Infratil Limited (IFT) Earnings Call Transcript & Summary

Welcome. I'm Jason Boyes, the Chief Executive of Infratil, and I'm joined by our CFO, Phillippa Harford, and we're here to present our annual results for 2021. This morning, we uploaded a peck of information to NZX and ASX, and included in that is our annual report and the presentation we're going to run through with you today. As always with Infratil, there's quite a lot going on. And don't worry, we're not going to read out that whole presentation. We'll try and hit the high points and make it simple, it's our aim. And we'll leave some room at the end for questions for people who want to drill into some more detail. How is this going to go? I'm going to do some introductory remarks. Then I'll hand over to Phillippa to run through the group results. Then we'll spend a bit of time on the key subsidiaries and how we think about them. We'll return for guidance and wrap up and hopefully a bunch of interesting questions. So hold that thought and let me begin. Let me call out, I think, 4 things from the year we have just had, which has been pretty remarkable. I'll start with me, which is not a natural thing. But obviously, I'm the Chief Executive now of Infratil, and I took over on the 1st of April. The first thing my mother said when I said that was happening that was April Fool's Day, which is nice. Thanks, mom. But actually, I couldn't be more excited and delighted to be here and in this seat. We have a nice piece in the annual report reviewing Marko's really stellar run as Chief Executive, which is well worth a read. And I guess it emphasizes a couple of things, there's really big shoes to fill, just like Marko had when he started. But also that the portfolio couldn't be better placed really for the next period ahead. So very fortunate there, and I know I've got his support and the support of the Infratil Board for what's to come. So enough about me for now. The next big thing, obviously, over the year that happened is COVID, and there's a couple of things to call out here, I think, and you'll see this in the results. We have took for a long time in the portfolio about the resilience of it, and it's never been more tested like most people than the past year. What you should see in this result is while there are some assets that were quite affected, like Wellington Airport is an obvious one, but also Vodafone where I am here today, with roaming revenues and things like that. So quite a big severe impact on that other side. But then on other parts of the portfolio, actually experienced incredible tailwinds. CDC is a great example of that where with the sort of rushed move to remote working experienced and still is exceptional tailwinds in terms of growth and demand for its services as everybody moved their communications and office environments into the cloud. Vodafone saw that as well. The other thing we saw through the period was a massive increase in demand for assets aligned to renewable energy and decarbonization. So a big acceleration on other parts of our portfolio. And as a whole, I think what you'll see is quite a pleasing overall result, although there's actually a heck of a lot going on within the portfolio through that period. The other thing I really want to mention is acknowledge the hard work of all the people in our businesses through that period, an incredibly tough time and an extraordinary amount of work has gone into it, and we're incredibly proud of what's been achieved. On the one hand, for example, at RetireAustralia, who's charged with looking after some of our most vulnerable people, right, they mobilize quickly and kept all of their residents safe and COVID-free through that period. But also I know this is a real big focus for Britain team, right, Phillippa, really big focus on mental well-being and social connection through that period as well, and they've achieved an extraordinary thing. I'd also like to acknowledge the work done by the teams at Wellington Airport and also Vodafone where I am today. All those teams had to mobilize really quickly and maintain extremely strong cost discipline, which takes a lot of work and a lot of effort in order to produce the results and set themselves for the next period to come as well as they could. So extremely well done from the people perspective. Third, second to last thing I want to mention in the intro is AustralianSuper and Tilt. I think they go together well. AustralianSuper, had a cracking and good on them. I think it shows the desirability of the assets that we're sitting on already in terms of decarbonization and digital infrastructure. But also this idea of a platform valuation really coming into the fore. And what do we mean by platform valuation? We've talked a lot in the past about the ability of some of these businesses to continue to deploy capital and grow from a valuation perspective over a long period of time, particularly if they're experiencing long-term tailwinds like digitization or decarbonization. What you used to see is that value for that pipeline, you didn't used to get paid a heck of a lot for that, maybe you'd get a year forward, right? But I think what you're seeing through this period, and it's shown up in Tilt is an ability and a recognition of that value over a much longer period of time. And while that's turned up in Tilt, I believe it exists in a number of other assets in the portfolio today. So Tilt is the kind of classic example of this and a number of things really. But what an exceptional outcome that, that team has produced over actually a relatively short period of time. What you saw there was over 100% premium from the time Infratil announce a strategic review to where we're sitting today with that outcome. And a lot of that is sitting in recognition of the value of the pipeline of projects they had before them and the likelihood that would be executed and be able to be capital deployed at quite good returns over a long period of time, and that value has been recognized. We believe that value is there. And obviously, the buyers do as well. But that's being recognized now for the first time. And that premium is obviously well beyond, and that value is obviously well beyond a normal takeover premium. Last thing I want to say just here in the interim, I'll hand over to Phillippa, from the year is we're really excited and delighted to be -- have started investing in the health care sector, which is something we've monitored for a while, and we're happy to find an entry point in Qscan last year in Diagnostic Imaging. And we've added to that recently post 31 March, and talked about it a few weeks ago with our agreement to invest in Pacific Radiology, similar sized diagnostic imaging business here in New Zealand. I think Infratil can add a lot of value to these businesses and make a real difference by helping them scale, even just having 2 sister companies of the size of Qscan and Pacific Radiology will make a lot of difference to their ability to invest in new technology, but also find ways of working together to get efficiencies across both of them. So I think that's an area that we should look ahead to that will attract more investment in the future as well. Okay. I'll leave that there and I'll come back and talk to you for a bit -- in a bit, but I'll hand over to you, Phillippa.

Thank you. Good morning, everybody. Okay. So I'll get through to there and where we are now. And I think I'd just like to start off quickly, just running through some of the financial sort of highlights from the year. Clearly, as Jason said, a lot going on in the portfolio. And I think as quickly as possible, then we'll move through to talk about the individual businesses. So we've got a proportionate EBITDA of $398 million, up from $370 million in the prior period. That really was no mean feat if you sort of step back and think about what was going on in the portfolio. Certainly, we weren't even in a position to provide guidance really until the very back end of calendar year 2020. So it's nice to be sitting here now and to be able to report that result. I think the challenge that we have is Jason referred to wanting to keep things simple this morning. What I then have to overlay that with is our accounting result, and to try to step you through how it is that we have a proportionate EBITDA of $398 million and yet our share of the net loss for the year was $49.2 million. And I think the easiest place for me to start with that is to actually just recognize that. The Infratil portfolio has changed quite a lot over the last few years. And what I mean by that is we've moved from having quite a few entities that we own 100% of or at least more than 50% of, to entities which we don't -- we're not regarded as controlling. So what that means is the way that we account for them within our financial statements is quite different to what you'd see normally. And what that also means is that the result doesn't come through to our financial statements in the same way. So that's one area that I can touch on later in the Q&A if people have any specific questions. But I think there's a couple of things worth calling out around our reported loss. One is that it includes quite a significant loss of -- on unrealized derivatives from Trustpower. That will -- obviously already reported their results, so we won't go into detail now. But as you'd expect, that flows through to our result, and that's what you're seeing. We're also seeing the impact of COVID on Wellington Airport. Normally, that would give us a strong contribution to our net surplus, while they were operating cash flow positive, they aren't clearly contributing anything to a net surplus this year. And I think the final thing to draw out is we have accrued performance fees of $225 million. Clearly, that's a significant expense to go through the income statement in one financial period. The thing to note about those performance fees, and I'll talk to the detail later, but it's actually only payable in 3 tranches with the second 2 tranches only being payable if the value of those assets stay up. But we actually record the full $225 million in the income statement this year, notwithstanding the contingent nature of those 2 tranches. The other thing to also note is as you would probably expect those performance fees are based on independent valuations of those assets. Those independent valuations, and we can look at Tilt and we can look at CDC, those values do not flow through to the financial statements for Infratil. And specifically, those valuation uplifts also don't flow through our income statement. So what you're actually seeing come through is we've got great news on those international assets and how they're performing. Jason has already talked to how much those assets are attractive to the market. But from an income statement perspective, we don't see that come through or we see as the performance fees. So I think it's just worth laying that out now because it really does help to explain those first 2 bullet points. I'm sure people will have other questions, but at least I've got the complicated part over for now -- or at least I hope so. So then I think I'll just quickly move through the other things. Jason has already noted, the big transactions that occurred through the year. So the announcement on Tilt and obviously, the acquisition of Qscan and quickly followed by Pacific Radiology. And really, just to go to the heart of the matter and what everybody likes to hear, we've actually moved to increasing our dividend. We've moved it by $0.005 to $0.115 fully imputed. And so -- and we'll talk later to what that means in terms of our dividend outlook as well. So right. As I said, sorry, I'm just having a little technology issue with my iPad. One moment. Right. As I said, the next thing for us to talk through with the financial highlights. I don't think I need to spend a lot of time. I think I've given most of that a go. Proportionate CapEx, though, it is worth calling out, we've got $1.2 billion in the current year. That includes the Qscan acquisition. Also noting that the year before was our acquisition of Vodafone and so much has happened since then. So results summary. Only thing I'd really want to call out here is we do have Qscan as a subsidiary in our accounts. What that means is that's coming through to our operating revenue, operating expenses and our depreciation and amortization. Interest expense is down on the prior year. That is actually largely because we had a couple of significant inflows of capital during the year, one of which was the capital return of about $180 million, the other being, of course, the equity raise. And given that essentially our net debt [ moats ] for quite a period, and we've seen that come through into our net interest expense. And then another lovely accounting twist discontinued operations because we've announced the strategic review of Tilt and as at 31 March, given that position, we have to treat Tilt as discontinued. That's for both the 2021 accounts and for the prior year comparative. So what you're seeing come through the year is Tilt in 2021, whereas the prior period essentially had Tilt Snowtown 2 and a number of other businesses, which we disposed of, which are listed there on that slide. So proportionate EBITDA. As I talked about, we do use this measure because we think it's a useful guide to tell people how we think the businesses are operating. Jason's already talked to how CDC has performed during the year and the demand that it's seeing come through. Vodafone, the uptick there reflects the 12-month contribution. The prior period had only been, I think, an 8-month contribution. And clearly, Vodafone, strong contribution, notwithstanding the impact of COVID on its roaming revenue. Other thing to note, Wellington Airport's come through at our proportionate share of 23.7. That's an outstanding result from the airport. As I said, net cash flow positive. We never would have really hoped for that when we were forecasting the year. In fact, I think we probably were looking at that being at least $30 million to $40 million in the order worse, had things played out the way we were forecasting. Longroad Energy, just to note, quite a difference from last year. That's largely driven by the severe storms that happened in Texas in February. Things were tracking along very well up until then, and Jason, you'll speak to that a little bit later. Proportionate CapEx and investment. Don't intend to spend a lot of time on this because the details are there on the slide. I think it is just worth noting RetireAustralia paused its CapEx for a period given the uncertainty in that sector, but that's resumed, and I'll talk to that a bit later. But really, it is pleasing to see that despite what was going on in the financial year, you really can see the amount of investment that was going on in the group. And those numbers that are shown there are our share. So that doesn't depict the full CapEx profile in those businesses, just our share. I mean as we got there, we've got the Qscan acquisition as well. So that was our major investment for the period. Now international portfolio incentive fee. I won't spend much more time on this other than just to call out a couple of points. The 2 movers, actually first, just to start with, this is only an annual incentive fee. There are no realization fees or initial incentive fees payable in relation to the period. The 2 big movers in that regard are CDC data centers and obviously, Tilt Renewables. I think it's worth noting that the CDC data centers valuation is pretty much on par with the market release we provided in January of this year. You may recall that we updated the market about CDC's view on its customer pipeline, and it's since gone and executed some significant contracts, and that has come through that valuation. So -- but as I said, not much movement since the January release. Tilt Renewables, clearly, a lot has happened there. You'll see that we've got a valuation of $1.3 billion that contrast to the $2 billion that we've actually are selling the business for. What we determined to do was to come up with what we thought was a -- what we call an undisturbed valuation. Clearly, this is a point of time at 31 March, it -- we are still subject to OAO, we are still subject to FIRB. We decided in conjunction with the Infratil Board that the prudent position to take was to determine an undisturbed valuation for Tilt and to adopt that valuation for the purposes of this incentive fee. So -- and as I mentioned earlier, the fees payable and 3 tranches second 2 tranches only being payable if the value of the portfolio holds up in those subsequent 2 periods. Debt and capacity -- debt facilities and capacity, I don't intend to spend too much time here. The picture at 31 March '21, down from the debt position at 2020, mainly because of the Tilt capital return and also the equity raise that we had undertaken. I beg your pardon it wasn't equity raise. It was -- we also did another bond issue of $83 million. So that was a net bond issuance, which you'll see come through to our net bank debt. The really sort of material thing to note, though, is pending the receipt of the Tilt proceeds. We will effectively pay down all of our senior debt. That includes the bridge facility that we've put in place for [ Pac Rad.] So we'll almost have 0% gearing at that point, subject to our investment options, which we're clearly considering. And then just for completeness, we've noted where our upcoming bank maturities are. We've also got a bond maturity coming up next month, and that ties in nicely to my next slide, which is that we are going -- we are considering opening up a bond. We would like to make an investment opportunity available for our maturing bondholders. We see the part that they play in our capital structure. So notwithstanding that we will -- we do expect to have a significant cash position. We see this as an important opportunity to offer our bondholders. So we're expecting to give more information on that during the course of next week. And then share price performance, quite an amazing graph. But I think 2 things to note here. The result for the year to 31 March is as much about where the share price -- well, not as much about, but it's also impacted by where the share price was at 31 March last year. So a lot of market volatility going on. So our starting point was lower than you would have seen in the month leading up to that 31 March. But the return that we like to focus on is that 10-year target, and it's really fantastic to be sitting here and saying that for the 10 years to date, we've got a -- over a 20% return. So that's great. And then full year distribution, as I alluded to earlier, we're moving the dividend to $0.115 per share, slightly up 4.5% from the prior year. The dividend will be partially imputed, up to $0.035. We've decided that we aren't able to offer the dividend reinvestment plan at this point in time. And then really dividend outlook, I know there has been questions on where we see this, and it is pleasing to be able to move the dividend. We've always indicated that we want to have regard to what the operating cash flows of our businesses are and how we see them tracking. And really, we do see this as a signal that we do have confidence in the operating cash flows and in particular, the way in which those operating cash flows can flow back through to Infratil. I think it is worth calling out that particularly on CDC data centers, their operating cash flows even now are very, very strong. The distinguishing point is that we choose, rather than receiving those cash flows in the form of dividends, we say, "No, you go and build another data center." What we're saying now is that the outlook that we see for CDC, notwithstanding its strong growth profile, it is also expected to support some cash flows through to Infratil. Now that's not talking now. That's more sort of further out in our forecast period, but we see this as an opportunity to bridge that dividend profile as we have confidence in those cash flows coming through further out. And then we're going to turn now to the operating businesses.

Nice work, Phillippa.

Thank you.

So let's just pause, there's a bit there, right? And it is quite a complex piece. You did a nice job, though, Phillippa, I'm sure we'll get some questions. On the operating businesses. And it's really hard, right, because each of these could almost take a whole presentation on their own. So we're going to try and just give you the tops of the waves on how we are thinking about them, and see what you think, and then we can take questions, as I said. Let's start in digital infrastructure and CDC. Now this is our biggest asset. It's a bit of a beast, right? But there is a phrase in my mind when I think about them is powering on, they are really still charging. And as I said before, in terms of COVID, that's accelerated exceptional growth they were already feeling. So when it came to cloud adoption and moving people's IT sectors into the cloud, that was accelerated by people remotely working from home, right, in one big bang. And I remember Greg at CDC talking about pallets of computer equipment turning up at his data centers to be installed as quickly as they could. That's continuing, that shift to the cloud, and has been accelerated. The other thing that's been accelerating is a theme that Greg, frankly, built his whole business on is this idea of resilience in all your supply chains, but including your digital supply chain rate. And that means, a much bigger renewed focus on where your data is in the world. Can't necessarily rely on and always being able to flow freely across borders. But also who owns the data center that houses in? That was already a theme, but that's become much more a focus in a post-COVID world. So even stronger growth than we've seen in the past. In Australia, that's turned up in a new regime hosting certification regime that they've put in place for people who want to do government work and it has sort of 3 tiers, and the top tier is strategic. And CDC's data centers, all 9 of their data centers are qualified as the top tier of that framework, and they're actually the only data centers in Australia that have that certification right now. So we continue to see CDC as having a strongly differentiated, high-quality product in what is quite a competitive market. And we see that through -- turning up in all sorts of ways in terms of its business development and growth going forward. If we look at their result then, we can see that in the last year, as per the guidance, they've continued on that trend that we've talked about in the past of about 25% EBITDA growth. Then next year, we've got guidance for next year, and that's showing, as you will have noticed, a 10% increase in EBITDA over the next 12 months. Now I want to emphasize that, that is not a sign that the growth in CDC is tailing off at all. And actually, if you go back in your history, you'll see that this trend has appeared in CDC's results before. What happens there is, when you sign a contract that underwrites the build of a new data center, it will take you over 12 months to build it and therefore, over 12 months for the revenue to turn up. But what Greg has had to do now is gear up to deliver those data centers. So they're building 4 data centers across their campuses, Canberra, Sydney and here in Auckland. The headcount has had to increase to deliver that. But they are delivering data centers for contracts that he has already got in hand. So that gives us the confidence to continue to say that we are highly confident, and that over the 2-year period, they will continue their trend of 25% to 30% EBITDA growth across that period. He just needs to build the data centers to get that revenue spinning up. The last point I want to make on CDC is something Greg mentioned and is still a focus, is the idea of expanding their geographies, which is really needed to continue that growth trend further into the future. They are still looking at that. The way Greg puts it is that, as with their other geographic expansions, it will be customer-led. So customers who want Greg's product in a different place for whatever reason. And that's been successfully deployed by them, obviously, it's stepping down to Sydney and across the ditch here in Auckland, and we should hopefully expect to see that model continue in the future. So CDC, as I say, top of the wave is on what is quite a big asset for us. Let's stick with -- let me do my slides. Let's stick with digital infrastructure and the other big one Vodafone. It's great to be here at Vodafone today, and Jason Paris is here in the room, so I better get it right. But also he's here for questions as well. What do we want to say here? Sort of 4 things, I hope. The result that they've put out is at the top of the guidance, which is what they said in February. The -- we're also really happy to be able to confidently confirm as guidance this time, the indication they gave in February that EBITDA next year would be up 10.5%, I think we've got there, 10%. It's really -- it's always really nice, right, when you see companies doing what they say they're going to do, and I think that's takeaway there. When you look at the result over that period and what's going on there, you can see this year revenue is off a bit and that, as John talked about in February, has a lot to do with COVID. But what gives us confidence in that EBITDA path going forward is a few things. A few things driving it. So from a trading perspective, as always, with businesses like these, there's ups and downs. We're actually quite happy with consumer postpaid mobile at the moment. But consumer fixed broadband is still really intense competitively. The other things that are giving us confidence in that EBITDA path, strong cost control, which is being enabled by investment in their digital transformation project. So that's a really key part of delivering that growth and enabling that investment that Jason has talked about in the past. That's underway. The other key things, as he's talked about in the past, network utilization, which is again being enabled by investment and things like 5G, and that should enable more fixed wireless, excess adoption and other things that are going to drive utilization, wholesaling, for example, which is another focus. So those are the 2 kind of key drivers. The third pillar that he talks about is investing in capability to deliver all those things in a consistent -- in a consistent way, and that's all happening. So those are kind of the 3 features that are really going to transform this business and position it quite differently once all that work is done. If we stand back from that, we still feel good about the guidance we gave when we acquired this, that the plan is to take the EBITDA margin of this business from where it is and has been to something more in line with its peers, in that low 30s type area. That plan is well in place and in train and is really now in the hands of the team to execute well behind that. But we still feel like that's the right target. Last thing on Vodafone here is just some industry structure things that are going on that we're keeping a close eye on, obviously. We have activity around Vocus this year, and 2degrees' IPO announcement are things for Vodafone and us to watch. We're also watching overseas as people over there look at separating out their network infrastructure and how that's being done and why they're doing that. So those are kind of areas that would be quite meaningful to infrastructure -- I mean the industry structure in New Zealand, and the things we're watching for the future as well. So that's Vodafone and digital infrastructure in a bit of a nutshell. I'll pause for a second there and we'll move to energy. So Longroad, there's kind of 4 things I want to mention here, and Paul Gaynor talked about them at our Investor Day. He says last year was the biggest year they ever had as a team. They've been doing this for 20 or 30 years. That's the most they've ever deployed in their entire career. So an incredible achievement over a really tough period, which we should acknowledge. The next thing I want to mention is something Phillippa alluded to and its sort of things since February, right, is the Texas storms, which you might have read about. So we had this huge cold system come down into Texas and essentially froze the electricity system. And it meant renewable projects were unable to generate at a time when prices were really, really high, and if you'd committed to sell that power to somebody at a price yet, you had to go into the market and buy that power at these really, really high prices. The impact on our proportionate EBITDAF is a little bit misleading in that the way that it is calculated is as follows. We have 2 projects in Texas, a wind one and a solar one. We actually only own half of those projects because we sold half of them to AIP, but -- which is a Danish pension fund. But for proportionate EBITDAF purposes, we're taking Infratil share 40% of the 100%, because actually Longroad consolidates all of that -- all of those solar and wind farms onto its income statement. So when it flows through to our proportionate EBITDAF, it's essentially doubled what the impact is and impact is to Infratil. What actually happened as well is we were quite pleased that the risk management systems within Longroad actually worked quite well. So what you had was the wind farm we have, El Campo, made quite a lot of money because of the structure of its PPAs and where it was sited. But the solar project lost money. And so actually, the difference was largely offset by the 2 moving in opposite directions, which is kind of what you want to see in a well-hedged portfolio. There was still a wedge, which is not a liquidity issue or we think a hangover for the long-term value of them. But that's USD 3 million or USD 4 million, NZD 7 million or NZD 8 million, I think it is, Kiwi impact that you see coming through that proportion of EBITDAF. So a little bit confusing, but worth mentioning. Last 2 things on Longroad would be Biden and his infrastructure plan. When that's in the house at the moment being debated, and you will have read all the headlines that, that's incredibly favorable for renewable energy investment. Talking to Paul about it at our last Board meeting, the way he put it was this, which is that the legislation in front of the house pretty much has everything they could possibly have asked for in the legislation. He doesn't know how much of that will get through, but the signs are really, really good. I mean the detail will matter for them. But I think that environment is worth bearing in mind as we think about their trajectory and the next point I want to make, which is really around valuation. Valuation of this one is really hard, and we know, and it is actually a bit of a project within Morrison & Co to figure out how we can provide more useful information on this asset. But we know from Tilt that the demand for these sorts of platforms is really, really elevated, right? And we also know from working with the team that they are incredibly comfortable, given the work they've already done, but also that environment -- the Biden environment I mentioned, that they can comfortably see their pipeline and how they will deploy over kind of multiple years out into the future. And so what we would expect is that, that ability to continue to deploy over the longer term. Unlike in the past, you've might have got 1 year's worth of that, you should see in valuations multiple years of that coming up. And that's not how the independent value currently does it because it's not how anybody used to do it. But certainly the case that it's being done now and Tilt is an example of that. So I would say keep an eye on valuation for that, that is an area where we need to do some work and I know a few of you are looking at that already. So those are the ones I was going to handle.

Tilt Renewables?

Tilt, how can I forget?

He was trying to slip it to me.

That's right. Whichever -- it's hard to say much more than has already been said. I think probably the last thing to add here from our perspective is hats off to Dion and the team and the Board, frankly, for getting that business into the position it was in to enable the transaction to occur. And that really is kudos to their execution capability, which created the pipeline of opportunities that ultimately ended up being valued the way they were. It doesn't cost anything near as much to build that pipeline as it does as the value that's created once they're built. So if you can build that stuff and then get paid, at least some of the value of it being delivered, you're making incredible returns. And I think our -- as might have snuck down below 40 not bad isn't it, but it's exceptional.

Great. Thank you. So I've just got a couple of more operating businesses to run through, and then we'll hand over for questions, and I'll do the guidance update. But Trustpower really don't want to say a lot today. They've clearly already provided the result. Two takeaways from us as a shareholder. We're looking -- and we'll be obviously waiting to see how the retail review progresses. They've given an update to that. So we'll wait with the market to hear that goes -- how that goes through. And the other thing just to note is Trustpower's also released guidance for FY '22, and we'll pull through our proportion of that guidance into our FY '22 guidance, as you would expect. Moving then to Wellington Airport. I think people are very familiar with it. We've talked a bit about how well it's come through COVID. Great to see passenger numbers, particularly in the domestic travel, come through. We've had days at that airport where they've exceeded pre-COVID levels of passengers, which is fantastic. As Jason said, that hasn't come without cost. There has had to be redundancies at the airport. There's been a lot of challenges trying to accommodate and navigate the resumption and then the curtailment of flights as we've gone to various different lockdowns. And even as an example, the fleet changes and how you move those aircraft around the airport at fairly quick notice. So I think it's been a fantastic year. We're very excited with how we ended the year. I think about 350,000 domestic passengers in March. At the same time, we don't want to get too far ahead of ourselves. So I think that the -- as we talk to the guidance a little bit later, we've made some assumptions around whether there'll be further lockdowns, both within the domestic context and also within the trans-Tasman. A couple of other things to note. We had -- they had gone to our banks and got bank funding support, given the uncertainty, and that's been great. Also, shareholder support was provided sort of hand in glove with that bank support, and it's pleasing to note that, that remains in place until June 2022, but that it hasn't been required to date. Because as I said, really, the key highlight is we have got an operating cash flow positive airport, which in the context of COVID, I think I would actually put it out there, we're probably the only airport in the world that can currently say that. But I haven't fact checked that. So that's it for Wellington Airport. RetireAustralia, we've already spoken to as well, thing I would draw out is we had 332 resales for the year. Putting that in context, it was a 138 for the first half. So the second half was an absolute stonker, and we really are seeing that continue to come through for the first period of FY '22 as well. What you then need to -- I would almost say contrast with that is I think you'll see that the development of new units is obviously nowhere near where we'd like to see it. We completed 24 apartments through the year. The forecast for FY '22 was only sort of a 20s number as well. But I think the context we do want to add there is that we did pause construction other than those projects that were already underway. We've now resumed construction on new projects, and what that will see is about 190 units coming through into RetireAustralia is completed construction in FY '23. So we see -- we're very happy with how we've come through FY '21. We see strong resales momentum for FY '22, less so on the development front just by virtue of how much we've got underway, but that will pick up and come through for us in FY '23. And as Jason noted, really just a significant achievement for the team at RetireAustralia. I think it's worth noting the environment in Australia hasn't been like it's been in New Zealand. They've been dealing with multiple lockdowns. We operate in 3 states. All of those states have gone through various lockdowns and alerts. So I think it's fair to say that it's pretty much been game on for that team for the entire FY '21. I would like to think that, that will start to give them some relief as people start to get vaccinated, and we can hopefully give them a bit of a well-earned break. And then just quickly on Qscan and Pacific Radiology. We acquired Qscan in December. So really, it's only been a 3-month contribution, and not a lot to report at this stage other than it's actually performing well and certainly well within our investment case. Really pleasing to see that we've also got Pacific Radiology to add to our platform. I mean who would have thought when we sat back here at 31 March last year that we'd have made we'll be talking about 2 investments into the diagnostic imaging and health care space. It really does show that we're very focused on what we thought was achievable for Infratil as well as responding to COVID. So we'll be reporting on them and also including Pacific Radiology in our half year result next year. And then just very quickly, Infratil guidance. As I've noted, that's on a proportionate basis, and we're setting a guidance range of $470 million to $520 million for the year. We've listed on that slide all of the various components. I think really, the only thing to call out is that we aren't currently providing guidance on Pacific Radiology. We'll do that as appropriate, we'll do that when that transaction is concluded. For the purposes of this guidance, though, we have excluded Tilt Renewables given the expectation that, that scheme will proceed. And I think that's about it, and I should hand you over for the wrap up.

Okay, everyone. How are you feeling? There's a bit. Let me wrap up quickly, and we'll see what the questions are. So one, a remarkable year, and I'm sure a bunch of companies are saying this as well for various reasons, but first takeover offer, the largest-ever sale, pandemic, new CEO, hopefully, certainly, that last part doesn't happen again this year. Next, I think the key point is actually for -- in terms of our EBITDA and earnings growth, which will feed through to our dividend profile, there's actually a lot of execution underway, but to do right, and let's not forget that it's really busy within the portfolio, particularly here in Vodafone, but also with Greg with the data centers he has to build. So it's all underway and in train, but execution is really important to deliver that EBITDA growth. Third point is this platform valuation point I want to leave you with. It is turning out to be quite real, certainly in decarbonization. And when we look across the assets that are left, we do think there's still a gap at CDC. We definitely think there's potential in Longroad, and don't forget Vodafone either. It's not a complaint at all. I'm really just giving my view of where I think the gaps are and an area for people to focus on and for us as well, frankly. And the last point is an important one, but reinvestment, obviously, with the Tilt proceeds, hopefully on their way soon. We still remain as upbeat as we were in February at our Investor Day about the opportunities we're seeing in our core 3 sectors that I've talked about. We also remain opportunistic for things outside that, but they face our hurdle because of the complexity they bring into the portfolio. So we see opportunities. But equally, we're staying just as disciplined as we've ever been, and hopefully, Pacific Radiology demonstrates that. We're not in any hurry, we're patient. We know you're patient as well. And everything will get assessed to the same standard as it ever was and against the obvious alternative of buybacks effect where that's appropriate as well. So we're optimistic, but we're disciplined. So I'll leave it there, and we can go to some questions, which we've left some room for, thankfully, Phillippa. And maybe we can start here in the room. Who are we going with? Phillippa, you [indiscernible]? We can go, bye.

Just a couple of quick questions. In terms of your guidance on Vodafone, what's the COVID assumption you put into next year?

It's still pretty conservative, as JP outlined in February. So no major return to roaming or anything like that.

Okay. A question that comes up a lot in terms -- just in terms of CDC. Given you've outlined the guidance for next year, which in absolute terms, sort of a reduction on the growth in terms of dollars, what you've done -- what you did last year and the year before. Are there pricing impacts coming through there?

No, it's literally timing to deliver the data centers for the revenue to come on. So they are not seeing any excessive pressure on pricing or margins, is how they would put it across their offering. And they're still feeling they've got a nice differentiated spot in the market. It is the timing to build the boxes, to get that revenue ticking in.

Okay. And finally, for me, just in terms of Wellington Airport. There's a comment in the presentation about aero pricing in a wash up to share risk. Can you sort of elaborate on that? What does that mean for aero pricing over the next couple of years?

Yes. Sure. So actually, that's a good question, Wade. Because as you'll appreciate, it was quite a challenge. We were on the cusp of agreeing the pricing with the airlines when COVID struck. That was already 1 year into the pricing period. So we had to sort of go back to the drawing board for the obvious reason that one of the big key determinants of pricing is CapEx. So with the advent of COVID, we relooked at our CapEx. We also relooked at our cost structure, as you would expect because that was moving as well. What we've moved to and put through our pricing is essentially, we have forecast use of traffic over the period. But rather than charging the full sort of passenger charge that, that would imply, we've instead elected to moderate that passenger charge with a wash up at the end of the period. The rationale for that is, as you can imagine, having a view on how traffic is going to come back over that period is not a great outcome for either them or for us. We could all be winners or losers in that. So the outcome that we've come to is we've settled on a price per passenger based on an assumed traffic forecast, and then with the ability to have a wash up at the end of that period.

So in terms of -- so with the wash up, does that get you back to earning WACC? Or is there a...

Gets us back to earning WACC. Yes.

It does? Okay.

Yes.

Just a couple on Vodafone. I just noticed in the annual report like the mobile revenues seem to have declined by quite a bit more than what you'd expect from roaming. So just kind of interested in whether there's some market share loss there, which, again, looking at the kind of subscriber numbers, looks as though possibly there is. The other one there, just in relation to that is just if Jason or you guys can make any comment around just how much independent kind of drive testing you're doing on the network at the moment in terms of the coverage, whether that's having any impact on market share? And then maybe just a quick update on the wireless broadband and how that's been going? Because obviously, the pricing on that is quite aggressive at the moment. So.

It is. We've got Jason here, so...

So we have 3 questions there, right? One was mobile market share, one was on network drive testing, and the third one was on FWA?

FWA, yes.

Yes. Okay. Just a really quick 30 seconds. how pleased we are as a part of the portfolio that Jason has taken a leadership role, where I feel like I've got the best of both worlds with Marko as my Chair and Jason already contributing strategically. He's a great New Zealander, so welcome to the team. Couldn't be more pleased. In terms of mobile, disproportionately impacted by COVID, as you know, especially in the prepaid market with a brand of our size and scale, but as Jason said, we're very happy, stellar postpaid result. Prepaid was mixed, and any revenue will be around some ARPU degradation as we probably meet the market and compete more heavily. But we don't see any deterioration in our mobile performance overall at all. So nothing to read in there. In fact, in the key segments we want to win and we are very happy with that momentum. From a network perspective, we always think about co-leadership with Spark. We deploy our capital, and as I think, as we said in the profile, our capital investment, a large chunk of that is going into maintain 5G leadership, but also upgrade our 4G towers at the same time. I think we announced 3 different regions, [indiscernible] Taranaki, Manitou in my hometown of South and this is coming soon as well, which is awesome. So in terms of a coverage perspective, we're very happy with our performance, but we want to improve that. And you just need to look at some of the key accounts that we've got, like, for example, New Zealand Police, you would find a more diverse workforce right across the country that we are the #1 mobile provider of. So that shows the confidence that our customers and we have in our networks. And then in FWA, we're hitting our numbers. I'd -- and our ambition is even greater than that, especially on -- as we roll out 5G. We think It's an opportunity for us to move away from talking about the technology input and talk more about what customers really care about, which is the experience from the technology. They get been bamboozled by HFC and for Dell and ADSL and 4G, 5G, fiber, et cetera, what they really care about is great connectivity. Are there teenagers? Have they got Wi-Fi in every part of the house, they can play a game without buffering? Can businesses have the resilience and security that they need? And so you'll see us, especially with 5G, really pushing towards more experience. So customers don't actually have to think about whether it's fiber or 5G, they just think about the outcome moving forward. And that will -- you'll see us start off the back of that to push not just in consumer, but become even more confident in FWA from -- for a business customer as well. So we're looking at going hard on consumer and business and FWA using our 5G capacity over the next 12 to 24 months. Looking at my team over here, anything else that you'd like to add? Okay.

Full marks. Thanks, Jason.

Two questions, first on Vodafone and then one on CDC. So first of all, my traditional question on Vodafone, and that is free cash flow. If you generated any free cash flow? And if so, how much? And secondly, on Vodafone, I just wondered if it was possible at all to quantify the roaming share of the COVID impact? Are we talking vast majority over half, some sort of estimate of how much of that was roaming and how much is other thing? And then on CDC, if I could just clarify. Did I hear you say that you think that EBITDA over the 2-year period -- and with that, I read FY '21 to '23, so '22 and '23, would add up to something like '25, '30 in line with history?

Exactly.

Yes.

Okay. So the Vodafone question?

The [ D&D ] question, Jason, do you want to take that? Or so free cash flow.

Yes. I was going to get -- JB is on the line.

I'm on the line. Firstly, on free cash flow, We don't provide guidance on free cash flow. So it's important nor do we report on a free cash flow basis other than to say, you see the Infratil results to close out, you'll see a cash proxy be EBITDA and cash -- and depreciation. So that would be where you should refer. Regarding roaming impacts and C19 impacts, Look, there are 3 major drivers of the C19 negative impact. And as I've noted at Investor Day and previously, by far, the largest driver of the impact of the C19 border closures, which has resulted in a loss of the high-margin inbound and outbound roaming revenue and a prepaid traveler and migrant worker revenues. That is disproportionately the largest portion of the $64 million EBITDA COVID impact that Infratil disclosed. And the balance is black, store closures and impact on trading. At times, impact on customer billings and collections at the height of the C19 impacts. And at times, some revenue substitutions as customers during lockdown, say, move from mobility to sort of in-bundle calling on their fixed line. But those components are far less than the -- what I mentioned was the border closure impacts on inbound and outbound roaming and prepaid migrant travelers. Hope that answers both questions.

Thanks, JB.

Sorry, Phillippa, could I follow up with 1 quick just on how we should think about interest expense in light of a quite sort of odd balance sheet potentially over the next 12 months?

Yes, sure. Well, the main thing is, clearly, we've got a fairly significant bond program. Those bonds will remain out there, as you would expect. So we will be sitting on a net cash position, but have the bond program. So we'll still have an interest cost in relation to that bond program.

Great. maybe we should go to the -- yes, go to the line. Ashley?

We got questions online now if that's okay.

[Operator Instructions] Your first question comes from Stephen Hudson with Macquarie Securities.

Just a quick one for me on CDC. I just wondered if you could give us some view for the features in Fyshwick [ NEC ] capacity rollout that's assumed in your independent valuation as at March. I know that's always a tricky one, but any sort of forward guidance on that would be would be great. And then just one on your comment on buyback options, Jason. I just wondered if you can give us a feel for sort of what any decision there may be dependent on, and which way you're leaning at this stage?

Did you hear that one on...

Not all of it. So Stephen...

He was asking on CDC and the independent val and this is what Greg talked about. How much of that how much Eastern Creek in Hume are in there? And what staging. Is that right, Stephen, I think you're thinking? How much of the pipeline that he showed is in that valuation?

Yes.

I'm not sure I have that.

I think it's about 340 megawatt at Hume, Fyshwick and Easton Creek. I just wondered how that comes on.

I don't think we have that right here now, but it hasn't actually changed since the 31 December. So...

And it won't have changed since Greg's presentation other than to note that actually some material new customer contracts have been executed. They were anticipated for the purposes of both the December valuation because they were reasonably advanced, and they would have been certainly a backdrop to the discussion and the comments of Greg in February. So I think the best thing, Stephen, is, if you went back to the February statements from Greg, those will be all on track, and we've now got executed customer contracts, which we anticipated.

So that's, I think, what we can say on that. And on buybacks, I think it's a common one we get, is all I was flagging. We're not anticipating large scale or anything like that, but it is -- we have traditionally run a program that's kind of more tactical and strategic as the share price moves. We don't actually have the Tilt proceeds yet. So we're not signaling that coming now. But obviously, when we're in a net cash position, then we should be thinking about that all the time, I think, in a more tactical way. So that's what I was trying to signal there, Stephen.

Your next question comes from Nevill Gluyas with Jarden.

Just 2 questions for me. Just the first related to Longroad. Obviously, proportion of EBITDAF in this situation sounds like it could be a bit misleading. I was wondering if you could give us your assessment of the economic impact in terms of Infratil's proportion? And the second question is just in related to the Longroad is just whether or not these sort of exposures are sort of more widely -- a future issue, for that investment? I suspect no, but just got to get some clarification on that. And the second group questions, which is really trying to engage in some speculation is, when should we expect the next major transaction with you guys? Obviously, I'm not even going to try and ask you what it might be. But do you think it's as soon as the second half of this calendar year? Something major? Would you place decent probability on that?

Okay. I can never got those. What do you reckon?

Great.

Okay. So Longroad, I think I did say it. But I probably said it quite quickly. It is -- so if you take the 19, you should cut it in half, effectively right the NZD 9.5 million, and that's Kiwi. So when I think about it in U.S. terms, it's sort of $4-ish million, and that's sort of a one-off cash impact. It doesn't affect the valuation at all. So it's pretty small. You know that the EV of that business is well over $1 billion now. In terms of going forward, it could be a risk. One -- but one we would like to avoid. So one of the sort of the types of projects that really struggled during that environment were ones that have what are called hedge contracts, and that's where you'd committed to provide power of different quantities at different hours during the day, so they take what's called shape risk. And for a solar plan, that's usually pretty predictable during the day while the sun goes up and down, particularly in Texas. So Prospero 1, where we hold 50% of it, has that embedded in it. So that was the one that was negatively affected. El Campo, the wind one doesn't have that. So that's one was positively -- performed positively. The next one we're building is and El Campo-type project. So it won't experience the same shape risk. And really, what you want to do and how we think about operating a portfolio of these things is having a range of them that are geographically diversified, so you can have these offsetting effects that I talked about if there are major issues. So it's not our plan to go long on hedge contracts and the hedge contracts are a bit out of favor as a result of that Texas event. But there's no more in the pipeline that are coming soon. I'll definitely say that. And then our next major transaction. If I knew that, then I'd be a happy person because it's never really in our control about which transactions we're actually going to get to the end of the line and still like and then actually be the person that executes. It could be this year, I guess. But that for a major transaction, that would be -- that would be a pretty good effort. But I don't really know. And it is hard to say. What we do is around multiple, obviously, ideas at once, and we progress them and some of them drop away, the vast majority do, and it's really the ones that sort of come to the finish line is very, very hard to predict. There are some in the pipeline that could finish in that time frame, but whether they are the ones that will get up and where we will be successful, I couldn't really say at all. That's what I'd say on that. Hope that's okay Nevill.

That's right.

There are no further questions at this time. I'll now hand back to Mr. Boyes for closing remarks.

Okay. Great. Well, thank you, everybody, for coming and for listening online. I hope that was helpful. 2 quick things. Thank you to Jason and the team for hosting us here for the last couple of days. It's been great to be here and meet a lot of the team. And obviously, this room is fantastic for doing something like this in. So thanks very much. Hopefully, we can return the favor in Wellington some time. Number two, a bit of a shout out to Catherine Savage who made a distinguished fellow of [indiscernible] last night, which is pretty amazing. So congratulations to her as well. She's one of our directors. And the last thing I want to say is next time you should hear from us, I think we'll be Pacific Radiology, hopefully settling now we said that's unconditional. We were targeting settlement by $31 million. So that's probably the next time you will hear from us. So I think that's over and out. Thanks very much.

Thank you.