Thank you for standing by, and welcome to the Infratil conference call. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Jason Boyes, CEO. Please go ahead.
Thank you, Ashley. Tēnā tātou katoa. Welcome, everybody. Thanks for joining the call this morning. I'm Jason Boyes, the Chief Executive of Infratil. I'm joined here in the room by Phillippa Harford, our CFO, and the very excited CEO of One NZ, Jason Paris. A couple of Jasons for you this morning. An announcement in the presentation that we'll run through have been released by the NZX and ASX, but let me summarize what's happening. I couldn't be more pleased to announce that Infratil has today agreed to purchase Brookfield's 49.95% stake in One NZ for NZD 1.8 billion. This will take Infratil to almost 100% ownership, certainly full control, and is a financially and strategically compelling opportunity.
In many ways, it's really the logical conclusion of the story that we began when acquiring the business nearly four years ago to the day, actually, alongside Brookfield. We're very happy with the terms we've agreed, particularly given how well we know the business, their track record and trajectory of growth ahead of peers, and the strong tailwinds and outlook for the sector here in New Zealand. We're forecasting attractive 10%-12% per annum returns on that additional investment over the next 10 years, or 18% when blended with our returns to date on the existing stake, and we see upside beyond that. Jason Paris and I will talk more about the key drivers of those returns later on in the presentation.
It's also an important acquisition because it strengthens that cash generative core of Infratil's portfolio that we talk about, that generates stable cash flows that can support not only themselves, but other growth investments in the portfolio for years to come. The transaction is scheduled to settle next week and is unconditional. We'll fund it with a mixture of cash, debt facilities, which we have extended, and an equity raise, which we have announced this morning, too. That will leave us with good capacity and flexibility to address other growth opportunities we see within the portfolio and externally, and Phillippa will talk more about that capacity and flexibility later on, too. The equity raise is a NZD 750 million underwritten institutional placement, which happens today, and then a NZD 100 million retail offer that runs until 27 June and is not underwritten.
This is similar to the offer structures we have used before successfully, and gives almost all shareholders the ability to maintain their holding if they wish, but also minimizes the cost of the offer for those who can't. As usual, Infratil will remain in trading halt today while the institutional placement is completed. That's the summary. Now, I, Jason Paris, and Phillippa will take you through the transaction in more detail, and there'll be time for questions at the end. If we move on one more slide, let me expand on why this is a compelling opportunity for Infratil.
I mean, one of the first, and main reasons we invested in One NZ four years ago was that it owned, you know, this high-quality digital infrastructure that's critical to New Zealanders and New Zealand, and we saw tailwinds for the investment from increasing digitization globally. That infrastructure has only got more critical, as we've all seen recently, and those tailwinds have really only accelerated. The business has transformed itself since we bought it, with significant further investment in its infrastructure. Today, it's a high-quality business and management team that we know really, really well and have high confidence in. One NZ has been one of Infratil's best investments in recent times.
With the sale of its passive mobile tower network last year, Infratil's received back nearly all the capital we invested in 2019, and our return to date is sitting at around 30%. Its trading performance has been strong, too, with very good cost control and momentum following its recent rebrand, and the business has achieved double-digit annual EBITDA growth during our ownership ahead of its peers, and its guidance for the year ahead maintains that momentum. Although we've done a lot with the business since initial acquisition in 2019, it's not fully optimized, and we see significant and attractive value creation opportunities to achieve returns over and above our 10%-12% investment case. More like mid-teens core plus returns over the medium and longer term. We'll talk to some of those later on.
I think increasing our ownership to nearly 100% and full control now improves our flexibility to support One New Zealand to make the investments needed in the short term for those medium to long-term benefits. As I said before, moving to 100% gives us full control of One NZ's stable and growing cash flows to support our other growth platforms, it has the potential to perform that role in our portfolio for many, many years to come. I mean, in a lot of ways, the timing of this transaction is perfect for us, as some of those investments for One NZ, for those medium to long-term opportunities, really need to be started soon.
As our other growth platforms, like CDC Data Centres and Longroad Energy, like we talked about at the end of results, are really kicking into an even higher gear to address the demand that they're seeing. If we go ahead one more. These graphs show that our weighting in digital infrastructure will increase modestly, but it remains our highest conviction investment sector at, I think, about 65% after this transaction. I mean, that's not concerning to us today. Our two investments in that sector, CDC Data Centres and One New Zealand, are in a large part, quite defensive because of their scale and the stable growing markets they're in, driven by those attractive long-term tailwinds.
Investors can also expect that our renewables platforms you'll see here, will continue to grow as they develop, new projects, that they're already planning to do. Then the last one from me before we talk about One NZ, just zooming out, I guess, and thinking about the portfolio as a whole, it's performing, well and remains well positioned. When we released our annual results a couple of weeks ago, right, Phillippa, we announced double digit EBITDA growth and outlook and an increased dividend. We can continue to see the tailwinds driving our digital infrastructure and renewable investments accelerating. That's continued since our results, with CDC in particular, continuing to see strengthening demand for its data centers.
With the equity raise, additional debt facilities, and full access and control of One NZ's cash flows, we retain good capacity and flexibility to support those growth platforms, but also to address other opportunities. I've said, you know, for some time now that some of the most interesting new opportunities we see are in the digital infrastructure space, like One NZ, and we'll continue to explore those opportunities after this as well. With that, probably time to zoom in on One NZ for a bit, and I'll hand you over to Jason Paris to see, you know, how he's seeing the developments today and the outlook ahead. Jason?
Thanks, Jason. Mōrena, everyone. As Jason Boyes mentioned, super exciting day for One New Zealand. This is Infratil know us very well. They've been with this business for 4 years. We love that such an important and iconic Kiwi company that keeps more than, well, around half the country connected is gonna be 100% kinda owned and operated out of Aotearoa for the very first time. We bought it back in 2019. You know, I think this is just the natural next step, which is really exciting. Infratil know the business really well, as I said, the strategy is really clear.
It's about value creation across all of those themes that we've been talking about, often around growth and mobility, ICT, expanding our wholesale business, and then good cost control through simplification and automation of the business. There's also further opportunity in infrastructure. I think it's important to remind ourselves that we're the second largest owner of fiber in New Zealand. That's just not an opportunity for greater utilization, it's also an opportunity for greater optimization at the same time. All of those options are available to us. The trading momentum that we've got in place, mixed with the good cost control, has seen us on track for that 30% EBITDA margin that we have been talking to.
In fact, the FY23 results that we recently announced, you're seeing really good underlying performance, both from a cost and a trading perspective, that is creating further momentum for us as reflected in our FY24 guidance. Moving to the next slide. The performance is not a surprise to us. It's been taken created through a deliberate set of actions and strategic choices, and a lot to thank Infratil and Brookfield for, from 2019. Both have been outstanding shareholders, and we're delighted that they've both benefited from the success. You know, 2019 really saw us take a business back from Vodafone Group that was ripe for upside after some investment.
Those investments that Brookfield and Infratil have made have paid off, whether it was in network upgrades or rollout across the country. You've seen that we've been awarded New Zealand's best mobile network for the second consecutive year. If it was investment in service or IT stability, you'll see that we've had the best service and IT results since records began. Of course, when you have those things in place, so, you know, service experience and high network quality, your trading comes. We're growing more business with our existing customers across all segments, and we're attracting more customers to join us at the same time. That's just where we're at. We've still got further opportunities ahead.
When I look at, when I look at those further opportunities. The next slide. Oh, sorry. The performance within the market has been excellent, but it's important to note that it's a very stable market. 2019 the market was competitive but stable. We think that's improved even further with Vocus's acquisition of 2d egrees'. We are a three-player mobile market. Each player has a significant number of customers, and we are seeing us all focus on ARPU and margin growth versus attacking for net base add. There's also, you know, further optimization from an industry perspective.
I think, you know, we've publicly stated that some of these key pricing moves that we've made, we've got still some more pricing moves to make, and we look at CPI-based pricing constructs internationally with interest. Is an opportunity for us here in New Zealand at the same time. If we move to the next slide. On top of that, so, healthy existing performance within a stable market structure, the themes for further growth potential remain the same. Our strategy is set, and it's about accelerating it further across mobile, across ICT, across wholesale, and from a cost efficiency perspective. What I love about the Infratil ownership is that we can continue to look at medium to long-term value creation through investment and focus, Jason.
Agree.
Yep.
Agree. That's what attracts us to this business. I agree, Jason. You know, our approach at Infratil is to find these businesses where you can continually reinvest to earn effectively compound returns over the long term. This one always looked like it had the potential to be that, but as the market structures remain stable and digital transformation has accelerated, it's become clear, probably super clear to Marko Bogoievski a few years ago, but clearer to everyone, the many opportunities that are ahead of businesses that form the core backbone of connectivity in their countries, like, this one does.
All these things on the page, all the things Jason's mentioned about, we agree with, and the ability to invest in those early and earn those kind of compound returns over the long term, exactly the kind of thing we look for on top of access to the excess cash flows for other high-growth platforms as well.
I think the growth that we're having in the market from a trading perspective is pretty clear across those areas that I mentioned. I'll just, before we move on, mention, you know, a bit more detail on our costs. The first phase of cost discipline really was around operational excellence, so within each of our divisions, just running our businesses significantly better. Then what that's leading through to now is further cost optimization in areas that we haven't yet really gone after. Dramatic product and plan simplification, migrating our customers onto those latest in-market plans, allowing us to turn off legacy technology, digitizing and automating those customer experiences, which then leads to a much more efficient operating model. This is really the next big phase.
It's a proven way forward, based on the best telcos internationally. If you look at those best telcos internationally and the EBITDA margins that they are getting of, you know, 35% or in excess of that's the kind of trajectory that we're targeting internally. As I mentioned previously, we've said for a few years now that our focus has been on getting to that 30% EBITDA margin, and based on the guidance that we've recently outlined, we'll be nearly there at the end of this year. Again, that EBITDA is driven through both cost and trading, and in particular, the revenue probably hides on the slide, the real mobile momentum that this business has.
Eight consecutive quarters of post-paid growth outperforming the market, and the market is growing at the same time. It's a rising tide for the market and an even faster growth trajectory for us. The only thing I will mention on this slide as well, is that we know exactly where we play within the Infratil portfolio, and that EBITDA growth needs to turn into cash generation. You'll see that we are managing our capital well and getting to those 11% or 12% capital intensity ratios that we've been talking about.
That doesn't mean, however, that we don't have a very supportive shareholder when opportunities come up and whenever they have, and I know when they will in the future, that we've got a supportive shareholder that will invest in the right things for medium to long-term value creation for our customers and for our business. Just lastly, you know, in terms of our FY24 outlook and then beyond, you can see that our performance is made up of a mix of both cost and trading. We're 2 months into this financial year, I can tell you that we are on, and we're on with confidence, both from a trading and from a cost perspective.
Again, that momentum in the business continues, and we still see further growth opportunities in the business, while also avoiding some of those one-off costs that we incurred in previous years. You know, the One rebrand in particular, you know, I've noted there that it's a one-off project and rebranding cost. That could not have gone any better from our perspective. It's been very well received in the marketplace and not only does it reduce our costs, but it has improved our trading momentum immediately as well. That was it from me, I think.
Just before we go to you, Phil, I thank you, Jason. That was a great run-through, clearly you can tell from this investment and that summary, that we're upbeat about the outlook for this business. We're rational, right? This requires good execution and market structure to remain stable. There are many levers in this business to deal with changes over time, which we've always liked, we're rational about that. We do feel, though, that the returns we're talking about will reward us well for that, the upside beyond us that we do see will reward us even more. We're positive about making this step today. Thanks, Jason, maybe over to you, Phillippa.
Thanks, Jason. Yep, I'll just run through a couple of slides quickly before we move to the equity raise. Just in relation to the FY24 guidance, you'll be aware that we set that guidance range of NZD 570 million-NZD 610 million when we came out with our FY23 results in May. The components of that guidance remain unchanged, as do the underlying assumptions that we set to then. Really just to note that we've increased that guidance range, to reflect the fact that we'll be holding or will hold 49.95% of One NZ for two and a half months. For the balance of the year, we'll obviously have 99.9% of One NZ. The result of that is we're increasing our guidance range for FY24 to NZD 800 million-NZD 840 million.
The other thing to note is just in relation to dividend outlook, as you'll expect and as we've talked about, one of the fundamental propositions for the acquisition of the balance of One NZ is the cash flow that allows us to flow through to Infratil. As a result of that, we are expecting that we can continue to support a stable dividend posture at the Infratil level. Turning now then, just to the funding of the transaction, and I won't spend too much time on this. Total cost of NZD 1.815 billion, including transaction costs. Completion is expected to occur late next week, and the completion funding will be by the placement portion of the equity raise, together with cash on hand and drawing down of debt facilities.
As you'd expect, the retail portion of the equity raise will follow, and we'll then use that to partially pay down some of the debt we've drawn. Slide 20, and I think, really just to note that as Jason's talked about earlier, we've got not only the excitement of this acquisition, but we've also got a lot going on within the portfolio of companies, as well as potential investment opportunities that we also want to keep in mind. As a result of that, in tandem to negotiating the acquisition of the 49.95%, we've also looked to secure our capital structure so that we can continue to fund the portfolio and look at those opportunities.
As a result of that, we've put in place additional bank facilities with three and four-year terms of NZD 300 million in total, and we've also put in place a NZD 400 million bridge. The purpose of that bridge is to effectively allow us to now go out, post-transaction announcement and look to also extend some of our core debt facilities, and also just to consider what our capital position is relative to things like our bonds, which is also another good source of capital. Overall, we've got total liquidity of NZD 880 million post-completion of this transaction. We're reasonably confident about the forecast commitments that we have over the next 12 to 24 months, and the way in which the portfolio can look to fund those.
Final point is, post-completion, we'll have gearing of about 19%, which is still well down on the 30%, but we think appropriate at this stage. Now I'll hand back to you, Jason Boyes.
Thanks, Phillippa. Just quickly on the equity raise, just to expand on that a little more. We're raising NZD 850 million to partially fund the acquisition and maintain that flexibility Phillippa just spoke about. As I said before, there's a NZD 750 million placement, which is underwritten, and a NZD 100 million retail offer, which isn't. Investors who bid for their pro-rata stake in that placement will be allocated their full bid on a best efforts basis. The placement will take place today, and the retail offer will open on Tuesday the 13th and run through to the 27th of June. Retail shareholders will be contacted directly with instruction as to how to participate. If you want to participate in the placement, you should contact your broker.
There's more details on the page there, but those are the highlights. Let me summarize, and we can go to questions. Appreciate that's a quick run through the presentation. As you can tell, we're excited to be announcing this transaction today. Investing in a high-quality business we know really well, which is trading well and has good growth opportunities ahead of it. Our investment case, equity returns at 10%-12% over the next 10 years are attractive, and there are opportunities to achieve more over the medium to longer term, which we really like.
The rest of our portfolio remains well positioned, and we continue to see upside in the valuations of CDC Data Centers and Longroad, as I said at the annual results, in particular, as they continue to experience these strong tailwinds in their sectors. The equity raise, new debt facilities, and full control of One NZ's stable and growing cash flows will maintain and enhance our capacity and flexibility to support those existing growth platforms and address new, attractive opportunities if we wish to, as always, remaining patient and disciplined. I'll finish the presentation here. I think we've made good time, actually, but we can go to questions, Ashley, if there are any.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up your handset to ask your question. Your first question comes from Aaron Ibbotson with Forsyth Barr. Please go ahead.
Hi there. Thank you, good morning, Phillippa, Jason, and Jason. Thank you for taking my call. Couple of questions from me. I appreciate a few of them you may want to defer. Just first of all, on, you know, you now have a sort of captive cash flow from One NZ. Is it too early to comment on how that may influence your dividend policy and sort of build up of imputation credits? Maybe secondly, if I may, my favorite question on One NZ, you know, 30% EBITDA margins, you're talking about 11%-12%, you know, CapEx effectively. That leaves 18%. It tends to disappear a little bit between those two numbers.
I was just curious to know if you could share with us anything around, you know, Jason or Phillippa, what you see as the sort of free cash flow to revenue type?
Yeah
... number we should think about when we think about this business sort of medium term? Thank you.
Yep. Phillippa, do you wanna?
Yeah, sure. I can start with the question you had on the dividend. I think the message we're giving at this stage, at the level, is that we do expect to be able to have a stable dividend outlook. As you'd expect, you know, we've got other investment opportunities across the portfolio. Like, any shareholder of ours would expect, we'll look at the amounts that we get in, look at the investment opportunities that we have, and at the same time have regard to the desire to receive dividends. At this stage, our message is that we expect our dividend to be stable.
Mm-hmm. Free cash flow through to us?
Yeah, free cash flow through to us, I think it actually goes back to Jason Paris's point that, you know, it's a bit of a balance between where we need to invest capital and want to invest capital at the One NZ level, and actually tagging or tying that into the cash flow needs at the Infratil level. I think the beauty of the result today is that we can both actually be quite flexible about that. Clearly, there will be CapEx and other spending at the One NZ that's a strategic imperative. At the same time, we'll have cash flow needs at the infratil level, which will be a strategic imperative for us. We're not really giving guidance at this stage, but, you know, obviously, we're expecting it to be net incremental for infratil.
Yeah, triple digit plus type stuff, Aaron?
Yeah.
Thank you. Very clear. You know, obviously, we have to ask about this EBITDA margin. You talked to near term, I guess if we take the number you're guiding us towards stripping out, these sort of One NZ rebranding costs and the SaaS, you're already there. You know, you sort of tease us with some cost out initiatives and some continued strong growth, I appreciate you don't wanna go out with a new guidance when you're just about-
Yeah
... to achieve your previous one. If we think about it broader, and maybe this is a question to Jason Paris, you know, if we look at, you know, you have higher weighting towards mobile, clearly, than Spark has. If you look at the business overall, mobile is clearly a higher margin business. You know, when you think about your mobile operations relative to your non-mobile operation, is there a wide margin differential? You know, can we think about your overall stretch target to reach sort of similar margins for the group as Spark has for their mobile? Is there anything you can help us with when we think sort of over the next 3 to 5 years of where One NZ can get to?
Yeah, I'll hand that to Jason Paris. We're about to answer all those elements of it, but I know the general direction you're asking in.
Yeah. I think I said, you know, in the presentation that the best performing international telcos have an EBITDA margin percentage of 35% or above, and I think 10 or 15 of those, and there's no reason why we shouldn't be one of the world's best digital telcos. I talked about that cost program before. That's not at the expense of customer experience, so our people want us to make it easier for them to do their jobs. Our customers want us to be more digitized and automated, and all of those things mean that we reduce our operating costs. I see margin expansion in all three areas I mentioned, though, mobile, ICT, and in wholesale.
I think our posture in all of those is that the overall market is growing at the same time, though. This is not at the expense of any market stabilization at all. If you look at the projections over the next 5 years in mobile and in ICT, they're all in growth mode. I think mobile is about 3.5% over the next 5 years. ICT is about 10%. We would like to be a bit faster than that, and that's our definitely our target. And in ICT in particular, we're starting from a lower base, so we don't have any walk back slowly or incumbents business to protect, especially in cloud. You'll see us already as the hyperscalers, the hyperscaler partner of choice.
I've mentioned in the pack, very strong relationship with Greg Boorer from CDC. In fact, I think we did our first 30 sales calls together. We want to work with customers to migrate to these hyperscaler cloud solutions as fast as possible. Whether it's IoT or cloud or contact center or security, we see some good margin expansion in there, as well as in mobile, as well as in wholesale.
That's more forthcoming than I had anticipated. Thank you very much. Last question from me. Apologies, you do-
I'm here to play. I'm here to play.
Wow. You mentioned Jason Boyes in the, you know, in the release, you know, clarification of the IRR benefit. You know, obviously, all of us that read this assume that this is good clarification or positive, but you don't spell it out. I just want to know if you, if you were willing to add just a tiny bit of meat on that sentence, for the benefit of us. Thank you.
What is that sentence, yeah?
I think you said, you know, since our results, we have seen strong demand signals for CDC and clarification of the IRR benefit for Longroad.
Oh.
If I got-
IRA.
If I got it wrong.
IRA, sorry. Yep, sorry.
Yeah, IRA. Sorry, my Swedish accent, yeah.
Yeah, yeah. Yeah, I think it was really those local content requirements are now with lawyers and accountants who are getting more and more confident about what they actually mean, which will make it easier for us. I think by the time we get to the site visits, certainly by the time we get to the site visits in Phoenix with the Longroad team in September, to give everyone some clarity on free cash flow drop-through from the investments we've got in the pipeline, was really what I was referring to there. That more and more of that is coming out every day from the team as the lawyers pour over the details of that.
It's not straightforward, but it's becoming clear, and we can guide more confidently in a month or two on what that free cash flow is gonna look like.
Thank you. Thank you.
Sure. Thanks.
Your next question comes from Phil Campbell with UBS. Please go ahead.
Yeah, morning, everyone. I was just wondering, Phillippa, if you could just help me a little bit on the transaction in terms of what the potential tax implications could be. Obviously, you were taking full control, so I'm assuming, given you go north of 66%, you will be able to potentially utilize some payment type structures. I don't know if you wanna be giving this number, but just.
Yeah
... trying to get an idea of what the value of that could be, because obviously, on one of the slides, we're looking at free cash flow of over NZD 200 million. It may just, I suppose, help us understand. Obviously, the valuation does look pretty similar to Spark. If you take into that tax benefit, obviously you could be further benefit to Infratil. Just wanna try and get a bit of an understanding of that.
Yeah, that's you're right on the money there, Phil, in terms of the ability to put in place tax loss offsets and subventions. At this stage, though, really it's not just a question of what the taxable income of One NZ is, but also what the tax losses are at the Infratil level, which you'll be aware are largely generated by virtue of interest deductions and other deductions. In terms of our investment case, we've taken a pretty moderate view of the extent of that benefit, but certainly we are expecting that between the Infratil tax losses and the One NZ taxable income, we will look to optimize that, so that we can apply the subvention.
Great. Is there any way to quantify what that potentially could be, or is it?
No, it's a little bit tough. These other things... Yeah, sorry. There's other sort of tax things that go on that soak up those losses within the Infratil group. It's a bit of a watch the space at the moment, yeah, that's about it. All we can say at the moment, Phil.
Yeah. I mean, I guess the full size is driven by the infrastructure bonds and the interest rate you could get on those and bank debt.
Yeah.
That'll give you the total bookings, and then obviously, as Phillippa says, some of it's used elsewhere in the group, but that'll give you.
Yep, that's right.
... the thick end of it.
We've got accumulated losses to date as well, Phil. Perhaps if we start in the accounts and work forward from there using the method that Jason talked about, we'll get close.
You'll get pretty close.
just maybe a quick one more just for the kind of industry, the telecommunications industry in New Zealand in general. Like, as a result of this transaction, it doesn't sound like we're really seeing any major change to. You know, we've got a pretty rational, kind of sensible industry structure, both in mobile and fixed. We're not really seeing any major changes from that. There's no real major change in strategy as a result of the transaction, or is there potential for some acceleration of certain things like 5G or?
No, no. No, expect stable but competitive market structure. I think we publicly said that we wanna have co-leadership on network. You know, for all the reasons that we've outlined in the use cases that provides us, whether it's trading fixed wireless access, et cetera. That's bang on, Phil. You shouldn't expect any change on strategy or any change on market dynamic.
Great. Thanks, guys.
Thanks, Phil.
Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Wade Gardiner with Craigs Investment Partners. Please go ahead.
Hi, guys. A couple of quick questions from me. Given the good outlook, why did Brookfield decide to sell?
Yep, I can talk to that. I think it was inevitable that we would have a longer hold period than them. They are a long-term investors, they naturally invest from funds that had limited lives. I guess not surprising they would be looking to exit before us. Also, it felt like they would be thinking about this about now, having executed that mobile tower deal last year, Wade Gardiner, and the IRR that they're seeing and we have as well, at 30%, is incredibly strong. You know, the forward outlook, we're positive about, it's, you know, we're not saying we're gonna get 30% out of this going forward.
It does feel like the rational time for them to have been thinking about it, we thought, and that's proven to be the case. You know, there are things, I think, going forward that will require sort of more medium to longer term investments and views on the market that you want to really be starting now. You don't want to get behind on your mobile network like this business did before we owned it and things like that. That I think would have added to that idea that are they better to realize this IRR that we're sitting on as well and move on to other things, you know, they'll have other funds to raise in the future as well, and that's that's proven to be what they've wanted to do.
Okay, can you comment on board changes at.
Obviously, the Brookfield representatives will move on. The board representatives on the Infratil side will stay the same. At the moment, that's Marko Bogoievski, Brett Chenoweth, another experienced telecommunications ex-executive, and Phillippa Harford here, the CFO, who will be the chair. There's good continuity there with people who know the business, know the strategy, and know the opportunities ahead. We'll look to probably, sort of, supplement that over time with a maybe a couple more, but there's nothing we're announcing on that today.
Okay. There's sort of NZD 20 million, was it NZD 26 million or so of imputation credits? Sorry, that was at the end of last year. Is there any impact on the imputation balance from this?
There was only about NZD 2 million at the end of last year for One NZ.
Right.
Wade. No, no.
Okay.
Those will be lost, but that wasn't really regarded as material to the transaction.
Okay. Finally, just on page 16 of the presentation, where you've got the EBITDA bridge... Where has it gone here? There it is. The NZD 35 mil of one-off costs and capitalization of the SaaS expenditure. What's the split between the two of them there?
Maybe that's for Roughly, I think.
Sorry, I'll just pull up my notes on that. Essentially, there's two things going on there. We've had, as you know, we've stopped paying group on the brand at the end of March 2023, last year we had rebrand costs, which will continue to some extent into FY24, but at a lesser level. The other point to note, though, I think the net movement in that regard is about NZD 30 million. The other point to note is we just wanted to call out that One NZ's got slightly elevated SaaS costs at the moment because it's actually more in the development phase for some projects, as opposed to just paying licenses.
What we're expecting over the longer term is that the SaaS cost at the One level go more to sort of where you'd see in its comps. That's the reason for drawing that out.
Okay. That's all for me. Thanks.
Great. Thanks, Wade.
Your next question comes from Neville Lewis with Jarden. Please go ahead.
Good morning, team. Thanks for the chance to ask questions. I think you've covered most of the ground already, I had to ask. Just a few from me regarding the digital platform. First one is really: Should we think of this as the last sort of big acquisition to the platform, given it's already sort of got quite a high weighting in the portfolio? I guess the second part of that question, and you flagged it in this presentation, was the potential for more capital, potentially, Infratil equity capital at CDC if it's getting positive growth signs more so than you saw since the result. How should we think about the platform size going forward?
Yeah. I mean, I would never say never on another big one, but I think more likely it would be something that is a higher growth business with potentially more global exposure. Because when you roll forward, the portfolio does look at the ANZ, and I think to complete the picture, something that would expose more globally to the tailwinds we're seeing, a bit of down here will make more sense, but it'll be more at more of the growth end, I would say, if there was gonna be something else. Never say never. On CDC, we are seeing attractive upticks.
I think it's more like the type of thing we've done in the past, really, and I mentioned this at the annual results, where as a result of the discussions they're having, we're definitely being more active and confident about extending our land portfolio to be able to address the demand and the timeframes people are looking for. If you remember back to when we first expanded to Sydney, I think the business raised sort of $100 million to acquire that site. It's really, accelerated land acquisitions that require equity shareholder support. It's sort of that order of things, maybe more this time, right? Because the signals we're seeing are strong. We're more confident we know how to expand into other regions.
That sort of order of things is what I've been thinking about. Pretty similar in some ways to the Longroad, the way the Longroad capital is going to be dripped, and I think.
Great. Thank you. That's useful color. Just to follow on then, make sure I understood correctly the first part of that question. You said sort of more growth focused. I guess that means we should expect sort of slightly smaller acquisitions, sort of not on the scale of this deal now with-
Yeah. Yeah, exactly.
a higher IRR.
Exactly.
Yeah, great.
Yeah, exactly.
Useful.
Exactly. You sort of ones where you drip feed the capital and then to grow the business.
Perfect. Okay, thank you. Just one more from me, and I guess this is really just a disclosure question. You know, for a while, Spark's had pretty clear disclosure, you know, quite detailed, cut down, and I imagine that's been harder for you guys to replicate with another shareholder. Now that.
Yeah
... it's your business entirely, can we hope for a similar level of disclosure to Spark?
No promises, definitely that takes a lot of more work out of the equation for us. We're not averse to it at all. We know people will need... It's a significant part of the portfolio, right? People will need the right level of information. Yeah, you could definitely expect an uptick, I would say.
Great, much appreciated. Thank you.
Thank you. Thanks, Neville.
There are no further questions at this time. I'll now hand back to Mr. Boyes for closing remarks.
Thank you, Ashley, and thank you, everyone, for joining. Nothing really to add here. You know, you can tell we're excited. We think this is a positive step. We look forward to catching up with you again soon. Thanks, everyone.
That does conclude our conference for today. Thank you for participating. You may now disconnect.