LGI Limited (LGI.XA) Earnings Call Transcript & Summary

[Audio Gap] and CFO, Dean Wilkinson. Following a brief summary of the results released to the ASX this morning, investors and research analysts will have an opportunity to ask questions. [Operator Instructions] And with that, I'll pass it over to you, Jarryd.

Thank you very much, Sam. Well, thank you for joining us this morning. And between Dean and I, we're quite pleased to step you through the full year FY '25 results and an update as to what the business is focused in for FY '26. We always like to just recap off anyone who is new to our business when you do our story, like who is LGI. LGI is a domestic leader in the recovery of biogas from landfill sites and the subsequent conversion of the biogas into 3 main segments between our infrastructure and management stream of revenue, which is fee-based work for private landfill operators for council and floperators as well. We have our carbon abatement section where we derive ACCUs or Australian carbon credit units, And we also have our Energy segment, which is currently a core area of our growth and strategy where a lot of our CapEx is going. So you'll see through our update today across all segments, we're talking through growth and strategically growing these segments of the business. So starting off with our highlights for FY '25. Pleasingly, we have had a very strong EBITDA growth compared to FY '24, where it's increased by 14% and that's actually at the upper end of the guidance range that we put in the market through the year as well. So we're really quite pleased with that result. We've been able to increase the operating cash flow through the business as well. So that's up 24% compared to the same reporting period. That's as a function of how we've transacted our ACCU bank that we were holding on balance sheet. And importantly, we've done this to help fund the growth and the capital that we've been deploying back into the business as well. So the capital level of investment across the business reached over $18 million for the last financial year, and that was through a combination of the free cash flows, about $9.2 million and by drawing down from our debt facility about $9.4 million. All in, we've also signed 6 contracts across the financial year. So 5 of these provide LGI with long-term biogas rights to keep growing and establishing even more biogas into the future. But really exciting is a first for us is a stand-alone battery project that we're developing -- we're looking to develop, sorry, with WAM. That's a state-owned corporation in New South Wales Waste Asset Management Corporation. Looking more now in the operations from FY '25. So our team have had a stellar year on safety. We've actually had 0 lost time injuries across the year, and that compared to 2 in the prior year of FY '24. We have achieved a record rate of biogas recovery of energy creation and ACCU creation as well across all of those metrics. We're very pleased. And all while the maintenance of our equipment and what our asset team are actually managing to achieve is at record levels of availability. So our generators achieved an availability rate of 98%, which is an increase from last year from 97% but it's well above our target of 95% also. And this has all come together to help see our revenue increase. But importantly as well, we've kept a lid on our operations and maintenance costs because as net revenue has grown by 10% and our O&M and our costs to run the business have only increased by 5%. So we've maintained that discipline across the business around cost control. Really excitingly, too, talk about our growth overall in the portfolio. So we've achieved a 43% increase in our oping megawatt capacity across the year, and that was largely driven by the upgrade to our Canberra site with 2 megawatts coming online. And also the commissioning of our Sydney facility at Eastern Creek with BINGO. And that has helped us have a nice uplift at the very back half of the second part of the financial year, but we're now in a really strong position for FY '26 because we'll get the full run rate of those assets in this year also. What's also been worthy of calling out is just the efforts from our biogas team. So while we've been upgrading the power stations, sorry, and developing a brand new one at Eastern Creek, we've successfully installed a range of new facilities for flares and upgraded a site as well. So we have brought online our flaring site at ESC. We've also upgraded Comet New South Wales. Grafton will talk to in more detail shortly. But these collectively have also helped increase the ACCU creation for the year. And again, that puts us in a nice strong position for FY '26. So bringing all this together, what we're really pleased to also announce is the extension of our contracted development pipeline, which now increases from 47 megawatts to 56 with the inclusion of the Belrose battery project that I'll bring you through in more detail. So for those who were either part of our Investor Day in April last year or simply following us remotely, the waterfall chart on the left-hand side and look familiar. We found this to be a really effective means to help everyone understand that the business is seeking to grow and in particular, the energy segment for LGI. Now today's update, what we're pleased to bring to the market is both an update of what we have achieved through FY '25. So that's that 43% increase in our operating megawatt capacity from the megawatts being at Mugga Lane, the new power station in Sydney. So collectively, that's a nice healthy increase across FY '25. But also it's the exciting news around the Belrose contract, which adds on to this development pipeline. So this brings the total up to 56 megawatts that we're seeking to develop over the near term. There are some updates there on the chart to where we've removed the projects for Dakaban. -- and I'm happy to talk in more detail through the Q&A. And also just some subtle changes to the project sizing as a function of how the manufacturers of the batteries and our size in those products as well. So we've just decided to provide a clear update of what that development pipeline looks like. And that will be a core focus of our discussion today. The fact that our pipeline of sites or portfolios continue to increase, meant that the chart we used to use here or the map was getting quite busy. So we've opted for a table format. But the main points of update here are the new sites that we've signed being with [indiscernible] and Warwick. Of the Belrose battery project, Grafton, Listco and Tari. There's also another site which we have access to, which is in [indiscernible] another Midcoast council site. Tony is currently going through a feasibility asset -- so depending on how that shakes out, it will be whether or not we include it on this as a development side in the future as well. But as of where we stand today, we've got 34 contracted sites, 9 of which are power stations and 16 producing carbon credits. Over to Dean.

Terrific. So I'll cover off the profit and profitability. So as Jarryd mentioned, we've hit new high levels for our gas megawatt hours and -- and as a result, that flowed directly into our revenue. So there's been a 10% increase in our revenue. The focus on managing our costs, as Jarryd also called out, has meant that our EBITDA actually grew by 14%, which was a great result. We did commission the 2 megawatts at Mugga Lane, and we commissioned the 4 megawatts to Eastern Creek. And as a result, some depreciable assets moved from our working capital work in progress into our depreciable assets section. So therefore, our depreciation has actually stepped up, and you can see that in the chart there. So the EBIT has actually increased 10%, so we're pretty pleased with that. So that effectively all of that revenue increases dropped down into the EBIT line. So there's been an increase in our interest expense. That increase in interest expenses as a result of increasing our debt facility to build out that capital program. So you can see that come through as well. What's pleasing to note is that the EBITDA and EBITDA margins have either been increased or maintained. And so that sort of just proves out the business model that we have in terms of how we manage our revenue and how we manage our costs. So we're very, very pleased that we've been able to maintain those margins. In fact, the EBITDA margin grew 3%, which is a fantastic result. Looking at our revenue specifically. The revenues skewed a little bit towards the ACCUs in this particular financial year. There's a couple of reasons for that. So first of all, we had more ACCUs. And I've got a chart later, which shows the pricing throughout the last 12 months, and it's remained relatively steady. So it's traded within a band of $35 to $40. And so with that steady ACCU price and with us actually creating more ACCUs, we can see that ACCUs has actually grown as a function across our revenue. The realized electricity price has actually been a little bit lower than it was in FY '24. That realized electricity price being a blend of both our contracted price and the spot price and also behind the meter prices. So focusing on that electricity segment. So first of all, you can see that the megawatt hours have grown, and therefore, the LGCs have grown. So the actual volume of growing -- sorry, 14%, 13%, respectively. So that's very pleasing as well. The LGI -- we actually achieved that blended electricity price of $121 a megawatt hour for FY '25. So we're really happy with that price. And the LGC price we achieved was $35.88. They're both just to tickle above where the market prices are. What we've also shown you at the bottom of this slide is that chart, which shows you a year's worth of electricity price history. You can see that volatility over the last 12 months is continuing to be a feature of the electricity pricing market. And then the forward prices, which on average, average across the next forward period, $100 for Queensland and approximately $120 for New South Wales. So here is the carbon abatement segment. As I said, the electricity -- sorry, the ACCU price has been pretty stable across the year. There was a bit of an increase in the price as we led up to Christmas. There was some, what we believe is some buying activity from safeguard mechanism compliant organizations that sort of pulls that price up a little bit. And then as that compliance period sort of -- well, they filled their compliance requirements, then we saw the price come off -- but really, there hasn't been much volatility in price at all across the last 12 months, which is actually pretty pleasing to see that price be being steady for the last couple of months. With the infrastructure construction segment, so what we've been doing is chasing the gas, and Jarryd talked about the fact that we're at a new high level mark for the gas flows that we achieved for the year. Now all of the focus on our own sites to increase the gas flow on the sites where we have rights to the gas has actually meant we've actually had a little bit less time to focus on infrastructure construction. Having said that, though, we still managed to get $1.6 million worth of infrastructure construction work done within the last financial year, which was a good result, but it is a little bit down on last year, but mainly because we've been chasing the gas. And so that's -- so we're okay with that as an outcome. With the balance sheet. There's about 3 things to note on the balance sheet. First of all, the property, plant and equipment has increased, you can see the healthy increase in property plant and equipment. That's as we've commissioned those power stations and invested in those assets. There's been a slight decrease in the holding of ACCUs, so our ACCUs, we actually lightened off that holding, turn them into cash and that helped fund some of the CapEx, which was by design, quite deliberately done. The other thing is you can see that the debt has increased as we built out that capital program as well. Cash flow. So the revenue pretty much drops into the cash flow line. So the operating cash flow has actually gone up 24%. So that's a great result, and we've actually managed to increase our cash conversion. Increasing the cash conversion part of that is part of the ACCU conversion from the holding of ACCUs into cash. So that's what's happening there. So here's capital expenditures. So this is a new chart. We haven't shown this chart before, but I think it's a valuable chart to include in our presentation deck. So you can see from this chart, there's a few things to focus on here. First of all, the sustaining CapEx, which is that light blue is pretty consistent year-on-year, and that's sustaining CapEx being maintenance of our plant and equipment. So that has been quite consistent. The next thing to look at here is our pipe work installation CapEx, and you can see quite the large increase in FY '25. The bulk of that large increase or the single largest piece of that increase is actually the work we're doing at Eastern Creek in Sydney, that Sydney site. Now we're actually quite happy to increase our gas load construction work, increasing the gas flow construction where actually has 2 benefits. First of all, on sites where we get ACCUs, it actually means we get more gas flow more ACCUs to use. But on sites where we've got generation, it also means we've got more generation -- more gas flow available for generation. We get that availability up, as Jarryd mentioned, very high availability. You can see the project CapEx is actually pretty consistent over the last couple of years. I took over $13 million in both years. The bulk of that CapEx across the 2 years is both the Canberra facility and the Eastern Creek facility in Sydney. Over to Derek, the operational performance.

So really looking at the increases in our biogas recovery, just touching back to this point that Dean made the investment we've made in pipe work and extending our gas fields is bearing fruit. So it's not just through us securing new sites and new access to biogas, but also tapping into the existing contract portfolio and really lifting up the recovery rates of biogas as being key across this last 12-month period. the sites in particular that have received a lot of time and attention being the Canberra site at Mugga Lane, the Sydney site being Eastern Creek, crucial to seeing the gas flow come up so that we really unlock the full value of those megawatts worth of generators that we have on site. The extra sites being Tumut, Hawkesbury, Gatan, Kobelco, all receiving upgrades as well, which has helped lift the portfolio's level to a record high, which is wonderful. So with more biogas available and also with diligent planning to our maintenance by our asset team, that actually achieves this really high availability, but also an increase in our overall megawatt hour or creation of electricity. So it's a great result, again, that we're not only on the availability front, being able to lift that even higher, because of our team's efforts around parts and planning of maintenance and being very strategic as to when they conduct crucial maintenance work, but also just being opportunistic around timing in the market, maintenance is best done during the day when we've typically got lower or negative pricing, and that means the equipment is available and ready for when the market requires the capacity and the pricing signals are there to actually incentivize generation as well. We're also happy to update that the results for the Banner battery site here in Southeast Queensland. So it's achieved a 70% uplift in its price that it's realizing with the use of this battery system, the hybrid battery system. And that's really, again, further providing us with a great deal of confidence of the rollout of batteries for the portfolio also. So with more biogas recovery, we have had an increase in our ACCUs that we've been able to create also both again from a function of the work we're doing in our existing sites, but also bringing into the portfolio, some new carbon abatement projects. So that's been great to see the ACCU creation increase. One small call out for these numbers as well is that in signing our Clarence Valley contract for SiteGrafton, there was a one-off parcel of ACCUs that were transacted as part of that deal. So the 493,000 credits includes that. But even still, the increase in biogas does translate into an increase in ACCU creation as well. So coming down into projects and very pleased to say that the team has done an amazing job across the last 12 months, preparing and augmenting our facility in Canberra for the significant upgrade. So the reason why we've opted to provide a photo of it here with the call out is it is actually a very photogenic facility. It looks fantastic now that we've got all the generators on site. As of June, the batteries have been delivered. We've been able to have negotiate an early delivery with the supplier being Tesla. And the team had also navigated the challenges through the year of upgrading what was a brownfield site because taking an existing facility and upgrading it is actually more challenging than building a brand new site because you're trying to mitigate the disruption to existing operations and continue the revenue creation. So across this last 12-month period, we're not only landed and connected and commissioned the 2 new generators, but it also required us to recommission the existing 4 units while we were bringing them across to the new 20-megawatt connection. And this was still achieved across the year where we're able to increase the amount of energy that we created from the site while we did this prep work for the batteries. So as I said earlier, the fact that we have Canberra now operating with 6 megawatts, it's in a very solid position for FY '26 because we will get a full run rate of that benefit through the year. And with all the items that are within LGI's control, we're still progressing in whatever pace we can to bring the batteries online. The best estimate we have is that they'll likely come through to operation in the second half of FY '26. Another significant project that we're really pleased with through the year was the Sydney Eastern Creek site. So remembering that we signed and announced this deal with Bingo back in February of last calendar year, So effectively 15 months from us signing to having the facility online and operating is something we're really quite pleased with. It's a demonstration of our team's ability to execute on what they said they can do and what we promised the market as well. So the fact that we brought the facility online in the month of May was also very well placed for us because there was actually quite a bit of price activity in the wholesale market of New South Wales at the time. So both with the 4 megawatts being available at the Eastern Creek site in Sydney and the additional 2 megawatts that we had at our Canberra facility, that extra capacity was quite valuable to us and it flowed through positively in the financials. But the site there, brand-new facility. It will also require 41,000 tonnes of material -- or sorry, cubic meters of IRF to be moved. That's about 16 or 18 Olympic cement worth of dirt. There was quite a bit of material. But brand-new generators, we've got space there for more generators if the gas is actually available as we further increase the gas system. And we're already looking at what can be done for the next phase of that project by working with BINGO as well. So while the projects team have been very busy on those 2 key power stations, it's also worth just calling out the efforts from our projects and our operations team to bring online 3 new carbon abatement projects -- so the 1 up there being with Clarence Valley Council in Grafton, we're really just at how we were able to help move a long-term client from what was previously a monthly O&M arrangement, us providing services to them, and transitioning that site across to a long-term contract, which we won through a competitive tender process. But we won the contract in December. We did talk to it very briefly at the half year update. Our team was able to mobilize the site by February and the work that we completed by April of this year already resulted in a 120% increase in the amount of gas that we recover from the facility, which again is really quite telling of our teams' skill and experience in just tapping in and chasing that biogas. Very similar story with the site at Tumut as well. We worked with the client, which is a private landfill operator to help them through a process of installing the initial system completing more upgrades, and we've already been able to increase the recovered biogas by over 110%. And we're now -- we've already -- sorry, we've already replaced the flow with a larger capacity, so we have even more abatement capacity there on site. And then lastly, to the side at the very bottom is Esk. I think it's just worth acknowledging with this site. While it is very small and it's at the very lower end of our carbon abatement projects, it just gives you a demonstration of the scalability of our business and that we can operate from these very small regional waste facilities, right through to the larger, more metropolitan ones as well. So it was great to see the Esk site come online also this year. Now looking a little bit more forward and in the Energy segment. So we're really excited to talk now publicly about the arrangement that we've come to agree with Wamsi or waste Asset Management Corporation. So Wamsi a state-owned corporation, which holds the responsibility for managing a number of very large and old landfills in and around Sydney and some parts of New South Wales as well. The particular site here is the Belrose landfill in which we've -- which this agreement sits with. So essentially, the site had a landfill gas collection system for some years, and that operator had made a choice to move on from the facility. [indiscernible] we're looking at what ways they could potentially unlock some value from it, and they ran a public tender process, which LGI participated in and ultimately won. So what we now have the exclusive rights to look at is the development for LGI to design, build and operate a battery energy system. So it's a 12-megawatt, 24-megawatt hour battery that we're proposing. And we're really excited about this because it aligns very tightly with our strategy to expand our flexible energy segment assets. And this will help us have even further protection from downside pricing in the wholesale market while also enhancing the upside potential of the energy that we create. The beauty of the national electricity market is that we can deploy an asset like this at Belrose, and we can actually through the network itself, we can effectively transfer the energy that we have generated from 1 location into the battery or we could choose to charge the battery from the wholesale pricing that's available as well. So there's an even greater level of flexibility and will add to more of our revenue potential in future when it comes online. Again, talking to the scale of our business. So while we're very excited about adding more to our megawatt development pipeline, we're equally excited to bring online even more carbon projects. And so across the year, there new long-term biogas rights contracts that we signed through FY '25. They're listed there on the left, and they range from Queensland to New South Wales. Ultimately, work has already commenced here in our workshop in Eagle Farm, and you can see the flares that we've begun fabricating. And the team are well prepared to strategically bring online these new sites throughout FY '26. So collectively, these sites will help even further increase the ACCUs that we create across FY '26 as well. What -- what we would like to just highlight also within the market is the energy market, it's continuing to evolve. It's still evolving in a way that we have, for some years, been observing, and we're quite comfortable with the evolution and some might say that -- but there's 2 main distinct points with these charts that we've got in front of you today. So starting off with the chart on the top right, we've presented that material for showing the typical 24-hour price curve for Queensland and New South Wales. What we have continued to see is the daytime part of the 24-hour curve coming down and the peaks in the afternoon in the morning being more pronounced. which is a key driver of why we're looking to enhance our portfolio with batteries to give us this flexibility. But then looking at the chart on the left-hand side, what we're trying to demonstrate to you here is the way that we actually see the opportunity in the energy market is around the separation between the top 25% quartile and the bottom 25% quartile of that pricing in the day because if you look at a battery only installation as we are now happy to talk about for Bellrose, the way in which those assets will operate is they'll naturally charge at the low price points and they'll discharge higher price points. So what you can see on the charts that we've got on the left is the Queensland and the New South Wales market pricing of those quartiles, and it's actually been trending up. indicating that there is a greater spread or a separation between those quartiles day-on-day over time, which is a key area of interest for us around how we see ourselves well placed to facilitate the energy transition and deploy assets into that part of the market. the chart here is just a further explanation around the extension of our project pipeline. So there's significant growth that we have in front of us out through FY '26 by bringing on the batteries in Mugga Lane. As I said, all going to plan. Those batteries will be operating in the second half of this financial year. And that will really see us lift the earning potential from our Canberra facility up in a similar way that we've been able to achieve with our -- but equally exciting is the news around the Belrose project. So it's placed on the waterfall chart now to help you understand, over time, how we see our portfolio growing and reaching out to this 56-megawatt capacity that we're talking about. Now while we will be working through the process of obtaining the necessary approvals for Belrose and the connection agreement, we'll naturally keep the market informed of our progress there. but we're anticipating that, that project will come through to fruition over the next 2 financial years time essentially. And then the chart on the very bottom is just as a recap of say that our focus is not solely on the energy section of our business. We actively look to grow the contracts we have, which we get to buy gas long-term rights. And this chart helps show that. So we've increased the number of sites we have under management year-on-year for the last few years now, and it's sitting at a CAGR of around 6%. But that's very strategic because we're quite keen to keep a diversified revenue base. And also, we see that there's immense opportunities in locking down the long-term biogas rights and even some of the smaller sites because they may actually grow into larger opportunities or possibly even power generation in future years also. So exciting to talk about for FY '26 is that LGI is expecting to grow our FY '26 EBITDA by between 25% and 30% compared to FY '25. And this is subject to market dynamics, operational and project timing issues outside of the company's control. Now we're quite confident in our ability to do this because we have a number of assets that were brought online through FY '25, and we've talked about those today being predominantly the extension to the Canberra facility, also the new site in Sydney being Eastern Creek, that in FY '26, we now have the full run rate for those generation. While we've also been able to bring online a number of new carbon abatement projects producing even more ACCUs. So we're fairly well positioned for FY '26. We see that momentum being immensely powerful for us continuing forward as we roll out even more megawatts in our development pipeline as well. Thanks, Sam. We're happy to go to Q&A.

[Operator Instructions] There have been a few submitted questions throughout the call and prior, so we'll kick off with them. Firstly, just on Belrose. Congratulations on the update. Can you provide any additional details on the conditions precedent and the expected time line for satisfaction.

I'll take that question. So the very nature of the arrangement is that we will look to obtain development approval and a connection agreement before LGI commits to it being a modified projects. And that just allowed for both parties to be comfortable that there wouldn't be a situation that the project would have to proceed if either unrealistic development conditions were imposed on the project, or the connection costs were prohibitive and, therefore, made the projects not viable. So with both of those in mind, we see that being very reasonable, very fair between the 2 parties as a way of saying that those have to fall into the right position for the project to proceed. We're fairly well advanced with our preparation work on both of those fronts. And in fact, the reason why we were quite keen to incorporate the update in our full year update to the market is so that we can now actually submit the development approval, progress the connection agreement because that's actually when they become discoverable in the public realm. So that's high on our projects team radar to start work ASAP.

Great. How would you expect the 5 new landfill gas right contracts to impact your ACCU creations in FY '26? PAUSE

Yes, I'll take that one. So looking at our existing portfolio. So if you take out the generation sites that also produce ACCUs, so if you actually remove them from our from the calculation. We produce about on average 1,000 ACCUs a month per site. So you'd be looking at around those 5 sites that just averages out to about 60,000 additional ACCUs. Now that will be in the first year. With ACCUs methodologies, looking to change those As, there's not as many into the future. But certainly, looking back at our portfolio, it's averaging around that 1,000 a month per site.

And just on capacity. With the pipeline now 56 megawatts, what are the risks to commissioning Mugga Lane batteries and the newly announced contracted site within this financial year.

I'll take that one. So a project of the size of both the Mugga Lane or the Canberra side, sorry, and Belrose is that they -- you were required to interact with AEMO because it's greater than 5 megawatts in capacity. Now we're well across that. And LGI has started the process almost 2 years ago, interacting with AEMO to explain to them our development plans, understand what their expectations and requirements are. And so we're well advanced in working with AEMO to obtain the approval to operate the batteries. Now AEMO is an independent body. They're also very busy with the whole heap or projects that are being brought online in the NIM, so we are being very, very clear and very transparent by saying that while the batteries are at our Canberra site, and we've done as much as we can do within our control. There are factors beyond our control, which is largely the timing of which AEMO issues the approval. And that's expected to occur at some point through the later part of the second half at this point in. Similarly for Belrose, we've taken a fairly conservative view around the overall process of getting the approval from the council from a planning authority perspective, the network connection approval, but then also it requires an interaction with AEMO for the operation of the batteries. We've factored that into the overall project development, and that's how we've described it as in 2 or more years time, but that project will likely come into fruition. and that's the nature of those projects. If we were able to develop many more projects below the 5-megawatt threshold, you do eliminate some of that complexity by not needing to deal with the AEMO, but you still have town planning and you still have network-related approval processes as well.

Could you please elaborate on the 1% decline in electricity revenue? Was this just a function of market electricity pricing? And is there any way you can mitigate this variability going forward?

I'll take that one. So the short answer to that question is yes. So it's -- clearly, we had a slight increase in volume, which was great. And so the fact that it declined is actually price related. The price we achieve or the blended price we achieved actually has 3 components to it. So we have a hedge book, and so there's pricing associated with the hedge position we have. There are some megawatts exposed to the spot market. So actually are exposed to that spot market. And then there's some megawatts that are actually sold back to -- behind the meter back to the person on which site we're sitting. So look, there are actually 3 components that sort of go into forming that price, that blended price that you see that we've achieved. But certainly, as the market is evolving, it is coming back to those sort of long-term averages, which we're seeing is about $100 in Queensland and about $120 in New South Wales. So to the extent that we getting hedges in that sort of price range. And to the extent that we're getting offtake arrangements and those sort of price ranges, that's going to be sort of typical in the norm and then the spot market. As we actually add more batteries into our portfolio and the fleet has more batteries in it, you'll see us actually separate a little bit out from that average. And so obviously, those batteries allow us to actually our electricity into the higher-priced brackets within the 24-hour cycle. And so as we add more batteries, we'll probably see us step up from the averages. But certainly, as the last 12 months has shown. Yes, we're drifting back towards those averages across time.

Okay. Great. And just one more for me question before we move to the verbals. It looks like 3 megawatts have come out of the pipeline, given that it's increased by net 9 megawatts, but Belrose is 12 megawatts. Is there any additional detail you can provide here around Duchemin and other projects?

Certainly. So we took the opportunity to update the project development waterfall chart, which all in shows changes both from adding in Belrose, as we've talked through, but also removing Dacaban as a strategic project there. And the reasons behind this is that as we progress through looking at any project, perhaps it was cost related or perhaps even it was simply the returns that, that project was actually going to generate simply didn't warrant us looking specifically at an extra megawatt of landfill gas fuel generation at Dakotan relative to the returns that we could earn for the same capital being put into another project. So we are quite disciplined in how we analyze, scrutinize the deployment of capital. We're not necessarily looking to simply expand megawatts at any cost. And that is why ultimately, we decided to remove Dacaburn from the list for now. Now it's also as a function of how things are changing because the initial thoughts around upgrading [indiscernible] megawatt was as a function of gas flows. Instead, what we're now looking at is how might the site be well placed to consider both more megawatts of generation and batteries. But because we are very early on in that discovery process and understanding of the costs, that's the reason why the project is being dropped off our, what we were calling high conviction, but it's our development pipeline. The other change that's worth understanding is the battery manufacturer has actually changed the specifications of the battery. So when we first announced the 47-megawatt pipeline, the Canberra site was due to have 14 megawatts, 28-megawatt hours of battery capacity. But as a function of the battery, the mega pack itself is now just a different spec from factory. We've actually seen a cost reduction per megawatt hour, which is to our advantage. But the simple unit metrics are slightly different. So we've updated that in that slide or in the waterfall chart, both for the camera side and also reflecting it of what we expect to order for the Belrose project as well.

[Operator Instructions]. We'll move over to Jared at Morgans.

Congratulations on a great result. Just a couple on the commodity side of things. I mean just on LGCs, it kind of looks like you're over earning maybe a little bit in this half or maybe I'm interpreting it wrong, but looks like a relatively high price achieved on ODCs in the half has gone sort of relative to that market has been trending. I was just wondering if you can maybe sort of touch on how you're sort of thinking about that segment. I understand it's a small part of the business, but it looks like a pretty solid result there.

Thanks, Jared, for the question. First things first, we've just flipped the slide back over to our profitability drivers. This is a chart we've shown previously in previous decks. We've popped it down in the appendix because we weren't particularly going to highlight this slide, but more than happy to talk to it in the context of your question. So you can see for the first couple of years, what we do here is we've -- when we listed in 2022, we've sort of taken that as base 100, and then we've actually tracked our EBITDA versus some of the underlying commodity prices. And you can see for the first 2 years of our listing, those commodity prices were actually those 2 that we've shown here were both declining, but yet our profitability increased. In the last 12 months, we've seen those market -- those commodity prices increase a little bit, but that's fine. EBITDA is increasing as well. So you can see here that this is showing, again, its confirmation of our business model that we can achieve growth in our EBITDA, despite the fact some of the underlying commodity prices are actually going the other direction. Now specifically to your question, yes, so the LGCs are a calendar annual product. And so we actually had a hedge position actually finished in December of '25 -- '24, sorry. So it was in the first half of the financial year. And then we had a new contract start in January '25, which is the second half of this financial year that we're reporting on. That second contract actually had a more favorable price than the original contract. So yes, you're quite right. Our second half is higher than our first half, as a result of stepping into a new hedge position. So we're pretty pleased with that. It meant that the sort of average price across the year, I think it was $35.88 in terms of an average price, which is just a tickle above sort of what the average was for LGCs, which I think was $34 across the 12 months. So yes, we've actually achieved a slight advantage in the market on LGCs based on that hedge position that began in January.

And maybe just a follow-up to that. Sorry, Dean, but I guess can I just maybe understand what portion of the book now of LDCs would be sort of hedged relative to spot exposed. I just guess sort of looking at the futures markets for some of those products, they've sort of come back quite a bit. So I'm just trying to understand maybe some of the moving parts going forward?

Yes. So going forward, that hedge position is -- stays in place for FY '26 for the full FY. It's approximately 75% of our volume.

Great. Appreciate that. And maybe just on ACCUs, sorry, while I'm on the commodities. I'm sorry I'll stick to 2 questions, but just on the ACCUs of things as well. I mean, -- you did sort of call out the integrity issues there as well, but clearly getting some strong volume growth. So I guess maybe if you could just give a bit more detail in terms of what potential volume impacts your portfolio of sites maybe relative to some of the relative to the baseline that are sort of required? I'm just trying to understand any sort of volume risk that there might be in terms of your existing portfolio?

That's a good question, Jared. So we've been very active in this review, which was initiated by the federal government. And the fact that they now have actually published a paper on it, which we've further responded to. There's a copy of our response on our website. It's also available through the DEC website as well. So yes, overall, we are supportive of the approach to improving the integrity, the consistency in baselines and having a method where historic projects are also equated in the new method is definitely what we are supportive of. Look, there will be a very -- there will be an impact in the first year when the method comes into effect to our existing sites, but what we're actively doing now and have been for some time is we're looking to bring in new sites and further increase the overall volume of gas that we recover from our sites to try and counteract whatever initial impact they may be in the creation of ACCUs from our facilities. But we are quite comfortable with this. We see this as just a way of progressing the industry as a whole towards an approach where you have a stained genuine abatement that's achieved above and beyond the default levels, and that's really what the reward of the ACCU is supposed to represent. So we're aligned with that outcome, and it's then on the business to manage the progression of that in time to try and smooth that out. So we're quite comfortable.