Dyno Nobel Limited (DNL) Earnings Call Transcript & Summary

Thank you for standing by. Welcome to the Incitec Pivot Fiscal Year 2022 Full Year Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Geoff McMurray, General Manager of Investor Relations. Please go ahead.

Thank you, and good morning, and welcome to Incitec Pivot Limited's 2022 Financial Full Year Results Briefing. I'm joined this morning by Managing Director and Chief Executive Officer, Jeanne Johns; and Chief Financial Officer, Paul Victor. The materials we'll be covering today have been lodged with the Australian Securities Exchange and can be found on the ASX and Incitec Pivot Limited's websites. At the end of the presentation today, we'll have time for questions, and an audio recording of this presentation will also be available on the company's website after we complete today. I would like to draw your attention to the disclaimer found on Slide 2 of the presentation. Slide 3 contains important information about forward-looking statements. I encourage you to familiarize yourselves with the information on both slides. Before we move into the main presentation, I'd like to start with an acknowledgment of country. I'd like to acknowledge the traditional custodians of the land we are coming to you from today, the Bunurong/Boon Wurrung and Wurundjeri, Woi Wurrung peoples of the Eastern Kulin Nation. I pay my respects to the elders, past, present and emerging. Thank you. And now I'd like to hand over to Jeanne.

Thank you, Geoff, and hello, and welcome to everybody. I'm very pleased to be here today to announce IPL's record results and share more about some of the team's key accomplishments during the year. I look forward to walking you through the excellent results and the progress on strategy of both of our businesses. I will also take you through our announcement today regarding the strategic option review of the Waggaman asset and why we believe it is in the shareholders' best interest to fully explore the approaches that we have received, given the strong market conditions. I will also touch upon what that means for the demerger time line. But turning first to an overview of our achievements during the year. We have delivered a record result while making very strong progress on our strategy. Our results are underpinned by strong operating performances from our 2 category-leading businesses, which delivered in a high demand, but disruptive market. The 4-year journey we've been on to deliver manufacturing excellence opportunity and the investments that we've made in the turnaround enabled us to capture significant value from the up cycle. And the continued execution of our strategy across technology growth as well as strategic bolt-on acquisitions, positions both our explosives and our fertilizer businesses well for the future, as we deliver on our strategy to grow recurring earnings. We also have good momentum with our decarbonization plans with 4 substantial projects now being progressed, which collectively give us a pathway to medium-term emissions reductions of over 42% for our current portfolio. And our outlook is positive, supported by compelling opportunities for growth underpinned by our technology solutions as well as the continued constructive global and nitrogen supply and demand dynamics. We have a strong balance sheet and are absolutely committed to attractive returns to our shareholders. Along with our record full year dividend of $524 million, we've also announced today an on-market buyback of up to $400 million. It is with this clear shareholder mindset that we have today announced a strategic review of our Waggaman asset. The timing driven by interest from a number of credible counterparties. The strong pricing outlook for ammonium coupled with the improvement from our manufacturing excellence strategy to improve Waggaman's reliability means that now is an excellent time to consider monetizing our excess commodity exposure. Importantly, the strategic review is consistent with our focus on growing recurring earnings, reducing excess commodity exposure, maintaining capital discipline and focusing on shareholder returns. And while it will extend the demerger time line by an estimated 6 to 12 months with the new timing depending upon the length of the Waggaman strategic review process, it provides a very attractive potential value unlock opportunity for shareholders as we progress our demerger plans. I'd like to provide you an update on our #1 company value Zero Harm. This year, we continue to work towards our ambition to achieve industry-leading performance in occupational health, personal safety, process safety and reducing our impact on the environment. Nothing matters more than ensuring that our people get home safely every day. Across the business, we continue to roll out our Safe Teams program, which has managed to touch over half the IPL global population since we commenced implementation in June of 2021. And while our recordable incident frequency rate has plateaued in FY '22, I'm very pleased that the severity in our injuries have decreased by 73% over the last 3 years. We've also been able to maintain our excellent environmental performance with 0 significant environmental incidents and decreasing environmental events at all severity rates. Process safety incidents decreased by 34%, a significant improvement reflected by the implementation of process safety improvement plans across all aspects of our business. While continued focus on delivering effective operational management of risk and learning from incidents. While COVID thankfully subsided as the year passed, there's no doubt to put an additional burden on our teams throughout 2022. And I'd like to recognize the very visible safety leadership in the field that steered us through this period. Turning now to our full year results. We've delivered a record EBITDA of $1.8 billion and an operating cash flow of over $1 billion. Our team focused on safe, reliable operations and delivering for our customers in a complex operating environment to capture the strong market and the benefits of the commodity upswing. The strong result is reflected in our return on invested capital of 13.8%, including goodwill and 21% excluding it, demonstrating our commitment to shareholder returns, we've announced a record final dividend of $0.15 per share, bringing our total dividends for the year to $524 million. We've also announced today a buyback of up to $400 million. This amounts to up to $924 million of dividends and capital management initiatives based on our FY '22 results. It should be noted that the buyback amount and the executed timing will be dependent upon the allowable trading windows in conjunction with the Waggaman strategic option review. These actions reflect our commitment to shareholder returns and is underpinned by our strong operating performance in FY '22 and our confidence in the future. And the strength of our balance sheet positions the business very well to continue to invest for growth. I want to cover now why we continue to have confidence in the market dynamic we're seeing today by talking through the underlying supply and demand fundamentals. The disruption in natural gas markets emanating from Europe has resulted in shortages and high cost, reducing the production of ammonia and other nitrogen products as economics for marginal suppliers have turned negative. The steepening of the cost curve shows both the higher pricing required to incentivize manufacturers to cover the demand as well as highlighting the strong margins available to the most competitive plants. The forward curves for gas in Europe and Asia indicate that this pricing disconnect is expected to continue for the foreseeable future. And the continued ag sector profitability maintains demand incentivizing the use of nitrogen for increased yield. With global grain and oilseed stock flow, the demand for fertilizer is expected to stay robust. And this dynamic is supportive of continued strong profitability of our nitrogen plants in particular, Waggaman and underpins the ideal timing for us to pursue the opportunity to unlock value from the strategic review. I would now like to cover 2 key strategic value drivers that we've been talking about for several years, manufacturing performance and technology growth. Four years ago, we launched our manufacturing excellence program to improve the reliability of our ammonia plants to world-class standards. The business case provided for a $40 million to $50 million benefit to be delivered after the execution of our major plant turnarounds. In today's environment, that benefit is actually worth about 3x that amount. It was the right strategy to put in place 4 years ago, and this year really showcases the outperformance against the original business case and the ability to reward our shareholders from the execution of our plans. Our teams have now delivered 3 major turnarounds in a COVID disrupted environment, which is a real credit to them and reflective of their careful planning and dedicated focus. The planning for our fourth major turnaround at Cheyenne is well progressed and is now due to commence in the third quarter of this financial year. Our regional model is well embedded with manufacturing now integrated into each of our respective businesses. We have the people and the processes in place to support continued strong performance from our manufacturing assets. Now turning to technology. Our technology is all about bringing practical solutions to customer problems, delivering them superior safety, productivity and environmental outcomes. Our high-value offerings are enabling us to secure profitable volumes and grow high-value earnings across our explosives and our fertilizer businesses. As you can see from this slide, we have strong momentum in the growth of our Premium Emulsions and Electronic Detonators. And both still have plenty of room for growth from increased market penetration and new market opportunities. And we continue to benefit from our innovation pipeline of new products for commercial applications. Our wireless offering is now commercialized and has been very well received. We continue to explore with our customers innovative ways of using it with one customer combining wireless with traditional detonators to improve safety performance and efficiency. We have a strong pipeline of other products, many of which are tied to our sustainability agenda, including new lower emission emulsion technologies, remote loading capability and electric NPUs. In fertilizers, our soil health strategy is gaining momentum. We're seeing strong demand for our specialty liquid products, which have been bolstered by our recent acquisition of Yara Nipro. Our soil testing offers through Nutrient Advantage is accessible to farmers, supporting their ability to apply the right amount and type of fertilizer where they need it. And our fertilizer offerings are extending into more organic, enhanced efficiency and biofertilizers, which support better environmental outcomes. I'd like to turn now to our climate change pathway. We've made significant progress and remain committed to net 0 by 2050 or sooner if practical. We're progressing 4 major projects at pace as we seek to deliver a material change in our operational emissions. These 4 projects collectively give us a pathway above 42% reduction in the medium term with our current portfolio. Importantly, we continue to incentivize our key executives to deliver these projects, and they're being progressed as quickly as possible. We will revisit our targets next year when these projects are further progressed and the science-based targets initiative releases its methodology for the chemical sector pares the line target setting in 2023. We've also made good progress in on scope 3 emissions. Our work with external experts on Scope 3 measurement and plans has progressed during the year. And it's important to note that we already have a number of products on offer that reduce Scope 3 emissions. Customer trials of our Delta E technology have measured full life cycle savings of 25%, which we're looking to get verified this year. And in our fertilizer business, our enhanced efficiency fertilizer have demonstrated an ability to reduce emissions by up to 70%. These are 2 great examples of how we are already in action on our Scope 3 emissions and underpins our progress on supply chain emission reductions. We've obviously had a strong focus on climate change, but our ESG achievements extend beyond this. In 2022, we were once again included in the S&P Global Dow Jones Sustainability Index based on our company benchmarking score for the year. I'm proud to say that we're improving year-on-year. Our 2022 score showed a 5-point improvement over the past 6 years against ever-increasing criteria. This is an important benchmark, and we're pleased to deliver such a strong performance relative to our industry peers. It reflects our commitment to all of our stakeholders across local community, social responsibility, governance, human resources, the environment and modern slavery. And while we're very pleased with our performance, we continually remain focused on finding new areas for improvement. Turning now to our financial performance this year, starting with Dyno Nobel. Dyno Nobel has delivered a very strong financial performance in what has been a high demand, but complex operating environment. The earnings improvement of 16% in the Asia Pacific region was underpinned by very strong momentum in emulsions and electronic detonators. And you can now see this pull-through of this technology momentum coming through to our earnings. We completed the Titanobel acquisition during the year with the business delivering to plan. As anticipated, integration costs during the year offset the earnings contribution. In the U.S., our explosives business delivered good volume growth across both our Q&C and the coal sector. And while demand remains strong in metals, our volumes in the second half were impacted by a customer's temporary outage as we had flagged at Strategy Day. In addition, the lag in the pull-through from price increases to address inflation and supply chain issues impacted margins in the second half, albeit we maintained our industry-leading margins. We remain very focused on cost pass-through and anticipate to mostly recover these cost increases during FY '23. Waggaman delivered USD 344 million in earnings despite the downtime earlier this year from a failure of a crossover pipe due to an original construction defect. The plant has run exceptionally well since its restart and continues to perform well with the repaired ammonia cooler. The plant shutdown to replace this cooler in FY '23 will potentially move to later in the year if it continues to run well, enabling us to capture the favorable planting season demand. St. Helens had its best performance in a decade, enabling earnings capture of the strong commodity pricing. And both explosives businesses are well placed to unlock more value from the high end ammonium nitrate pricing as the contracts are renewed over the next few years. The growth opportunity for Dyno Nobel is compelling. We have significant opportunities to further leverage our footprint, technology and customer relationships across our current markets as well as new ones. Today, we participate in less than 50% of the global market, which means we can choose where our technology is going to unlock value for customers and where we can grow profitably in a targeted and selective way. And our acquisition of Dyno Nobel provides us with a great opportunity to grow in select European and African markets. And there's a lot of opportunity for growth in our existing markets as our customers look to drill more complex ore bodies and value the improved productivity, safety and environmental outcomes that our premium technologies offer. Our new copper contract win in Chile is a good example of our technology helping us win in future-facing commodities. And we're continuing to build partnerships to grow in a high return, low capital way as evidenced by our recently announced joint venture with Modern in Saudi Arabia. We have more upside to unlock as we continue our manufacturing excellence journey with our final major turnaround at Cheyenne as well as initiatives to improve efficiency of our -- and automation of our initiating system supply chain and the debottlenecking of our ammonium nitrate plants. We're well positioned to continue to deliver industry-leading margins, underpinned by our proprietary premium technology as well as our commercial discipline, when securing volumes to deliver growing recurring earnings. As you can see, we have a clear and compelling runway of growth opportunities and investment discipline to deliver mid- to high single-digit earnings growth in Dyno Nobel in the medium term. And importantly, the potential Waggaman sell-down doesn't change our growth case, and is very consistent with our strategy to grow recurring earnings. As we go through the review, we will look to unlock value from our excess commodity exposure at Waggaman while preserving security of supply for our customers and an integrated margin for our shareholders. Turning now to our fertilizer business. Earnings increased to $614 million, up from $268 million last year. The manufacturing performance at Phos Hill allowed us to capture strong profits during the year, while the team also delivered the biggest ever turnaround. The Gas team secured feedstock for Phos Hill following curtailments in contracted supplies. And while it has come at an elevated cost, it has enabled us to keep the plant running at full rates and capture the earning potential. Consistent with our first half results, the distribution performance reflected trading discipline in a highly volatile market, as well as commercial discipline and deferred purchasing due to elevated fertilizer pricing and rainfall resulted in a strong finish to the year. The strong margin performance reflects this disciplined approach as well as growth in higher-value products in soil health. We are very well placed to deliver increased volumes from Phos Hill this year and well positioned to grow our recurring distribution earnings by delivering on our soil health strategy with farm economics expected to remain favorable through the year. Looking at our fertilizer strategy more broadly, our unrivaled distribution platform and manufacturing footprint provides us with an ability to offer customers security of supply, generating significant cash flows through the cycle as well as grow high-value, high-margin earnings. We have a clear and compelling opportunity to grow our recurring earnings through the acceleration and expansion of our soil health strategy, across enhanced efficiency, liquid, biofertilizers and Nutrient Advantage. The delivery of these innovative products and solutions come with attractive margins. And longer term, the potential to unlock growth from Perdaman and transforming our Gibson Island facility to green ammonia are compelling opportunities. We have a clear opportunity to invest to accelerate our soul health strategy with a view to more than double earnings from our distribution business in the medium term. Turning now to our shareholder returns. The delivery of our strategy as well as our strong operating execution in a high demand, but also highly disrupted market enabled us to capture significant value for shareholders from the up cycle, and declare a record dividend of $524 million. You can see from this slide that we consistently pay out 50% of our profits to shareholders, and this year, we have augmented the dividend with the announced buyback today of up to $400 million. These actions demonstrate our commitment to shareholder value. Importantly, we can deliver these very attractive returns to shareholders while maintaining a prudent approach to capital management. And with that, I'd now like to hand over to our CFO, Paul Victor.

Thanks, Jeanne. Good day, ladies and gentlemen. It is my privilege as incoming IPL CFO to present the financial year '22 results to you today. As Jeanne mentioned, financial year '22 has been a record financial year for IPL in terms of EBIT generated and returns distributed to shareholders. Shareholders have been very patient over the past couple of years. And today, we're very pleased to return value back to them. Our results benefited from a stellar business performance as well as the high commodity price cycle. We acknowledge that we can always continue to improve our performance. However, today, we also need to recognize the years of hard work that went into delivering the strong business results. Markets were difficult to navigate, inflation reaching double digits in our key markets, coupled with supply chain constraints, adding complexity in cost. With a sharp and diligent focus, we delivered capital and working capital results in line with our internal controllable targets, and we're able to keep our businesses running effectively and efficiently. We continue to look for areas to improve and our focus on addressing those opportunities. Our recently updated capital allocation framework aims to return maximum sustainable value to our shareholders. We believe we struck a good balance in being prudent in how we plan to manage the balance sheet whilst also delivering compelling returns reflecting the high cash flow generation of the business. As Jeanne mentioned, our plan is to return north of 85% of financial year '22 NPAT to shareholders through dividends and the buyback we announced today. Financial, to introduce, market outlook remains strong for the total IPL business. We are very well positioned to further leverage the benefits that current market conditions present. And this, coupled with the solid and reliable operations platform sets us up for another great year. As mentioned before, the group recorded a stellar business results. Jeanne already took you through the underlying segmental performance. At group level, revenue increased by 45%, while EBITDA increased by 99% to nearly AUD 1.9 billion. This underpins the strong overall volume, cost and working capital performance as well as benefiting from the high commodity prices. Our fertilizer business contributed 37% to the group's EBITDA whilst the Dyno business contributed 63% to the group's EBITDA. EPS increased by 186% to $0.529 per share and we have announced fully franked dividends during the year of a total of $0.27 per share. This is the highest full year dividend in the history of the company. ROIC with goodwill increased to 13.8% and ROIC, excluding goodwill, increased to 20.9% for reasons already mentioned before. In terms of our capital allocation framework, we have considered the most value accretive options to return value to shareholders. The Board are pleased to announce up to $400 million on-market buyback program or approximately 5% of our issued share capital at current market prices, which we plan to execute over the following 12 months. It is important to note that the buyback program is on the back of record earnings realized for financial year '22 and the execution of the program will be performed as per the permitting trading windows. The decision to buy back shares are informed by our recently updated capital allocation framework discussed at the September Investors Day and is focus to best award shareholders as well as being prudent in terms of balance sheet [indiscernible] management. Working capital remains one of the key focus for management. Absolute working capital levels increased by $495 million year-on-year, although working capital as a percentage of sales remains flat on an annualized basis. Controllable items such as percentage inventory to sales, day sales data, percent increases to payment terms, slightly improved in a very difficult to operate market. This underscores the effort made by business to stay on top of working capital management practices. The increase in working capital was mainly driven by the absolute increase in commodity prices resulting in a $292 million value build in working capital, coupled with the management decision to utilize $64 million less of working capital facilities as the balance sheet [ deleverage] . IPL also reclassified $48 million of precious metals from PPE to inventory and net-net on the total balance sheet asset level and lastly, $91 million increase due to the acquisition of working capital associated with new ventures. Management is fully aware of the value lockup as a result of the elevated prices, and we will do our utmost to manage all controllable factors in achieving sustainable working capital levels for the business on a go-forward basis. At our recent Investor Day in September, we shared with the market our capital allocation framework. Over the past couple of years, IPL made a significant investment in its sustenance spend to ensure the long-term reliability of our manufacturing footprint. Jeanne already shared the result of improved [indiscernible] reliability and how it favorably positions us to reap the benefits in favorable markets. The current cycle of sustenance capital spend on major turnarounds is nearly complete with only Cheyenne to go in financial year '23. We also made a significant investment to improve the general sustainability of our assets and also had an element of catch-up maintenance, which we forecast to taper down post financial year '23. Despite the increased spend, we still managed to keep the sustenance investment rate close to 80% of the depreciation charge. Our guidance for financial year '23 is aligned to the guidance provided at the Investor Day. We therefore forecast financial year '23 sustenance spend to be between $180 million and $220 million for explosives and fertilizers combined. We also estimate turnaround capital to be between $60 million and $70 million, mostly associated with the Cheyenne turnaround and sustainability capital to be between $50 million and $60 million. Total sustainability capital was still within $100 million to $140 million in aggregate guidance provided up to 2030 at our Investor Day. The returns on sustainability capital are still forecast to be above the weighted average cost of capital. We are committed to ensure that we deploy the most fiscal purpose capital management practices in managing our capital portfolio on a continuous basis. Importantly for shareholders, we remain committed to continuously invest in our assets. We believe the most significant sustenance spend is behind us and plan to execute our sustenance capital program in line with the guidance provided. Over the past year, cash flows generated from operations improved significantly allowing the balance sheet to deleverage to below 1x net debt to EBITDA. Our debt maturities are very healthy. We have ample liquidity headroom, and our absolute debt levels can sustain the potential continued commodity volatility. These levels also allow us to manage our balance sheet to well within investment-grade metrics, which we plan to continue doing going forward. Whilst we hold the view that we plan to manage the balance sheet within a risk tolerance level of 1.5x net debt to EBITDA, we are also focused on delivering sustainable returns to our shareholders by not unnecessary retaining excess capital on the balance sheet. Given the market outlook, financial '23 cash flow forecast is positioned to benefit from high commodity prices and a strong underlying business performance, providing good flexibility across balance sheet strength and capital returns. At our Investor Day in September, we spoke extensively about our capital allocation and presented the capital allocation framework and associated metrics, which we will use to optimize returns to shareholders. The focus is always on balancing the capital choices to deliver maximum sustainable value and returns to shareholders while living within our means. IPL generated nearly $1.1 billion of cash flows from our operations. As part of the order of allocation and as described before, $202 million of this were allocated to Sustenance capital, $113 million to turnaround capital and $28 million to sustainability capital. These categories are always the first priority for capital as safe, reliable and sustainable operations are critical to our business success. We are also committed to the payout of a competitive dividend to our shareholders. Our dividend payout range is 50% to 60%. And given the status of the balance sheet, we are very pleased to announce a fully franked final dividend that brings our full year dividend payout to 51% of impact. This is a very competitive dividend and dividend yield compared to our peer group. We further allocated capital to smaller seed scale growth projects amounting to $91 million. The order 2 capital allocation requires us to firstly maintain the health of the balance sheet and being to choose the best option between any available growth projects and other returns to shareholders. Given the status of our balance sheet and the strength of cash flows generated, the Board has approved a share buyback program of up to $400 million to be executed over the following 12 months. This represents approximately, as I've mentioned, 5% of issued shares. This means for financial year '22, 90% of the cash flows generated by the company is planned to be returned to shareholders. This year, we have maximized capital returns to shareholders while maintaining our investment-grade balance sheet to absorb any volatility. As mentioned before, the buyback program will be a 12-month program and will be executed within the allowable trading windows. We are approaching financial year '23 on the front foot. Our operations platform is safe, reliable. We understand what we need to do to deliver full value and our robust balance sheet allows us the flexibility to keep the momentum in further executing our strategy. We expect the macroeconomic volatility to continue. However, on balance, the current price environment does favor our business. For the Dyno business, we expect, firstly, as previously mentioned to the market, the closure of the Gibson Island will result in the Moranbah plant output to be negatively impacted by around 37,000 tonnes of AN production. Secondly, customer growth underpinned by our technology offering to continue with real momentum. The explosive business to continue managing the inflationary impact on the business results. The Cheyenne plant turnaround is scheduled for June and July 2023, and finally, the WALA plant to operate at nameplate capacity. For the first business, we expect, firstly, the Phosphate Hill throughput to increase to around 1 million tonnes for the year. We plan to continue procuring gas volumes for our phosphate hill assets until February 2023, given the previously cited gas curtailments. We estimate the additional gas cost impact to be around $60 million to $70 million for financial year '23. The first business margins to further benefit from the rollout of soil health initiatives. In summary, the business has strong operating and strategic momentum going into financial year '23 and remain brief focused and to continue delivering sustainable returns for our shareholders. Before handing over to Jeanne, I want to conclude by reiterating that IPL has a strong investment case supported by a robust strategy, which allows us to meet our agreed emission reductions and grow the company to add long-term sustainable value and competitive returns to our shareholders. This brings me to the end of my section. And I will hand back to Jeanne to complete the last section of the presentation. Thank you very much.

Well, thank you, Paul. And I'd now like to talk in more detail about how we're advancing our strategic choices to unlock value for our shareholders. While the separation of our 2 businesses to create a focused global explosives and a focused fertilizer business remains our top strategic priority, we have today announced that we will undertake a review of the strategic options for our Waggaman plant. Our corporate strategy is focused on adding value through technology solutions for our customers, in both of our businesses that will grow recurring earnings. And while we recognize the opportunity for us to participate in the fuel industry with clean ammonia opportunities, we've made a conscious decision that this is not the right choice for us. Therefore, our asset review in conjunction with our strategy highlighted the desire to address the excess commodity exposure to ammonia in our current portfolio. The very strong ammonia markets and the incoming interest from quality counterparties means that now is the right time to execute on this intent. We, therefore, decided to resequence our strategic priorities to explore the strategic options for Waggaman in the short term, while we continue to progress our demerger plans. This will, however, impact our demerger timing, estimated at this point at 6 to 12 months, but we believe in -- of Waggaman will be a very attractive value-add opportunity. As you all know, Waggaman Plant is a world-class ammonia manufacturing facility. And it produces volumes well in excess of what we need to support our Dyno Nobel explosives business in the U.S. The asset value has appreciated considerably in the past year, driven by improved asset performance following our turnaround investment and the strong underlying supply-demand dynamics playing out across the world. Our Waggaman facility is also ideally located for conversion to blue ammonia. And with the 45Q credits available in the U.S., this is a very attractive investment opportunity for the facility. While the potential for clean ammonia use as a fuel in the energy transition is potentially profound, we've decided that entering this emerging clean fuel market is not the right one for us and likely better suited to others. Therefore, we believe it's in our shareholders' best interest for us to consider the approaches that we received and the potential to monetize our excess commodity exposure in these very favorable market conditions. As we go through the strategic review process, we will prioritize preserving the strategic value of Waggaman to the integrated Dyno Nobel Americas Explosives business. The work on the separation to prepare for demerger is progressing very well, and we remain excited about the value unlock opportunity that the demerger presents. We will progress the Waggaman strategic review as quickly as possible in order to maintain the momentum in our separation plans. But this will not come at the cost of our 2 strategic priorities for the Waggaman review, that is to maximum value creation and the preservation of the strategic value of Waggaman to our DNA business. While the separation work is well progressed, we have not yet stepped into material dis-synergy costs, and we remain confident that we can deliver the demerger within the cost estimate that we provided on Strategy Day. The extension of the demerger time line actually provides increased confidence to optimize to the lower end of the range that we gave, and we remain convinced of the considerable value to be unlocked by the demerger. The key senior appointments that we've made in the fertilizer business will support the momentum in strategic delivery as well as enable the focus to capture the profits available in the current constructive market environment. Before we finish, I'd like to cover the key priorities for the FY '23 year. We have very good momentum across our safety and sustainability agendas, and this remains a key focus area. This year, we will complete the turnaround at our final large ammonia plant at Cheyenne to deliver the manufacturing excellence prize that we set out 4 years ago. We will continue to leverage growth from our premium technology in explosives to grow in existing and new markets and leverage new technology coming through commercialization like our wireless offering. And in fertilizers, we remain focused on growing our high-margin soil health products and solutions. We will remain absolutely focused on executing well to capture the favorable market conditions we see. And in addition to continuing to execute the growth strategies for our Explosives and our fertilizer business, we will progress 2 very meaningful shareholder value creation opportunities. The strategic option review at Waggaman and progressing the demerger of our fertilizer business to create a category-leading global explosive business and a category-leading fertilizer business. And that concludes our presentation for this morning. Thank you for your time, and we'll now open it up for Q's and A's.

[Operator Instructions] Our first question comes from the line of John Purtell from Macquarie.

Jeanne and Paul, how are you?

Very good.

Just had a couple of questions, thanks. Just in relation to WALA. Can you just remind us what the percent of production sold internally to Dyno is? And -- in terms of whether you're looking to potentially sell part or all of WALA, are you open to all options in that regard?

Yes. The current production, it varies at how much we purchased from third parties, but it's between 20% and 30% as that goes into internal purchases. So that's the strategic value of the output for us. It is a strategic option review. So we will be looking at all options that, a, preserve that 30% integrated margin that we currently hold as well as maximizing the value of the asset. And so we'll be pursuing those 2 as our key strategic outcomes from the review.

Second question on the D&A business. Obviously, there was a large cost increase there first half '22 that impacted the earnings in the second half. So are you expecting the majority of that $29 million of supply chain and other costs to be recovered for the year ahead? And what happens if there's further cost increases? I mean, is there more timely recovery than what we've seen over the last 12 months?

Yes. Thanks, John. I mean, I mean, first of all, we are very proud of our industry-leading margins in our Dyno Nobel business in the Americas. But we do expect to be able to capture the increases we've seen this year, next year. And as you say, it's likely that there will be more increases coming through. But the team on the ground are live to those. And we do believe that we are managing them better than or as well as anybody. And we do think that they are recoverable in pass-throughs in the coming year. Do you want to add anything, Paul, to that? .

Yes. Maybe just the only color to this is financial year '22 was really abnormal year. The amount of increases that we've seen in the U.S., specifically in that market really challenged the team in passing through their cost due to the regular increases that we've seen. But the team has put a lot of effort into making sure that all of those elements are well understood, and are now correctly positioned to do that and judging by the October monthly results, we can already kind of be much more comfortable than what Jeanne said in terms of capturing all the value back is definitely doable and executable.

Our next question comes from the line of Grant Saligari from Credit Suisse.

Good morning. Well, very exciting times ahead for you and the team. Just to maybe just a clarification question. I don't know whether you're prepared to be called out or give an approximate tax base or tax value for the WALA business, so we sort of got [a pig in the sand there] and whether there'd be any material tax or other liabilities realized should that business be sold?

Okay. I'll let Paul answer that tax question.

Yes. So we have benefited quite extensively in the past in the diverse tax environment in writing off a substantial amount of the asset value of the assets. In terms of the potential [indiscernible] structure, we are considering the tax implications in terms of the different options that we want to pursue. So we don't have a final answer on exactly that have kind of help to kind of get our minds around that, but there's a lot of work that the teams are currently putting into it. However to say that it is with low remaining tax base that we currently have on the assets.

Okay. All right. That's very helpful. And maybe just, Jeanne, just a question on the operating performance and outlook. Titanobel, you've had it for a little while now. What are the prospects for FY '23 as you think about that business, please?

Yes. I mean it was really a pleasure. I went in the business in May to see the team on the ground and see how enthusiastic they are in embracing Dyno Nobel and our premium technologies and what they can offer them in the local marketplace. So we're really quite pleased that the opportunity ahead, we estimate the market for detonators in Europe to be substantial and only 5% electronic today. So we continue to be very pleased with the acquisition. As always expected, the first year or two with the integration costs, the flow-through profits are not yet visible, but we're quite confident of those coming through in the next year or two.

Our next question comes from the line of Niraj Shah from Goldman Sachs.

Hope you can hear me. Just a couple for me. First, just do you guys have a view or an estimate on where you think the replacement cost of WALA sits at the moment?

Yes. It's a great question. Obviously, at the time we built it, we were very pleased that we were at the low end of a new build cost profile. But as we said, U.S. construction costs and U.S. inflation has really grown since then. And I think it would be very, very, very difficult to build it for less than I don't know, $1.5 billion. So like I said, we haven't gone out and looked at what a greenfield would cost us. But there's no doubt that there's a significant appreciation of the asset from a replacement value, but also a market outlook value. The market outlook is ideally suited for blue ammonia. It's sitting right on top of the right client kind of reservoirs. There's a lot of industry players to get synergies for the infrastructure and the 45Q credits, you can't beat them. So there's -- this is an extraordinarily valuable asset that we hold. We just think that this is the right time to explore that value and it's a better strategic fit perhaps with a different counterparty.

And just following up on that, what's the incremental CapEx for CCS augment?

I don't think we've done that. But I think the important thing to remember is, first of all, the Waggaman facility sits in the middle of this industrial corridor along the Gulf Coast, and there's multiple chemical plants and refineries in that corridor. So likely you'll be able to share some of the infrastructure cost and have a third party do the infrastructure. The other thing that's really attractive about ammonia plants is there's a highly concentrated stream of CO2. And so all that is required is to drive that and compress it to the right pressure to get it down the pipeline. So relatively speaking, you don't have to separate it. You don't have a low concentration of CO2. It's a very valuable stream for how the 45Q credits are designed. And so the capital while not being minor is quite affordable.

Sorry, and maybe just to kind of refer to that is that when we did the capital guidance on sustainability, on the Investor Day, we did provide you with that 100 to 140 in aggregate. The CCS capital amongst the other projects that were reflected on today is within that range of capital.

Got it. And last one for me. Can you just remind us of, I guess, the timing and cadence of contract resets domestically for the DNAP business, please?

For the DNAP business, we have in FY '23, a very, very modest amount. Most of them come through in '24 and '25. And -- so it is over the last 3 years, but it's actually concentrated in the last 2 of 3 years.

Our next question comes from the line of Daniel Kang from CLSA.

Congratulations on the record results, Jeanne and Paul. Just to continue on the recontracting cycle and DNAP. Can you elaborate on the potential magnitude or positive contribution from the recontracting cycle in FY '23 and beyond?

Yes. It's difficult to know exactly how it's going to be. We do know from when we have spot volumes due to wet weather and so forth, when we have a bit extra volume, and we sell at spot, they are selling at materially higher pricing, contracting is always a bit different. Obviously, customers are looking for what they think as more average pricing as opposed to the current spot pricing. And obviously, domestically, it's a combination of import parity pricing and domestic pricing. So imports, there are very few imports coming into Australia right now given the global situation. But if they were coming in, they'd probably be closer to 1,200 than the current contract pricing. But whether you can actually translate that into a contract, we will find out in the coming years.

Thank you, Jeanne. And the second question maybe for Paul. On the working capital increase, which was driven by higher commodity prices, with prices pulling back recently, do you expect to reverse and a working capital inflow in FY '23?

Well, on the -- just on a fundamental basis, if prices retrieve on average year-on-year, there will be that unlock that you will see on your working capital. I guess where we stand is -- and our view is to make prices stay as high as they are because on a net basis, we will always benefit from that. But the reality of the matter is as prices comes down, that unlock from the balance sheet to the income statement will occur.

And I'll just add, Daniel, I think our view is that this is the time of year that a lot of the big demand regions are not planting. That's what drives the nitrogen cycle. And between that and the European winter has been slow. I think I read somewhere that 8 of the largest economies in Europe had their they're warmest October in a long, long time, which has brought down the natural gas price to some extent. But we see these as actually in the scheme of things, as I mentioned earlier, sort of the temporary movements in pricing. We think the fundamentals remain very strong. And as we go into next year's planting season, we're not expecting softness in the pricing. So like I said, we're not a predictor. But like I said, as Paul said, if prices go down, we will see the release of working capital. But if they stay elevated, we won't see that, but we will see the profits.

Our next question comes from the line of Brook Campbell-Crawford from Barrenjoey.

Just the first one, Waggaman, just curious if the delay in the demerger time line by 6 to 12 months is solely due to the potential sale of Waggaman, if you can confirm that or not? And I guess why would it take 6, 12 months, I guess, to progress an asset sale there? It seems like quite a long time.

Yes. I mean the merger time line is solely dependent upon a successful conclusion of the Waggaman strategic option review. We do believe 6 to 12 months is a prudent time estimate. It does need to -- it would likely need to go through regulatory approvals as well as a deal construct as well, if that's where we end up. So we do think 6 to 12 months is a very prudent estimate at this point. And we'll update, obviously, as we can as much as commercially sensitive as possible as we go through the process.

And then I guess, in the North America business, can you comment on how much sort of volume upside you can realize over the next couple of years? Or you effectively sell that there? And if not, what's the potential volume growth opportunity from those assets and putting to one side, I guess, to turn around at Cheyenne, you could just comment on that, that would be great.

We do think there's more opportunity in North America. I think that obviously, having access to security of supply for the ammonium nitrate is going to be key in the short term to achieving our longer-term ambition of up to 1 million tons of AN. So I think, like I said, I think that there will be continued volume growth. We see Q&C continuing to grow in -- through the years. the need for Q&C in the U.S. continues to be strong. The government spending to achieve that remains good. We think it is somewhat recession-proof. But there's probably a limitation of how fast it can be actually spent. So we see that -- but we see that continuing for many years. And then coal is going to be fundamentally the basis of natural gas substitution, and that's what will drive that. But with the energy transition and the need for more minerals, -- we do think mining will continue to grow. So we do think that we'll be able to grow at market and a bit above in our 2 target areas.

That's great. And I guess just to confirm that is within your own manufacturers ammonium nitrate capacity, you're talking about potential for volume growth?

We have about 2/3 coverage in our portfolio today. So it's -- I believe it's the strongest of any of our competitors. As far as own ammonium nitrate coverage ratio. And we are looking at small debottlenecks at both our Cheyenne and our LOMO facilities. They're relatively small de-bottlenecks, but in today's current environment, they're very attractive.

Our next question comes from the line of Andrew Scott from Morgan Stanley.

Jeanne, a couple of questions for you on your gas supply into Phos Hill, if I can. From what we've seen, if I'm correct, the drilling time line for Black Tip has been delayed, and I think it's now talking in a period November to February. So can you just talk about your level of confidence, will have reliable gas restored by February and -- what is the risk there's a serious longer-term issue with the supply there?

Yes. Thanks, Andrew, for the question. We obviously are following very closely and in a very close contact with our supplier as well as governments in both Northern Territory and federally. We do understand the drill rig that's coming to Black Tip is due in November. So later this month, it will start drilling the wells. We obviously have done our own reservoir look at that reservoir, and we are very -- at least the experts believe is a very good reservoir. So it's really field management, not a reservoir issue. So that gives us high confidence as well as our suppliers' high confidence that the drilling in November will address the issue, the outlook statement that we provided does assume that it will take some time well into February until we get restored in our full contracted volume. So we believe that based on our best knowledge available that we will return to our contracted volumes by the end of February.

Okay. And then I just want to ask a bit of a bigger picture question. You obviously -- this year, you had an issue at WALA, you were therefore short of product and you had to make good with your customers. Here, you've got a contract for the supply of gas, your supply is short and somehow IPL ends up carrying the can for that. So I just really want to ask you about sort of the risk management and the contract structures and how these things are being done from a commercial perspective because -- it's not the first time we've seen you where the costs for other supplier outages like rail outages, et cetera, have appeared. So just can you talk about that risk management profile and why it is that whichever way it seems to happen, IPL's carrying the can for these?

Well, I think that -- I think they are very different situations in the two. I think you mentioned about taking it up a level. I mean we've got very rigorous risk management processes. And we do look at our single points of failure mode. Obviously, to address every single one of them, it does -- will carry a high cost to it. I think that we are well aware of those -- and like I said, most of the 2 you quoted are things that were decided a long time ago. I think that on a point forward basis, I think we've addressed all the commercial risks. We look at those quite carefully. And every risk is a cost to alleviate. But I think if you think about it, despite the disappointments in the original construction defect, that's a bit of a Waggaman in this year the turnaround that we did, did address actually the vast majority of issues. It's been running actually flawlessly since. And we did have insurance to cover the vast majority of it. I mean Waggaman did make almost AUD 500 million this year. So I think it's important to keep in mind that these assets are very valuable assets and have contributed an awful lot to the profitability and our ability to return value to shareholders this year through dividends and the buyback.

Okay. And look, just 1 more for me. We heard from Orica, your competitor last week that they are proactively engaging with customers, doing what they can to shorten the lag for ammonia pass-through in to -- to get passed through for more categories given this inflationary environment. Are you undertaking a similar task?

Absolutely. Yes. We talked about our U.S. businesses out there pushing the cost through. As Paul mentioned earlier, we're seeing the results of that in the October, and it's always difficult to push these through to customers. We are in action on that everywhere we can. Obviously, we do have to honor our contracts, but where customers are willing to do early contracting at reasonable prices, that we'd be certainly open to that. But like I said, we're doing everything we can to capture the new pricing environment we all find ourselves in.

Our next question comes from the line of Richard Johnson from Jefferies.

Jeanne, can I just start with a couple of questions on strategy. And the first is really just following on from the first of Brooks questions. And I was just wondering whether you could help me understand why you need to do a full strategic review around the sale of WALA. Presumably, you considered all these issues before you -- when you put the demerger strategy together?

Yes. Thanks, Richard. I mean we do know the options, but that obviously, you have to explore with counterparties how you match up your strategic objectives with potential counterparties and deal structure. And there's quite a lot of complexity and a lot of value on the table. So like I said, I think that it's only prudent not to rush into this, but to make sure we get full value for our shareholders, and we preserve the long-term strategic value that the asset was built for.

What's a bit confusing is at the time of the demerger announcement while it was obviously an integral part and very strategically important to the Dyno business. So what's changed?

Well, the Waggaman asset is still important for 30% of integrated margin that it provides, and that's why it was built. The 70% is some of that's under long-term contract. And when we looked at our options, we knew both were value accretive. It was really a matter of timing. Since that time, we've received a number of incoming levels of interest that were very attractive. And the ammonia market has remained robust, it was seen as being part of a cyclical high before, but I think now people recognize that this is more structural, long-lasting, and the value of the assets appreciate considerably in the last 6 to 12 months with the blue ammonia opportunity on top of that, the 45Q credits with the Inflation Reduction Act passed in the U.S. the assets only appreciated in value. And hence -- and we can't choose when counterparties want to engage seriously on this. A number have now shown serious interest, and we think it's in the shareholders' best interest to change the order. I think it's only smart when conditions change, to change the order and respond to them.

That's helpful. Thanks. I think the confusing thing is really around the fact if it is a structural improvement and there's a strong argument for not selling it in that case. But anyway, moving on. I mean selling an asset is obviously only 1 side of the equation. The other side is what you do with the proceeds. So perhaps you could talk a little bit about what your thinking is in that regard? And maybe touch on the proposed investment in Saudi as well at the same time given that investment in that region comes with unique challenges?

Yes. Thanks for that, Richard. I mean, I think it's a bit premature as to proceeds. I mean, depending on the deal structure and where we are in 6 to 12 months, we'll go through our capital framework and do what we think is in the best interest of the shareholders. And obviously, I'm about to -- we're about to engage on the international roadshows. So we'll also hear from our shareholders where they're at. But I think as far as the Saudi, as I mentioned, we see this as a low capital, high return type project, is a little bit like our Perdaman deal as well. Our main interest is to get advantage offtake to support our growth agenda in Europe, Middle East Africa. We're not looking to go participate in the Middle East market. We're really looking at a facility that has deepwater access, has advantaged ammonia based on its proximity to some of the cheapest gas reserves in the world and provide a growth platform internationally for us. So we think it's a very attractive potential option and not something that we're looking to put substantial capital on the ground for.

So that's helpful. So it's just an offtake arrangement, correct? .

Well, we're still negotiating the joint venture agreement as to what we bring and what they bring. But again, it's not intended to be a substantial investment on our side in Saudi Arabia. And like I said, the attraction to us is the offtake agreement, the international.

That's helpful, Jeanne. And there's a couple of quick ones probably for Paul, if I may. Just on the timing of the buyback, given the number of moving parts, particularly around the structure of the business, I was curious just to get your view on why you've announced the buyback now and you're not paying a dividend at the top end of your payout ratio range?

Well, 2 things. We have considered firstly, what is best value for shareholders. But importantly, we -- a quite significant portion of our shareholders are Australian-based and the franking curbs accompanying the dividend was quite important. We feel that, that balance is around that 50% and hence, we weigh that up compared to our assessment of what the valuation of the share is and how much value it can offer shareholders if we are going to buyback. And as we said on the Investor Day, we'll look at those level of balanced returns how we can actually maximize value for shareholders. And we believe that this is the balance probably best balance between the 2 decisions or strategic decisions that we have to return value. In terms of the proceeds, Richard, is we have to navigate effectively the buyback over the next 12 months. And it can be quite alive to the trading windows given the fact that we have the WALA overview and potential sale of a part of the asset, so to say. So we need to kind of see when we can actually get into the market and buy back the shares, and we're very much alive to that. But we'll update the market as we progress during our usual reporting back to the market in terms of the buyback, but we will only do the buyback in the next 12 months when we are permitted to do so. But we believe that there should be ample opportunity to execute the program with a reasonable chance over the next 12 months.

Great. And then just an easy one. Your interest guidance, does that include an assumption on the buyback?

The interest guidance on the year ahead, definitely includes one of our assessment of how much of that $400 million we can get away, yes.

Our next question comes from the line of Scott Ryall from Rimor Equity Research.

[indiscernible] Richard, but there's a few differences in there. The result is fine in the second half, in particular, you participated in the commodity price upswing, which is great. So my query is more strategic and around decisioning processes, please, triggered by both the strategic review on Waggaman and the buyback and the result in delay in the demerger. And I'll start with a statement that from the outside, it appears the decision-making around the structural -- big structural strategic issues appears very driven by some banking advice and very reactive in nature rather than due to commercial and industrial logic. So feel free to rebut that in your answer to the question. Don't have a problem with the actual outcome that you've come to, but it's really around the process here that I'm querying. So at your Investor Day in early September 2 months ago, you -- firstly, on the buyback, you talked to us that option was well down the priority list. When you talked about capital management, you're very much talking up the pristine nature of both balance sheet post the demerger. So I'd be interested to understand just a little bit more detail around what changed. Maybe, Paul, if you're answering that one, you can talk about any excess franking credits that are over and above the dividend that you're paying in the second half? And then the second 1 is what changed with Waggaman again, 2 months ago, you were supporting ownership by Dyno Nobel and the industrial logic of that. Ammonia prices have been relatively stable since that time. And I would have thought if there's attractive interest that's been shown that a strategic review process should take a lot less than 6 to 12 months because you've got the underlying work done as has been discussed before, and a sale process shouldn't take anywhere near that long if the prices are as attractive as you suggest. So again, what's changed with that strategically?

Yes. Thanks, Scott. I'll take the first one on strategy, and then I'll hand it over to Paul to deal on capital allocation priorities. And our strategy hasn't changed. The Waggaman exposure to excess ammonia has always been something on our mind -- and we've been in conversation with counterparties for years, not just the last 6 months. And I can assure you that the level of interest and the value that people put on that asset has considerably appreciated in the last 6 months. . So it is just the fact. I can't control how the perception of assets are perceived in the marketplace, but it absolutely has changed. There's no doubt that blue ammonia and the excitement about the attractiveness of blue ammonia for use in whether it's co-firing or the bunkering industry has grown tremendously, and people are very interested in any asset that's already built that can actually step into that place. So the market has actually changed in for it, and that does warrant a look at the ordering. It's just an ordering issue. We can't do both at the same time. So moving Waggaman forward does require the demerger to be timing to slip a bit. 6 to 12 months is not unusual. Like I said, it does require assuming we do have a change in the structure of our interest in that plant. It's going to take a while for all of the deal structure and the regulatory approval, and that's not at all unusual. So I think that where we're at is absolutely true to our strategy, and it's quite prudent on time frame. Maybe I'll hand over to you on the capital allocation priorities.

Scott, yes, my favorite topic, and we can maybe spend a lot of time on capital allocation. But maybe just to reinforce messages, I really -- I don't agree with kind of your deduction on the narrative, what we left the investors with on capital allocation. We approach today with a clear understanding to say this is the way that we plan to manage capital. These are the orders. These are the choices in the way that we allocate capital but with an underlying principle always to maximum shareholder returns and look at choices and balance, that was the essence in terms of that. Now on the one side it is to make sure, and we articulated that clearly to say it's quite important that with the global market volatility and the fact that our debt still sits at $1 billion plus at that point in time that we continue to manage the balance sheet prudently -- and for that reason, we did focus on the 1.5x debt to EBITDA as a guideline also allowing us to go above that to 2x for something strategic or if there is volatility that play out on the balance sheet. So we were quite clear that, that's kind of the strategic framework of how do we plan the risk level on the balance sheet and couple that to investment grade. The flip side has been, how do you allocate and how do you return? And there, we were quite clear to say on the first order of allocation, it's very important to make sure that we run safe and reliable operations. It doesn't mean that we'll overspend on sustenance. We need to spend the right amount of capital on sustenance and sustainability and then paid the dividends within the range. When it came to the other part, and I think that's the part that I disagree a bit with you is on our choices when it comes to second order. And I will refer you back to our capital allocation framework, where we said it's about maximizing and balance returns between growth projects as well as any other form of returns to shareholders, which includes buybacks, and we will look at those choices. So today, where we are, the balance sheet is on the IPL side very much deleveraged, and we do sit with a 0.6x netted to EBITDA, which is quite low. And hence, we don't want to have capital, the synergies on the balance sheet. And for that reason is we look at how can we maximize the dividend with the franking credits on the one side, and on the other side is to say how and what value that's a buyback can offer to shareholders, plus we also look in terms of growth projects. So at this point in time, we don't have any significant growth projects that will be an immediate taker for capital today. And hence, we maximize then the returns to shareholders through the buyback program. And this is typically where we will go forward where we did announce to say, looking forward, we want a growth rate in the company on the Dyno side of mid- to high-single digits. We know that we need to invest capital to do so, but that will not be the only taker of capital. Surely, we'll also look at buybacks in the future as opportunity to also bring value back to shareholders. So that's the way that we look at capital allocation. And what I'm very happy with is this was actually the first time that we could trial and test that capital allocation framework that we put forth to you and hopefully, our intention, Board's intention, is very clear that we want a relatively lower risk level on the balance sheet to manage volatility, pay prudent dividends within our range and maximize franking credits and then get best maximum returns through buybacks or through growth projects to our shareholders, and we want to do that in balance. So hopefully, more of this to come in the future, but we feel quite comfortable that our capital allocation does allow us with the flexibility to return maximum value to shareholders.

Okay. sorry, -- can you just confirm the franking balance after the full year dividend, please? .

Yes. So we believe that given the 50% dividend payout that, that maximizes the franking credits available for financial year '22. We still believe that given our outlook of the next financial year, that we can actually continue with that practice unless something fundamentally change in the market. We do believe that around a 50% dividend payout fully franked is quite doable for the half year coming. But I mean, that's the emerging market conditions to persist.

Thank you. I would now like to turn the conference back to Jeanne Johns for closing remarks. .

Well, thank you for that, and thanks all of you for joining the call today. In summary, FY '22 results is a testament to the strategic focus over recent years across manufacturing excellence and technology growth as well as the strong operational execution of our teams during the year. I'd like to send a big thank you for all the teams across IPL for all of their efforts during the past year. We have a clear strategy and strong momentum as we go into FY '23 and we're being supported by strong and constructive market conditions. And we are approaching our strategic choices from a position of strength, and we look forward to updating you in due course on the Waggaman strategic options review process and the demerger time line. Thanks again for your time, and we look forward to talking again soon.

This concludes today's conference call. Thank you for participating. You may now disconnect.