Channel Infrastructure NZ Limited (CHI) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Channel Infrastructure Half Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Ms. Naomi James, Chief Executive Officer. Please go ahead.

Good morning, and welcome, everyone, to our conference call for our first set of financial results as Channel Infrastructure. It's great to have so many joining us today on the line. And of course, it was great to meet many of you recently at our Investor Day. As you know, we decided to reset our business and make the transition to an import terminal model so that we could look to the future with the confidence that comes from having a sustainable business model that delivers stable returns for shareholders. I'm pleased to report that these first financial results for the terminal alongside the significant progress we have made towards execution of our strategy, demonstrates the laser sharp focus we have on driving shareholder value. Today, I will run through our operating performance for the year. Then I'll hand over to Jarek Dobrowolski, our Chief Financial Officer, to run through the financial results. I'll then finish with an update on how we are progressing with our carbon targets, some of our near-term growth options and our guidance before opening up for Q&A. I'd like to turn your attention to the usual disclaimer information contained on Page 2. I I'll start with the highlights and operating update on Page 4. The results we are announcing today really confirm the significant progress we made towards delivering on our strategy and demonstrate our delivery to expectations for the new business model. After significant planning and preparation, we safely shutdown the refinery and commenced terminal operations as we relaunched as Channel Infrastructure at the beginning of April with an improved operating and financial model. The transition went smoothly, and we now have almost 5 months of import terminal operations behind us, with 19 import shipments discharged in the second quarter. Importantly, our conversion project remains on plan and to budget with the most intensive decommissioning work and workforce transition now behind us. We have made great progress with the reset in our cost of capital with the successful retail bond issue completed in May and bank refinancing now underway. We are tracking the guidance for FY '22. And for FY '23 are now expecting EBITDA at the top-end of our guidance range. And in our very first quarter of terminal operations, we have delivered a strong EBITDA margin of some 66% and strong cash flows, which increases our confidence in returning to dividends in March 2023. Turning to safety performance on Page 5. We have always had a firm focus on our health and safety and protecting our environment, and this was even more important through the period of the refinery closure and intensive decommissioning that we undertook in the first half of this year. I'm proud that our team has completed the refinery shutdown and transition to terminal operations safely into plan despite the challenges of COVID and the community through this time. In the first half, we had no Tier 1 or 2 process safety incidents and 2 recordable personal safety incidents, which did not involve any significant harm. At the same time, we have significantly decreased our environmental impact and through our transition, have made a step change in our carbon emissions. We have seen a 98% reduction in our Scope 1 and 2 emissions with further reductions expected from Q3. Today, our energy requirements have significantly reduced with electricity demand down by 85% and no requirement for any gas. Together, this reduction in gas and electricity is equivalent to a reduction in New Zealand's electricity demand by around 3%. We have also completed our obligations under the National Greenhouse Agreement with the New Zealand government, under which we have been reducing the energy intensity of refinery operations at Marsden Point over the last 20 years. Moving next to fuel demand on Page 6. As we noted in our Investor Day presentation, we have continued to see fuel demand recovering from the impacts of COVID travel restrictions in the last half. Diesel demand remained strong as it has regardless of the impacts of COVID. Petrol demand showed rapid recovery from lockdown impacts. However, it has been impacted through the half by higher pump prices only recently recovering to pre-COVID levels. And lastly and importantly, we have seen a rapid recovery in jet demand following the opening of orders from the end of February, with jet fuel demand recovering to over 50% of pre-COVID levels. I'll talk to the outlook for jet demand in more detail later on. The translation of this demand to throughput to our infrastructure is shown on slide 7. The chart on this page shows the steady recovery in fuel demand over the last 12 months as COVID restrictions have eased. Fuel throughput was up 9% in Q2 compared to Q1 as fuel demand across all products increased, and we expect throughput to continue to grow as aviation capacity returns to New Zealand. Refined product has now been flowing through our terminal and into the fuel supply chain for almost 5 months, and you will see the significant increase in fuel storage we are investing in through the transition with more than 80% increase in fuel storage capacity at Marsden Point compared to the refinery once we have all of our private storage available. Earlier this week, we welcomed the largest refined product chip ever to be received in New Zealand, the STI LILY, which is classed as LR2 vessel among the largest refined product ships in the world and capable of handling up to 120 million liters of fuel. As the largest fuel import terminal in the country, we are the only location capable of receiving product tankers of this size, and our tankage capacity means we are well placed to store and distribute the fuels on-board, providing significant freight benefits for our customers. Turning now to Page 8 and the conversion project. Importantly, our conversion work continues to track to plan and to budget as we have communicated at the Investor Day and in our quarterly updates. The highest risk phase of the project being the refinery shutdown and intensive 2-month decommissioning work was completed in May safely to schedule and to budget. Decommissioning works are now more than 70% complete with equipment cleaned, depressurized and all catalysts and major internal equipment removed and sent for recycling. Our workforce transition is now substantially complete, and I'm really pleased with the outcomes we are seeing from our extensive program of transition support, which I'll talk to shortly. Terminal upgrade works are continuing with the conversion of 2 of our former crude tanks into private storage tanks now underway. Conversion project spend was approximately $84 million to the end of July, with more than half of the costs now spent or committed, reducing inflationary risk and increasing our confidence that this work will continue to track the budget. As we said at our Investor Day, we remain comfortable with the level of contingency we have in our project budget. Now I'll pass you to Jarek to run through the financials.

Thank you, Naomi, and welcome everyone today. Starting on Page 10. I'm really pleased to report that terminal operations are delivering strong cash flows. Our results reflect the change that we have undergone at Channel this year with the refinery as discontinued operations operating for the 3 months to 31 March and the import terminal operating from 1 April to 30 March presented as continued operations. And as you will see, these results really highlight the benefits we have realized from moving to the new operating model and how this provides us confidence that we will be able to return to the dividend in 2023. We have generated a strong EBITDA margin of 66% in Q2, reflecting the lower operating cost of the import terminal model. We have seen significant cash flows funding 2-thirds of the conversion spend. And the net profit for the 6 months and has increased net assets by 5% from NZD 1.33 to NZD 1.40 per share at the end of June. And finally, tax losses from refining assets write-offs are now crystallized as we seize the use of and shutdown refining units. As Naomi mentioned, we have made a good progress towards lowering our cost of capital through our retail bond issue in May, and our bank refinancing process is expected to complete in the second half. Our performance for the year is tracking in line with previously issued guidance, which increases our confidence in return to dividends at the end of this year. And for FY '23, we are now expecting EBITDA towards the top end of the guidance. Let me now turn to Page 11, which reflects continued operations, principally import terminal performance in its first 3 months Q2. We earned nearly NZD 30 million in revenue, mainly delivered by new terminal services agreements, which were in place from 1 April, translating to EBITDA of NZD 19.7 million and an attractive EBITDA margin of 66%. Below EBITDA, you will see the effect of asset useful lives review that we have undertaken in the first half. Terminal asset lives have been extended to reflect new service of these assets and resulted in a notable reduction in ongoing depreciation compared to our refinery. For the full year, we expect the depreciation to be around NZD 32 million. Financing costs are tracking in line with our earlier market guidance, reflecting the drawn debt being fully fixed, which provides us with certainty of funding costs looking forward. Now turning to Page 12. As you are aware, our earnings profile is now more stable, and we have some opportunities for operating cost reductions going forward. Our revenue is underpinned by our strong contract protections. In fact, over 90% of the revenue is fixed and the PPI indexation mechanism, which is effective from next year provides an opportunity for earnings upside. Looking at our operating costs, they have now been reset to terminal levels and are largely fixed. The variable portion of operating costs relates to electricity, where we see a real opportunity to improve earnings by securing new partnerships for provision of long-term supply and through setting transmission and distribution charges, which Naomi will talk to shortly. Turning to Page 13, I will now take you through the performance of the refinery, which, of course, was still operating in Q1 and is now classified as discontinued operations. The revenue earned under our processing agreements with customers, which concluded at the end of March with the refinery closer included NZD 47 million of processing revenue and NZD 6 million from pipeline fees. Operating costs in Q1 related to running the refinery is in its final months and excludes any conversion-related expenditure, which are presented below EBITDA. As a reminder, the majority of the conversion costs were recognized in FY 2021 when the decision to cease refining operations was made and the ongoing operating costs relating to conversion in the first half relates to those that were not eligible for recognition of liability in 2021. A dose for clarity are included in our overall conversion project budget of between NZD 200 million to NZD 220 million. Also, as we have seen interest rates increasing during the period, we have updated discount rates, which resulted in a reduction in conversion provisions with a corresponding credit to the income statement offsetting the ongoing conversion costs. Turning next to cash flow on slide 14. In the first half, Channel generated approximately NZD 41 million in operating cash flows, which has funded a significant portion of the conversion spend. The residual spend has been funded through debt, with net debt at the end of June of NZD 215 million. While the borrowings are anticipated to increase, we continue to generate strong EBITDA and we are expecting net debt to remain below 4 times EBITDA at the end of this year, enabling a return to dividends from March 2023, which Naomi will talk to shortly. Moving to the balance sheet on Page 15. We have seen a NZD 114 million reduction in receivables and payables as we no longer collect excise duty following the commencement of import terminal operations. Provisions for the conversion fell from NZD 185 million to NZD 131 million, reflecting the amount spent to-date and a decrease in provisions due to higher discount rates as I talked to earlier. Importantly, we saw tax losses crystallized with approximately NZD 467 million available on day one of the terminal, and these are now recognized as part of the deferred tax asset in the balance sheet. Tax losses, obviously, are important assets of our business going forward as they will improve our free cash flows for many years to come. And given the profit realized in the first half, we have had a notable 5% increase in net assets from NZD 1.33 to NZD 1.40 per share. Finally, turning to our financing on Page 16. You would be aware that one of our strategic pillars is to deliver value by improving the cost of capital of Channel Infrastructure. As such, during the first half, I was really focused on delivering our financing strategy to diversify funding sources and to improve the competitiveness of our debt. In May, we undertook a successful NZD 100 million retail bonds issue and now our attention is on refinancing our bank debt, which is well progressed and focused on resetting our cost of bank funding to align with infrastructure business. Our interest rate at the moment is higher due to the undrawn lines we are holding. This will come down, though, as our lines are drawn and we expect to see a reduction in the interest rate we pay as we refinance our debt. We have confidence in our funding costs going forward as our debt is fully fixed. And as I noted earlier, we are tracking in line with our guidance. With that, I'll now hand back to Naomi, who will provide an update on strategy.

Thank you, Jarek. Before I dive into providing you with an update on our strategy and the outlook for our business, I'd like to remind you of the 3 strategic priorities to deliver value to our shareholders, which you'll find on slide 18. These are to leverage our existing capabilities with safe, reliable, low-cost operations with a high-performance culture, to transform, to deliver value through a competitive cost of capital and realizing the full value of our infrastructure and to position our business for future growth by supporting the transition to low carbon fuels and growing and diversifying our earnings. I won't talk to all of these today as we have done recently during our Investor Day presentation, but I will today provide an update on our progress with our climate targets, the outlook for debt recovery and near-term terminal growth opportunities. Starting with climate on Page 19. One of the first acts of our new business was to release our first-ever Sustainability Report called our transition to a sustainable future. We believe infrastructure has a critical role to play in supporting the decarbonization of the fuel supply chain. We now must keep fuel affordable and available for everyone throughout the energy transition and the way to achieve this is by utilizing existing infrastructure. In our sustainability report, we set ourselves 3 ambitious but achievable targets. And today, I'm proud to provide you with some updates on the progress we have already made. Starting with the just transition of our workforce. Only 5 former employees who have left the business are still looking for work with more than 90% of those who have already left having already found their next opportunity. With regards to our net zero target, as mentioned before, we've seen a 98% reduction in emissions and 85% reduction in electricity consumption with no requirement for gas, contributing to a significant reduction in thermal generation required in New Zealand. And lastly, we are making good progress towards meeting our long-term target of supporting our customers to reduce Scope 3 emissions. We are working with customers and other parties on opportunities across biofuels, sustainable aviation fuel and hydrogen to utilize the infrastructure we own at Marsden Point and expect to have more to update on later this year. Moving next to the outlook for jet demand on Page 20. We are the only supply route to Auckland Airport where more than 3-quarters of international flights out of New Zealand depart, and the airport consumes 80% of New Zealand's jet fuel. We've seen strong growth in jet fuel demand since the Board has started reopening at the end of February. Last week, AIAL reported a 70% increase in international flights since February. And since that time, we have seen a near 60% increase in jet fuel demand to now sit over 50% of pre-COVID levels. And we're seeing Air New Zealand report extremely strong load factors, indicating the significant demand that exists when aviation capacity becomes available. This points to a strong recovery in jet fuel demand as aviation capacity returns with a number of airlines due to reinstate New Zealand routes this summer and the potential for a faster recovery than we had previously expected. With a clearer view on COVID recovery than we have had for some time, we are planning to work with Hale & Twomey to update our demand forecast in the second half of this year. Turning next to near-term growth on Page 21. We see a number of near-term growth opportunities beyond the contracts we have signed to-date. We are still waiting on government to take policy decisions on the biofuel sales mandate and domestic stockholding policy. But in the meantime, are working on some additional private fuel storage opportunities. We are also looking beyond Marsden Point. Mobil's recent ComCom clearance application in relation to the Auckland aviation fuel infrastructure has highlighted both the need for investment in additional capacity, which has not changed since the 2017 disruption and the need for a new commercial structure to support this investment and that allows for open access. Having put in place long-term agreements which support investment in resilience and open access at Marsden Point, we see Channel as the logical owner of the shared infrastructure in Auckland at the end of our pipeline and believe that we are in a unique position to support both the investment and the agreements required across industry to ensure the resilience of this part of the supply chain, which is especially important as we see jet demand recovering. Turning now to electricity on Page 21. As Jarek shared when he showed our operating costs with you, electricity is the single largest cost to our business at around one-quarter of our OpEx currently. This is despite our demand being significantly lower under the new operating model. While a significant portion of this cost relates to electricity supply, more than half relates to transmission and distribution costs, which we continue to pay at refinery levels. For our business going forward, there are 2 issues we need to solve. We need to reset our transmission and distribution charges to an acceptable level for our much reduced demand and we have a number of actions underway with Transpower and Northport to do this. We also need to secure supply at a much lower cost than the market is currently pricing. Market prices in New Zealand are effectively being set of [indiscernible] prices, which is high with the cost of coal, gas and carbon. This situation is great for [indiscernible] as has been reflected in their results released over the past few weeks, but it is incredibly frustrating for electricity consumers when thermal generation makes up only around 15% of New Zealand supply. That is why we are looking to secure our own requirements more directly, so that in the future, we are paying a price for electricity that reflects the actual cost and is made-up of more renewable electricity supply. We are doing this through an RFI process, which we launched last week. With resource consent in place and available transmission capacity, our Maranga Ra solar project can be developed much faster than most other solar projects being proposed and represents a great opportunity to deliver low-cost renewable electricity supply for our business and hopefully also to others in Northland. We have already had significant interest from potential partners in the project, which reflects its unique ready now status. To finish, I will talk to the outlook and our guidance, starting on Page 23. Going through such a significant business change, it is really pleasing today to deliver results that are in line with the previous guidance given for FY '22. As you will see from the H1 update column on this page, where we are tracking the full year expectations. Today, we have also provided depreciation guidance of NZD 32 million for the full year. Turning to Page 24. Our performance in the first half has given us increased confidence in the payment of a dividend at the end of FY '22. As Jarek mentioned, at year-end, we expect net debt to be below 4 times EBITDA, allowing us to recommence dividends in March 2023. We will need to wait until the year-end to assess the exact level of dividends. But to give you an idea of the free cash flow we have seen from the terminal in the first few months would imply a NZD 0.06 per share dividend at the midpoint of our dividend range. This is obviously subject to the Board's due consideration following the FY '22 results. Turning now to Page 25 and our expectations for FY '23. These FY '23 indicative financial metrics you have seen a few times now, and we can confirm that our expectations are now towards the top-end of the EBITDA range. On the revenue front, starting with PPI, in the 9 months ended 30 June 2022, PPI was 6.6%, which implies terminal fees towards the top-end of the range. We continue to expect our private storage capacity to be progressively brought online through to mid-2023 with the larger tanks towards the back-end of that schedule, meaning that we expect to be at the full run rate on private storage revenue of NZD 9 million per annum before any PPI adjustments in the second half of 2023. On the cost front, with higher forward prices for electricity next year, we are working hard to [lock] transmission and distribution costs, which are still at refinery levels to offset that. And we expect to see a reduction in bank funding costs through the refi process we have underway, and we'll be able to provide an update on that later this year. Moving on to Page 26, where we've included in the presentation, the capital allocation framework we announced at Investor Day to grow shareholder value by delivering both dividends and growth. With the stability that comes from our long-term contracts, we are focused on returning to dividends. Our dividend policy is to pay out 60% to 70% of normalized free cash flow, and we expect to return to dividends at the start of 2023. This dividend policy leaves the remaining 30% to 40% of cash flow available to fund deleveraging and growth. We are targeting net debt-to-EBITDA of 3 times to 4 times, which is consistent with an investment-grade rating and have today confirmed we expect to remain below 4 times at the year-end. And we are very focused on having a disciplined approach to growth that drives shareholder value for the investment criteria we have set-out in our capital allocation framework. Finally, turning to Page 27 and working through that capital allocation framework using our indicative financial metrics for FY '23, we estimate some NZD 30 million to NZD 40 million of dividends, which equates to between NZD 0.08 and NZD 0.11 per share for FY '23, leaving NZD 15 million to NZD 20 million available for deleveraging and growth. To wrap-up on slide 28. Today's results confirm our transition to the new business model has been delivered to plan. We're seeing increasing fuel demand as COVID restrictions ease and expect to see increase in jet fuel demand as aviation capacity returns. Our refinancing this year to reset our cost of capital is well progressed with the retail bond issue completed in May and the bank refinancing now underway. We have confirmed again today that we are tracking to plan with both our conversion project costs and FY '22 results, which gives us confidence in a return to dividends from the start of next year. And we are tracking to the top-end of EBITDA guidance for FY '23. And finally, we are continuing to work on a range of growth opportunities, which have the potential to grow earnings in the short and medium term. With that, I'll open-up for Q&A.

[Operator Instructions] Your first question comes from Andrew Harvey-Green from Forsyth Barr.

A few questions for me, probably not unexpected. First of all, I just want to clarify a couple of things around the dividend, in particular, the FY '22 comments around NZD 0.06 a share. I just wanted, first of all, in terms of the FY '22 dividend, are you looking at any essence returning cash based on 9 months of the infrastructure operation from 1 April.

Hi Andrew. So yes, the way to think about the dividend indications that we talked about today is that in a sense from 1 April, we operate under a new business model, which in a sustainable way will return cash flows for the business and shareholders and translate into dividend. So we are looking to paying dividends from that new business model. The refinery has had some positive cash flow for fiscal Q1. But we look at that as a part of the previous operating business model and that effectively will be used to fund partly the commissioning of the other business.

Okay. And then thinking about, I guess FY '23 and beyond, do you have a plan or you are content what first half, second half dividends that might look like? Is it going to be sort of 50-50 or are you going to look to weight it towards the back half of the year?

Look, I think it really comes down to that cash flow question, Andrew. And that's obviously also driving sort of where the dividend might come out. But I think the key question will just be where we get to on some of the growth and what that means in terms of where we're paying in the range rather than a sort of a strong weighting one way or other. But the cash flow is from the terminal are obviously pretty steady and reliable. So there's not a need to sort of hold back in the first half for that reason.

Yes. Okay, that's great. Second question I just had was around the private storage, and you mentioned looking at, I guess, middle of next year expected run rate revenue of around about NZD 9 million. Just to give us a sense of where you're at. Can you give us an idea of what the current run rate private storage revenue is.

Yes, it's fairly nominal at this point. So we do have a couple of the tanks in operation, but they are progressively coming online through the next just under 12 months. So there will be some contribution in current year earnings to that, but it is only a small portion of that annualized run rate that we're forecasting once we get all of the capacity online and that reflects just the size of some of the tanks, the bigger tanks are coming on later, and the nature of the contracts is we're paid by volume.

Okay. And I guess that sort of make not many expression around the FY '23 guidance, particularly around the revenue. If we look at effectively what you've reported here today it's almost second quarter operations. It looks like the lab services business at a full half, but everything else was the infrastructure, the terminal and pipeline piece. That kind of a just on a simple pro rata basis, looking at around about NZD 114 million, NZD 115 million before you add on additional private storage and the PPI increase in FY '23. Am I missing something here or is revenue looking like it should be comfortably ahead of NZD 120 million next year.

Yes. I think, as you mentioned, Andrew, the slight complication as you've got IPL in for 6 months. So there is a little bit more than a quarter of revenue if that makes sense. So it might be slightly lower than the numbers that you were quoting from a run rate perspective. But to your point, are we sort of -- in having the expectation were top end on EBITDA that we would be at or even slightly above top-end on revenue guidance. That's right.

Yes. Okay. Great. And then last question from me is just around, I guess, your comments no in terms of there being the natural owners of the weary assets. And I think that's well understood. I guess the question I have is whether you have had any or started any sort of discussions around potentially becoming an owner of those assets.

Yes. So we've been very much focused, I guess, over the last period of time on the conversion project and getting that done safely and to plan. And so it's really at this point now that we are through that, that we are looking beyond Marsden Point and starting to have those discussions. But obviously, any acquisition is subject to being a willing seller as well as a willing buyer. So I don't really have any update on that at this point. But yes, something that we think makes logical sense. And so we'll be having those discussions as we move forward.

[Operator Instructions] Your next question comes from Nevill Gluyas from Jarden.

Reasonably simple one to start with from me. Can you tell me what the RFI timetable is? So when do you think you'll have that concluded?

Yes. So the first stage of it Nevill is, I think we've asked the proposals later on in October. And then from there, we'll sort of go into a short listing process.

Do you think you'll have that sort of -- is the aim to have it done by middle of next year, say.

Look, I think it's very much dependent on what option we go with. I would certainly hope we were getting pretty close to a final decision by then. It's not earlier. But yes, they're very connected with what the best option looks like, and we see that as being about locking in long-term supply. So we do want to make sure we get that right.

Great. And sort of a follow-on to that. You talked about sort of one-third hedged at NZD 175 a megawatt hour. The other 2-third is sitting at spot? Is it you are buying from the market?

Yes. So at the moment, that's correct. We sort of accumulate hedges Nevill sort of over-time. Would have viewed that sort of we have a better coverage in the near term and sort of tailing-off in the longer term. Market has been extremely challenging. When we look at forward pricing, it still sort of remains high in the next 2 years despite spots being long, but sort of we'll be looking at opportunities how to firm-up next year from a costing and pricing perspective.

Yes. So we are hedged level this year, and we just sort of looked at next year and continue to look at it. It's obviously -- I'm sure you've noticed that too while near-term prices have come off when it range, the forwards are just sitting there, which is a bit odd, but I think an indication of what's going on in that market. So we'll just keep looking for opportunities to cover the rest of the positions over the remainder of this year.

Yes, correct. I imagine it would get good interest from [indiscernible] as it's already you've heard inbound on it. Maybe a separate track on that, though, what are your chances of being able to have any impact on transmission and distribution charges because of course they fall under a different banner. Is there a regulatory process, some kind of process you can adopt to reflect the reduced demand now at your location or what are the prospects for that? What kind of approach you need to take?

Yes. There's a number of things within the current pricing frameworks that we can do and have underway. So there's a process for rerating the site as well as a prudent discount applications in train and just the discussions that are occurring because obviously, there's an element of discretion as well in how both the transition and distribution providers choose to allocate cost. So all of those things are being actively worked to get those charges down to a reasonable level.

And just following on then on the growth question. I wonder what the prospects are for the -- you're probably going to have to answer this for the 3 current owners to really want to share it with third parties, but that would presumably be the more desirable outcome from a wider economic perspective. But I don't imagine there have been a rush. So I guess it's just another way. Have they approached you to see whether you're interested to buy or is there something that's really in your court to try and pursue with them?

Well, if you have a look at the application that Mobil to ComCom, they actually advocate for Open Access themselves. And so we obviously support that. That's something we've put in place here at Marsden Point, but our infrastructure into Auckland does feed into their infrastructure. So we really need open access through the supply chain. So look, we think that is the expectation that exists in the market and we think that as we've seen with the Mobil ComCom agreement that there would be support for putting similar arrangements in place as new commercial arrangements are put in place for the Auckland infrastructure now. The question of whether it involves an acquisition of those assets by us is obviously another step. But either way, those assets need new commercial agreements to support the investment in capacity that needs to be built in Auckland. And so that's going to create the opportunity to make sure those things like Open Access get addressed in the next certain period of time.

Okay, thanks. We'll keep watching. And just the last question for me really is just around your lease access to the sites, obviously, the end of the wrap turning up on rail land, lease expires in a decade. What happens after that, do your current agreements basically not require you to lease the land as on? Should we expect some new kind of arrangement, does some new kind of range have to occur to keep delivering to the fuel contracts or to the pipeline contracts.

Nevill, you're referring to the Wiri lease arrangement site?

Yes.

Yes. So they come to an end in a couple of years' time and the nature of them is that we don't have any ongoing obligations or rights. And so the way to think about it is that, that earnings stream will come to an end at that point. And so we're certainly conscious of that in terms of the growth in other earnings that we look to realize over the next few years to having a growing revenue and earnings profile over-time.