(Kia ora koutou. Nau mai, haere mai.) Hello, everyone. Welcome. I'm Jason Boyes, the Chief Executive of Infratil. As usual, I'm joined by Phillippa Harford, our Chief Financial Officer, and we're here to present our interim results for financial year 2023. I'll flick you through to this page. This sort of lays out where we're gonna go in the presentation today. This presentation and our interim results report have been released to the New Zealand and Australian Stock Exchanges this morning. If you wanna follow along, you can follow through this presentation as well. I'm going to hand over to Phillippa in a second to talk through some of the highlights from our H1, and then we're gonna go through the things laid out here. Without further ado, we've got a lot to get through. I'll hand over to you, Phillippa.
Thanks, Jason.( Morena), everybody, and thank you for joining us. I thought we'd just go through some of the highlights for the period, as we did at the full year. We've got quite a bit of detail in the appendices, so people who want a bit more than what I talk through can go there. First thing to note is we've got a net parent surplus of NZD 350 million for the period. Similar to last period, the last prior period, a large chunk of that is actually coming through discontinued operations and reflects the gain on sale of the Tilt Renewables.
However, we're also seeing revaluations at CDC and its investment property, and as Jason's gonna talk to you later, we've had the 4 new data centers in CDC come online during the period, and that also is contributing to that net parent surplus. You may recall that from a guidance perspective, we refer to proportionate EBITDA. Our EBITDA for the period is NZD 275 million. That's up about 10% from the prior period, with strong contributions from Wellington Airport now that the COVID recovery is underway, a nice uptick from Vodafone, and a softer result from Manawa, with that result already having been released to the market late last week. Continuing theme for us is investment. We have recorded a proportionate investment of NZD 471 million for the period.
A large chunk of that is through CDC and through the data center construction, but we've also had CapEx within Vodafone for their 4G and 5G network. You know, with that macroeconomic backdrop that we've got, you know, we've got available capital of over NZD 1.4 billion. That's a mixture of surplus cash of approximately NZD 400 million. We've got bank facilities of NZD 900 million. If we roll that forward and take into account what our known outgoings are at the moment, plus the proceeds from the tower transaction, which is gonna see over NZD 600 million coming back to us, that's where we get to the NZD 1.4 billion. Shareholder returns, everybody's interested in that. Since the period from 31 March, we've got a shareholder return of 6.5%.
That's in the context though of a 10-year average return of 20.5%, so, you know, well and truly within our 11%-15% target. We're declaring a NZD 0.0675 per share interim dividend, which is gonna be fully imputed. I'll hand back to you, Jason.
Thanks, Philippa. It's a pretty robust sort of overall outcome I think. Thank you. I think you summarized that nicely, and we're pretty excited to take you through some of the detail of what's going on there in the next few slides. Let us zoom out a little bit and have a look at the portfolio as a whole. This slide should be familiar to you. It shows our focus on digital infrastructure, in particular, nearly 60% of the portfolio, but then across the other three kind of headline sectors of renewables, healthcare, and of course, the airport. In the period, the big changes here have been an increase in the proportion of the portfolio and renewables. I think we showed 17% at the annual. We're now 21%.
That reflects the increase in the valuation of Longroad implied by the transaction. We agreed and have now settled actually with Munich Re to invest in that platform. That pushes that valuation up. Offsetting that a little bit is the reduction in the value of Manawa, reflecting the special dividend and the sale of their retail business, but also, some of that soft result that Philippa mentioned. On the digital side of things, there's actually a bit of an uptick in there, even though its percentage has reduced. That reflects that sale of Vodafone's passive mobile tower business, which happened at valuations a bit ahead of actually what we were predicting last time we showed you that picture.
Looking ahead, I'd expect that to come back a little bit as the proceeds from that tower sale are distributed back to shareholders, as Phillippa flagged. Also you'll start to see our interest in our new tower business there, 20% of that tower business Infratil has retained. I think that kind of outlines a lot of the portfolio activity in the half. You can see at the bottom we put our flags there to show the increasing global diversity, which is a real theme, as well. Before we head into the businesses, I wanted to give you an update on Infratil's sustainability strategy. We released that strategy in our annual report in May, and we've been making strong progress trying to implement that over the half.
It's a bit complex for Infratil because we're exposed to a number of sectors, and they all have different needs. We're also not the sole owner of some of those businesses, so we need to work with our partners to figure out the right path for those businesses. Over the half, all of our or 10 of our portfolio companies, including Infratil itself, participated in the annual GRESB Infrastructure Assessment, which is globally recognized benchmarking system for measuring the sustainability efforts of infrastructure assets. The detail of those outcomes are set out in our interim report, and it's showing solid progress as you'd expect in many areas. We've been doing that for a couple of years now. Also, it identifies some opportunities for further improvement, which we're working on as well.
One of those in particular is the next workstream I wanted to update you on, which is our progress towards releasing our inaugural sustainability report next year. Underlying that has been quite a lot of work measuring our greenhouse gas emissions profile across all those various businesses, and we've landed a very robust and externally assured process for doing that now, which will be reflected in that report. That will enable us to make some pretty ambitious but very robust emissions reduction targets in that report as well. Look out for that next year. It's a big workstream. It's been a big focus for Morrison & Co. as Infratil's manager as well, and of course, Morrison & Co. is leading all of this as the manager.
It's fundamental to Infratil's ambitions that Morrison & Co. is leading that as well. Morrison & Co. itself has been a signatory to the UN Principles for Responsible Investment since 2010, so a heck of a long time, and has been committed and very good at integrating sustainability assessments into the full investment process, and was recently acknowledged as I think one of a dozen or so responsible investment leaders in New Zealand by the Responsible Investment Association Australasia. It's a big focus. There's lots of work to do, and we'll continue to update you on that. Let's go through the operating businesses and give you a feel for what's underlying that high-level result Philippa had talked about. The first one always, CDC Data Centres. It's our biggest single investment.
During the period, that result there reflects pretty much on track performance from what we predicted and guided at the start of the year, with one slight exception. In the period, we've delivered those four data centers I talked about at the full-year result. It's an additional 104 megawatts of capacity across Canberra, Sydney and Auckland. That takes our total built capacity to 260-odd megawatts. To put that in perspective, I think the entire New Zealand colocation and hyperscale data center capacity is estimated at around 40-50 megawatts now, versus the 250+ that CDC has. It's a very big business, and even the hundred that's been delivered over the period is a heck of a lot of capacity. Now, there were some delays in getting those commissioned during the period.
Lots of supply chain issues that had to be managed like everywhere else in the economy, I guess. They have come in within the cost budgets, but a little bit late, and that's meant some of our customers haven't been able to move in when we expected. What we've done is tightened their guidance range, which we talked about actually a couple of weeks ago, it was released to the market down about 10 million to NZD 210 million-NZD 220 million. At the start of the year, we were guiding NZD 220 million-NZD 230 million. That's still up well over 30% at the midpoint of that range for the year. Still demonstrating that really strong underlying growth. Remember also that CDC's contracts are often very long-term contracts.
Once you've got your customers in there, the revenue you have is very predictable. We feel really confident about the trajectory from here, having opened those data centers. There's no better way to demonstrate that than that weighted average lease term that we talk about often, which is still well above 20 years. Quite unique actually for data center businesses, regionally, and a real strength of our investment there. On sustainability, CDC is doing quite a lot of work on that as well. Actually, 78% of its data centers' power is from renewable energy. It's 100% in New Zealand, it's actually 100% in Canberra as well.
The real focus now is on New South Wales and what can be done there to kinda complete the picture and meet not only CDC's ambitions on sustainability, but also what its clients and us, as its customers, will require. Looking ahead, we had that investor day in Sydney that I talked about before, and we visited CDC's new facility out at its Sydney campus at Eastern Creek. I would characterize sorta Greg Boorer's description of how he's seeing the business as pretty bullish, backed by essentially a lot of indications of customer demand that he's seeing day to day in that business, which is great for us as investors, right? We've started building our first Melbourne campus, which should be delivered in the middle of next year.
The New Zealand data centers that we've built and are now commissioned are more or less full, and they are starting work now on extensions to those data centers, small extensions that are more or less full, as well. When we were at Eastern Creek, everybody could see that preparatory works for the next two data centers at Eastern Creek were well underway. In fact, that preparatory work has now been completed. The outlook is still really strong. Greg describes, you know, if we've delivered four data centers over the last period simultaneously, he's talking about doing at least that again, over the next period. Look out. I think there will be.
He described in Auckland and New Zealand additional capacity land for land for capacity of up to 70 MW has been acquired, and I would expect pretty imminently announcements about plans for actually developing some of that capacity, at least one additional data center, pretty imminently. Look at that as another sign of that confidence in the demand that's driving the build-out from here. Also mention that CDC has extended its debt facilities and completed its initial, very first USPP in the last few weeks. That's sort of extending the size of its bank facilities to meet that demand that we see. Also the tenor has been extended as well, which is quite hard actually at the moment to do in a cost-effective way, but they've achieved it.
I think the average tenor of our facilities has gone from sort of three to six years. I guess to sum up then, you know, we do see this as continuing to be a strong source of growth for Infratil. One to sort of in the short term and in the medium term, so definitely one to watch if you're interested in understanding the trajectory of the value of our company. I'll move on to the second biggest one, still in digital infrastructure, which is Vodafone in New Zealand. The big things over the period were the sale of its passive mobile tower assets, which we've talked about for NZD 1,700 million, which is certainly well ahead of some analyst forecasts. A very pleasing outcome.
The other big news in the period was, of course, its plan to rebrand next year to One NZ. The idea behind One NZ is to, I guess, speak to the efforts the company is going through and will continue to go through to simplify customers' experience of dealing with now Vodafone, in the future One NZ. But also to talk to other parts of the market that actually Vodafone is not very well known for that, as part of the strategy now, things like ICT and security. We support that, and that will be rolled out at the beginning of next year. I think the other things to note over the period would be obviously that our normalized EBITDAF operating performance is up NZD 15.5 million or so from the prior period.
That would exclude the costs of that tower transaction I mentioned, which are one-offs, but actually still includes costs being spent on the rebrand, which would be one-offs as well, and also the cost of paying to use Vodafone's brand as well. Even including those costs, that NZD 15.5 million is more or less on track with the guidance we gave at the start of the year, a sort of 4%-5% uplift in underlying EBITDAF, and reflects continued strong mobile post-pay performance both in terms of customer acquisition and ARPU, but also, of course, as borders have opened and roaming has resumed. They're also continuing to focus on controlling their cost base, which has been a big source of their EBITDAF margin expansion as well.
They now, I think, have a pretty clear pathway to get their EBITDAF margin from the low 20s% when we bought it to the kind of 30s% that Spark consistently achieves. I think through this period, we'll find that we've sort of got about halfway there. We'll see when we get to the full-year result if we can confirm that. Within the business, the focus and investment on its embedded infrastructure has continued. Part of the towers transaction, but also part of the direct allocation of 5G spectrum that was announced sort of last month, we're going to see strong upgrades in our 4G and 5G networks, even though at the moment we were rated as the best network in New Zealand by an independent report.
I think just to pause on that, direct spectrum allocation, I think it was a very positive outcome obviously for the industry, but an incredibly pragmatic and sensible approach from the government and potentially a good template to be used overseas as well. Very welcome. The simplification of Vodafone's IT systems continues, and a lot of progress has been made there, leading to some of the service and organizational health scores that I mentioned here, which are all positive. The team has referenced a change in tech on that program from here. Rather than building a totally new system, they're now focused on, I think, improving some of the systems we've got, which have proven to be more resilient and certainly performing better than perhaps we initially expected.
The work and the planning for that is continuing, and we should be able to give an update on that, or we will be able to give an update on that at the full year about exactly what that means for the work, done to date. I think that's it for Vodafone. Vodafone, I think is in a really good place. It will be and is a really important source of operating earnings for us as Infratil and will drive things like potential dividend growth in the future. Definitely one to watch meaningful in the portfolio. Let me quickly switch to renewables. Longroad Energy, now our biggest exposure in this space, given the valuation implied by the transaction we completed now and agreed in the half with Munich Re's investment arm, MEAG.
That implied quite a big uptick in the value of our investment in Longroad, as we've announced before and demonstrated on this slide. Remember, the whole reason for that investment was to raise capital for Longroad to accelerate its development cadence from, you know, a little around 1 gigawatt a year to now closer to 1.5 gigawatts a year. The plan, as Paul laid out at the start of the year and still very much the case, is to develop 4.5 gigawatts over the next three years. To try and put that in some perspective, the installed capacity of generation in New Zealand is about 10. So that is a big chunk of generation.
It's sort of about 20% if you measure it by in the actual sort of electrons that are put out, 'cause obviously the solar farms only produce during the day. A really big and impressive set of plans. We're already developing 7 projects, 1.3 gigawatts this year, all across the States. It's actually the biggest Longroad's ever built. Actually, the plan for next year is even bigger, 1.5 gigawatts. What's been really pleasing in the half is with the passage of that Inflation Reduction Act, in the US, which was incredibly supportive for the renewable energy sector, we've seen a real acceleration in certainly the PPA market, so the market for selling the power for these projects. It's so important to get the project off the ground.
What we're seeing now is that we have PPAs in place for all but one of the projects for this year, and we're in exclusive negotiations for the last one. We're also in exclusive negotiations for all of the power for all of next year's projects as well, which is, you know, close to 6-12 months ahead of actually what we would normally plan. A real acceleration there. I think that means, you know, when we think about that transaction valuation, when we think about the plan, net-net, the risk feels more to the upside than the downside there. I mean, there are procurement pressures. You know, the markets for solar panels and batteries and other key pieces of equipment remains really tight, but the team is navigating that really well.
In general, I think we're more positive even than the plan Paul laid out. It'll be great to update you at the full year on that. In renewables, a quick note on Manawa. They released the result the other day. David and Paul did a great job of outlining that. I won't repeat all that now, except to say it was obviously a soft result, both in terms of looking back, but also that short term with the elevated stay in business CapEx that they flagged. I know the team is really focused on improving that business and bedding down what is, you know, a pretty new generation-only business. We remain supportive of their efforts to develop new generation in New Zealand, but we wanna see how those compare to all the international opportunities we're seeing as well.
That's well known to the team and understandable as an Infratil investor as well. Those returns sort of at the moment need to be a bit risk adjusted for projects like the South Island battery, which introduce a bunch of risks that we don't see in other places. A timely resolution to that would be helpful. Last one, renewables, and I'll hand back to you, Philippa. Just to zoom out, a reminder of the global platform that we have now and we're developing. Galileo is the next sort of mature platform. They are seeing obviously strong demand for what they produce given the war in Europe. They're gonna put the Irish pipeline actually that we developed in a joint venture with Vestas on the market this year.
If that sells as we expect, you know, we can expect to get maybe roughly half of everything we've invested into that platform back. I think it will prove the Longroad-like kind of capabilities and outlook for that platform, which I know a lot of people are looking for. Hopefully, we should be able to update on that at the full year. It would be nice to see that one mature. Obviously, Gurin is then behind it. We will also imminently announce our approach to reentry into Australia. That will look a lot like the other platforms you see on here, as you would expect. I'll finish there. Hand back to you.
Thanks, Jason. Thanks, everybody. Yeah, I'm just gonna have a quick run through the remaining businesses. Wellington Airport's actually already released its results, so I won't spend too much time on that. Starting with the diagnostic imaging, and I think our first reflection is that, it is interesting to see the way that the different portfolio companies are recovering from COVID. I think as we talk to Vodafone and its roaming, and I'll talk to Wellington Airport later, you can see quite a hefty cadence in terms of that recovery. Our headline in relation to diagnostic imaging is that it's actually rebounding slower than we would have expected. I think our data points in that regard are quite extensive. We've got over 140 clinics. We're not just talking about New Zealand.
We've also obviously got Qscan, with an eye to the Australian market and how that's behaving. Obviously, we've also been looking at the listed comps in terms of the Australian market as well. Where we've seen that come through is essentially the Australian operations, patient referrals are trailing our budget by about 13%. New Zealand is slightly behind that, trailing its budget by 11%. In some respects, we think that those are the same themes. We've essentially got lower patient referrals, and as you can imagine, those operations are also having to deal with ongoing issues whereby you've got staff who are ill from COVID, and we're having to restrict services in some occasions. Part of the Qscan operation and the impact that we're seeing though is also related to, you know, significant weather events in Australia.
They've had a lot of flooding, and clearly that impacted some of their clinics during the period as well. As a backdrop, however, I think it's worth reminding ourselves that the underlying health issues that are effectively causing the need for diagnostic imaging remain present. It's our view that demand for diagnostic imaging will return, and that we will at least see it come back to pre-COVID levels. I think the challenge at this stage is to know exactly how that will play out for the balance of FY 2023. Because of that, what we've done is we've reduced our guidance range for the platform to NZD 160 million-NZD 170 million. We'll just see how that plays out for the balance of the year.
As you can imagine, though, from a platform perspective, we just remain focused on being prepared for that rebound. It's fair to say that it's not always easy to ramp up and be able to meet that demand if it comes back quickly. We've been investing in new clinics. We've had the acquisition of Envision in Western Australia. That actually brought 23 new radiologists so that our radiologists are now over 300 radiologists across the platform. We've also had new clinics open in New Zealand, and we're really pleased to announce that we'll be opening a new clinic in Whangarei in middle of 2023, which we see as a significant development for the Northland area, so that people who need those services won't need to travel to Auckland going forward. That's a good thing.
I think it's also just worth noting how much capital we have been able to deploy through that platform, and we do see that as a meaningful benefit that having Infratil as a shareholder has been able to bring to those operations. Moving to RetireAustralia, and I think it's worth putting this investment into context. As you'll be aware, we have got a strategic review underway of that business and that remains ongoing. Fundamentally, from our perspective, it really is a business that's just going from strength to strength. The reason that we had initiated the strategic review was really as much to do with the size of the asset and the part that it can play in the portfolio.
What we see, though, in terms of performance is it's, as you can see on the slide, we've got an underlying profit of over AUD 31 million. That's up nearly 40% from the prior period. A lot of that comes through from the unit price increases that they've been able to generate or support within the market and the corresponding impact that that has on our deferred management fees. But if you look at the other key performance indicators, we've got strong resales. We've got utilization of 93%, which is effectively as much as saying that we're full. And also we've got waiting lists in over 20 of the 27 villages that RetireAustralia operates.
Now, the other thing to note about this business is, you know, a lot of that is actually coming from its purposeful decision to make sure that it's focusing on the particular segment of the market. It started that transition about two years ago, almost just on the brink of COVID, really. What we are seeing is that the market and potential residents are identifying with that, and they value the offering that OA is talking to them about. That's been really pleasing. Very quickly, development is ongoing in RetireAustralia. We've got new lands that we've purchased in Brisbane. We're also looking at developing Lane Cove in Sydney, and that pipeline just keeps extending as the team look for opportunities in the right places. As I signaled, the strategic review is ongoing.
As you would expect, you know, we've got an eye on how well the business is performing. We wanna make sure that the decision we make is in the best interest of shareholders. Nothing to report at this stage, but we'll keep you updated as we go. Now, Wellington Airport, as I said, they've actually already come out with their results, so we won't spend too much time on that. I think, in contrast to diagnostic imaging, it's been a really strong recovery from COVID within the domestic passenger network. I think towards early September, we were at about 93% of domestic capacity. So, you know, that's a great signal for the way that that airport is placed within the New Zealand context and its emphasis on domestic. As you can imagine. Excuse me.
As you can imagine, though, we have seen international come back a little bit slower than domestic. That's largely due to the airline's ability to bring those services back to Wellington. They're suffering, I suppose, like anyone in terms of staff and actually the process required to get the aircraft back in the sky as well. At a headline level, I think it's worth noting, though, we've got forecast EBITDA of NZD 80-NZD 85 million for FY 2023. You know, that's a long way from what was effectively zero EBITDA for the month of April in 2020. You know, to put that in context, pre-COVID, the airport had EBITDA of just over NZD 100 million. Really good to see it coming back to those kind of levels.
Looking forward for Wellington Airport, just to note that we've got PSE5 negotiations starting next year. The airport's obviously very focused on understanding what its CapEx envelope needs to be, and then obviously feeding through that into the negotiations with the airlines. Now I'll just briefly talk about financial position and outlook before we head to Jason. As I said earlier, there's more detail in the appendices if you wanna go through some of the line by line and how the businesses are performing. One thing we wanted to call out was the accrual of international portfolio incentive fees at the half-year. As you would expect, we've got to do an accrual for the purposes of our financial statements. The accrual for the period is about NZD 124 million.
That's largely as a result of the Longroad capital raise and the introduction of MEAG into the shareholder base for Longroad. There has been an increase in that fee for Longroad or the estimated fee for Longroad. That's a bit of a mixture of foreign exchange and also how we have calculated the hurdle. In any event, though, it's just worth noting that this is an accrual. What's actually more relevant is where those valuations land at 31 March 2023. Those independent valuations will determine the ultimate outcome. Just to remind people, if there was an annual incentive fee payable, it's divided into three tranches, with the remaining two tranches only being payable if the valuations hold up. For completeness, worth noting that Qscan will actually fall into the initial incentive fee calculation this year.
At this stage, we're not expecting that there'll be an incentive fee in relation to Qscan. As I said, that's essentially going to be determined at 31 March based on an independent valuation at that time. Dividend, I won't spend too much time on that other than to note that, you know, we are continuing to be confident that we can support a modest CPS growth in the dividend in the outlook. That will reflect an increase in cash flows from the likes of CDC and Vodafone, and also contributions from Wellington Airport as it recovers from COVID. We've decided that the dividend reinvestment plan won't be activated for this dividend. Now, just to wrap up on the capital position for the period, I think as I indicated at the beginning, we've got a very strong capital position at 30 September.
Our gearing is well below the target levels of about 30%, just shy of 14% at 30 September. We've got available cash, which will be further supplemented from the TowerCo transaction, which we expect to settle in the next couple of months. We've also got very strong available bank debt facilities. All in all, we're forecasting NZD 1.4 billion of available capital, you know, which is a great place to be given the current economic environment, but also as we look to see what opportunities that environment might create for us. Just for completeness, we've got NZD 100 million of bonds maturing in December. Given that capital position, we've made the decision that we will not issue bonds for that maturity. Holders of that IFT240 bond will receive cash in redemption.
Then just to wrap up before I hand to Jason, FY 2023 guidance update. You know, we're essentially slightly narrowing the range, taking off NZD 10 million at the top end with a revised guidance of NZD 510 million-NZD 540 million. People will have already seen the Manawa guidance update. We've also reduced our diagnostic imaging guidance as I spoke to, so it's now at NZD 160 million-NZD 170 million. We've also slightly narrowed the CDC data centres range as Jason talked to. With that, I'll hand over to you, Jason.
Thanks, Philippa. Let me try and sum up, and then we've got some time for some questions as usual. I guess from the half, you've seen a lot of portfolio transactions, towers, MEAG, which demonstrate the embedded optionality we look for in our businesses and paths to showing kind of substantial value creation at various stages of the life of our assets. There are others of those within the portfolio still to be worked on. If I look at the performance, we feel it's pretty robust set of numbers given, you know, obviously inflationary pressures out there, which is what you'd expect from, you know, more or less an infrastructure portfolio. Good to see that coming through in the headline numbers and the overall growth that we're seeing.
That's underpinned by the quality of our investments, but it also helps us continue to have confidence in the investment thesis in the sectors that we're invested in. We have that strong capital position Philippa outlined, which feels great in a volatile environment. Just to manage that, but also to take advantage of opportunities to invest at what could be quite attractive entry points, certainly relative to when the market was quite a lot hotter. That is a nice feature to have. Looking ahead, I would expect the global diversity of our portfolio to increase right as those renewables platforms we talked about continue to grow, as CDC continues to build out its pipeline.
As we look to continue to invest to diversify, some more in digital infrastructure and also I think in healthcare as well, in a volatile environment. I'll leave you with that thought. We continue to remain confident about our platform and those investment opportunities. With that, perhaps we've got time for some questions. Operator, are there any questions?
Thank you. Your first question comes from Owen Birrell from RBC. Please go ahead.
Yeah. Good morning, guys. Look, I've just got, I guess a couple of questions. The first one on CDC. In Australia, we've had some very major data security concerns following the recent Optus and Medibank breaches. I'm just wondering whether you have seen any sort of increase in malicious activity and whether the approach to security has changed at CDC. If so, have you seen any sort of change in the cost required to undertake security activities? That's the first question.
I can take that. It has been increasing. We're obviously mainly a provider of the passive infrastructure, the building around it. We need to secure our own building systems, and we're involved in the provision of connectivity in some cases. That's meant we have actually increased our investment in our own cybersecurity capabilities. We have a new senior person from Telstra actually, who's now on board and is focused on making sure CDC continues to be right at the front of that. Yeah, there is some additional executive cost, but nothing too much beyond that, Owen.
Excellent. Look, just a second question from me. Just looking at the asset valuations that you've put through.
Mm.
With this result, just wondering whether there's been any revisions to the WACC that have been used in those valuations, and I'm just keen to understand-
Yeah.
I guess, which assets have seen the WACC change, and proportionally between assets, which ones have seen a greater change than others?
Mm-hmm. Mm-hmm. Do you wanna comment on that, Phil?
Yeah, I think it's worth noting that the starting proposition in some of those independent valuations probably had higher, for example, risk-free rates than perhaps we would've seen in the market or there would've been a market observation of.
Mm-hmm.
It's not always, you know, a straight look-through to what's happening in the market versus the way an independent valuation approaches it.
Mm-hmm.
We will definitely see some movement, and it will depend on an asset by asset basis, so clearly independent valuers take their own view on that.
Mm.
I wouldn't say that the movement has been as much necessarily as you would expect, given that they weren't really at the same point to start with.
I mean, the big one is obviously CDC, Owen, and that is a more recent valuation, so that's a 30 September valuation, which is obtained for various purposes within the company. The risk-free rate has moved in that maybe 40 points, I wanna say. That's why that is flat, that valuation you're seeing, more or less from the start of the year. That is some risk-free rate coming through. There's no change in Longroad 'cause we're still really using the transaction valuation. I would expect maybe something to come through in the valuation there, though. We've also had the tailwinds of the Inflation Reduction Act and the factors I've talked about before. I would guess those will offset, but we will see.
Those are probably the most meaningful ones that I would comment on now. Some of the other valuations are, I think, more 30 June ones, give you a feel for it.
What you're saying, CDC, you've seen a
Yeah.
Rate will come through.
Yeah.
most of the others, it's still coming.
Exactly. Exactly.
Perfect. Thank you.
No worries.
Thank you. Your next question comes from Aaron Ibbotson from Forsyth Barr. Please go ahead.
Mm-hmm.
Hi there. Good morning. I have 2 questions, if I may, and then 1 last one as well. I guess 2.5. Firstly, just on Manawa, I'm just curious to hear from you, from Infratil's perspective, how you think about, you know, this 1.7, if I'm correct, gigawatt pipeline?
Mm-hmm.
You know.
Mm-hmm.
Do you find New Zealand an attractive place to develop?
Yeah.
Relative to elsewhere where you've got opportunities? You know, what's your timeframe? You know, how do you think about that? It felt quite long-dated when I listened to Manawa.
Yeah.
So.
Yeah. I can answer that first, if you like, before your next question, Aaron. I think that's right. I think the economics are a little clear. We develop offshore at hold-to-maturity returns that are, you know, solidly double digits, so kinda low teens, which is where Tilt used to develop as well. Maybe that's compressed a little bit, which maybe you can risk adjust. So we're sorta waiting to see where they can. I think we believe they could develop at those returns. CapEx is up, but there are pockets of really strong demand for that power. But I think it'll be very much project by project, having a project in the right place at the right time to trigger an investment at the types of returns we're seeing overseas. I think that's still actually a feature overseas as well, right?
It's just that it's happening on a much bigger scale, so Longroad can do it across such a big continent at a higher cadence. I don't think it's necessarily different here. I think there are pockets of demand that we think perhaps Manawa can tap into and get a good return, but we haven't seen those offtake arrangements yet, so couldn't confirm it. I think that does probably mean it's a bit more long-dated.
Okay. Thank you.
Mm-hmm.
Secondly, I'm just gonna be a little bit boring here.
Sure
Try to understand what has happened to the valuation of Longroad. You published sort of $640 million on your August release, pre-money, post-tax and sale costs. If I've got it right, I get to maybe something like $550 or $540 if I use September exchange rate.
Mm-hmm, mm-hmm.
That seems to me that it's down by $75 million
Mm-hmm.
±.
Mm-hmm.
You say that you haven't changed anything.
Mm-hmm.
I'm just trying to understand that.
Mm-hmm
If someone can help me out with that.
Yeah. I think we've had a look at that this morning for you, Aaron, and you might have got something. I think the difference there will be some money that was put in pre-completion to restructure the company. If you remember, for example, some of the projects we owned in different proportions than our Longroad holdings, those were all merged back into one entity. To wash all that up, I think that's the gap of about NZD 80. Nothing happening to the underlying-
You know, well, that's a different gap.
Is that a different gap? Yeah.
I guess that's how we get from NZD 927 down to whatever, the NZD 600. But-
Not much has changed.
Yeah. Okay, we can take it offline.
We're happy to take it offline. Yeah, I don't think much else has changed.
So-
That is the number that we haven't really shown before 'cause obviously we're still figuring that out. It's not a big gap. There's nothing else underlying has changed, to give you some comfort.
Okay. Fine.
Mm-hmm.
Maybe finally, just my usual question, you know, where do you find, you know, to date, but also the last six months, some meaningful dislocation. I'm always curious to hear where you see the biggest dislocations, maybe or maybe not.
Mm-hmm
around the world and by, you know, some asset class.
Yeah.
If you have anything to share with us.
I think what surprised me. I mean, you have views on this, Phillippa. What surprised me in Europe is, you know, with interest rates going up, we were worried that the buyers' IRR for renewable assets would push up as well, threatening the kind of power price and economics that you'd assume going in. Actually, what we've seen is utilities really piling in to get capacity and really holding up those buyers' IRRs, which is why we're doing what I mentioned in Ireland. That feels like a dislocation. That doesn't feel necessarily, you know, fundamental economics driven. Who knows when that will end as well. I would definitely describe that as a dislocation. A little bit curious to me in the data center space is how valuations are holding up in private transactions.
You know, we keep looking to find a readjustment of views, and we're not finding that. We're still seeing, you know, 30+ type multiples and getting kicked out of processes that, at that level. I guess it's good feeling for our existing investments, but it's still a little bit puzzling, I would say in some markets. I don't know if you would add to any of that.
Yeah. I think the only thing I'd add is.
Yeah
When we look at our portfolio, we feel that it's relatively well-positioned from an inflationary impact point of view.
Mm-hmm.
that we should see that come through to those valuations as well.
I think the other thing to look for, which might be a dislocation in the buyer's favor, are kind of sensitive assets that should be owned either with local partners or with a kind of Five Eyes or whichever kind of alliance lens you wanna put on it. Definitely seeing that in some processes that are happening in Europe and other things around the world. In our minds, there might be a little bit of a theme there of that club of nations and investors from them having kind of privileged access maybe to some of those assets, which we're working on.
Okay. Thank you.
Welcome.
Thank you. Your next question comes from Phil Campbell from UBS. Please go ahead.
Good morning, everyone. Just a couple of questions from me. Just on the CDC valuation, Jason, I noticed that obviously the range, the low and the high had widened out.
Mm-hmm.
Just wondering if you can make any comments on that.
Mm-hmm.
I can take that. I think nothing untoward there, Phil. We have actually got a new valuer for CDC this period. Essentially, we've got a valuer rotation process, and that's for CDC and all of its shareholders.
Mm.
That'll simply be a factor of what range that new valuer has set for the period.
Yeah.
Okay, great. Just a second one on Qscan. Just wanted to get your views on it. It looks as though there could be some, you know, kind of changes to the licensing around MRIs.
Mm-hmm
In the kind of rural or regional areas, which then could translate into those licenses kind of being taken off in more urban areas. I was just kind of curious to see what you kind of thought the impact on Qscan was as a result of that?
I'm not aware of anything coming through on that, Phil. I can certainly ask that question and come back to you, if that's okay.
I think the one thing.
Okay, yep.
We, yeah-
No, we're good.
One thing we have talked to them about there, because we're kind of a community-focused provider, not in hospitals, we should be the type of provider that should benefit from that. Again,
Mm
You sort of need to see the details. I think if you were, you know, focused on hospitals, maybe there would be an issue.
Mm-hmm.
Yeah. That's what I've heard from the team on that, but not too much more recently, Phil.
Okay, great. Just the last one just on Vodafone. Just when I look at the guidance, 'cause I think it's unchanged, but it looks as though it does include the rebrand.
Yeah.
Just, 'cause obviously I probably didn't have that in my numbers.
Mm-hmm
I'm not sure how much the rebranding cost, but if it was like NZD 10 million or NZD 20 million, I suppose you effectively got compared to previous forecasts, effectively an upgrade there. Is that the right way to think about that, or-
Yeah
Am I missing something?
Yeah, no, that's right. We haven't disclosed the cost of that yet. Obviously, that's still washing through. You'll get an update on that at the full year for sure, but that's definitely the way to think about it.
Okay, awesome.
Great.
Thanks.
Great. Any other questions?
Thank you. Your next question comes from Nevill Gluyas from Jarden. Please go ahead.
Great.
Good morning, team.
Morning.
I'll start with three questions perhaps. Just the first one, in terms of your guidance for the year ahead, can you give us any kind of commentary color around the contributions you expect for Longroad, sort of as that starts to tick up in EBITDA over time?
Mm-hmm.
I imagine there's a sort of a degree of contribution that we haven't seen in the past starting to come through and whether or not that's in the second half sort of contribution to FY 2023 and similarly for RetireAustralia.
Mm.
Second question, I just wondered if you could sort of clarify the math, the gross amounts to get you to your net NZD 614 million, post-balance date, Telco fund repatriation.
Yeah.
Really just a third one, very interested in the sort of imminent potential re-entry into Australia.
Mm-hmm.
Just trying to get a sense, you know, partly of scale.
Mm.
-but also of approach, whether this is-
Yeah
a small entry with a kind of organic tail or whether it's a bit bigger.
Sure.
Thanks.
On Longroad, do you have their second half contribution in your head? I know you actually have it.
I don't. Sorry.
We can get that through, Nevill, just the second half of this year, but you should definitely see that increase over time. At the Investor Day at the start of this year, Paul talked about targeting, you know, NZD 400-500 million EBITDA once that buildup program has been completed. That's still very much in the plan. Obviously, that's a really massive number, and I think our plan heading into Investor Day next year probably is to try and lay that in a bit more detail for people so it feels a little more real. But obviously, at 37.5% of that it will be quite a different level of contribution than we've seen in the past. You had a question on RA, I think.
Yeah, I think RA, you know, we're continuing to expect that the performance in the first half carries through to the second half. They will be considering, you know, whether or not their unit pricing needs to be readjusted. I mean an upward adjustment given the demand that they're seeing for their product. We, you know, we think that they are, you know, on track to continue with their current trajectory. I think one thing to note is, you know, availability of stock clearly is more of a challenge than it used to be. That's obviously reflected in the waiting list. You know, we'll just have to watch this space as to how that plays out for the next six months.
Cool. Do you wanna pick up his 6:14?
Oh, yeah, the NZD 614. I think the main thing on that, Nevill, is, as we've talked about, gross proceeds from the transaction were NZD 1,700. We can come back to you about the breakdown, but essentially, after transaction costs, all of those proceeds are being distributed to the shareholders. What's worth noting for Infratil, though, of course, is that we're also investing to buy the 20% stake in TowerCo. In fact, we've already done that, and we're yet to receive the proceeds. We'll have had a capital outlay in October to buy our 20% stake in TowerCo, and we're now just awaiting the capital return from Voda. The NZD 614 reflects that net capital return.
Yeah. 850 minus transaction costs times 0.2 give you the number, I think.
Yeah.
Um, Australia-
Oh, okay. It's not net of your reinvestment in TowerCo?
It is net.
That is net.
That is net.
Yep.
It is net, yeah.
It is. Right. Okay.
Yeah.
That's just incredibly highly geared, so it's not a large number. Right.
Yep. The gearing definitely helps.
Great. Thank you. Yes. Yeah, and Australia?
Australia, yeah. It's not like buying Origin or anything like that, if you're asking. It's definitely more a development platform. You know, very similarly sized, I think, to the other ones. You know, with Dion and Clayton here in-house now, and some people they have a lot of belief in and trust, it is very focused on, I think, building up a greenfield pipeline, which will be a bit long dated. Also looking around being a, probably a little more flexible than Tilt in terms of what it addresses, finding other ways to enter into what is a quite a complex market.
They will look at all sorts of things that are floating around there that don't have a kind of necessarily a natural home in the sort of super fund, kind of large-scale platform.
Yeah
Kinda place you can imagine there. A little bit like Galileo in that way. You know, more joint development agreements, stuff like that. Things that you'd expect a lean, nimble player to try and be able to address below the kind of line of sight of the big behemoths.
That's very clear. I would suggest that the Origin transaction would suggest those big city plus multiples through the door are still hanging around.
Yeah. Yeah.
Any sort of synergy with Trustpower or Manawa, as I should say?
There could-
Out of that.
There could be.
Would you run them quite separately?
They'd be run quite separately, but there definitely could be, you know, there's Kiwis in Australia and Aussies in New Zealand. I actually wouldn't rule that out. They're actually proving to be synergies across the group. Actually, the Manawa team spent a few weeks on the road visiting all our other platforms and learning a lot. At the very least there'll be that. You could see work, capacity and, I think capability flow between those two platforms a bit more freely at this end of the world.
Very useful. Thank you very much.
Good.
Thank you. Again, if you wish to ask a question, please press star one on your telephone keypad. Your next question comes from Wade Gardiner from Craigs Investment Partners. Please go ahead.
Hi there. It's just a couple of questions from me. First of all, on TowerCo, I was just interested when you were talking about RetireAustralia and the reason why you would look to review there. One of the things you mentioned was scale.
Mm.
When the TowerCo investment is gonna be smaller.
Mm.
The price
Mm
I would argue was fairly hefty.
Mm.
You don't have control. Why are you in it?
Yeah. No, I think it's a fair question. We sort of blend it together with our Vodafone investment. We kind of think of it in terms of the portfolio scale, it's kinda fine. We thought the forward IRR on that investment was quite solid, compared very favorably to, say, our Wellington Airport or maybe even Manawa these days. Fine in terms of its return outlook even though I acknowledge the price was higher than we expected. We don't know in the long term where necessarily the most accretive investment or value will accrue in the telecommunication system, so it felt like an option that was easy to have.
In terms of our influence, because we're obviously a major player and its only customer, even though we only have 20% shareholder interest, we have an outside influence, I would argue, compared to what that 20%, conveys. Then finally, if all of that proves unnecessary and we need to get rid of it, we think these sorts of stakes are highly liquid because they're highly sought after as the process shows. We've got enough liquidity, we think, from seeing how other players who buy these assets think about it to move that on if we absolutely had a total change of heart as well. I guess that's the kind of full set of reasons why hanging on to it felt like a good idea at the time and something we could address later on if we wanted to.
Okay. My next question, just, in regards to the CDC valuation.
Mm-hmm.
I mean, I understand there's a new valuer there, but can we get some color on, you know, first of all, what WACC they've applied, but probably more importantly, what they've actually included there in terms of, you know, development. I think there's been
Mm-hmm
some, you know, uncertainty in the past when you've increased that valuation as to what has actually been included in terms of those developments versus greenfield.
I don't have a WACC, but we can talk about cost of equity maybe. I think we've shown that in the annual reports. What they do, remember, is they sort of do a blend, so a lower-
Mm-hmm
Cost of equity for the more contracted ones, a higher one for things in development, and an even higher one for things that are in development yet. I think in the annual report, you might even have it in front of you. We talked about a blend of around 9 and a bit. They're up over 10 now, just to give you know, low teens. So that has moved in line with that, both that risk-free rate increase, and I think some more future-dated construction coming into the pipeline relative to where the previous valuation was. I don't have at my fingertips built versus future megawatts, which I think is the kinda split you're looking for. It doesn't include.
I can tell you, though, it doesn't include the Auckland stuff we were talking about, and perhaps we should come back and confirm that split, because I think that's kinda what you're looking for, right? How that fits relative to the pipeline, Greg was talking about. Let me take that away. I know it.
Yeah, yeah. That'd be handy. I mean, you know, it'd be nice to know that there's.
Yeah.
We're not gonna get sort of these surprises where.
Yeah
The value is suddenly revised to include, you know, an extra 300 MW, for example, that we didn't realize wasn't included in the past.
That's a good surprise, I guess, to have. Yeah, and to be fair to them, that can be driven by customer conversations that can be quite lumpy, but at least you'll have a base, right, to start from. Let us refresh that.
Okay. Thank you.
Thanks, Wade.
Thank you. There are no further questions at this time. I'll now hand back for closing remarks.
Great. Well, thanks, everybody, for your attention, and your questions. Hopefully, that's helpful. We'll give you back the rest of your day. Good to see you. Ka kite. Thank you.