds, we continue to believe in the long-term growth potential of these markets. We are now seeing the full benefits of the Ignite cost and productivity improvement program with at least $40 million of benefits now embedded in the business's performance. China delivered a softer result in 2 half '21 due to typical seasonality. However, the business delivered a record full year result and continues to perform well. Demand is strong and order books are robust. In India, second half performance was slightly weaker than the first half, principally due to COVID impacts on operations, supply chains and demand. Overall, though, the business had a much stronger year than FY '20. Turning to Buildings North America. The strong contribution from the BlueScope Properties Group has led to a solid EBIT result of $88 million and a ROIC of 17.5% for the year. Underlying EBIT in the second half was $17 million with no projects delivered from the Properties Group. Outside of the Properties Group activities, the core engineered buildings business delivered a similar result to 1 half '21. Demand has continued to recover with stronger dispatch volumes, but with the benefits offset by margin compression on escalating steel input costs. Mark earlier touched on the incremental investment we're making to upscale the BlueScope Properties Group. To recap, the Properties Group developed Class A industrial properties in the U.S., broadly across the growing warehouse and distribution center market. The business provides access to projects for its builder network, undertaking a mix of build-to-suit, that is pre-leased, and build-to-demand projects. The business has a robust approach to risk management with extensive due diligence conducted and minimum hurdle rates applied to each project. Now with the confidence of having profitably completed 10 projects in the last 5 years, we are increasing the capital invested to a maximum of USD 300 million, up from around USD 100 million today. We're targeting projects broadly in the range of USD 10 million to USD 30 million in investment scale with 8 to 10 projects in progress at any given point in time. We'll be winding up the investment pipeline over the next 3 years, and we're seeking to deliver an annual EBIT return above a 15% return on invested capital. In the short term, whilst we build the project pipeline, the performance of this business will remain lumpy, and I'll cover this in the outlook. We expect that, over time, a key benefit of this expansion will be both increased and more consistent earnings contribution from the Buildings North America segment. The New Zealand and Pacific Islands business delivered a significantly improved result with underlying EBIT of $130 million, with $73 million delivered in the second half. Domestic demand remained strong, particularly in construction and infrastructure applications. Sales of metal coated and painted products were particularly strong on the back of robust residential construction demand. To this end, capacity upgrades will be made to the [ color ] steel manufacturing plant in the second half of '22 to meet increased domestic market demand. Performance improved through the half on stronger global steel prices. However, energy prices were stubbornly high and continued to materially escalate in the second half. The New Zealand strategic review has been completed and a number of initiatives implemented, including the elimination of a number of loss-making products. The balance of the initiatives from the strategic review will now be deferred until current cyclically strong conditions normalize. Turning to the underlying EBIT group walk forwards. On the left-hand side chart, from FY '20 to '21, you can see the benefit of stronger spread and demand conditions across all of our major markets. The net increase in costs includes the impact of escalation and employee profit share programs, part offset by cost and productivity improvements. The profit share plans have been progressively introduced across BlueScope over the last 4 years. This is the first year that all business units, including corporate, have employee profit share programs in place. As I mentioned earlier, for reporting purposes, we classify these costs as escalation, but they naturally wind up and down in direct proportion to varying levels of profitability. From our perspective, we're delighted that the broader part of our people are participating in the success of the business and driving alignment with shareholders. On the right-hand side, with 2 half '21 performance compared to 1 half '21, we see similar things with strong spreads and demand across our major markets. Conversion costs include the impact of employee profit share plans and the stronger Australian dollar dampening the impact of our U.S. dollar earnings. Turning now to the financial framework and key financial indicators and settings. The financial framework is key to our success in managing the business through the peaks and troughs of the cycle. By way of recap, we have 3 key focus areas: firstly, in delivering returns greater than our cost of capital and maximizing free cash flow generation through the cycle. Secondly, we seek to maintain a strong balance sheet and credit metrics given the ability to weather cycles and providing the capacity to deliver on value-accretive opportunities. And finally, we remain disciplined in our capital allocation, balancing shareholder returns with investing for long-term sustainable growth. And you'll notice that we've added commentary to this framework that, for a period of time, we'll be operating outside of our target capital structure with the intent of retaining a stronger balance sheet to prioritize key investment opportunities for the purpose of delivering long-term sustainable earnings and growth, and I'll talk to this further in a moment. Specifically on ROIC, the group delivered a 24.8% return in FY '21, up significantly on FY '20 and ahead of the strong performances in '18 and '19. We saw strong performances at North Star, notwithstanding the impact of the capital spend of the expansion project on the invested capital of the business. We also saw a fantastic performance at Australian Steel Products and ongoing recovery in the Building Products segment. The delivery of the outstanding result in the Properties Group has also contributed to the result. And for New Zealand, even if you adjust out the impact of the June '20 write-down, it delivered an excellent contribution. Turning to cash flow. Record spreads and volumes assisted the group in generating a solid cash flow of $898 million for FY '21, which is an outstanding result given it includes the heightened level of CapEx on the North Star expansion project. In the second half, we saw a building working capital, which was predominantly driven by higher rates for inventory and receivables as well as strong activity levels across all of our businesses. Turning down for a moment further into working capital. This page highlights the build in working capital from receivables and inventories. Again, this is fundamentally rate driven, and the overall level of working capital remains within comfortable parameters. Turning to our capital structure. The balance sheet is in a very strong position, with $798 million net cash, and we have ample liquidity of over $3 billion. Our investment-grade ratings from Moody's and S&P have been maintained, and we recently extended and downsized our core revolving facilities, which we had increased at the onset of the pandemic. This will bring about reduced cost of having these standby facilities. Given the strong cash flow generated from the business and the robust position of the balance sheet, we are now taking this opportunity to simultaneously invest in growth to reposition the business for a low-carbon future and to deliver enhanced returns to shareholders. So in the short to medium term, we'll retain balance sheet capacity to fund such investments. But in the longer term, we'll continue to target around $400 million net debt. On capital expenditure, you can see the impact of the pandemic-driven pullback on sustaining asset spend early in the financial year. But as foreshadowed in February, we've now almost normalized for sustaining asset spend in FY '21 with many operating units running at full capacity. We've also continued to make good progress on the North Star expansion project. Just a reminder, the numbers you see on the chart are the accounting basis of capital earned value, which reflects the value of work done, and it differs to actual cash outflows through capital creditor movements. To keep it simple in terms of cash payments, we have approximately USD 290 million to USD 330 million remaining to be spent on the project, of which approximately USD 210 million is anticipated for 1 half '22 and the balance in 2 half '22. And there's more detailed information at the back of the pack. You'll also notice on this page, we've now incorporated Climate Capital into our capital allocation framework. This includes projects to support achievement of the decarbonization pathways and GHG emissions reductions targets and goals. Climate Capital is considered critical in maintaining BlueScope's long-term sustainability and as such, will be prioritized ahead of growth investments and shareholder returns where appropriate. However, it's also recognized that climate-related investments must have an appropriate commercial overlay to ensure that decarbonization is pursued in the most capital-efficient manner so as to support long-term sustainable operations growth and returns. Where the economics of climate-related investments are less compelling, we will look to options for external stakeholder funding. This page sets out very preliminary cost and timing dimensions around the indicative $1.5 billion of investment projects we're currently contemplating. And I think all of these have already been covered in some detail. We've provided this information to give you some broad parameters around the investment program, but we're keen to stress that this is highly indicative only. Progress on each of these projects will be subject to our rigorous capital investment evaluation process, and we'll keep you informed as we progress through the program of work. Turning to shareholder returns. Our approach here is to seek to distribute at least 50% of free cash flow to shareholders in the form of consistent dividends and on-market buybacks. Now whilst the overarching policy remains unchanged, we are making some revisions in terms of mix and execution. As Mark mentioned earlier, we have reviewed our approach to dividends and the Board has approved a new target of $0.50 per share per annum of ordinary dividends, starting with FY '21. This is comprised of $0.25 per share final ordinary dividend and $0.19 per share special dividend announced today, complementing the $0.06 per share interim dividend paid in March '21. We expect this level of ordinary dividends can be sustained through the cycle under most scenarios, but naturally the Board reserves the right to change this approach. Dividends remain unfranked until such time as we've utilized the $710 million of remaining Australian tax losses, and we've begun to accumulate franking credits. Buybacks will continue to be an important component of our capital management approach given the flexibility they provide in managing capital and for the earnings per share enhancement they deliver. The buyback of up to $500 million is intended to be conducted over the next 12 months, and the timing and value of shares purchased will be dependent on the prevailing market conditions, share price and other factors, and, in short, we'll be taking a more nuanced approach to execution. And then, finally, I'll touch on the outlook across the individual segments before handing back to Mark. For ASP, we expect a better result compared to 2 half '21, with similar to or slightly higher domestic dispatches and stronger benchmark spreads. We are, however, seeing higher scrap and coating metal costs on global index pricing and are expecting a lower export coke contribution on lower realized margins. For North Star, we expect a significantly stronger result compared to 2 half '21, with higher benchmark spreads, part offset by unfavorable impact of realized sell prices, noting specific sales mix to benchmark. The planned outage will have an unfavorable impact of lower volumes, and we're also expecting higher alloy and conversion costs, including labor. For the Building Products segment, we expect a similar to slightly better results 2 half '21 and with the result out of China around double that of 2 half '21 on favorable seasonality, a similar result in North America and India and a lower result out of Southeast Asia due to the ongoing COVID-19 disruptions particularly in Malaysia and Indonesia. For Buildings North America, we expect a slightly higher overall result than 2 half '21, with lower earnings in the core engineered building solutions business on ongoing margin compression expected to be offset by a higher contribution from the BlueScope Properties Group. In New Zealand, we expect a higher result than 2 half '21, with similar domestic dispatches and higher benchmark steel pricing, partly offset by the unfavorable impact of specific sales mix relative to benchmark. We're expecting to see moderately lower energy costs and a similar net vanadium contribution. And lastly, we expect higher corporate costs, reflecting investment in digital and climate initiatives. And with that, I'll hand back to Mark.

Thanks, Tania. And as I said at the outset, a fantastic set of results that we're very proud of. If I turn to the outlook. At the beginning of the first half of FY '22, order and dispatch rates in our key markets remain robust. Spot steel spreads in North America are materially higher than both the second half FY '21 and longer-term averages. In light of these unusually strong conditions, the company expects underlying EBIT in the first half of FY '22 to be in the range of $1.8 billion to $2 billion. Of course, these expectations are subject to spread, foreign exchange and market conditions. We're acutely aware that current conditions are providing considerable tailwinds and may not be sustainable. However, due to the hard work of our 14,000 strong BlueScope team, and the successful implementation of our strategies, we're in the unique position of being able to take advantage of these conditions to invest for long-term sustainable earnings and growth. And this includes carbon proofing our business. We operate our large and long-life asset base in a cyclical industry. And while we take a long-term view, we also work to ensure that we can withstand cyclical lows as well as take advantage of opportunities to deliver returns through the cycle. The benefits we're seeing today have been underpinned by the decisions that have been made over the last decade. And we're now seeking to lay the foundations for future growth and returns for decades to come, whilst maintaining a highly disciplined approach to capital allocation. So to summarize, these exceptional results show again that BlueScope is a very different type of steel company, 1 that's uniquely positioned to grow and deliver across our major markets. We believe that we have a high-quality global asset portfolio with demonstrated operating leverage and a dedicated and agile team of 14,000 people. We'll benefit from the structural changes in the industry in the U.S. and China. We're well positioned for emerging trends towards lower density and regional housing and the need for e-commerce and logistics infrastructure. We're focused on the successful completion and commissioning of the North Star expansion project, which will provide compelling value and growth in FY '22, '23 and beyond. We continue to demonstrate the quality of the Australian business and the earnings and cash it generates and have successfully commenced the pre-feasibility assessment for its next chapter, a possible reline of the #6 blast furnace. We have a strong balance sheet and cash flow supported by strong financial disciplines. And very importantly, we remain firmly committed to transitioning our business to a low-carbon future as further demonstrated by today's announcements. So thank you for your time this morning. And with that, I'll turn it over to Q&A.

[Operator Instructions] Your first question comes from Lyndon Fagan from JPMorgan.

So the first 1 is just on the capital management framework. If I look at next period for the half year, picking the midpoint of guidance, we're looking at free cash flow over $1.5 billion roughly just for the half versus an implied dividend based on $0.25 of, say, $115 million. So I'm just trying to figure out how to best think about that excess cash. I noticed you paid a special. Is there a way you'd like us to think about forecasting special dividends going forward? Just trying to get a better sense on how to think about all of that. And then the next question is, a lot of focus on emissions in this presentation, which is great. I'm just wondering if you could perhaps give us a sense of the actual emissions intensity at Port Kembla today, so 2.5 tonnes of CO2 per tonne of steel or something like that. I'm wondering if you could confirm what that is, and how that might look post the reline and the investment that you're making on carbon there? And if I could sneak a third 1 in, just with North Star Phase 2, great to see a bit more talk on the 500,000 tonne expansion. Wondering if you could give us a sense of when we could realistically expect first production from that?

Thanks, Lyndon. So let me just run through these quickly and Tania can chip in around the special dividend. So perhaps just a couple of things at a principal level around the dividend. I'll answer the other 2, and then Tania can fill in all the bits I've missed. But just in terms of the principal of the dividend, we want to -- we want to pay dividends out of the cash we've accumulated. It's one of the financial principles that we have. And if you kind of look at our cash balance of $798 million, think about the buyback of $500 million, $250 million of dividend over the year. That's kind of the cash that we've accumulated, right? So we're more paying it out of what we've earned rather than paying it forward out of what the prospects are. But I'll let Tania talk about the specifics of special in a moment. What we're really trying to do there was just reflect that 2021 finished better than we expected, Lyndon. So we felt we should make good the first half given we had a much better outcome than we were anticipating when we announced dividends in the first half. On emissions intensity, we don't announce the individual assets, but you understand the numbers. We have a range from, obviously, North Star and good EAFs are in that sort of 0.5 range. In fact, I think in the climate action report, we probably even call out the detail you'd be able to get it. But typically, an EAF is around 0.5 tonne per tonne of steel. We then have blast furnaces that typically operate in the 2 to 2.5 tonnes per tonne of steel. And then, of course, our New Zealand operating assets or steelmaking assets actually have a higher level of intensity again. So we have a range across the portfolio. And what we're attempting to do with the reline at No. 6 with the technologies and investments that we're thinking about is everything we do around No. 6 will be to further improve that intensity. And again, I note I'm pleased that we were able to reduce our overall intensity by 1% this year. And then to North Star and Phase 2, yes, an obvious opportunity for us to explore that extra 0.5 million tonnes. I can update you guys. We are actually melting steel in the EAF as we speak. I've just got off the phone from Pat Finan. The team have commissioned the EAF this weekend and have struck an arc. We're having some typical teething problems as you start up an asset like that. But we've seen a video of the first arc this morning. It's a pretty exciting time for North Star and BlueScope, a long way to go. But in terms of actually commissioning the EAF, that's not the caster or the tunnel furnace, we're underway. So that's a fantastic achievement for the team in North Star. But we will focus on the Phase 2 expansion once we get into the commissioning of the existing expansion. That will take us 18 months as the current schedule to build up to the full capacity of the Phase 1 expansion. And as we're going through that process, Lyndon, we'll be thinking about what we need to do to incrementally grow from that and take advantage of the extra 0.5 million tonnes of steel make capacity. So that's our thinking in terms of timing. Is there anything you want to say about special dividends, in particular, Tania?

I think just specifically on the special dividend, we've declared this time around, that was really just -- we did far better this year than what we anticipated. So we simply trued up the interim dividend up to $0.25. I think, Lyndon what you're actually asking was, do you need to think about special dividends going forward given potentially a larger amount of cash on the balance sheet. What we're calling out is that we have a significant program of spend that we're looking at over the next 4, 5 years. We'll be working on that further over the next 6 months. We're also going to be keeping, obviously, a good eye on the outlook. We're not going to set a specific number at this point in terms of where we might hold the balance sheet for a period of time. But I would say that we are going to hold a stronger balance sheet for a period of time given those longer-term investments that we're looking to make.

Thanks, Tania. So just to clarify that. So the future investment profile is $1.5 billion to $1.6 billion out to FY '27, I guess you're funding that in the next 6 months based on free cash flow and where it could be against your guidance and certainly my numbers. So I'm just really trying to get a better sense of how to deal with the excess cash, which is a great problem to have, but the $100 million a half or $115 million a half dividend certainly leaves a lot of spare cash in the [ Q ]. So should we really just be directing that into a top-up of the buyback? Is that the best way to think about it?

Yes. It will depend on the circumstances at the time. So we'll obviously reevaluate that with the Board in February. We'll look at all the options. You look at special dividends, you look at buybacks. But I think more importantly, we'll be looking at that bigger program of investments that we're looking to make, including the carbon proofing of the business. So there's a number of factors that need to be taken into account.

The next question is from Simon Thackray from Jefferies.

Mark, you mentioned previously the end of blast furnace 5 campaign was feeling more like the back end of the FY '26, FY '30 and appreciating that the $700 million to $800 million indicative CapEx is only indicative. But talking to the spend between -- being between FY '23 and '25. So appreciate you need to be ready for FY '26 if that's the end of blast furnace 5. What happens if blast furnace 5 is still running beautifully into '26 and '27 and '28. Do you -- what do you do with a reline blast furnace 6? Do you keep it off-line and idle? Or do you bring that online during that period? I'm just trying to understand what happens in that campaign given your previous comments.

Yes. No, good question. Look, we would -- for a start, in terms of the investment profile, some key components of a reline that actually have a couple of years in lead time for spend, which is why we're calling it out as we are. As I've said to you guys before, I mean, we typically run our blast furnaces very well, and the raw material inputs are high quality. So we tend to get extended life out of them. This one, #5 has had a tougher period than any blast furnace we've run previously. You'll recall, we all recall the copper stave issues. So there's been shuts, half of dozen shuts in the blast furnace that we wouldn't typically have undertaken. So we're just building a bit of -- building in a safety valve for that, Simon. If we get to 2026 and No. 5 is continuing as it is now, and it's performing like a steam train, quite frankly, I say touching wood. We would just continue to operate No. 5 and not fire up No. 6. So we'd be able to get the majority of the reline done, do it in a measured way at the lowest possible cost with the lowest possible risk. And at the time that we choose or the time we require to, we'll turn off No. 5 and turn on No. 6. There's no prospect or no thought of us running both. That's not something that we've thought about. It's actually not something we have the capacity to do anymore, particularly around our center capacity. So there's not a scenario, if that's what you're inquiring about where we'd run 2, but we just simply leave No. 6 ready to go, and at the right time, decommission No. 5 and fire up No. 6, mate.

Yes, that's perfect, Mark. I thought that was the case. Tania, you're talking -- you gave some good commentary on what's happening in Australia. Downstream capacity constraints in resi and in A&A. Products like TRUECORE, I presume are taking share from timber just given what's happening with timber constraints. Can you give us a feel for some of the -- your estimates of the market share movements in your key downstream products? And how you're thinking about steel frames, I guess, is a good one, given they're about 20%, I think, of the frame and truss market. And then as a follow-on to that, are customers now on allocation in resi?

I'll leave Mark to talk to the customer allocation comment. But in terms of steel framing, it's probably roughly about a 15% share. We previously were sort of sub 10% share, started off at 5%, 6%, I think, quite a number of years ago. In terms of how we think about the market, if you just look at detached residential housing, there's probably a 500,000 tonne steel equivalent. If you take a 50% share, there's 250,000 tonnes, which is what we would aspire to, given that's broadly where we are with COLORBOND. That's what we'd like to get to. So there's obviously a lot of upside opportunity in this market, but you're never going to change it overnight. This is a long-term play. We've been at it for a number of years now with a very comprehensive growth strategy. So currently sitting at around about 15%, relatively low levels, but certainly, a lot of growth potential. That's just attached residential housing. There's also a light gauge commercial that sits on top of that, probably adds another couple of hundred thousand tonnes to the size of that market. So it's a large market. We've certainly gained share recently. I think it's probably a combination of the timber shortages and timber expense, but also I think the benefits of the programs that we've been running over the last couple of years. We've been working extensively in building out the fabrication capacity, building out the trades, getting the pricing strategies right. So a lot of technical support that's been provided across the framing industry. So I think it's the result of a lot of hard work as well as those issues with timber.

Yes. And in terms of the broader question, Simon. Mate, you've been around with us long enough. You saw the lows. You'll recall back in 2013, we were 1.7 million tonnes of flat steel sales, we're now 2.5 million tonnes. We've seen an extraordinary level of demand, and we have ratcheted up every asset that we have, and we are running as hard as we can on all of the assets. We're not covering ourselves in glory necessarily with our delivery performance and our teams are doing an amazing job and working with our customers to ensure that we get them as much steel as we can make as soon as we can. But our delivery performance right now to be really honest with you, is not where I want it to be. Hence, the consideration now of even more capacity. So we're running all of our metal coating lines in particular flat out. We fired up No. 5 18 months or 2 years ago at Western Port. It's now flat out. So the bottleneck for us is metal coating capacity, and we're doing our darndest to satisfy everybody's requirements. But I think it's fair to say the level and the speed of the bounce back has surprised everybody, mate.

So it's sort of a combination of the good work you put in to position it in the market coming together.

Yes, there's no doubt. I mean, the strategy work has been successful and I'm thrilled about that. But the macro is also strong. So it is a combination of the 2. That's correct.

And what is that -- what's the implication there for, Mark, for export tonnes then from [ Aus ]? I mean, they're obviously down in the second half. I mean what happens with the JV markets?

[indiscernible]

And yes. But what happens in the next 12 months, they should be down again, right?

Yes, significantly down. So we're selling as much as we can domestically. We're obviously working with our export customers as well. We're actually bringing a little bit of product in where we can supplement our range. So we are doing everything we can. So we've become a net importer of steel -- importer of steel, sorry, net is probably the wrong way to describe, but we've become an importer of steel as well. So we're trying to solve our customers' problems wherever we can. So we're pulling every lever. But yes, a significant reduction in exports and the JV is -- we're getting great support out of Nippon in the JV, and they're finding other sources of steel.

Excellent. And then I've got one just tiny wrap-up housekeeping issue. Back when we did the Port Kembla plan, there was -- my understanding, there was a payroll tax deferral from the New South Wales government. It's just -- just so from my own edification, is that now being paid?

It's in the process of being paid. Believe it or not, it was actually legislated in terms of the repayment structure, Simon. So we've -- we're working through that legislated repayment structure.

And is there a quantum that was at -- I can't recall, I'm sorry, Mark.

$60 million, mate. It was $60 million, $60 million. It was a 5-year deferral and then to be repaid. I'll stand corrected on the 5 years, but it was $60 million and a deferral. It wasn't -- It wasn't a pass. It was just a deferral.

Yes. So it's $6 million...

$6 million per annum, 10 years, sorry, I got it wrong.

The next question is from Lee Power from UBS.

Just continuing on from Simon's question. You talked about adding metal coating capacity in Australia. Is there anything else limiting the upside you can get from here around domestic dispatches? I'm just interested to hear your thoughts around trade availability in logistics.

Lee, it's tight across the spectrum, mate. It's tight in freight, it's tight in terms of trades. Of course, we've got the shutdowns in New South Wales that we're now dealing with around the construction industry and the catch-up that will be required there. So there's actually not -- I mean, I'm mindful that there's parts of the sectors or industries that are suffering very badly under COVID. So I make my comments with due respect to those people that are struggling in this space. But in the space that we're in right now, it's pretty much drum-tight across the value chain. So yes, we're -- we're taking every freight option we can. We're using shipping, which we hadn't done for years. So we're taking every option we can to get product out and get it into our customers.

Okay. And then you probably figured this question. But I mean, what do you think happens to tonnes on longer lags in -- around North Star when prices eventually roll and the benefit versus index pricing on the way down. I mean, it's pretty hard to think of a comparable period. But maybe can you talk about what you saw post the [ 232 ] bump in prices and when they rolled off. I mean the customers on those longer-term contracts, do they cancel and go to the spot market? Or is there -- is there something -- some proportion of that that's take or pay or something special around the specs of those tonnes that mean you kind of hold on to them?

Yes, you'll generally get a little bit of a pickup. I mean, it really depends on how fast prices actually come off. If you get a significant price decline, you'll always get customers looking to modify what their orders might be. If it's a more gradual decline, then you'll probably see less of it. So it really -- the answer is it sort of depends.

Yes. The only thing I add, Lee, is I think what's been demonstrated in the last 12 to 18 months is the value of domestic supply and sovereign capability. North Star is a privileged asset in terms of its product and the customer service that it provides. And the customers that work with us are very keen to maintain supply with North Star. So us seeing people through up cycles and honoring commitments if someone was to determine they didn't want to honor commitments on the downside, then there'd probably be an outcome from that. So Tania is right. It varies across the group, but I think domestic supply and the value of sovereign capability has been really highlighted in what we've been through in the last 12 to 18 months.

The next question is from Daniel Kang from CLSA.

Just in terms of the North Star, just focusing on for a moment. Your guidance obviously, is for spreads to lease, which is understandable. The average you're assuming is $1,175, which basically assumes that for my calculations, it falls through at about $1,000 for the remainder of the year. Now I realize that these are very high numbers at the moment. But just wondering what you'd expect to bring these current levels down? I mean, from what we're seeing, the steel shortage is still there. Lead times are still very high, inventory still below average levels. Are you seeing any pushback from customers at this point?

No, not really pushback from customers, but we can see a scenario where in the second quarter, imports will improve, lead times will improve, inventories will improve, and hence, we'll build that profile in there.

Okay. Got it. And then just...

It's based on the scenario, right? So it could be in a number of scenarios, but that's the one that we've used for the purposes of the outlook.

And on these comments of longer-dated contracts, is that -- what proportion -- can you give us a sense of proportion of longer-dated contracts versus your normal monthly contracts?

Yes. So we don't give a specific proportion on those longer-dated contracts. What I would say is that the majority of the book sits there on broadly a 1-month lag. There's a portion of the book that's on 3 months and a portion that's on longer. So there's a variety of pricing mechanisms in there. So the best reference is the monthly lag. But when you get these larger movements in price, it does highlight the alternative mechanisms that do sit in the book.

Got it. And on the Port Kembla reline, obviously, that's a big chunk of your investment spend over the next 5 years. Just in the absence of any technology breakthrough, I guess one option that would clearly help the decarbonization target would be simply to move to imports and shut Port Kembla down, which the company obviously considered back in 2015. Is that an option that's no longer on the table for the company?

Well, I mean, there's a couple of things I'd say about that, Daniel. Firstly, that actually doesn't help. The global carbon position, what you're doing is shifting the carbon to somewhere else and taking the economic impact for that. So that doesn't -- that doesn't make any sense if you're genuinely looking to reduce carbon. In fact, it makes it worse because then you've got to ship all the steel here. And I think what we've demonstrated in ASP is we've got an asset that can compete globally, and we've got an asset that is financially very attractive for us to own. So that wouldn't make any sense. So to the question about, is it off the table? Well, I've been around long enough to see this industry go through a whole range of cycles. But part of the reason we keep our foot on the pedal and require the businesses to perform to the level I do around cost and efficiency is the very heavy times we're in right now will change, none of us around this table think that where we are is where we're going to be forever. So we stay focused on keeping our businesses efficient, keeping our businesses growing and branding and thinking about value-added products because I want them to remain lucrative enough for us to continue to invest and continue to make products and employ people in Australia. So that's how I think about the ASP business, mate.

The next question is from Jack Gabb from Bank of America.

First question is just on New Zealand. I guess, back in FY '20, you announced a $30 million to $50 million cost savings plan there. And I think for the year '21, operating costs were pretty flat albeit dispatches were up. So just curious what the cost update is for New Zealand at the moment.

Yes. Sure, Jack. So we put in place that cost program, started to do some work around that. So we've withdrawn from the pipe and tube segment from the cold rolled segment from some of our wire products, we've actually withdrawn the production capacity taken the cost savings, had a net reduction of north of about 100 people all up. And then, of course, the market took off. So we've still got the plan in place to deal with the fact that, that business wasn't giving us the level of returns that expected, and that can be taken back off the shelf and put into action when we need to. But of course, right now, with the very, very strong domestic cycle, we're taking advantage of that volume.

Yes, perfect. And then just on volumes, more, I guess, for Australia than for New Zealand. But I think when we first kind of -- when COVID first hit, there was a sort of a fear, I guess, that maybe demand was being brought forward a little bit, just given the amount of renovations that were being done. Obviously, we've seen these demand continue for a lot longer than expected. Just curious, do you still think that we've brought forward a lot of demand and then we'll have a bit of a hangover once all restrictions end and we're sort of back in normal phase?

I'm not sure I'm good enough to make that prediction, mate. But look, if I think about it a few things. I mean, firstly, the level of immigration, I think, is a whole at some stage. So one could imagine that at some point, that high level of immigration that occurred in Australia and drove a lot of economic activity. If that stops for a couple of years, then there will be an impact at some stage. Having said that, we've seen high levels of people returning to Australia who want to live here. And I suspect once the COVID restrictions are removed, there's probably a whole lot of people overseas who look at places like Australia and New Zealand and think that might not be a bad place to live going forward in the new world of pandemics. So -- but I think there's no doubt there's potential for some sort of step down in migration. I think the governments around the stimulus programs, extending deadlines have worked to smooth out the level of work, which is a good thing. And I think the other factor here, Jack, is that amount of money that would normally have been spent offshore, on overseas travel and holidays, that's now continuing to be spent in Australia. So most of our building customers tell us their forward order books are strong for at least 6 months and even 12 months. So I don't see it certainly in the next 6 months. And I think the conditions are reasonably positive for that continued high level of spend, and we're benefiting from that, obviously.

Yes, perfect. And last one just for you Tania, if that's okay. Just curious, you're obviously eating up your Australian tax losses pretty quickly at these sorts of rates. Have you got a revised expectation when you'll be back paying tax here?