Dalrymple Bay Infrastructure Limited (DBI) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Dalrymple Bay Infrastructure's FY '25 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Michael Riches, CEO. Please go ahead.

Good morning, and welcome to Dalrymple Bay Infrastructure's results for the 12 months ended 31 December, 2025, or FY '25. I'm Michael Riches, CEO; and with me today is Stephanie Commons, our CFO. Today, we will be providing an update on our financial performance for FY '25, including detailing the outcomes of our capital allocation review process that has led to a 7.7% increase in our distribution guidance for year '25-'26 from the prior guidance provided in May 2025 as well as detailing some of our key strategic priorities for 2026. We continue to improve our financial performance and grow distributions to shareholders during FY '25. EBITDA rose 5.2% year-on-year to $294.3 million. Funds from operations, or FFO, was $173.3 million, up 10.6% on FY '24. This excluded the one-off early repayment costs and associated tax benefit arising from our December 2025 refinance. And Slide 12 provides some detail on this reconciliation. We continue to invest back into the growth of our business with approximately $429.6 million of capital projects underway via our non-expansionary CapEx, or NECAP program. We raised facilities of $1.07 billion to repay the 2020 USPP notes and repay and cancel $410 million of revolving credit facilities, substantially lowering interest costs on the debt repaid and providing enhanced flexibility and diversity to DBI's balance sheet. This refinancing proved that DBI has the credit profile to be able to access more flexible and better priced debt capital over the long-term. This is a key strategic priority for the business in 2026. The strong financial performance resulted in a distribution of $0.24625 per share being returned to security holders during FY '25, an 11.4% increase on the prior year. And importantly, we continue to operate in a safe and environmentally responsible manner with 0 incidents that caused this serious injury. DBI continues to drive a broad range of initiatives delivering improved returns for security holders. It is important to note that our unique business model and investment-grade balance sheet will continue to support our strong distribution profile. From this foundation, we are focused on revenue initiatives and cost savings that require no capital deployment, effectively enabling a direct flow-through of the revenue and reduced costs on a post-tax basis to cash flow, increasing our FFO and the ability to grow distributions for security holders. In FY '25, some of the value-creating initiatives undertaken by the DBI management team included revenue initiatives such as optimizing capacity for customers, managing security arrangements for customers more effectively and driving additional value through NECAP, such as our NECAP Series Y, all of which we expect to deliver greater FFO in FY '26. Cost-saving initiatives that despite the impact of inflation, saw G&A costs remain constant year-on-year. And finally, financing initiatives, which improve the flexibility of and diversity to DBI's balance sheet, delivering substantial future interest cost savings and opening up further sources of more flexible and better priced debt capital. These revenue and cost initiatives have an important impact on our ability to increase distributions. At our FY '25 half year results, I indicated that we would be undertaking a capital allocation review. That review has now been completed, 3 key decisions leading to the step change in distribution guidance that was announced today. Firstly, sustainable incremental revenue and cost-saving initiatives will posttax be applied in full to distributions to security holders. As an example, delivering a $5 million increase in FFO through these initiatives would equate to a $0.01 per security increase in distributions. Secondly, it is intended to increase the utilization of debt to finance NECAP expenditure, resulting in a more balanced mix of debt and operating cash flow being used to fund NECAP. The utilization of operating cash flow to substantially fund NECAP in the last 4 years has been a key factor in the creation of the significant headroom in our debt covenants and investment-grade rating criteria, which now permits the increased debt funding of NECAP. As you can see from the chart on the bottom left of this slide, and there's further detail on Slide 13, our leverage remains well below debt covenant levels. The addition in FY '27 of over $400 million to the NECAP asset base and the resultant uplift in TIC will further drive leverage improvements. Finally, and most importantly, with reduced reliance on FFO to fund NECAP projects, the distribution payout ratio can be increased to the upper end of the 60% to 80% payout ratio target band. The outcome of the review is a step change uplift in distribution guidance for TIC year '25-'26. The combination of the strong FFO performance and the decisions from this review has resulted in distribution guidance for the remainder of TIC year '25-'26 of $0.26375 per security, and we expect in the usual manner to further assess distribution guidance in May this year once the inflation and NECAP amounts and the resultant TIC for TIC year '26-'27 are known. This uplift we are announcing today represents a 7.7% increase in the distribution guidance for TIC year '25-'26 on the guidance that was provided in May '25. Along with the step change in distribution guidance, DBI also announced today a Q4 '25 distribution of $0.0675 per security, a 10.2% increase on previous guidance for the Q4 '25 distribution. That distribution will be paid on 19 March, 2026. It should be noted that the impact of the tax deductions associated with the early repayment costs incurred on the December 2025 debt refinancing has resulted in no tax being payable by the group in respect of FY '25. There is a consequential reduction in franking credits that DBI otherwise expected to be available in respect of the Q5 '25 and -- sorry, Q4 '25 and FY '26 distributions. The Q4 '25 announced distribution is, therefore, a combination of unfranked dividend and repayment of loan notes. Importantly, we continue to retain our target of 3% to 7% per annum growth in distributions for the foreseeable future, subject to business developments and market conditions, meaning this uplift today in guidance will have a positive compounding impact in future years. I will now hand over to Stephanie, our CFO, to talk through our financial results in more detail.

Thanks, Michael, and good morning, everyone. Just on Slide 10 for those following the presentation, debt refinance. So as Michael mentioned earlier, we raised $1.07 billion in debt in December 2025. We were continuing to assess the debt markets over 2025, and we're regularly testing whether the benefits of a refinancing warranted the costs associated with an early repayment of any of the USPP notes. In late 2025, DBI determined that the compression in spreads over the year, ultimately resulting in a 1.56% weighted average margin on refinance debt compared to a 3.26% weighted average margin on the 2020 USPP notes, together with other financial and nonfinancial benefits, warranted execution of the refinance. The early repayment costs which comprised cross-currency swap rate costs and make-whole amounts, which totaled $103 million with an associated $27 million tax benefit, were funded by drawing on the new revolving bank facilities as well as utilizing funds we realized from the conversion of in-the-money value in our remaining cross-currency swaps. The increase in leverage resulting from the refinance remained well within our debt covenant and our investment-grade credit rating criteria, and there exists sufficient headroom in the new revolver facilities to continue to fund our NECAP program. The refinance delivered and will continue to deliver significant benefits to DBI securityholders over the longer term, well above the direct net $75 million of reduced interest costs through to 2030. We expect the strong credit profile of DBI reflected in this refinance will provide us with significant opportunity to access more flexible and better priced debt markets going forward and assessing those markets to capture a further reduction in interest costs and to reduce refinancing risk is a strategic priority for the management team in 2026. In terms of profit and loss statements, our FY '25 revenue and EBITDA are both up on prior year, demonstrating the resilience of our business model and the focus that we've had on incremental revenue creation and our disciplined approach to costs. The TIC revenue increased by 3.9% in FY '25, which is in line with the increase in the TIC growth. And as a reminder, handling costs represent the amount invoiced to DBI by the third-party operator of the terminal, noting that the operator is owned by a subset of the terminal customers and those handling costs are fully recharged to customers of the terminal, as can be seen by the matching handling cost line. Accordingly, these costs have no impact on DBI's EBITDA. And the table at the bottom right of the slide provides a reconciliation of the components of the net finance costs that went through in 2025. In the cash flow statement, you can see that capital expenditure represents the spend on DBI's NECAP projects. This spend increased in 2025, driven by the progress on the major asset replacements underway in our NECAP program. This current NECAP spend is anticipated to contribute meaningfully to our TIC revenue from July 2027 onwards. And in the appendices, we have provided a reconciliation of the NECAP spend to our statutory accounts, and we've also provided reconciliations of net finance costs and income tax. DBI maintains an investment-grade balance sheet with S&P and Fitch, who both reaffirmed their ratings during 2025 at BBB [ flat ] and BBB- respectively. Fitch has in the last month reconfirmed their investment-grade rating with an improvement from a stable outlook to a positive outlook. We currently have $2.25 billion of total debt facilities, of which $2.07 billion was drawn at 31 December, 2025. Our drawn debt has a weighted average tenor of 6.3 years, and we continue to [ remain ] the strong performance against our key coverage metrics with substantial headroom to debt service, leverage covenants and rating agency criteria. And in the appendix, we've provided a reconciliation of our borrowings disclosed in our financial statements to our drawn debt amount. In terms of hedging, all of our foreign currency debt remained 100% hedged, swapped back to AUD. So DBI has no FX risk for either interest or principal payments. DBI manages its interest rate risk via a mix of fixed rate debt issuance and interest rate swaps. We're currently reviewing our longer term hedging strategy to take account of the expected change in the debt markets that DBI is able to access in the future with maintaining a strongly hedged position on interest rates as a priority. DBI's weighted all-in interest rate for its debt book will be approximately 4.63% until mid-2026 and will step up to around 6.5% thereafter when the block of 5-year interest rate swaps that were transacted in May 2021, roll off and are replaced with forward start swaps that we transacted during 2022 and 2024. The 6.5% weighted average interest rate from mid-2026 is well below the 8% that we previously guided at the HY '25 results and reflects the positive impact of the December refinance on our borrowing costs. I'll now hand back to Michael.

Thanks very much, Steph. If I can draw your attention to Slide 16 in respect of organic growth in our NECAP program. Our NECAP program has been and will continue to be a source of organic growth and uplift in our TIC. It is important to remember that DBI earns a return on and of NECAP expenditure with the TIC adjusted each 1 July to account for NECAP projects commissioned during the previous 12 months. NECAP also includes an interest during construction component, ensuring a return on capital expended whilst projects are being undertaken. As referred to earlier, the NECAP program will be funded by a greater proportion of debt than has historically been the case. We have adequate capacity within our debt facilities to execute on that funding requirement. DBI's capital allocation, operational expertise and relationship management, has continued to ensure a smooth facilitation of the NECAP program, and all committed NECAP is fully approved by all customers. With committed projects underway today and based on current asset management plans, a similar amount of capital spend is projected, but is yet uncommitted over the next 5 years. NECAP remained a significant growth driver for our business and will continue to add meaningful value to customers and security holders. The chart on Slide 17 illustrates the positive impact of how our investment in NECAP will lead to future revenue growth via an uplift in our TIC. If the Shiploader 1A and Reclaimer 4 projects are completed, as expected, together with all other committed NECAP projects, our TIC would increase by approximately $0.70 per tonne in TIC year '27-'28, that is from 1 July, 2027. To place the contribution of NECAP into perspective, every $0.70 per tonne uplift in the TIC adds approximately $59 million to our revenue base. Slide 18 provides you with a self-explanatory update on the progress of our largest NECAP project, Shiploader 1A. The project commenced in April 2023 with commissioning and existing machine removal expected by Q4 of 2026. The project remains on schedule and on budget,+ as does the Reclaimer 4 project, our other major NECAP project. Across the industry, finding major projects that over this time period are on schedule and on budget has not been common. Our projects team is to be commended on the quality of their work and their commitment to these projects, that has delivered this outcome. We continue to make that a strong focus and delivery of these projects over 2026 is a key strategic priority for the management team. In regards to our 8X expansion project, we retained significant expansion optionality to accommodate metallurgical coal exports from the Bowen Basin. As a reminder, 8X is expected to deliver up to 14.9 million tonnes per annum of additional capacity with the option of delivering that capacity incrementally via a phased approach. We reviewed the DBT access queue during 2025 and did not accept renewals for customers with indefinite capacity requirements. The queue, however, remains at over 29 million tonnes per annum, and therefore, we believe there is demand for the 8X project. The timing of that demand is subject to a variety of factors associated with current mine expansions and new mine developments. We continue to explore opportunities to optimize the utilization of existing capacity in parallel with the 8X expansion. Ultimately, the provision of capacity in the most efficient manner available will deliver the best long-term outcomes for DBI and its customers. As we focus on generating long-term security holder value, we will naturally explore opportunities to grow our business in alignment with our current risk profile. Our competitive advantages will be key guides in the opportunities we consider. As a reminder, our competitive advantages include: our regulatory expertise where we have demonstrated an ability to navigate complex regulatory situations to deliver substantive value; our capital deployment capability demonstrated through a strong track record of successful execution of multiple major projects; our operational expertise where through our substantial oversight of terminal operations we've been able to create positive operational benefits, particularly we're balancing the interest of multiple stakeholders in the supply chain; our funding capacity where our successful execution of the December refinance and numerous previous debt programs has created access to multiple debt capital funding sources; and finally, and importantly, our key relationships, which has been developed with customers and key stakeholders over many years, allowing constructive and positive negotiations that have delivered win-win outcomes. Applying those skills and capabilities to enhance and/or unlock the value in other businesses or assets will be the lens through which we assess opportunities. In doing so, however, we remain disciplined and mindful of the key attributes of our existing business. Any opportunities pursued will take into account those factors. And finally, focusing on the key strategic priorities for the management team for the next 12 months. With our take-or-pay contracts and future earnings profile, DBI is well positioned to continue to deliver long-term growth in total securityholder returns. Our priorities over the next 12 months will include: delivering further organic revenue growth through new revenue initiatives and the inclusion of the cost of completed NECAP projects in the NECAP asset base; completion of the Shiploader 1A and Reclaimer 4 projects on time and on budget; progressing opportunities to capture long-term Bowen Basin metallurgical coal production via our continued review of the use of terminal capacity, including optimization of existing capacity; and our economic assessments of the 8X project. Further assessment, as Steph mentioned, of refinancing opportunities to improve balance sheet flexibility, reduce refinancing exposure and access other sources of debt capital to reduce interest costs over the long-term, whilst maintaining an investment-grade credit rating; identifying opportunities for diversification through acquisition of assets that have a similar risk profile to the existing DBI business and which enable value to be created through our competitive advantages. We will continue to explore and assess opportunities for alternative uses of DBT, but within our existing resource base. And finally, we will deliver whole of terminal ESG and sustainability initiatives, many of which are set out in our sustainability report, which was also released today. Thank you very much for your attention, and I'll now hand back to the operator to take questions, and we'll respond to those.

[Operator Instructions] The first question today comes from Andre Fromyhr with UBS.

I just want to start with the outcomes of the financial review. I understand the new guidance is for the payout ratio at the upper end of the target range, 60% to 80%. But I also understand that sitting behind that is a new assumption that you can fund more NECAP projects with debt. And so I'm curious if that's a structural permanent change to how NECAP is funded, why you couldn't have, at the same time, actually lifted that target payout ratio range?

Yes. I think -- thanks, Andre, for the question. Yes, it's certainly the intention at the moment, and we will continue to assess capital allocation and make sure it's appropriate going forward for the business. But it's certainly the intention at the moment to fund our NECAP with a greater proportion of debt. You will have seen our FFO payout ratio has historically been around 70%, pretty much in the middle of the target range we've provided. As mentioned, the intention is to increase at the higher end of that range. We think at the moment, that remains appropriate, the 60% to 80%. Whether going forward, we -- the Board assesses that, I think will depend on how we progress with some of the initiatives around looking at our financing options going forward. We certainly think the December refinance has created an environment, particularly in the current debt markets, where it presents opportunities for us, may well lower interest costs in the future. And in those circumstances, depending on FFO and what we need to utilize it for, there may be an opportunity to increase the payout ratio. But at this stage, we still believe 60% to 80% represents an appropriate number to ensure we can continue to grow our distribution strongly, but retain capital as required, particularly for NECAP projects. So we think it will be -- certainly the intention is for it to be at the upper end of that range. Whether there's an opportunity to change that range going forward, that always remains something that we will constantly assess.

Okay. And I've just got another question about the NECAP spend on the shiploaders. I mean, I guess you're active on Shiploader 1 at the moment. But I'm wondering, can you provide an update on sort of the age and replacement schedule of the other shiploaders at the moment? And I'm also curious that in the 8X costing the fourth shiploader is quite a bit more expensive than what you're spending on the SL 1 replacement. So just wondering if you could reconcile what other works go into that?

Yes, sure. So Shiploader 2 and 3, we're actually undertaking a NECAP project at the moment, which was part of the NECAP W series, which is undertaking a study for the replacement or refurbishment of Shiploader 2, and it will also include an assessment around Shiploader 3 as well. Shiploader 3 is about 5 years younger than Shiploader 2, but is actually -- because it services berth 3 and 4, has actually shipped more tonnes through Shiploader 3 than Shiploader 2. Both are getting to the point where refurbishment or replacement is becoming necessary just from a whole of life cycle cost perspective. So that study, which we expect will be completed during the course of 2026, will give us some guidance, and we will talk to users around what is the appropriate approach to either replacement or refurbishment of those shiploaders. So we should have, by the end of this year, a bit of a pathway towards how we're thinking about the timing of those -- replacement or refurbishment of those shiploaders. In terms of the second part of your question on Shiploader 4 as part of 8X, the reason for the change of cost or the additional cost is that Shiploader 4 not only involves the new shiploader itself, it also involves effectively a new outloading stream that is required to ensure that we can actually get the coal to Shiploader 4. So it will need new conveyor belts, new galleries, new trippers to effectively -- which we'll have to build so that the coal can come from the stockpile out to Shiploader 4 because obviously, there's currently 3 outloading strings which takes the coal to each of the current 3 shiploaders. For Shiploader 4, we have to build probably not a whole new outloading string, but it will be substantially that. And that's where the additional cost associated with Shiploader 4 is derived from.

The next question comes from Cameron McDonald with E&P.

Question actually probably for Steph, Michael. The -- just the $75 million worth of cumulative interest savings, how should we think about the phasing of that relative to the years that is saved over? And then how does that interact? Because you've previously obviously given guidance about a step-up in the interest bill as well. And this looks like that's removed that profile as well, please?

Sure. Thanks, [ Cameron ]. So answer to your first question, that $75 million assumes that when we come to refinance the USPP 2020 under the -- previously, we had an amount maturing at the end of 2027 and a larger amount maturing at the end of 2030. And we have simply taken whatever interest we were going to be paying for those 2 tranches and replacing it with the current weighted average margin of this refinance. And so it's just the net difference. So there is a small amount of weighting in the first year, but the majority -- and then the rest of it is really just over about 3 years. So I think it's about $183 million in '27 and close to around $400 million, $500 million in 2030. And then there's a small amount in 2030 too that's actually not included in that $75 million. It's above that. Also the $75 million is a net number, but that's probably the way to think about it. But it's relatively even, but slightly weighted towards the first 2 years. In terms of the second question, which I've forgotten. So go ahead...

It was the previous step-up.

Thee step-up. Yes. So that step up, a lot of that was based on the -- what hasn't changed is the base rate being replaced by the forward start swaps and the fixed rate 2023 notes that have been left fixed staying in place. So most of the change is really coming from a combination of the lower margins on the refinancing that's replaced the 2020 and also the lower margins on what we expected the NECAP funding to be. So obviously, the NECAP funding that we expected to draw between now and beyond 2026 was going to be at a higher rate. So that NECAP funding that we already had drawn and we expect to draw in the future, that was going to be a lot more expensive. So we refinanced all the revolvers at a much lower rate. We're also just doing a bit of analysis to see to what extent the base rate may have impacted that. I wouldn't have expected it to be too much because I think the base rate we had hasn't changed too much from what our assumptions were to what we now think they're going to be. So I think most of it is really on the margins on the revolvers and the savings on the USPP, which is permanent savings there.

And perhaps just to add to that, Cam, I think you can -- obviously, we will still have an overall step-up in interest costs come mid-'26 as a result of the roll-off of the cheap 2021 swaps and the replacement with new swaps that we put in place over 2022 and 2024. So there will be a step up. And I think probably where you should look is, as we've said in the presentation, we were expecting across the whole debt book an average interest rate of about 8% for -- going forward from mid-2026. Now that's reduced down to 6.5%, thereabouts. So if you want to think about it in a holistic way, it's to look at, okay, what would have been the debt payments on, call it, close enough to $2 billion on 8% against what they'd be on $2 billion on 6.5% and think about the overall interest cost change. And then obviously, we're at 4.63% now. So the uplift is going to be between 4.63% to 6.5%, so whatever that is, 1.85% on the debt book is probably the way to think about where our overall interest cost increase is going to go.

I think there's also the assumptions we would have made around what it would have cost to refinance the 2020 when they did come up for refinancing. So I think the fact that, that's come right in is that we would have [indiscernible] a much higher rate that we would have needed to pay to refinance that.

Great. And then just -- Michael, just the capacity optimization initiatives, like what was the benefit in this period? And what further opportunities are you currently working on?

Yes. So you can see the other revenue line for this year was about $3.5 million. That was a combination of things, including capacity optimization, some work on security arrangements with customers. So we expect that number on an annualized basis to -- that other revenue to be higher, and that will be largely driven out of capacity optimization initiatives. We still think there's opportunities around capacity optimization. It's probably -- there's been, as you'll all be aware, quite a bit of flux in the market at the moment, in the coal market generally. I mean, Anglo are now looking to go out to reprosecute the sale of their assets. Fitzroy have gone through a sale process in relation to the AMCI ownership. Obviously, Bowen Coking Coal has now been bought. So we expect with some of those things playing out over the course of 2026 and getting a bit better handle on what those outcomes might be, there certainly should be further opportunity for capacity optimization. The terminal is still not running at the capacity level we would hope. The beginning of this year has been significantly impacted by weather, particularly Cyclone Koji. We're getting through that, the end of the wet season, which is positive, and we do see coal availability from miners starting to ramp up. And that's very positive, I think, for the industry generally. But we still see there being pockets of potential for future capacity optimization going forward.

The next question comes from Sam Seow with Citi.

Can I please ask on the $0.70 NECAP driven TIC upgrade? I think previously, you talked that might have been $0.63. So we've got like a 10% uplift where the uplift in the NECAP schedule appears minimal. So just wondering what's driving that? Is it the higher 10-year bond yield? And if so, can you perhaps provide some color around what's embedded in that assumption of $0.70 from a yield perspective?

Yes, sure, Sam. So I think it is a combination of 2 things. So the previous $0.63 didn't include NECAP Y, which was approved in the second half of last year. So that's $24.2 million. So that's a bit over 5% on what we were previously contemplating. So that's probably half or so of that uplift. The rest is we -- the 10-year government bond rate has definitely crept up, as we've seen across all bond yields. So we've applied a sort of assumption around 4.5% for that bond yield going forward, at least in the short-term. And that's been the driver above what our previous expectation was around bond yields for the other 3% to 4% uplift. So they are the 2 key drivers that move it from $0.63 to $0.70. And we will also have the potential we're putting our proposal to customers in the next couple of months around NECAP Z, which will be in that sort of $30 million to $50 million range as we sort of generally forecast, subject to obviously customer approval. And that will further grow the TIC as well, but that's not included in the $0.70.

Got it. That's very helpful. And then maybe on the 6.5% weighted cost of debt in the second half '26. It implies that basically your base rate might have been a bit lower as well, maybe around 130 basis points as well as the lower margin. I just want to ask 2 questions. One, is that right? And then two, when you think about further refinancing of the other half, what are your considerations as it really would appear that both base rates and margin are still attractive even with the recent pickup in yield? So yes, just what are your considerations about pulling that, I guess, second bullet?

Sure. So on the $0.065, yes, so that's primarily -- as I said, it is primarily margin driven. The base rates we've adjusted for whatever the forecast is on the current curves look like. But to a certain extent, our debt is -- the debt that was fixed previously, which is the 2023 USPP notes, the base rate within that hasn't changed. We just swapped that back from U.S. dollars to Aussie dollars but kept it fixed. All the other swaps we have in place that start -- that we built forward start swaps we put in place, they're still there. So there's an amount of unhedged debt that is susceptible to float rate, but we don't feel that our assumptions in there. That's probably gone -- changed a little bit, but not substantially, I wouldn't have expected. Most of the change in that rate is really margin driven, and it's driven by both the existing refinances that we've had, the cost of funding future debt draws to fund NECAP. And also the repayment on the USPP that we would have assumed would have been there, that isn't there now. So that's -- there's not really much of the base rate in there. In terms of how we're thinking about the other half of our debt, we're certainly looking at that this year to see if there's any opportunity to refinance any of the other U.S. private placement debt. So we will go through another exercise this year to have a look at that. Again, we'll make that assessment as to whether or not the costs of repaying that make that worthwhile given market conditions at the time and access to different markets. And we do have a lot of our debt sitting now in very flexible revolving facilities. So we do have a lot of flexibility about approaching the market at some time if markets are very positive and particularly if they can deliver a cheaper rate of interest than what we are currently paying even under our existing revolver. So we've got a lot of flexibility this year both for refinancing existing drawn debt into new markets if it's attractive or looking at some of the older fixed rate U.S. private placement debt to see if there's any benefits in paying that [indiscernible].

Great. That's helpful, guys. So just -- maybe just one clarification. So what amount of your debt is actually floating at the moment?

Currently, I think in the presentation, it's sitting at around 83%, but that is stepping down over the next...

That's what's fixed, not what's floating. Just to clarify, Sam, about 83% fixed at the moment.

17% float rate at the moment on what's drawn at 31 December. And if we were to draw anything else, and there's a chart there that sort of shows our hedge profile in one of the -- in the slide as well that looks like the hedging percentage or the fixed hedge percentage does step down to around the sort of mid-60s, sort of 70% by the end of the decade. And that's assuming the amount of debt we've drawn today doesn't change. So it doesn't take into account -- clearly, we're going to be doing additional debt draws to fund NECAP and those debt draws on revolvers will be float rate. So we do intend to do some sort of hedging program during the year to increase that fixed rate. But we -- that's something that we're focused on doing probably over the next [indiscernible].

The next question comes from Ian Myles with Macquarie.

Congrats on the results. Look, just a couple ones. Just on the tax, are you likely to receive a refund this year and pay pretty much minimal tax this year? And I guess into next year, will you actually pay much franking as a result?

Yes, we will get a refund this year, but we will start to pay tax during this year as well. So we expect to generate franking credits that will be available at the very back end of this financial year and definitely into 2027 so that we sort of return to what has been the normal franking position that has applied previously, obviously, subject to a few tax idiosyncrasies, if I'd call it that. But generally, we'll get back to a franking credit position by the end of this year and into '27.

Okay. In terms of your -- if I just look at your NECAP program and all the programs to finish by June, that's about $55 million of conversion into NECAP. Is that a reasonable expectation? Or will it be probably slightly less than that?

It will actually probably be slightly more.

Any reason why?

Yes, because I mean, I think 2 things. One, we have spent time with all of our customers. Some of those projects were not fully approved by customers and therefore, had to go through a QCA approval process, which means you sort of have to start that process as it applies to completed projects earlier in the year. When you've got full customer approval, QCA process is a much shorter time period. So we can actually wait longer before we have to submit sort of this is our addition to NECAP, and that allows us to complete some of those projects that perhaps weren't otherwise going to be completed earlier. And that's something that we've been very conscious about working with customers on to get the most efficient approach. And -- yes, that's predominantly it. The other aspect is we do add IDC to the project. So the amount you see is just the base project cost and then there's IDC as well.

I think also, Ian, the date that you see in that NECAP schedule is effectively the date the whole series will be finished. There will be projects within a series that finish beforehand or some series might have 8 to 12 different projects. So there's often a number of projects that are finishing, but the whole series won't be finished until the dates that are indicated there.

Okay. So should we sort of expect something close then to $60 million to $70 million in terms of the commissions ex the capitalized interest?

Yes, that's probably a fair expectation.

Okay. That's great. And look, just on the interest expense side, the -- is it attractive in the current bond market and the debt markets to actually pursue the refinancing of those residual USPPs? Or is it something where the current environment may not be conducive to it?

I think it's one that we -- as Steph mentioned, we spent basically almost all of 2025 looking at our USPP debt profile, combination of make-whole payments that we'd have to make In -- and obviously, that's back determined against U.S. treasuries, swap rate costs, which were on both FX rates and interest rates. And so there's a huge amount of interplay between all of those factors. Towards the end of 2025, we decided with the way credit spreads were moving that it was attractive to do that for the U.S. 2020 notes, I have to say, and all credit to Steph and our finance team, we moved extraordinarily quickly on that and did a $1 billion refinancing in a very, very short period of time because as we all know, time kills deals and who knows which way the market is going to move or things are going to change. So focus for this year will continue to be, is there opportunity to look at the 2021 USPP notes. 2023 USPP notes, I'll frankly say, are hard because they have such long-dated tenure. We have -- some of those notes go out to 2038. And obviously, when you're looking at make-wholes and the like for an extended tenor, it has a significant impact. But it's not to say it's not possible. But definitely, the 2021s, we certainly think there's opportunity in that space, and we'll continue to assess it. Debt markets continue to be strong. As Steph mentioned, base rates are less of a consideration because of our high hedging position in any case, and it really comes down to whether we can access markets, which give us attractive margins that make the cost worthwhile. And I think there's definitely opportunity there, and that's why it remains a key strategic priority for us, and we will continue to assess it over the course of this year.

And is there a Board policy about how much you're happy to have in bank versus bond markets, given -- I know it's a long time ago, but GFC keep frightening a lot of people, so?

Yes. I think definitely, we have a policy in place. It's reasonably flexible. And we spoke to the Board at length about this refinance. And then how we think about the debt stack going forward, what the maturities look like and how we make sure that we don't get caught by having too short tenor debt. And I think as we go forward over into this year, you'll see how we're progressing around making sure that we have that appropriate mix of long-term tenor debt and some shorter term tenor debt to give us some flexibility and improved pricing.

Yes. There's also some -- there is definitely Board guidelines on how much we can have refinancing in any year and both for bank and bond. And that's why we try to focus the profile of maturities that we've got has always been very good. We do have a lot of refinancing now in 2030 because of the revolving facilities that we put in place for 5 years. Given the bank debt, we do have a lot of flexibility about when we turn some of that out. And what we'd like to do is now that we've got that flexibility is be a bit more opportune about when we look at markets and what markets we do look at and whether or not there are other fixed -- we can bring some more diversity into our debt book apart from just U.S. private placement and bank debt.

That makes sense. One final question then. You look at your NECAP spending for the SL2 and SL3. When do you think you'll be in a position to put that on the books that it's an approved project? And are they 2 projects or one?

Not yet determined. There may be 2, there may be one. That's the study that we're undertaking at the moment and the discussion we're having with customers. In fact, we have a customer forum today where we'll be talking to customers and giving them a bit of an update on those 2 projects. I think the studies will come to a conclusion during the back half of this year around what is the most effective solution, both in terms of throughput life cycle costs and upfront costs. And then once we do reach that conclusion, the intention would be for the operator to recommend a project, whether it's both shiploaders, whether it's one shiploader at sort of this time next year for us to seek approval probably in the first half of '27 to have it as a committed NECAP project sometime during '27.

The next question comes from Nathan Lead with Morgans Financial.

Just 3 or 4 for me. I hope you don't mind. First up, the Slide 16, the $429.6 million, maybe I'm asking Ian's question in a different way, but could you give us what you think the time profile will be of when that spend gets rolled into the asset base? Obviously, it happens across time. So just wondering whether you can help us out there?

Yes, sure. I think as sort of indicated to Ian's question, 1 July '26, I think you should assume $60 million to $70 million without IDC represents a pretty reasonable sort of estimate. Obviously, not quite yet determined, but that's probably going to be close to the mark. The rest of the $429.6 million, almost all of it, not quite, but certainly an amount that gets you in aggregate above $400 million would -- will be added to the asset base in 1 July '27. So if you were to say, I just pick some hypotheticals here, $60 million at 1 July '26, then you'd see $340 million at 1 July '27. So $400 million. Again, some of those projects still have some time to get completed. And as I said, Shiploader 1A and Reclaimer 4 are the biggest component of those. They remain on budget and on schedule. So that's all looking positive for being added to 1 July '27. But obviously, things can change, but that would be our best estimate at the moment.

That's great. Second question, the -- you see the step-up in the -- particularly in second half '25 of the ancillary revenues. Like how sustainable do you think that level is? Or are you looking to grow it even further beyond there?

Definitely looking to grow it beyond there. Everything in there is almost entirely sustainable revenue, in our view, and we're certainly looking to continue to grow that other revenue line.

Okay. And corporate costs for FY '26, what's -- what are you budgeting on that front?

Yes. Pretty much flat line again.

Okay. Fantastic. And then on the interest cost, maybe if I could just draw you to -- within the notes to your accounts, is that table 22 which has the undiscounted principal and interest for less than 6 months -- 6 to 12 months. Is that a pretty good steer where you guys are expecting that to come out? I mean I'm assuming that as at balance date no further draws, so we'd have to layer that in, but did it bake in all of the 2025 refinancing it?

Yes, that's correct.

Yes. Good steer. So -- and the 6.5% that you're referencing, that doesn't assume that you -- I mean, you refinance long-term debt into short debt -- shorter term bank debt. It doesn't assume that you then go out and refinance into longer term, right? So it could lift above 6.5%?

No. I think that 6.5% -- so that 6.5% step-up doesn't assume that we're going to refinance everything at what we've just refinanced. It does include a bit of a buffer to assume that we would refinance into something that would be perhaps slightly longer term. So we won't necessarily be doing kind of 3 to 5 years ongoing, we would look to -- [indiscernible], you would look to go to market that give you a mix of bank debt and bond and a mix of flexibility and short-term pricing and a little bit more tenor and pay potentially a small amount more. So there is a little bit of buffer in that 6.5% to allow for some slightly increased margins on top of what we just refinanced in order to ensure that we maintain tenor. But it's -- yes, I wouldn't expect it to be above 6.5%.

Fantastic.

Subject to where base rates continue to move potentially. But we are strongly hedged.

Depends on how my hedging goal proceeds. The last question comes from Sam Seow with Citi.

Appreciate you allowed me a follow up. Just a quick question on the other or ancillary revenue you've been talking to. Just wondering, is there any costs associated to that? Or how should we think about...

Effectively, certainly no capital deployed and no additional costs in the business. I mean there are always some of these things we need to get the lawyer or 2 involved in to draft the contract here or there. So there's always a little bit of cost. But as Stephanie indicated, the intention is to keep our G&A flat. So to the extent there is a bit of cost on some of those initiatives, we'll find the savings elsewhere within the business. So yes, there is some, but a limited amount of cost associated with those initiatives. But as I said, we intend to keep G&A flat. So it will be -- ensure that any additional costs from what we budget is managed elsewhere within the business.

Got it. Could you perhaps frame up then how big that line item could get or what you're targeting? Just...

Yes. No, it's -- I think as I mentioned, there's -- we think there's significant potential in it. It's not going to be -- as I said, it's not going to be huge. It's not going to make a material difference to our EBITDA. We still think there's potential there. I couldn't really give you a number, Sam, for FY '26 because I think it is dependent on a whole variety of different factors. But our focus is we sort of bite this off in $5 million FFO increments and say, if we can add $5 million to FFO, that's $0.01 per security. I think we got close in FY '25. And if you looked at it on an annualized basis, pretty -- very close. We're hopeful that FY '26 we'll be able to continue that growth in incremental revenue. But we don't have ourselves a target in terms of dollars. We sort of target the initiatives and try and optimize and maximize the dollars that come out of each of those initiatives.

Probably the only thing I'd add to those is that the focus on them is to make them sustainable. So it's rare that we'll go after the quick win that just gives us a bit of an uplift for 1 year. So we may take slightly less structure in a way that it is -- sits there year-on-year, and that's really the only -- that's where the focus tends to be is on the sustainable revenue streams, even if they're relatively small, just by compounding them it can add up to something that does make a difference.

There are no further questions at this time. I'll hand the call back to Mr. Riches for closing remarks.

Well, thank you very much, everyone, for attending. We really appreciate the questions that we got. Hopefully, we're able to provide you with some constructive answers to those. And certainly, if there's anything further that you need, obviously, Craig Sainsbury is our IR contact. So feel free to reach out to Craig. And obviously, we look forward to talking to you over the course of the next few weeks as necessary, we will be out seeing investors towards the end of March. Thanks very much.

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