Q2 2026 Dalrymple Bay Infrastructure Ltd Earnings Call

August 25, 2026

Operator 2: Thank you for standing by, and welcome to the Dalrymple Bay Infrastructure Limited H1 2026 results call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phone, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to turn the conference over to Mr. Michael Riches, CEO. Please go ahead.

Operator: Thank you for standing by, and welcome to the Dalrymple Bay Infrastructure Limited H1 2026 Results Call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. I would now like to turn the conference over to Mr. Michael Riches, CEO. Please go ahead.

Speaker #1: If you wish to ask a question via the phone, you will need to press the star key followed by the number 1 on your telephone keypad.

Speaker #1: I would now like to turn the conference over to Mr. Michael Richards, CEO. Please go ahead.

Speaker #2: Thank you, and good morning. Welcome to Dalrymple Bay Infrastructure's results for the six months ended 30 June 2026. For the first half of 2026, I'm Michael Richards, CEO, and with me today is Stephanie Commons, our CFO.

Michael Riches: Thank you, and good morning. Welcome to Dalrymple Bay Infrastructure's results for the 6 months ended 30 June 2026, or the H1 2026 for us. I am Michael Riches, CEO, and with me today is Stephanie Commons, our CFO. Today, we will be providing an update on our financial performance for the H1 2026, updating the market on the status of our NECAP and organic growth programs, and confirming our strategic priorities for the remainder of 2026. in the H1 of the year, we have continued to improve our financial performance and grow distributions to security holders. EBITDA was AUD 150.5 million, a 4.7% increase on the H1 of FY 2025. Funds from operations, or FFO, was AUD 92.7 million, up 10.2% on the H1 of FY 2025.

Michael Riches: Thank you, and good morning. Welcome to Dalrymple Bay Infrastructure's results for the six months ended 30 June 2026, or the H1 2026 for us. I am Michael Riches, CEO, and with me today is Stephanie Commons, our CFO. Today, we will be providing an update on our financial performance for the H1 2026, updating the market on the status of our NECAP and organic growth programs, and confirming our strategic priorities for the remainder of 2026. in the H1 of the year, we have continued to improve our financial performance and grow distributions to security holders. EBITDA was AUD 150.5 million, a 4.7% increase on the H1 of FY 2025. Funds from operations, or FFO, was AUD 92.7 million, up 10.2% on the H1 of FY 2025.

Speaker #2: Today, we'll be providing an update on our financial performance for the first half of 2026, updating the market on the status of our NECAP and organic growth programs, and confirming our strategic priorities for the remainder of 2026.

Speaker #2: In the first half of the year, we have continued to improve our financial performance and grow distributions to security holders. EBITDA was $150.5 million, a 4.7% increase on the first half of FY25.

Speaker #2: Funds from operations, or FFO, was $92.7 million, up 10.2% on the first half of FY25. We continued to invest back in the growth of our business, with approximately $370.6 million of approved capital projects still to be added to the NEKAP asset base.

Michael Riches: We continued to invest back in the growth of our business with approximately AUD 370.6 million of approved capital projects still to be added to the NECAP asset base. We placed AUD 350 million in the Australian Medium-Term Note market to further diversify our debt funding sources at an attractive margin. Our strong financial performance resulted in a distribution of AUD 0.135 per security being returned to security holders referable to the H1 2026, a 14.9% increase on the prior corresponding period and in line with our guidance. Importantly, we continued to operate in a safe and environmentally responsible manner with zero incidents that caused serious injury.

Speaker #2: We placed $350 million in the Australian medium-term note market to further diversify our debt funding sources at an attractive margin. Our strong financial performance resulted in a distribution of 13.5 cents per security being returned to security holders referable to the first half of 2026, a 14.9% increase on the prior corresponding period and in line with our guidance.

Speaker #2: And importantly, we continue to operate in a safe and environmentally responsible manner, with zero incidents that cause serious injury. DBI has a stable and predictable revenue stream underpinned by our key contract terms with customers, which include 100% take-or-pay, revenue socialization, pass-through of terminal operating costs, and strong force majeure protection.

Michael Riches: DBI has a stable and predictable revenue stream underpinned by our key contract terms with customers that include 100% take-or-pay, revenue socialization, pass-through of terminal operating costs, and strong force majeure protection. DBI receives Terminal Infrastructure Charge, or TIC, revenue on every ton of contracted capacity through the terminal, which is 84.2 million tons per annum. During the H1, we announced that the TIC applicable for TIC year 2026/2027, which runs from 1 July 2026 to 30 June 2027, was AUD 4.02 per ton, up approximately 8.1% versus TIC year 2025/2026. The uplift in TIC, which commenced on 1 July 2026, will drive a further uplift in our revenue for the H2 of the year.

Speaker #2: DBI receives Terminal Infrastructure Charge, or TIC, revenue on every ton of contracted capacity through the terminal, which is 84.2 million tons per annum. During the first half, we announced that the TIC applicable for TIC year 26/27, which runs from 1 July 2026 to 30 June 2027, was $4.02 per ton—up approximately 8.1% versus TIC year 25/26.

Speaker #2: The uplift in TIC, which commenced on July 1, 2026, will drive a further increase in our revenue for the second half of the year.

Speaker #2: Under our pricing arrangements, secured with our customers through to 2031, the TIC is adjusted each year and comprises a base TIC that is indexed annually in line with the March-to-March All Australia Group's Consumer Price Index, a NECAP charge that reflects a return on and a return of the NECAP asset base, and the QCA fees, which are a pass-through of the Queensland Competition Authority's costs.

Michael Riches: Under our pricing arrangements secured with our customers through to 2031, the TIC is adjusted each year and comprises a base TIC that is indexed annually in line with the March to March All Groups Consumer Price Index, a NECAP charge that reflects a return on and a return of the NECAP asset base, and the QCA fees, which are a pass-through of the Queensland Competition Authority's costs. The inflation-adjusted TIC, coupled with our continued investment in significant NECAP projects, delivers a predictable and growing stream of cash flows. As a reminder, our contract terms with customers, including take-or-pay contracts and the operational cost pass-through, provides an exceptionally low-risk business model for DBI. Today, we announced a Q2 2026 distribution of AUD 0.0675 per security in line with guidance.

Speaker #2: The inflation-adjusted TIC, coupled with our continued investment in significant knee-cap projects, delivers a predictable and growing stream of cash flows. And as a reminder, our contract terms with customers, including take-or-pay contracts and the operational cost pass-through, provide an exceptionally low-risk business model for DBI.

Speaker #2: Today, we announced a Q2 2026 distribution of 6.75 cents per security, in line with guidance. The payment takes our first half 2026 distributions to 13.5 cents per security.

Michael Riches: The payment takes our H1 2026 distributions to AUD 0.135 per security. Our payout ratio for the H1 2026 was 72.2% of FFO. Our TIC year 2026, 2027 guidance for distribution remains unchanged at AUD 0.2862 per security, up 8.5% on the prior year. We continue to target a distribution of 60% to 80% of FFO, and 3% to 7% per annum growth in distributions for the foreseeable future, subject to business developments and market conditions. DBI has a range of growth opportunities that are expected to underpin a continued uplift in revenue, ultimately driving improved FFO to support growing distributions. We continue to deliver organic revenue growth through pursuing new revenue initiatives such as capacity optimization and revised security arrangement initiatives.

Speaker #2: Our payout ratio for the first half of 2026 was 72.2% of FFO. Our TIC year 2026/27 guidance for distribution remains unchanged at 28.62 cents per security, up 8.5% on the prior year.

Speaker #2: And we continue to target a distribution of 60 to 80 percent of FFO, and 3 to 7 percent per annum growth in distributions for the foreseeable future.

Speaker #2: Subject to business developments and market conditions, DBI has a range of growth opportunities that are expected to underpin a continued uplift in revenue, ultimately driving improved FFO to support growing distributions.

Speaker #2: We continue to deliver organic revenue growth by pursuing new revenue initiatives, such as capacity optimization and revised security arrangement initiatives. These initiatives involve no capital deployment and only nominal additional costs, consequently delivering additional cash flow at high margins.

Michael Riches: These initiatives involve no capital deployment and nominal additional costs, consequently delivering additional cash flow at high margins. On capacity optimization, we have recently presented to our customers a capacity pooling mechanism and will consult with customers over the next couple of months on this opportunity. Our NECAP program has been, and will continue to be, a source of organic growth and uplift in our TIC, and I will provide more detail on this in the following slides. DBT itself retains significant expansion optionality to accommodate metallurgical coal exports from the Bowen Basin. As a reminder, the ADEX project is expected to deliver up to 14.9 million tons per annum of additional capacity, with the option of delivering that capacity incrementally via a phased approach.

Speaker #2: On capacity optimization, we have recently presented to our customers a capacity pooling mechanism, and will consult with customers over the next couple of months on this opportunity.

Speaker #2: Our kneecap program has been, and will continue to be, a source of organic growth and uplift in our TIC, and I will provide more detail on this in the following slides.

Speaker #2: DBT itself retains significant expansion optionality to accommodate metallurgical coal exports from the Bowen Basin. As a reminder, the ADEX project is expected to deliver up to 14.9 million tons per annum of additional capacity, with the option of delivering that capacity incrementally via a phased approach.

Speaker #2: DBI's access queue has grown to approximately 33 million tonnes per annum of demand for capacity, comprising a combination of near-term capacity requirements and longer-term needs as mine developments progress.

Michael Riches: DBI's access queue has grown to approximately 33 million tons per annum of demand for capacity, comprising a combination of near-term capacity requirements and longer-term needs as mine developments progress. Underpinned by growing demand from India and Southeast Asia for high-quality hard coking coal, we expect demand for seaborne metallurgical coal to continue to grow steadily through the 2030s and 2040s. The growth in our access queue, the value of recent M&A activity for metallurgical coal mines, and recent announcements from metallurgical coal miners would indicate that there is a strong view that the Central Bowen Basin, with its high-quality met coal, is uniquely positioned to capture this future global demand. DBT and the well-developed ADEX project is strongly positioned to expand to meet this inevitable demand, particularly as the ADEX expansion can be undertaken in stages to respond incrementally to demand signals.

Speaker #2: Underpinned by growing demand from India and Southeast Asia for high-quality hard coking coal, we expect demand for seaborne metallurgical coal to continue to grow steadily through the 2030s and 2040s.

Speaker #2: The growth in our access queue and the value of recent M&A activity for metallurgical coal mines, along with recent announcements from metallurgical coal miners, would indicate that there is a strong view that the central Barn Basin, with its high-quality met coal, is uniquely positioned to capture this future global demand.

Speaker #2: DBT and the well-developed ADEX project are strongly positioned to expand to meet this inevitable demand, particularly as the ADEX expansion can be undertaken in stages to respond incrementally to demand signals.

Speaker #2: This continues to represent a significant opportunity for DBI, Queensland, and Australia, and it will be important that all stakeholders work together to deliver the right policy settings to encourage the necessary investment.

Michael Riches: This continues to represent a significant opportunity for DBI, Queensland, and Australia, and it will be important that all stakeholders work together to deliver the right policy settings to encourage the necessary investment. Finally, as we focus on generating total security holder value, we will naturally explore opportunities to grow our business in alignment with our current risk profile. Our competitive advantages will be key guides in the opportunities we consider, and in doing so, we remain mindful of the key attributes of our existing business, and any opportunities pursued will consider those factors. Now, I'd like to talk about our key organic growth opportunity, which is our non-expansion capital expenditure. Our NECAP program has been, and will continue to be, a source of key organic growth and uplift in our revenue.

Speaker #2: And finally, as we focus on generating total security holder value, we will naturally explore opportunities to grow our business in alignment with our current risk profile.

Speaker #2: Our competitive advantages will be key guides in the opportunities we consider. In doing so, we remain mindful of the key attributes of our existing business, and any opportunities pursued will consider those factors.

Speaker #2: Now, I'd like to talk about our key organic growth opportunity, which is our non-expansion capital expenditure. And our NECAP program has been and will continue to be a source of key organic growth and uplift in our revenue.

Speaker #2: As amounts are spent on KNECAP, interest during construction, or IDC, accrues at an agreed rate until the expenditure is added to the KNECAP asset base.

Michael Riches: As amounts are spent on NECAP, interest during construction, or IDC, accrues at an agreed rate until the expenditure is added to the NECAP asset base. This compensates DBI for the cost of debt funding and provides a return on equity during the period of construction. Once added to the NECAP asset base, the expenditure earns a return on invested capital set at the 10-year Australian government bond rate, which is reset annually, plus a margin, and a return of the invested capital in the form of a depreciation allowance. NECAP spend includes both regular and major project expenditure. Outside of major asset replacements, like SL1 and Reclaimer 4, spend on regular NECAP projects is typically between AUD 30 to AUD 50 million per annum.

Speaker #2: This compensates DBI for the cost of debt funding and provides a return on equity during the period of construction. Once added to the regulated asset base, the expenditure earns a return on invested capital set at the 10-year Australian Government bond rate—which has reset annually—plus a margin, as well as a return of the invested capital in the form of a depreciation allowance.

Speaker #2: Kneecap spend includes both regular and major project expenditure. Outside of major asset replacements, like SL1 and RL4, spend on regular kneecap projects is typically between $30 million to $50 million per annum.

Speaker #2: Capital spent on a project is added to the NECAP asset base on 1 July, the year after the project is commissioned, with the return on and of that capital delivering an uplift in the TIC.

Michael Riches: Capital spent on a project is added to the NECAP asset base on 1 July, the year after the project is commissioned, with the return on and of that capital delivering an uplift in the TIC. AUD 97.8 million, comprising AUD 91.3 million of project costs and AUD 6.5 million of IDC, was added to the NECAP asset base on 1 July 2026, resulting in a 15-cent per ton increase in our TIC. At 1 July 2026, the current NECAP program had a total of AUD 370.6 million in projects underway, which are still to be added to the NECAP asset base, and that excludes IDC. We anticipate approximately AUD 300 million of project costs to be added to the NECAP asset base on 1 July 2027, which, combined with the expected IDC on this spend, should deliver an uplift in TIC of approximately 53 cents per ton from 1 July 2027.

Speaker #2: $97.8 million, comprising $91.3 million of project costs and $6.5 million of IDC, was added to the KNECAP asset base on 1 July 2026, resulting in a $0.15 per ton increase in our TIC.

Speaker #2: At 1 July 2026, the current Kneecap program had a total of $370.6 million in projects underway, which are still to be added to the Kneecap asset base, and that excludes IDC.

Speaker #2: We anticipate approximately $300 million of project costs to be added to the NECAP asset base on 1 July 2027, which, combined with the expected IDC on this spend, should deliver an uplift in TIC of approximately 53 cents per tonne from 1 July 2027.

Michael Riches: We anticipate approximately AUD 300 million of project costs to be added to the NECAP asset base on 1 July 2027, which, combined with the expected IDC on this spend, should deliver an uplift in TIC of approximately 53 cents per ton from 1 July 2027.

Speaker #2: As a reminder, our TIC for the current year is $4.02 per ton, and we will then, on 1 July 2027, add the $0.53 if all things continue to progress as expected, together with the inflation uplift on the base TIC component.

Michael Riches: As a reminder, our TIC for the current year is AUD 4.02 per tonne, and we will then, on 1 July 2027, add the AUD 0.53 if all things continue to progress as expected, together with the inflation uplift on the base TIC component. A new AUD 38.5 million regular NECAP program, which we call NECAP Series Z, was unanimously approved by customers on 13 July 2026. Turning to a couple of our key replacement projects. Shiploader 1 replacement involves the replacement of Shiploader 1 with a new shiploader, and that commenced in April 2023 under a design, bid, and build model. The SL1 replacement program is approximately 90% complete, with the shiploader having completed its commissioning in Western Australia, where it was built, and is awaiting shipment to Dalrymple Bay Terminal.

Speaker #2: A new $38.5 million regular kneecap program, which we call Kneecap Series Z, was unanimously approved by customers on July 13, 2026. Turning to a couple of our key replacement projects.

Speaker #2: So, Shiploader 1 replacement involves the replacement of Shiploader 1 with a new shiploader, and that commenced in April 2023 under a design, bid, and build model.

Speaker #2: The SL1 replacement program is approximately 90% complete, with the shiploader having completed its commissioning in Western Australia, where it was built, and is awaiting shipment to the Dalrymple Bay terminal.

Speaker #2: The transit is scheduled for September and early October, with the handover to the operator expected by year-end once on-site commissioning is completed. Project cost is on budget at $165.4 million, which does not include interest during construction.

Michael Riches: The transit is scheduled for September and early October, with the handover to the operator expected by year-end once on-site commissioning is completed. Project cost is on budget at AUD 165.4 million, which does not include interest during construction. AUD 4.5 million of those project costs were added to the NECAP asset base on 1 July 2026, as we commissioned some changes to the berths at the terminal, with the remaining amount of just over AUD 160 million plus IDC expected to be added to the NECAP asset base on 1 July 2027. The successful completion of Shiploader 1A will provide a blueprint for future shiploader replacement projects. The other major NECAP program is the replacement for Stacker Reclaimer SR2 with a new reclaimer, which is called RL4. The budgeted project cost is AUD 115.6 million, and the project remains on budget and on schedule.

Speaker #2: $4.5 million of those project costs were added to the NCAP asset base on 1 July 2026, as we commissioned some changes to the berths at the terminal, with the remaining amount of just over $160 million plus IDC expected to be added to the NCAP asset base on 1 July 2027.

Speaker #2: The successful completion of Shiploader 1A will provide a blueprint for future shiploader replacement projects. The other major CAPEX program is the replacement of Stacker Reclaimer SR2 with a new reclaimer, which is called RL4.

Speaker #2: The budgeted project cost is 115.6 million dollars, and the project remains on budget and on schedule. A large proportion of that 115.6 million dollars being an amount in excess of 100 million dollars, plus IDC is expected to be added to the kneecap asset base on 1 July 2027.

Michael Riches: A large proportion of that AUD 115.6 million, being an amount in excess of AUD 100 million plus IDC, is expected to be added to the NECAP asset base on 1 July 2027. A small amount of the project costs associated with the final elements of the deconstruction of SR2 will likely be added to the NECAP asset base on 1 July 2028, as that work will be completed in the H2 2027. Overall progress. Sorry, H2 2026. Apologies. The overall progress on RL4 is 87%, with the assembly at the terminal progressing well and commissioning and handover into operation expected to be completed in December 2026. Deconstruction and removal of SR2, as I mentioned, is expected to be completed predominantly in the H1 2027, but potentially some of it into the later part of 2027.

Speaker #2: A small amount of the project costs associated with the final elements of the deconstruction of SR2 will likely be added to the Kneecap asset base on July 1, 2028, as that work will be completed in the second half of 2027.

Speaker #2: Overall progress—sorry, second half of 2026, my apologies. The overall progress on RL4 is 87%, with the assembly at the terminal progressing well, and commissioning and handover into operation expected to be completed in December 2026.

Speaker #2: Deconstruction and removal of SR2, as I mentioned, is expected to be completed predominantly in the first half of 2027, though some of it may extend into the latter part of 2027.

Speaker #2: All current kneecap works are being recommended by the operator and approved by all customers, demonstrating a strong alignment of interests in efficient investment in DBT.

Michael Riches: All current NECAP works are being recommended by the operator and approved by all customers, demonstrating a strong alignment of interests in efficient investment in DBT. As I mentioned before, it is currently anticipated that the addition of these major projects, together with completed projects within our existing regular NECAP series, will deliver an increase to the NECAP charge component of the TIC by a further AUD 0.53 per tonne at 1 July 2027. It is worth noting that every AUD 0.10 per tonne increase in TIC delivers approximately AUD 8.5 million of incremental revenue, reinforcing the role NECAP plays in being a significant contributor to our growth profile. Importantly, DBI has identified NECAP projects of similar capital spend to existing committed projects, which we anticipate to be committed and commenced over the next three to four years, supporting longer-term growth in our terminal infrastructure charge.

Speaker #2: As I mentioned before, it is currently anticipated that the addition of these major projects, together with completed projects within our existing regular kneecap series, will deliver an increase to the kneecap charge component of the TIC by a further $0.53 per ton at 1 July 2027.

Speaker #2: It's worth noting that every $0.10 per ton increase in TIC delivers approximately $8.5 million of incremental revenue, reinforcing the role NEKAP plays in being a significant contributor to our growth profile.

Speaker #2: Importantly, DBI has identified kneecap projects of similar capital spend to existing committed projects, which we anticipate to be committed and commenced over the next three to four years, supporting longer-term growth in our terminal infrastructure charge.

Speaker #2: I'll now hand over to Steph to talk through our financial results in more detail.

Michael Riches: I'll now hand over to Steph to talk through our financial results in more detail.

Speaker #3: Thanks. Excuse me. Thanks, Michael, and good morning, everyone. So, just on slide 16 of our investor deck: DBI maintains an investment-grade balance sheet with an S&P credit rating of BBB flat, reaffirmed during the first half of 2026, and it remains with a stable outlook.

Stephanie Commons: Thanks. Excuse me. Thanks, Michael, and good morning, everyone. On slide 16 of our investor deck, DBI maintains an investment-grade balance sheet with the S&P credit rating of BBB flat, reaffirmed during H1 2026, and it remains with a stable outlook. We continue to maintain strong performance against all our key coverage metrics, and we have substantial headroom to debt service, our leverage covenants, and the rating agency criteria. Our strong credit metrics was evidenced by our highly successful inaugural debt issue into the Australian medium-term note market in March this year, where we issued AUD 350 million of five-year fixed rate notes with a coupon of 6.234% per annum and a maturity date of 24 March 2031. That issue was more than 2.5 times oversubscribed, and the bonds have continued to trade very well in the secondary market.

Speaker #3: We continue to maintain strong performance against all our key coverage metrics, and we have substantial headroom to debt service and leverage covenants, as well as the rating agency criteria.

Speaker #3: Our strong credit metrics were evidenced by our highly successful inaugural debt issue into the Australian medium-term note market in March this year, where we issued $350 million of five-year fixed-rate notes with a coupon of 6.234% per annum, and a maturity date of 24 March 2031.

Speaker #3: That issue was more than 2.5 times oversubscribed, and the bonds have continued to trade very well in the secondary market. Opening up this market is a further demonstration of our strong focus on capital management and our strategic priority to diversify our funding sources.

Stephanie Commons: Opening up this market is a further demonstration of our strong focus on capital management and our strategic priority to diversify our funding sources. We had AUD 2.35 billion of total debt facilities at 30 June 2026, of which AUD 216 million was undrawn. Together with cash, that provides us with AUD 261 million of liquidity at 30 June. Our drawn debt has a weighted average tenor of 6.3 years. As at 30 June 2026, our all-in interest rate was approximately 7%. In the appendix, we are providing further reconciliations of our borrowings that are disclosed in our financial statements to our drawn debt. Moving on to our profit and loss, our H1 revenue and EBITDA are both up on H1 of the prior year, demonstrating the resilience of our business model, the focus on incremental revenue creation, and our disciplined approach to costs.

Speaker #3: We had $2.35 billion of total debt facilities at 30 June 2026, of which $216 million was undrawn. Together with cash, that provides us with $261 million of liquidity at 30 June.

Speaker #3: Our drawn debt has a weighted average tenor of 6.3 years, and as at June 30, 2026, our all-in interest rate was approximately 7%. In the appendix, we are providing further reconciliations of our borrowings that are disclosed in our financial statements to our drawn debt.

Speaker #3: Moving on to our profit and loss, our first-half revenue and EBITDA are both up on the first half of the prior year, demonstrating the resilience of our business model, the focus on incremental revenue creation, and our disciplined approach to costs.

Speaker #3: TIC revenue for the first half of 2026 increased by 3.6% on H1 25, in line with the increase in the TIC per ton applicable from 1 July of each year.

Stephanie Commons: TIC revenue for H1 2026 increased by 3.6% on H1 2025, in line with the increase in the TIC per tonne applicable from 1 July of each year. The increase in TIC revenue reflects the annual adjustment for inflation and the ongoing contribution of commissioned NECAP to the NECAP charge component of the TIC. H1 2026 EBITDA was up 4.7% on H1 2025, with the EBITDA margin remaining consistent with prior comparative period. As a reminder, our handling costs represent the amount charged by DBI by the third-party operator, noting that the operator is owned by a subset of our terminal customers, and those handling costs that are charged to DBI are then fully recharged to all customers at the terminal, as can be seen in the matching handling revenue line. Accordingly, these costs and any cost inflation have no impact on DBI's EBITDA.

Speaker #3: The increase in TIC revenue reflects the annual adjustment for inflation, and the ongoing contribution of commissioned KNCAP to the KNCAP charge component of the TIC.

Speaker #3: H1 2026 EBITDA was up 4.7% on H1 2025, with the EBITDA margin remaining consistent with the prior comparative period. And as a reminder, our handling costs represent the amount charged to DBI by the third-party operator, noting that the operator is owned by a subset of our terminal customers. Those handling costs that are charged to DBI are then fully recharged to all customers of the terminal, as can be seen in the matching handling revenue line.

Speaker #3: Accordingly, these costs and any cost inflation have no impact on DBI's EBITDA. The table at the bottom right of that slide provides a reconciliation of the components of DBI's net finance costs.

Stephanie Commons: The table at the bottom right of that slide provides a reconciliation of the components of DBI's net finance costs. In addition, in the appendix, there are reconciliations of net finance costs and income tax and how those amounts flow through into our FFO. Moving on to the statement of our cash flows. Our capital expenditure comprises the spend on our NECAP projects. Progress on the two major NECAP projects is a principal factor in the increased CapEx during H1 2026 as compared to the prior period. Further detail is provided in the appendix reconciling our NECAP spend and our uncommissioned NECAP. There is also detail on the buildup of the NECAP asset base since its inception.

Speaker #3: And in addition, in the appendix, there are reconciliations of net finance costs and income tax, and how those amounts flow through into our FFO.

Speaker #3: Moving on to the statement of our cash flows. Our capital expenditure comprises the spend on our NECAP projects, and progress on the two major NECAP projects is the principal factor in the increased capex during H1 26 as compared to the prior period.

Speaker #3: Further detail is provided in the appendix, reconciling our NEKCAP spend and our uncommissioned NEKCAP. There is also detail on the build-up of the NEKCAP asset base since its inception.

Speaker #3: Favorable movement in network and capital during H1 26 of $42.9 million primarily relates to an overcollection of handling charges from customers which, since 31 December 2025, was $14.9 million.

Stephanie Commons: Favorable movement in net working capital during H1 2026 of AUD 42.9 million primarily relates to an overcollection of handling charges from customers, which since 31 December 2025 was AUD 14.9 million, together with a net increase in the amounts owing to the terminal operator of AUD 23.2 million. All those handling charges will be trued up by the end of August. Moving on to our interest rate and our hedge profile. 100% of all of our foreign currency debt is swapped back to AUD, so there is no FX risk on either our principal or interest payments. Interest rate risk is managed via a mix of fixed rate debt issuance and interest rate swaps. Based on our current debt levels, DBI is over 90% hedged until mid-2027, over 80% hedged until mid-2028, and over 70% hedged until mid-2030. Maintaining a highly hedged interest rate position remains a priority for the business.

Speaker #3: Together with a net increase in the amounts owing to the terminal operator of $23.2 million, all those handling charges will be trued up by the end of August.

Speaker #3: Moving on to our interest rate and our hedge profile. One hundred percent of all our foreign currency debt is swapped back to AUD, so there is no FX risk on either our principal or interest payments.

Speaker #3: Interest rate risk is managed via a mix of fixed-rate debt issuance and interest rate swaps. Based on our current debt levels, DBI is over 90% hedged until mid-2027.

Speaker #3: Over 80% is hedged until mid-2028, and over 70% is hedged until mid-2030. Maintaining a highly hedged interest rate position remains a priority for the business. DBI's weighted average all-in interest rate for its debt book is 7% as at 30 June 2026, and it's expected to remain at approximately this level for the next 24 months, assuming our future debt draws utilize the available liquidity.

Stephanie Commons: Maintaining a highly hedged interest rate position remains a priority for the business. DBI's weighted average all-in interest rate for its debt book is 7% as at 30 June 2026, and it is expected to remain at approximately this level for the next 24 months, assuming our future debt draws utilize the available liquidity. I will now hand back to Michael.

Stephanie Commons: DBI's weighted average all-in interest rate for its debt book is 7% as at 30 June 2026, and it is expected to remain at approximately this level for the next 24 months, assuming our future debt draws utilize the available liquidity. I will now hand back to Michael.

Speaker #3: On that note, I'll hand back to Michael.

Speaker #2: Thanks, Steph. And finally, just to reiterate our strategic priorities for the remainder of FY26—with our take-or-pay contracts and future earnings profile, DBI is well positioned to continue to deliver long-term growth in total security holder returns.

Michael Riches: Thanks, Steph. Finally, just to reiterate our strategic priorities for the remainder of FY 2026. With our take-or-pay contracts and future earnings profile, DBI is well-positioned to continue to deliver long-term growth in total security holder returns. Our priorities over the remainder of FY 2026 include: delivering organic revenue growth through new revenue initiatives and the inclusion of the cost of completed NECAP projects in the NECAP asset base. Completion of Shiploader 1A and Reclaimer 4 NECAP projects on time and on budget. We will continue to progress opportunities to capture long-term Bowen Basin metallurgical coal production via our continued review of the use of terminal capacity, including optimization of existing capacity and our economic assessments of the ADX project.

Speaker #2: Our priorities over the remainder of FY26 include delivering organic revenue growth through new revenue initiatives, and the inclusion of the cost of completed kneecap projects in the kneecap asset base.

Speaker #2: Completion of Shiploader 1A and Reclaimer 4 kneecap projects on time and on budget. We will continue to progress opportunities to capture long-term Bowen Basin and metallurgical coal production via our continued review of the use of terminal capacity, including optimization of existing capacity project.

Speaker #2: Further assessment of refinancing opportunities will continue to improve our balance sheet flexibility, reduce refinancing exposure, and access other sources of debt capital to reduce interest costs over the long term, while maintaining an investment-grade rating.

Michael Riches: Further assessment of refinancing opportunities will continue to improve our balance sheet flexibility, reduce refinancing exposure, and access other sources of debt capital to reduce interest costs over the long term whilst maintaining an investment-grade rating. We will seek to identify opportunities for diversification through acquisition of assets that have a similar risk profile to the existing DBI business and which enable value to be created through our competitive advantages. We will continue to explore and assess opportunities for alternative uses of DBT while delivering whole of terminal ESG and sustainability initiatives. Thank you very much for your attention, and I will now hand back to the operator. I am very happy to take any questions.

Speaker #2: We will seek to identify opportunities for diversification through the acquisition of assets that have a similar risk profile to the existing DBI business and which enable value to be created through our competitive advantages.

Speaker #2: And we will continue to explore and assess opportunities for alternative uses of DBT, while delivering whole-of-terminal ESG and sustainability initiatives. Thank you very much for your attention. I'll now hand back to the operator and am very happy to take any questions.

Speaker #1: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.

Operator 2: 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 are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Ryan with Barrenjoey.

Operator: 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 are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Ryan with Barrenjoey.

Speaker #1: If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Ryan with Barron Joey.

Speaker #4: Oh, thank you. Good morning. I just had a question on the access queue. It looks to have increased slightly over the past year, so I was hoping you could give us some color on the conversations you're having with your customers at the moment, and how they're feeling about the volume outlook.

Matt Ryan: Well, thank you. Good morning. I just had a question on the access queue. It looks to have increased slightly over the past year. Just hoping if you could give us some color on the conversations that you are having with your customers at the moment and how they are feeling about the volume outlook?

Speaker #2: Yeah, sure, Matt. I think, yeah, the access queue's grown by probably three or four million tons over the last six to nine months. That's principally associated with new capacity that customers are seeking.

Michael Riches: Yeah, sure, Matt. I think, yeah, the access queue has grown by probably 3 or 4 million tons over the last six to nine months. That is principally associated with new capacity that customers are seeking, I would say, in the near term, probably the next one to two years. Principally arising from customers who have, I guess, acquired new mines, so part of the M&A activity that has happened, and those new owners of those assets looking to drive further value in those assets and looking for additional capacity as a result. So that is the principal reason for the increase in the access queue. I would say that the longer-term investment in new mine development still remains at the level it has been at for a period of time as customers continue to look at those key investment decisions.

Speaker #2: I'd say in the near term, probably the next one to two years, principally arising from customers who have, I guess, acquired new mines. So, part of the M&A activity that's happened—those new owners of those assets are looking to drive further value in those assets and seeking additional capacity as a result.

Speaker #2: So that's the principal reason for the increase in the access queue. I would say that the longer-term investment in new mine development still remains at the level it's been at for a period of time, as customers continue to look at those key investment decisions.

Speaker #2: But where there is capital that has already been invested in existing mines, we're certainly seeing a drive towards increased efficiency and additional throughput to bring down ultimately their fixed cost of production per unit, and obviously improve their own profitability.

Michael Riches: But where there is capital that has already been invested in existing mines, we are certainly seeing a drive towards increased efficiency and additional throughput to bring down, ultimately, their fixed cost of production per unit down and obviously improve their own profitability, and that is really driving the access queue.

Speaker #2: And that's really driving the access queue.

Speaker #4: That's helpful. And just, I guess, the frequency of conversations around ADEX—how would you sort of rate that at the moment, perhaps relative to the conversations in the past?

Matt Ryan: That is helpful. And just, I guess, the frequency of conversations around 8X, how would you sort of rate that at the moment, perhaps relative to the conversations in the past?

Speaker #2: Yeah, I think, as I said, on the longer-term, larger new mine developments, conversations continue, but again, probably at a level where there's no real meaningful commitments by those customers at the moment.

Michael Riches: Well, I think, as I said, on the longer-term, larger new mine developments, conversations continue, but again, probably at a level where there is no real meaningful commitments by those customers at the moment. And I think it has been well expressed by many of them as to the challenges, particularly around royalties at the moment, which are probably inhibiting those investment decisions. In terms of smaller, more near-term capacity, the actual discussions, we have certainly had more frequent and more, I guess, real discussions with customers around the progress of potentially a phase of 8X to meet those future customer requirements that are more near term. So I think we can see the potential for at least a phase of 8X in the nearer term.

Speaker #2: And I think it's been well expressed by many of them as to the challenges, particularly around royalties at the moment, which are probably inhibiting those investment decisions.

Speaker #2: In terms of smaller, more near-term capacity, the actual discussions we've certainly had are more frequent and more, I guess, real discussions with customers around the progress of potentially a phase of ADEX to meet those future customer requirements that are more near-term.

Speaker #2: So, I think we can see the potential for at least a phase of ADEX in the nearer term, and potentially longer term. I think we continue to see that more fulsome completion of ADEX, across potentially up to 15 million tons, being a longer-term increase in capacity at the terminal.

Michael Riches: Potentially longer term, I think we continue to see that more fulsome completion of 8X across potentially up to 15 million tons being a longer-term increase in capacity at the terminal, until some of those investment decisions are made by customers with new mine developments.

Speaker #2: Until some of those investment decisions are made by customers with new mine developments.

Speaker #4: Thanks, Michael. Appreciate it.

Matt Ryan: Thanks, Michael. Appreciate it.

Speaker #2: No problem, Matt.

Michael Riches: No problem, Matt.

Speaker #1: Your next question comes from Anthony Mulder with Jefferies.

Operator 2: Your next question comes from Anthony Moulder with Jefferies.

Operator: Your next question comes from Anthony Moulder with Jefferies.

Speaker #5: Good morning, all. If I can just follow on from that—so, it sounds like you've got 33 million tonnes of people, or people that want access to 33 million tonnes, but ADEX has been pushed out.

Anthony Moulder: Good morning, all. If I can just follow on from that. It sounds like you have 33 million tons of people, or people that want access to 33 million tons, but 8X is being pushed out. How should we think about those two factors? I would have thought that 8X was still thought about in the near, or not nearer term, but next few years as opposed to, it sounds like it is more of a longer-term consideration from today.

Speaker #5: How should we think about those two factors? I would have thought that ADEX was still considered in the near term, or at least in the next few years, as opposed to what it sounds like—it's more of a longer-term consideration from today.

Michael Riches: Well, I think, Anthony, when I say longer term, remember, we have been working with customers since 2023 on 8X when we completed our feasibility study. All of that is done. There will obviously needed to be some updates to that. I think, as I said, there is definitely capacity. When I talk about the near term, I am really talking 1 to 2 years for 8X, and we are looking at options with customers about how we could deliver that capacity requirement within 1 to 2 years. The longer term, I think, really becomes a question. A more complete construction of 8X would take us 3 to 4 years if you assume that customer decisions around 15 million tons of capacity, which would really depend on major new mine developments progressing like Whitehaven Coal's Winchester South, like Stanmore Resources' Eagle Downs.

Speaker #2: Well, I think, Anthony, when I say longer term, I mean we've been working with customers since 2023 on ADEX, when we completed our feasibility study.

Speaker #2: So, all of that is done. There will obviously need to be some updates to that. I think, as I said, there's definitely capacity. When I talk about the near term, I'm really talking one to two years.

Speaker #2: For ADEX, we're looking at options with customers about how we could deliver that capacity requirement within one to two years. Longer-term, I think it really becomes a question—more complete construction of ADEX would take us three to four years.

Speaker #2: If you assume that customer decisions around 15 million tons of capacity—which would really depend on major new mine developments progressing like Whitehaven's Winchester South, like Stanmore's Eagle Downs—if they were to make those decisions within the next 12 months, we could see ADEX completed within five years, call it, like, 2031.

Michael Riches: If they were to make those decisions within the next 12 months, we could see 8X completed within 5 years, call it by 2031. But they have been looking at those projects for a number of years. I think last year, coal prices were certainly a key factor, as were royalties. As you can appreciate and the industry has clearly indicated, the royalty regime is a challenge for existing mines. But we certainly see where capital has already been invested, there is the potential to look to work that capital harder, increase throughput, and therefore require additional capacity. Where it is new capital, it becomes much harder, it appears, for those miners to justify the investment in new mine developments, and that is making the ADX decision on a full completion of ADX, I guess, a longer-term prospect.

Speaker #2: But yeah, they've been looking at those projects for a number of years. I think last year, coal prices were certainly a key factor, as were royalties.

Speaker #2: And I think, as you can appreciate, in the industry it is clearly indicated, yeah, the royalty regime is a challenge for existing mines. But we certainly see where capital has already been invested, there is the potential to look to work that capital harder, increase throughput, and therefore require additional capacity.

Speaker #2: Where it's new capital, it becomes much harder. It appears for those miners, it's difficult to justify the investment in new mine developments. And that is making the ADEX decision on a full completion of ADEX, I guess, a longer-term prospect.

Michael Riches: Our view is that there will be demand as we approach the global demand for metallurgical coal from the seaborne export market through the late 2020s into the 2030s. The key question for policy settings in Australia will be, we are the best place to capture that demand, both from the quality of the coal we have, our proximity to the locations where that demand is going to arise, and key will be getting the policy settings right to encourage investment in new supply in order to meet that demand. We think it will happen. We thought it will happen for a number of years. It is really just getting those key policy settings right. I think when we do, there are certainly indications from the miners that they have capital they are willing to invest, but it needs to meet, obviously, their return hurdles.

Speaker #2: And our view is that there will be demand as we approach the global demand for metallurgical coal from the seaborne export market through the late 2020s into the 2030s.

Speaker #2: A key question for policy settings in Australia will be where the best place is to capture that demand—both from the quality of the coal we have and our proximity to the locations where that demand is going to arise. Key will be getting the policy settings right to encourage investment in new supply in order to meet that demand. We think it will happen.

Speaker #2: We thought it would happen for a number of years. It's really just getting those key policy settings right. And I think when we do, there's certainly indications from the miners that they have capital, they're willing to invest, but it needs to obviously meet their return hurdles.

Speaker #5: Of course. Any conversations with the owners of the Hay Point terminal is another way to deliver that kind of capacity growth.

Anthony Moulder: Of course. Any conversations with the owners of the Hay Point terminal is another way to deliver that kind of capacity growth?

Michael Riches: I think the owners of the Hay Point terminal being, for those who do not know it, BHP and Mitsubishi through their BHP Mitsubishi Alliance joint venture. That terminal has been owned by those two counterparties for 50 years. I think they still see significant value in the supply chain logistics and operational strategic value in their ownership of that terminal. It has never been open to open access during their ownership, despite at various points in time, their production being lower than the capacity of that terminal. I suspect they will continue to look at it as a strategic asset for utilization by BMA.

Speaker #2: I think the owners of the Hay Point terminal, for those who don't know, are BHP and Mitsubishi through their BHP-Mitsubishi Alliance Joint Venture. That terminal has been owned by those two counterparties for 50 years.

Speaker #2: I think they still see significant value in the supply chain, logistics, and operational strategic value in their ownership of that terminal. It has never been open to open access during their ownership, despite at various points in time there being production lower than the capacity of that terminal.

Speaker #2: So, I suspect they will continue to look at it as a strategic asset for utilization by BMA.

Speaker #5: That's a shame. Last question off ahead. The optimization benefits during the half — how are you thinking about whether or not that's fully scaled to what you hope to deliver from optimization benefits in the terminal, please?

Anthony Moulder: That is a shame. Last question, if I had the optimization benefits during the half, how are you thinking about whether or not that is fully scaled to what you hope to deliver from optimization benefits in the terminal, please?

Speaker #2: Yeah, I think largely so. Other revenue for the half was $2.9 million. I think we'd indicated at the end of last year that we expected the run rate to be $5 million.

Michael Riches: Yeah, I think largely, other revenue for the half was AUD 2.9 million. I think we had indicated that at the end of last year that we expected the run rate to be AUD 5 million, so we are a little bit ahead of that. I think there is probably a little bit more that we can capture over the H2 of the year, and we continue to pursue initiatives, as I mentioned, we are looking at a number of options with customers to create win-win opportunities for ourselves. I would think, in the H2, we should be more than AUD 2.9 million when we take it through for the full year, so AUD 5.8 million in total. Probably not materially more, but again, as we introduce these initiatives in the H2 and they start to create value, we will see additional value come through in FY27.

Speaker #2: So we're a little bit ahead of that. I think there's probably a little bit more that we can capture over the second half of the year.

Speaker #2: And we continue to pursue initiatives, as I mentioned. We are looking at a number of options with customers to create win-win opportunities for ourselves.

Speaker #2: So, I would think in the second half, we should be more than 2.9. We take it through for the full year, so 5.8 in total.

Speaker #2: Probably not materially more, but again, as we introduce these initiatives in the second half and they start to create value, we'll see additional value come through in FY27.

Speaker #5: Very good. Thank you.

Anthony Moulder: Very good. Thank you.

Speaker #3: Your next question comes from Andre from UBS.

Operator 2: Your next question comes from Andre Fromyhr with UBS.

Operator: Your next question comes from Andre Fromyhr with UBS.

Speaker #4: Thank you. Good morning. Just following on from the conversation about the demand in the Queensland coal market, I guess one of the themes that we learned from the Aurizon results a week ago was a tendency for some customers to scale back what they were willing to commit in terms of take-or-pay, and maybe even take some risks in the spot market.

Andre Fromyhr: Thank you. Good morning. Just following on from the conversation about the demand in the Queensland coal market. I guess one of the themes that we learned from the Aurizon results a week ago, was a tendency for some customers to scale back what they were willing to commit in terms of take-or-pay and maybe even taking some risks in the spot market. That is for the haulage part of it. Have you seen any feedback, or have you had conversations with your customers about that willingness to commit to certain levels of capacity?

Speaker #4: That's for the haulage part of it. Have you seen any feedback, or have you had conversations with your customers about their willingness to commit to certain levels of capacity?

Michael Riches: No. We haven't had any discussions with customers where there's been an indication of scale back of capacity. In fact, as the ADX queue has grown or our access queue has grown, you'll see there's more demand for permanent capacity at the terminal. We haven't seen any material transfers on a temporary basis of capacity where customers are looking to transfer capacity because they don't utilize it. Obviously, there has been a period of that with the Moranbah North and Grosvenor closures at various points in time. We think with the Dhilmar acquisition of those mines, obviously there's an intention to get both of those mines operating at full capacity going forward.

Speaker #2: No, we haven't had any discussions with customers where there's been an indication of a scale back of capacity. In fact, as the ADEX queue has grown, or our access queue has grown, you see there's more demand for permanent capacity at the terminal.

Speaker #2: We haven't seen any material transfers on a temporary basis of capacity, where customers are looking to transfer capacity because they don't utilize it, obviously.

Speaker #2: There has been a period of that with the Awemba North and Grosvenor closures at various points in time. We think with the Dilmar acquisition of those mines, we see there's an intention to get both of those mines operating at full capacity going forward.

Speaker #2: So whilst I think, from the Horizon perspective, as I understand it, it's more around above-rail contracting and not contracting as much above-rail capacity on a take-or-pay basis.

Michael Riches: Whilst I think from the Aurizon perspective, as I understand it's more around above rail contracting and not contracting as much above rail capacity on a take-or-pay basis due to the increased competition and the capacity in the above rail market. We haven't seen that translated in any way to any relinquishments. Not that they can relinquish capacity, but any changes in people's, the customer's demand for capacity at the terminal. And we wouldn't expect, I think, to see that. As I said, I think we're seeing the potential for greater throughput through the terminal over the near to longer term rather than reduced throughput. And I think if you look at Aurizon network's forecast for tonnage through the Goonyella system in 2026, 2027, it's actually gone up from their forecast for tonnage in 2025, 2026.

Speaker #2: Due to the increased competition and the capacity in the above rail market, we haven't seen that translated in any way to any relinquishments of the they can relinquish capacity, but any changes in people's customers' demand for capacity at the terminal.

Speaker #2: And we wouldn't expect, I think, to see that. As I said, I think we're seeing the potential for greater throughput through the terminal over the near to longer term, rather than reduced throughput.

Speaker #2: And I think if you look at Horizon Networks' forecast for tonnage through the Gunella system in '26–'27, it's actually gone up from their forecast for tonnage in '25–'26.

Speaker #2: So the network is actually expecting greater tonnage through the Goonyella system, with a primary of the premium hard coking coal. And we expect to see that increased tonnage resulting in, or we are seeing it resulting in, that additional demand for capacity.

Michael Riches: The network is actually expecting greater tonnage through the Goonyella system and obviously it is the system with the premium hard coking coal. We expect to see that increased tonnage resulting in that, or we are seeing it resulting in that additional demand for capacity.

Speaker #4: Sure. And then, I think you made reference to, let’s say, completion of Shiploader 1—the replacement—and what you learned from that before moving to what Shiploader 2 and possibly 3 replacements look like.

Andre Fromyhr: Sure. I think you made reference to, let's say, completion of Shiploader 1, the replacement and what you learned from that before moving to what Shiploader 2 and possibly 3 replacements look like. Just wondering if you could share any updates on the feasibility work you have done on those opportunities and what the timeline might look like for them.

Speaker #4: But just wondering if you could share any updates on the feasibility work you've done on those opportunities, and what the timeline might look like for them.

Speaker #2: Yeah, well, I think Shiploader 2 will be the next shiploader replacement. We're working with the operator at the moment around potential timing of that.

Michael Riches: Well, I think Shiploader 2 will be the next shiploader replacement. We are working with the operator at the moment around potential timing of that, and whether it is a replacement or a refurbishment, how we look at the requirements and the whole of life cost. I think as we indicated, we expect NECAP projects over the course of the remainder of the 2020s to be that equivalent sort of AUD 400 odd million to current NECAP projects. Shiploader 2 will be part of that. We expect that the proposal to customers would happen probably over the course of the next 1 to 2 years. It is still a little bit up in the air at the moment because we are just trying to work through what is the life, what can we do around maintenance of that asset over the near term to potentially delay capital spend.

Speaker #2: And whether it's a replacement or a refurbishment, how we look at the requirements and the whole-of-life cost. I think, as we indicated, we expect NECAP projects over the course of the remainder of the 2020s to be that equivalent sort of $400-odd million to current NECAP projects.

Speaker #2: Shiploader two will be part of that. We expect that the proposal to customers will happen probably over the course of the next one to two years.

Speaker #2: It's still a little bit up in the air at the moment because we're just trying to work through what is the life—what can we do around maintenance of that asset over the near term to potentially delay capital spend.

Speaker #2: So I think you will see over the course of the next 12 to 24 months decisions around what we do on Shiploader 2. And Shiploader 3 will not be long after that, given it obviously, for those who've been to the terminal, services two berths, and therefore the volume of coal that's gone through Shiploader 3 is almost the same as what Shiploader 2 has delivered, although it's about a 10-year younger asset.

Michael Riches: I think you will see over the course of the next 12 to 24 months, decisions around what we do on Shiploaders 2 and Shiploader 3 will not be long after that, given it obviously is, for those who have been to the terminal, it services two berths and therefore the volume of coal that has gone through Shiploader 3 is almost the same as what Shiploader 2 has delivered, although it is about a 10-year younger asset. It will need replacement within the next 4 to 5 years as well, we expect.

Speaker #2: But it will need replacement within the next four to five years as well, we expect.

Speaker #4: Okay. And then just one more, if you don't mind, and probably one for Steph. Just wondering if you could help bridge the guidance on the all-in interest rate, which six months ago you were sort of indicating would be more around 6.5% from mid-year.

Andre Fromyhr: Okay. Just one more, if you don't mind, and probably one for Steph. Just wondering if you could help bridge the guidance on the all-in interest rate, which 6 months ago you were indicating would be more around 6.5% from mid-year. Now it is around 7%. To what extent is that just the prevailing movement in base rates at the time that you rolled your hedges?

Speaker #4: Now it's around seven. To what extent is that just the prevailing movement in base rate at the time that you rolled your hedges?

Speaker #2: Yeah, sure. So, quite a bit of it is on the unhedged component of those base rates. So, that's contributed—they've obviously sat a lot higher than expected.

Stephanie Commons: Yeah, sure. Quite a bit of it on the unhedged component of those base rates. That has contributed, they have obviously sat a lot higher than expected. The AMTN we did in March, we did leave half of that at a fixed rate, which was really substantially higher than what we had at the time. If you keep in mind, up until mid-June, about AUD 1.2 billion of our hedges was sitting at around 89 basis points. The base rate on the fixed component of that AMTN was more like 4.6%. That certainly contributed to the much higher step up. Probably the remainder is to do with the repayment on the USPP, just repaying that out and there were certainly savings in terms of the margins, but some of the other margins that were entered into as part of that refinance were various.

Speaker #2: The AMTN that we did in March, we did leave half of that at a fixed rate, which was clearly substantially higher than what we had at the time.

Speaker #2: So, if you keep in mind, up until sort of mid-June, we were sitting at about $1.2 billion of our hedges, which were sitting at around 89 basis points.

Speaker #2: And then, the base rate on the fixed component of that AMTN was more like 4.6%, so that certainly contributed to the much higher step-up.

Speaker #2: And then probably the remainder is to do with the repayment on the USPP, just repaying that out. And there were certainly savings in terms of the margins, but some of the other margins that were in as part of that refinance were various.

Speaker #2: So, some of them were on the five-year debt and some of them were on shorter, two-year notes. And so, to the extent that some of that debt was drawn on the five-year debt, the margins were a little bit higher than what the all-in was at the time.

Stephanie Commons: Some of them were on the 5-year debt and some of them were on shorter 2-year notes. To the extent that some of that debt was drawn on the 5-year debt, the margins were a little bit higher than what the all-in was at the time. As we were drawing debt on that, it was probably at the more expensive end.

Speaker #2: So, as we were drawing debt on that, it was probably at the more expensive end.

Speaker #4: Okay. Thank you very much.

Andre Fromyhr: Okay. Thank you very much.

Speaker #2: Thanks.

Stephanie Commons: Thanks.

Speaker #1: As a reminder, in the interest of time today, please limit your questions to two per queue, and rejoin the queue if you have further questions.

Operator 2: As a reminder, in the interest of time today, please limit your questions to 2 per queue and rejoin the queue if you have further questions. Your next question comes from Ian Myles with Macquarie.

Operator: As a reminder, in the interest of time today, please limit your questions to 2 per queue and rejoin the queue if you have further questions. Your next question comes from Ian Myles with Macquarie.

Speaker #1: Your next question comes from Ian Miles with McQuarrie.

Speaker #5: Hey, good night, guys. Quick one on your NECAP spend. You've got approval from customers that's sort of $71.4 million for 1H26. That's on slide 10.

Ian Myles: Hey, good day, guys. Quick one on your NECAP spend. You have got approval from customers at 71.4 for H2 2026. That was on slide 10. I am just trying to get my mind around, are we seeing probably a structural uplift of NECAP spend on a yearly basis that is moving into, I don't know, AUD 50 or AUD 60 million per annum?

Speaker #5: I'm just sort of trying to get my mind around—are we seeing, probably, a structural uplift of kneecap spend on a yearly basis now?

Speaker #5: It's moving into $50 or $60 million per annum?

Speaker #2: Yeah, I think that's... I think the same. The question, I think that's likely to be the case over the course of the next few years.

Michael Riches: Yeah. Thanks, Ian, for the question. I think that is likely to be the case over the course of the next few years. Two key approvals for NECAP that have happened in the last 3 or 4 months. One was NECAP Z, which I mentioned, which was AUD 38 million, which is a regular series of a variety of different projects. As I think I mentioned, we would see regular sustaining capital at that AUD 30 to AUD 50 million per year. Over the course of the next few years, the other key component to make up that AUD 70 million that you mentioned, Ian, is our gallery wrapping project, which this year we will start. The first component of that is AUD 32 million.

Speaker #2: So, two key approvals for Kneecap that have happened in the last three or four months. One was Kneecap Z, which I mentioned, which was $38 million.

Speaker #2: Which is a regular series of a variety of different projects. And as I think I mentioned, we would see regular, sort of sustaining capital at that $30 to $50 million per year.

Speaker #2: Over the course of the next few years, the other key component to make up that sort of $70 million that you mentioned is our gallery wrapping project, which this year we will start.

Speaker #2: The first component of that is $32 million. That project probably has five to six years to be completed, because we have to wrap the steelwork across the three outloading galleries on 3.8 kilometers of jetty, together with some of the steelwork on the berths as well.

Michael Riches: That project probably has 5 to 6 years to be completed because we have to wrap the steelwork across the 3 outloading galleries on 3.8 kilometers of jetty, together with some of the steelwork on the berths as well. So it will be a long-term project. The initial project of AUD 32 million is really going to give us an indication of what the long-term cost will look like. So it is not to say that it will be AUD 32 million each year for the next 5 to 6 years. As we complete this project, start getting a better understanding of the cost of access, how access is undertaken in line with operations.

Speaker #2: So it will be a long-term project. The initial project of $32 million is really going to give us an indication of what the long-term cost will look like.

Speaker #2: So it's not to say that it will be $32 million each year for the next five to six years as we complete this project and start getting a better understanding of access, the cost of access, and how access is undertaken in line with operations.

Speaker #2: We'll get a better feel for the annual spend on gallery wrapping, and then when we go to customers—at the end of probably this time next year, or maybe a little bit earlier—we'll be able to put the next phase of gallery wrapping up.

Michael Riches: We'll get a better feel for the annual spend on gallery wrapping. Then when we go to customers at the end of probably this time next year or maybe a little bit earlier, we'll be able to put the next phase of gallery wrapping up, and that will be probably more aligned to an annual spend over the course of the next five years. So I think you should expect regular spend of that AUD 30 million to AUD 50 million, and then a gallery wrapping project on top of that. It's hard to know exactly what that will be each year. We'll get some better clarity of that as we work through the project. So, hopefully, that gives you a bit of a sense of what NECAP, as we said, is going to look like, just regular NECAP without major asset replacement over the next four to five years.

Speaker #2: And that will probably be more aligned to an annual spend over the course of the next five years. So, I think you should expect regular spend of that $30 to $50 million.

Speaker #2: And then a gallery wrapping project on top of that—it's hard to know exactly what that will be each year. We'll get some better clarity on that as we work through the project.

Speaker #2: So, hopefully that gives you a bit of a sense of what kneecap, as we said, is going to look like—just regular kneecap without major asset replacement over the next four to five years.

Speaker #3: Is it fair to assume that gallery wrapping is probably bigger than $100 million now as a total project? Because I think you would probably suggest previously it was around $100 million, but it looks like it might be a bit larger.

Ian Myles: Is it fair to assume that gallery wrapping is probably bigger than AUD 100 million now as a total project? Because I think you would probably suggest previously it was around 100, but it looks like it might be a bit larger.

Michael Riches: It could be a bit larger than AUD 100 million. Yes. Yep.

Speaker #2: It could be a bit larger than $100 million, yes. Yeah.

Speaker #3: Okay, that's fine. And in terms of your debt book, you've always had the option to, or potentially could, go and re-look at some of your USPPs and repurchase again some of those PPs.

Ian Myles: Okay. That's fine. In terms of your debt book, you've always had the option to, or potentially go and relook at some of your USPPs and repurchase, again, some of those PPs. What do you need to sort of see in the debt markets to maybe make that or bring that decision forward in the next couple of years?

Speaker #3: What do you need to sort of see in the debt markets to maybe make that or bring that decision forward? In the next couple of years.

Speaker #2: Thanks, Ian. The debt markets at the moment for refinance are actually very favorable, as you've seen both from our refinance in December last year and also the AMTN market that we accessed this year.

Stephanie Commons: Thanks, Ian. The debt markets at the moment for refinance are actually very favorable, as you have seen both from our refinance in December last year and also the AMTN market that we accessed this year. I think the debt markets themselves are very favorable. It is more around the cost of repaying those notes, and particularly the cross-currency interest rate swaps that sit over the top of that. The notes themselves, at the time they were issued in 2021, had quite low coupons, so the make-wholes on those are quite low. But because they were swapped back to AUD, and on a float rate, the float rate has gone up substantially and the foreign currency is also a lot higher. So what we have got now is both of those working against us.

Speaker #2: So, I think the debt markets themselves are very favorable. It's more around the cost of repaying those notes, and particularly the cross-currency interest rate swaps that sit over the top of that.

Speaker #2: The notes themselves, at the time they were issued in '21, had quite low coupons, so the make-wholes on those are quite low. But because they were swapped back to Aussie dollars and are on a floating rate, the floating rate has gone up substantially.

Speaker #2: And the foreign currency is also a lot higher. So what we've got now is both of those working against us. So we would need to see the Treasuries and the base rates in the Australian market substantially come down so that the make-wholes on those cross-currency interest rate swaps are a lot lower.

Stephanie Commons: We would need to see the Treasuries and the base rates in the Australian market substantially come down, so that the make-wholes on those cross-currency interest rate swaps are a lot lower. We are running the numbers each month at the moment on that, and it still does not make a lot of sense. It is still in the kind of tens of millions of AUD. Yeah.

Speaker #2: So we're running the numbers each month at the moment on that, and it still doesn't make a lot of sense. It's still in the tens to hundreds of millions, tens of millions of dollars.

Speaker #2: Yeah.

Speaker #4: Yeah, I think, NPV-wise, it still doesn't.

Michael Riches: Yeah. I think NPV-wise, it still does not-

Speaker #2: No.

Stephanie Commons: No

Speaker #4: Stack up. As Steph said, if we saw Australian base rates come down and US Treasuries stay a little bit higher, so the make-holds still on the notes themselves were relatively low.

Michael Riches: stack up. As Steph said, if we saw Australian base rates come down and US Treasuries stay a little bit higher, so the make-wholes still on the notes themselves were relatively low, but the costs on the cross-currency interest rate swaps were lower. That would start to make sense. That is probably the key thing that would be a trigger for us, potentially refinancing. To the extent that we see further margin compression across bank and capital markets, then that is of assistance as well. It is not something that we, as Steph said, we look at it every month because if things move in the right direction, it is something that we could move relatively quickly on. But it is still not an NPV positive outcome at the moment.

Speaker #4: But costs on the cross-currency interest rate swaps were lower. That would start to make sense. That's probably the key thing. That would be a trigger for us potentially refinancing, and to the extent that we see further margin compression across bank and capital markets, then that is of assistance as well.

Speaker #4: So it's not something that we, as Steph said, look at every month, because if things move in the right direction, it's something that we could move relatively quickly on.

Speaker #4: But it's still not an MPV-positive outcome at the moment.

Speaker #3: Okay. Can I just simplify that? Do you need to see the AUD/USD currency move down? I saw a lot of currencies with the same prevailing rates would be an ideal scenario.

Ian Myles: Okay. Can I just simplify that? Do you need to see the AUD, USD currency move down? A lower currency with the same prevailing rates would be an ideal scenario?

Speaker #2: It doesn't really help us a lot. And just because we have to refinance the notes in US dollars and we've got the cross-currency interest rate swaps aboard, the US dollars are swapped back to AUD.

Michael Riches: It doesn't really help us a lot, Dan, just because we have to refinance the notes in US dollars, and we've got the cross-currency interest rate swaps that brought the US dollars back to AUD. Effectively, wherever the rates move, that might help us a little bit, but it doesn't actually make a material difference to the math.

Speaker #2: So, effectively, wherever the rates move, that might help us a little bit, but it doesn't actually make a material difference to the math.

Speaker #3: Okay. All right. Thank you.

Ian Myles: Okay. All right. Thank you.

Speaker #1: So our next question comes from Owen Barrow with RBC Capital Markets.

Operator 2: Our next question comes from Owen Birrell with RBC Capital Markets.

Operator: Our next question comes from Owen Birrell with RBC Capital Markets.

Speaker #3: Okay. Good morning. Just a question around your contracted capacity—current contracts out to June 28. Can I just ask about the re-contracting process? Have you just started your discussions with your existing customers?

Owen Birrell: Hey, good morning. Just a question around your contracted capacity. Current contract's out to 30 June 2028. Can I just ask about the recontracting process? Have you started your discussions with your existing customers, and how do you see that playing out? Are you going to end up with, I guess, a continuation of the status quo, or do you expect that particular customers may break ranks from what the current status quo is?

Speaker #3: And how do you see that playing out? Are you going to end up with, I guess, a continuation of the status quo, or do you expect that particular customers may break ranks from what the current status quo is?

Speaker #2: Ian, I think so. So all of our contracts, remember, are evergreen contracts with an option for renewal that is in the customer's favor. So the requirement for contracts that expire on 30 June 2028 is that customers need to make a decision by 30 June 2027 as to whether they're going to renew.

Michael Riches: Yeah, no, I think so. All of our contracts, remember, are evergreen contracts with options for renewal that are in the customer's favor. The requirement for contracts that expire on 30 June 2028, is that customers need to make a decision by 30 June 2027 as to whether they are going to renew. When we look at the mines that support the contracts that are renewing on 30 June 2028, we, at this stage and in discussions with those customers that own those mines, expect that there would be recontracting or those customers would agree to renew those contracts post, or at 30 June 2027. There's not really a renewal discussion, obviously, from a pricing perspective. Pricing is in place till 2031, so we do not have to have any concern around that.

Speaker #2: When we look at the mines that support the contracts that are renewing on 30 June 2028, we, at this stage and in discussions with those customers that own those mines, expect that there would be pre-contracting, or those customers would agree to renew those contracts post, or at, 30 June 2027.

Speaker #2: So, there's not really a renewal discussion. Obviously, from a pricing perspective, pricing is in place until 2031, so we don't have to have any concern around that.

Speaker #2: And it's really customers' decision as to whether they would reduce capacity at that point in time. As I said, in terms of the mines that support the contracts expiring on 30 June 2028, there's nothing at the present stage that indicates those contracts wouldn't be renewed.

Michael Riches: And it's really customers' decisions as to whether they would reduce capacity at that point in time. As I said, in terms of the mines that support the contracts expiring in 30 June 2028, there's nothing at the present state that indicates that those contracts would not be renewed.

Speaker #3: So, under the evergreen structure, can we presume that the 100% take-or-pay is going to continue beyond that June 28 point?

Owen Birrell: Under the evergreen structure, can we presume that the 100% take-or-pay is going to continue beyond that June 2028 point?

Speaker #2: Absolutely. Yeah. There's no changes, and the only thing that happens in June 2028 is customers either renew on the current terms or they don't renew.

Michael Riches: Absolutely. There are no changes. The only thing at June 2028 that happens is customers either renew on the current terms or they do not renew.

Speaker #2: And you.

Speaker #3: So, do they have the option of reducing volumes at that point?

Owen Birrell: Do they have the option of reducing volumes at that point?

Michael Riches: They do have the option of reducing volumes if they are. To the extent, of course, any capacity becomes uncontracted at that point in time, we obviously will be then going to our 33-million ton access queue, offering that capacity to that queue for consideration as to whether any of those customers want to take it up or those access seekers. To the extent it is not taken up by access seekers, then obviously we would socialize the uncontracted capacity. At this stage in our discussions with customers, and they have still got effectively close enough to 12 months to make that decision, nothing would indicate that customers are either looking to not renew or to reduce the extent of capacity.

Speaker #2: They do have the option of reducing volumes if they're — and so to the extent, of course, any capacity becomes uncontracted, at that point in time, we obviously will then be going to our 33 million ton access queue, offering that capacity to that queue for consideration as to whether any of those customers want to take it up, or those access seekers.

Speaker #2: And to the extent it's not taken up by access seekers, then obviously we would socialize the uncontracted capacity. But, at this stage, in our discussions with customers—and they've still got effectively close enough to 12 months to make that decision—nothing would indicate that customers are either looking to not renew or to reduce the extent of capacity.

Speaker #3: Can I ask, if they do choose to renew, does that shift to a rolling basis, or does that renew for a set period of time?

Owen Birrell: Can I ask, if they do choose to renew, does that shift to a rolling basis, or does that renew for a period of time? We end up with another 10-year period, for example.

Speaker #3: So, we end up with another sort of 10-year period, for example.

Speaker #2: Yeah. It renews for five years. They're five-year renewal rights. Yeah. That's not on a rolling basis; it's just contracts that expired at 30 June 2028. If they're renewed, they'll now expire at 30 June 2033.

Michael Riches: Yeah, it renews for five years. They are five-year renewal rights. Yeah. So it is not on a rolling basis, it is just contracts that expired at 30 June 2028, if they are renewed, they will now expire at 30 June 2033.

Speaker #3: Okay. And just a second question from me. I know Anthony asked a question around any potential discussions regarding Hay Point. Wouldn't mind just asking whether you've had any consideration looking at Port of Newcastle as a similar port-style asset.

Owen Birrell: Okay. Just a second question from me, I know Anthony asked a question around any potential discussions around Hay Point. I would not mind just asking whether you have had a consideration looking at Port of Newcastle as a similar port style asset. Is that an asset that you would see yourself being comfortably able to operate?

Speaker #3: Is that an asset that you would see yourself being comfortably able to operate?

Speaker #2: Yeah, I think Port of Newcastle—obviously we're well aware that Macquarie Asset Management have appointed Goldman Sachs to consider a sale of their 50% interest.

Michael Riches: Well, I think Port of Newcastle, obviously, we are well aware that Macquarie Asset Management have appointed Goldman Sachs to consider the sale of their 50% interest. I think the Port of Newcastle, slightly different to us. Obviously, it has other elements to the port than just coal, although coal is the predominant part. I think what we will do is look and consider what Macquarie are looking to do with that asset, ultimately what maybe China Merchants are contemplating doing, what the sale process looks like, and consider those options when it does actually come to market.

Speaker #2: I think the Port of Newcastle is slightly different to us. Obviously, it has other elements to the port than just coal, although coal is the predominant part.

Speaker #2: And I think what we will do is look and consider what Macquarie are looking to do with that asset, and ultimately what maybe China Merchants are contemplating doing—what the sale process looks like—and consider those options when it does actually come to market.

Speaker #1: As a reminder, please limit your questions to two per person in the interest of time, and rejoin the queue if you have further questions.

Operator 2: As a reminder, please limit your questions to two per person in the interest of time, and rejoin the queue if you have further questions. Your next question comes from Cameron McDonald with E&P.

Operator: As a reminder, please limit your questions to two per person in the interest of time, and rejoin the queue if you have further questions. Your next question comes from Cameron McDonald with E&P.

Speaker #1: Your next question comes from Cameron McDonald with E&P.

Speaker #3: All right. Good morning. Two questions for Steph, if I can, please. So just going back to the interest line, with that step up in the first half, are we still expecting a second half step up, or how should we think about the net interest costs for the full year relative to the first half?

Cameron McDonald: Oh, good morning. Two questions for Steph, if I can please. Just going back to the interest line. With that step up in the H1, are we still expecting a H2 step up? Or how do we think about the net interest costs for the full year relative to the H1?

Speaker #2: Sure, thanks, Cameron. So, the first half interest rate, if you calculate it, is more around the 4.7% all-in rate. And then it is stepping up to 7%, pretty much from 30 June.

Stephanie Commons: Sure. Thanks, Cameron. The H1 interest rate, if you calculate it, is more around the 4.7% all-in rate, and then it is stepping up to the 7% from pretty much 30 June. I think in December 2025, at that time, the all-in interest rate was 4.63% and it has crept up a little bit over that next period of time. As we've done some of those refinances, with the AMTN and as the base rates have grown, that's where that step up to the 7% is happening. That will take place from effectively about mid-June, through until the end of the year. There is still a step up happening, but that's the sort of step up that's happening between the two periods.

Speaker #2: So I think in December, FY25, at that time, the all-in interest rate was 4.63%, and it has crept up a little bit over that next period of time.

Speaker #2: And so, as we've done some of those refinances with the AMTN, and as the base rates have grown, that's where that step up to 7% is happening.

Speaker #2: And that will take place from, effectively, mid-June through until the end of the year. So, there is still a step up happening, but that's the sort of step up that's occurring between the two periods.

Speaker #2: So, I would think of that 7% guidance as applying to the second half.

Stephanie Commons: I would think of that 7% guidance as being applying for the H2.

Speaker #3: Okay, great. And then just on the cash flows, the movement in working capital has been pretty volatile over the last three half-year periods. So, positive $34 million in first half '24, negative $12.5 million in first half '25, and then positive $42.9 million in this period.

Cameron McDonald: Okay, great. Just on the cash flows, the movement in working capital's been pretty violent over the last three half year periods. +34 million in H1 2024, -12.5 in H1 2025, and then +42.9 in this period. Can you just explain what's driving that volatility, please?

Speaker #3: Can you just explain what's driving that volatility, please?

Speaker #2: Yeah, so in working capital, it's primarily around the operator and what's been happening with their invoicing. So if you think about it, two things have occurred.

Stephanie Commons: Yeah. Working capital, it is primarily around the operator and what has been happening with their invoicing. If you think about it, two things have occurred. The first one is, the operator has underspent its budget and they work on a 1 July to 30 June period. They have underspent their budget for that 12-month period. If you take a 31 December snapshot, you get a particular position and at 30 June you get another position. That underspend is about AUD 21 million, AUD 23 million for the year. We will be refunding that to customers, around end of August, I think. Yeah, around the end of August, we will be refunding that. The second thing that has happened is as at 31 December, the amount we owed to the operator was very low.

Speaker #2: So the first one is the operator has underspent its budget, and they work on a 1 July to 30 June period. So they have underspent their budget for that 12-month period.

Speaker #2: And so, if you take a 31 December snapshot, you get a particular position, and at 30 June, you get another position. So that underspend is about $21 million to $23 million for the year.

Speaker #2: So we will be refunding that to customers around the end of August, I think—or, yeah, around the end of August, we'll be refunding that.

Speaker #2: The second thing that's happened is, as at 31 December, the amount we owe to the operator was very, very low. So, the way—probably appreciate, but the way working capital works is, if we are actually not paying as much to the operator as we were in previous years, then that actually gives us a working capital benefit.

Stephanie Commons: The way, probably appreciate, but the way working capital works is if we are actually not paying as much to the operator as we were in previous years, then that actually gives us a working capital benefit. We only owe the operator in their December quarter invoice about AUD 12 million or AUD 13 million because there was a big refund that had come through with some of the works that we were undertaking for them. There was a big credit that had gone through in that period. If you are just looking at these points in time, you see these big working capital movements. We expect a lot of that to flush out by this August, and then it should return to a more normalized rate that you would have seen probably since listing.

Speaker #2: So, we only owe the operator in their December quarter invoice about $12 or $13 million, because there was a big refund that had come through with some of the works that we were undertaking for them.

Speaker #2: So, there was a big credit that had gone through in that period. So, if you're just looking at these points in time, you see these big working capital movements.

Speaker #2: We expect a lot of that to flush out by this August, and then it should return to a more normalized rate that you would have seen probably since listing.

Speaker #2: But there will always be some movement depending on where the operator is sitting, in terms of their over- or underspend, and that can go either way.

Stephanie Commons: There will always be some movement depending on where the operator is sitting in terms of their over or underspend, and that can go either way.

Speaker #3: Okay. Thank you.

Cameron McDonald: Okay. Thank you.

Speaker #1: So our next question comes from Cynthia with Citi.

Operator 2: Our next question comes from Sam Seow with Citi.

Operator: Our next question comes from Sam Seow with Citi.

Speaker #4: Thanks, and good morning, all. I appreciate you taking my questions. Just a quick one on the distribution. Your guide for the next, kind of, tick year is eight and a half versus, I guess, your long-term target of three to seven.

Sam Seow: Thanks, and morning all. I appreciate you taking my questions. Just a quick one on the distribution. Your guide for the next kind of 2 years, 8.5% versus I guess your long-term target, 3% to 7%. Looking forward, you should see quite a material step up in revenue. Your interest effectively looks fixed now and your CapEx is stepping down. Just wondering how we should think about when you are happy to go outside that target range for distributions and what are your moving factors there, particularly around the 2027, 2028 tick year. Thank you.

Speaker #4: Looking forward, you should see quite a material step up in revenue. Your interest effectively looks fixed now, and your capex is stepping down. Just wondering how we should think about when you're happy to go outside that target range for distributions, and what are you moving factors there, particularly around the '27, '28 tick year.

Speaker #4: Thank you.

Speaker #2: Yeah. Thanks, Sam, for the question. I think as we progress during this year and we have, obviously, the certainty of SL1A being commissioned and completed, RL4 being commissioned and completed, and we fully expect the addition of those two major assets to the Kneecap asset base by 1 July '27. We obviously now have a clear view, as Steph has indicated, on interest costs over the course of the next, literally, couple of years.

Michael Riches: Yeah, thanks Sam for the question. I think, as we progress during this year and we have obviously the certainty of SL1A being commissioned and completed, RL4 being commissioned and completed, and we fully expect the addition of those two major assets to the NECAP asset base from 1 July 2027. We obviously now have a clear view, as Steph has indicated, on interest costs over the course of the next literally couple of years, given we are substantially hedged and assuming base rates do not materially increase going forward. As I mentioned, one of the key things will be understanding the CapEx profile on things like SL2, so Shiploader 2 replacement and the gallery wrapping to understand what our CapEx requirements are going to be there. Again, we should have a handle on those within the next, call it 6 to 12 to 18 months.

Speaker #2: Given we're substantially hedged, and assuming base rates don't materially increase going forward—and as I mentioned, one of the key things will be understanding the capex profile on things like SL2, so Shiploader 2 replacement and the gallery wrapping—to understand what our capex requirements are going to be there.

Speaker #2: And again, we should have a handle on those within the next, call it six to twelve to eighteen months. I think that will then enable us to have a reassessment of the profile of the cash flows coming through, what our FFO looks like, and what our capex requirements look like, and then make an assessment.

Michael Riches: That will then enable us to have a reassessment of the profile of the cash flows coming through, what our FFO looks like, and what our CapEx requirements look like, and then make an assessment, as we have done effectively on a 6-monthly basis over the last 24 months, around whether we continue to increase the distributions and whether they go above 3% to 7%. Obviously, from a management perspective, we are focused on getting the most out of our distributions and paying out what we think is appropriate. That has been obviously the high end of that range, and we will look at it on an ongoing basis.

Speaker #2: As we have done effectively on a six-monthly basis over the last 24 months, we review whether we continue to increase the distributions and whether they go above 3 to 7 percent.

Speaker #2: Obviously, from a management perspective, we're focused on getting the most out of our distributions and paying out what we think is appropriate. That has obviously been at the high end of that range.

Speaker #2: And we'll look at it on an ongoing basis. I think the only other thing to keep in mind is that a lot of our interest costs at the moment are being capitalized because we have that circa $260 to $270 million of NECAP works underway.

Stephanie Commons: I think the only other thing to keep in mind is that a lot of our interest costs at the moment are being capitalized because we have that AUD 260, AUD 270 million of NECAP works underway. Under the way that accounting standards work, we capitalize, we assume 100% of that is debt-funded at our prevailing interest rate. So when you look at a FFO payout ratio, as soon as those amounts get added to the asset base on 1 July next year, all of that will move into interest expense, which will then flow through into our FFO. Obviously, this amount of interest we are paying does not change. It is just really the categorization. So when you are looking at your FFO payout ratio, it still will be sitting at the high 70%.

Speaker #2: And so, under the way the accounting standards work, we capitalize. We assume 100% of that is debt-funded at our prevailing interest rate. So, when you look at an FFO payout ratio, as soon as those amounts get added to the asset base on July 1 next year, all of that will move into interest expense, which will then flow through into our FFO.

Speaker #2: Obviously, this amount of interest we're paying doesn't change; it's just really the categorization. So, when you're looking at your FFO payout ratio, it still will be sitting at the sort of high 70%.

Speaker #2: So, that's probably just something to keep in mind in terms of some of this step-up that's happening on 1 July '27, to a certain extent, is offset or is absorbed by just that step-up in interest that is happening from this year.

Stephanie Commons: That is probably just something to keep in mind in terms of some of this step-up that is happening in 1 July 2027, to a certain extent, is offsetting or is absorbed by just that step-up in interest that is happening from this year.

Speaker #4: Got it. That's helpful. But maybe just a follow-up on that. I mean, roughly, it still looks like you can stay within your payout ratio target and go above.

Sam Seow: Got it. That is helpful. But maybe just to follow up from that. Roughly, it still looks like you can stay within your payout ratio target.

Stephanie Commons: Yes

Sam Seow: And go above the kind of 3 to 7 range. But just remind me again, as you are thinking about this, with the stapled security and loan note structure, does that preclude you from doing buybacks? And is that something.

Speaker #4: The kind of 3 to 7 range. But just remind me again, as we're thinking about this: with the stapled security and loan note structure, does that preclude you from doing buybacks?

Speaker #4: And is that something that is potentially on the radar if you do have excess kind of FFO?

Michael Riches: No

Sam Seow: that's potentially on the radar if you do have excess kind of FFO?

Michael Riches: I think when we look at capital allocation across the business and where we would best invest that, certainly, share buybacks are one option. I think it's not something that we would not consider. We would always consider all of those options, whether it's something we would introduce. I think one of the challenges, Sam, is given the profile of our cash position and the amount of FFO, particularly when we're putting, as Steph said, close to the high 70%, if you factor in that capitalized interest component, you were to factor it in. There's not a lot of cash actually left to then do a material share buyback.

Speaker #2: I think when we look at capital allocation across the business and where we would best invest that, certainly share buybacks are one option. I think it's not something that we would not consider.

Speaker #2: We would always consider all of those options. Whether it's something we would introduce, I think one of the challenges, Sam, is given the profile of our cash position and the amount of FFO—particularly when we're putting, as Steph said, close to the high 70% if you factor in that capitalized interest component, your word of factoring it in—there's not a lot of cash actually left to then do a material share buyback.

Speaker #2: And so it’s important we think about, okay, what’s the value of these things overall, and how should we position it—whether it be a share buyback, whether it should be increased distributions, all of those things definitely will be taken into account.

Michael Riches: It's important we think about, okay, what's the value of these things overall, and how should we position it, whether it be a share buyback, whether it should be increased distributions, all of those things definitely will be taken into account. Then obviously people have mentioned other potential acquisition opportunities, and we obviously have to take those into account as well if they were to be something that we would look to pursue. As we have done over the course of the last couple of years, we will be constantly looking at our capital allocation and reassessing what are the right distribution levels. As we said, we've increased the FFO payout ratio. We think that's appropriate given the capital allocation review we did last year, and we'll continue to assess whether that 3% to 7% is the right target on an ongoing basis.

Speaker #2: And then, obviously, people have mentioned other potential acquisition opportunities, and we obviously have to take those into account as well if they were to be something that we would look to pursue.

Speaker #2: So, as we have done over the course of the last couple of years, we will be constantly looking at our capital allocation and reassessing what are the right distribution levels.

Speaker #2: As we said, we've increased the FFO payout ratio. We think that's appropriate, given the capital allocation review we did last year, and we'll continue to assess whether that 3% to 7% is the right target on an ongoing basis.

Speaker #2: Just to be clear, our guidance is what is on the distributions. We have a target of 3% to 7%. As a management team, we always look to exceed that target.

Michael Riches: Remember that, just to be clear, our guidance is what is on the distributions. We have a target of 3% to 7%, and we always, as a management team, look to exceed that target. We also appreciate that it's important that that target represents what we will think we can deliver on a go-forward basis.

Speaker #2: But we also appreciate that it’s important that that target represents what we think we can deliver on a go-forward basis.

Speaker #4: Got it. That's helpful. Thanks for that.

Sam Seow: Got it. That's helpful. Thanks for that.

Speaker #1: Your next question comes from Nathan Ledd with Morgan's Financials.

Operator 2: Your next question comes from Nathan Lead with Morgans Financial.

Operator: Your next question comes from Nathan Lead with Morgans Financial.

Speaker #3: G'day, Michael. G'day, Steph. Just two questions from me. And maybe they're a little bit nested, but I hope you don't mind that. So, slide 14—you've got your sort of illustrative rollout, I suppose, of revenue over time.

Nathan Lead: Good day, Michael. Good day, Steph. Just two questions from me, and maybe they're a little bit nested, but I hope you don't mind that. On slide 14, you've got your illustrative rollout, I suppose, of revenue over time. Can you just talk about how that profile has changed since you last presented that? Because I suppose it looks like 2027, 2028 is a little bit less. There's a bit more of a step-up in 2028, 2029, and it looks like maybe the additional NECAP coming through from uncommitted opportunities is a bit more back-ended. I suppose that does very much tie into slide 11 to do with the NECAP rollout. If you could just talk us through that'd be great, please.

Speaker #3: Can you just talk about how that profile has changed since you last presented that? Because I suppose it looks like '27, '28's a little bit less.

Speaker #3: There's a bit more of a step-up in '28 and '29, and it looks like maybe the additional kneecap coming through from uncommitted opportunities is a bit more back-ended.

Speaker #3: And I suppose that sort of does very much tie into slide 11, to do with the kneecap rollout. But yeah, if you could just talk us through that, that'd be great, please.

Speaker #2: Yeah, sure. So I think a couple of things, probably, where things have changed. I think, firstly, what we added to the NECAP asset base in FY26, to 1 July '26, was probably more than we expected.

Michael Riches: Yeah, sure. I think a couple of things probably where things have changed. I think firstly, what we added to the NECAP asset base in 2026 to 1 July 2026 was probably more than we expected. We pushed hard on some projects to get as much in there as we could, recognizing that it delivers TIC uplift straight away. Some of what would have previously been in the 2027, 2028 period has actually been brought forward into 2026, 2027. That's one thing to mention. Where you see 2027, 2028 potentially not being quite as high, and we've indicated it's AUD 0.53, I think previous days gone by might have mentioned more like AUD 0.55. Part of that reason is the bring forward of some of that NECAP into the asset base.

Speaker #2: We pushed hard on some projects to get as much in there as we could, recognizing that it delivers tick uplift straight away. So, some of what would have previously been in the sort of '27, '28 period has actually been brought forward into '26, '27.

Speaker #2: So that's one thing to mention. So where you see '27, '28 potentially not being quite assigned, we've indicated it's sort of $0.53.

Speaker #2: I think previous days gone by might have mentioned more like 55 cents. Part of the reason for that is the bringing forward of some of that kneecap into the asset base.

Speaker #2: In terms of going forward, we certainly see Gallery wrapping up. Until probably three to six months ago, it was a project that we were very focused on doing.

Michael Riches: In terms of going forward, we certainly see gallery wrapping up until probably three to six months ago, was a project that we were very focused on doing. We did not have approvals for it. We knew there would have to be some expenditure, but it was not very clear what that looked like. Some of that step up into 2028, 2029, will be a reflection of what we think is going to be some of the gallery wrapping NECAP that comes through. As I said, gallery wrapping is a year-by-year project. It is not a long-term project, so some of the gallery wrapping that will happen, we believe will happen in future years, is built into the gray component rather than the darker teal component for periods like 2028, 2029 or 2029, 2030 and 2030, 2031.

Speaker #2: We didn't have approvals for it. We knew there would have to be some expenditure, but it wasn't very clear what that looked like. And so some of that step-up into '28, '29 will be a reflection of what we think is going to be some of the gallery wrapping kneecap that comes through.

Speaker #2: As I said, gallery wrapping is a year-by-year project. It's not a long-term project. So, some of the gallery wrapping that we believe will definitely happen in future years is built into the gray component rather than the darker teal component for periods like '28, '29, '30, and '30, '31.

Speaker #2: And then of the large projects that we expect to happen towards the back end of the decade, like Shiploader 2, potentially Shiploader 3, essentially if they were to be committed—let's just pick a time period—some time in FY28 or late FY27, they're not going to be completed until '30 or '31.

Michael Riches: Of the large projects that we expect to happen towards the back end of the decade, like Shiploader 2, potentially Shiploader 3, essentially, if they were to be committed, let us just pick a time period, sometime in FY 2028 or if late FY 2027, they are not going to be completed until 2030 or 2031. Again, whilst we do not have any real clear commitments or understanding of the timing of that, we deliberately have not built that into the expected pick up lifts in, say, 2029, 2030 or 2030, 2031. If SL2 was to get approved and committed in 2027, then you might see, in 12 months' time, this chart change, and we would have a big gray bar sitting in 2030, 2031. So that is really the reason for it.

Speaker #2: And again, whilst we don't have any real clear commitments or understanding of the timing of that, we haven't built that—we deliberately haven't built that—into the expected tick uplifts in, say, '29-'30 or '30-'31.

Speaker #2: If SL2 was to get approved and committed in ’27, then you might see in 12 months’ time this chart change, and we’d have a big gray bar sitting in ’30, ’30, ’20, ’30, ’20, ’31.

Speaker #2: So that's really the reason for it, Nathan. It's a little bit of shifting some of the costs forward and some of them a little bit back.

Michael Riches: It is a little bit of shifting of some of the costs forward and some of them a little bit back. But it is not to say that, and this is why it is funnily enough, illustrative is, until we get a clear understanding of the absolute timing on these things, we do not want to be indicating that uncommitted, particularly uncommitted projects, will come into the NECAP asset base on particular dates. But we certainly expect there will be that NECAP required over the course of the next three to four years, and it will become committed.

Speaker #2: But it's not to say that—and this is why it's, funnily enough, illustrative—is until we get a clear understanding of the absolute timing on these things, we don't want to be indicating that uncommitted, particularly uncommitted, projects will come into the NEKAP asset base on particular dates.

Speaker #2: But we certainly expect there will be that need cap required over the course of the next three to four years, and it will become committed.

Speaker #3: Yep, okay, great. Thank you. The second question is just to do with ranking, I suppose, that ties in with your tax payments over the coming period.

Nathan Lead: Yep. Okay, great. Thank you. Second question is just to do with just franking. I suppose that ties in with your tax payments over coming periods. So can you just give us an update about when you expect to resume full franking, or not full franking, but back to normal run rate on the franking of the distribution and what that actually means for your tax payments that are going to impact the FFO over coming periods?

Speaker #3: So, can you just give us an update about when you expect to resume full franking—or not full franking, but back to a normal run rate on the franking of the distribution—and what that actually means for your tax payments that are going to impact the FFO over coming periods?

Speaker #2: Yep, sure. So, first of all, we expect to be paying unfranked distributions—unfranked dividends—for the remainder of this year. And we do forecast, or hope, that we would be paying partly franked dividends from the beginning of next year.

Stephanie Commons: Yeah, sure. First of all, we expect to be paying unfranked distributions, unfranked dividends for the remainder of this year. We do forecast or hope that we would be paying partly franked dividends from the beginning of next year. That would be the Q4 2026 distribution that we would look to pay in Q1 of 2027. That is obviously subject to board approvals. In terms of the FFO, just for clarity, the FFO does work off a current tax number rather than a cash tax number. The current tax relates to this year. Whenever we look at FFO, and whenever we look at distributions referable to a quarter, we do try to make sure everything in the FFO relates to the quarter or to the period that we are talking about.

Speaker #2: So that would be the Q4 '26 distribution that we would look to pay in Q1 of '27. So that's obviously subject to board approvals.

Speaker #2: In terms of the FFO, just for clarity, the FFO does work off a current tax number rather than a cash tax number. So the current tax relates to this year.

Speaker #2: So whenever we look at FFO, and whenever we look at distributions referable to a quarter, we do try to make sure everything in the FFO relates to the quarter or to the period that we're talking about.

Speaker #2: So, when we're talking about revenue or cost or interest or tax, it's referable to that quarter or to that year. And so, when we're talking about FFO, we're talking about the tax referable to our—so if we're talking about tax for this year, it's referable to 2026, rather than a refund we might be getting in relation to the 2025 tax return year.

Stephanie Commons: When we are talking about revenue or cost or interest or tax, it is referable to that quarter or to that year. When we are talking about FFO, we are talking about the tax referable to our. If we are talking about tax for this year, it is referable to 2026 rather than a refund we might be getting in relation to the 2025 tax return year.

Speaker #3: Okay, so you've got a tax receivable sitting there on your balance sheet. What is the actual tax paid likely to be in the next 12 months?

Nathan Lead: Okay. So you have got a tax receivable sitting there on your balance sheet.

Stephanie Commons: Yeah.

Nathan Lead: What is the actual tax paid likely to be in the next 12 months?

Speaker #2: So, our effective tax rate is sort of sitting at around—well, based on net profit before tax, the effective tax rate is sitting between that 15 to 20 percent.

Stephanie Commons: Our effective tax rate is sitting at around, based on a net profit before tax, the effective tax rate is sitting between 15% to 20%. It is probably sitting probably about the midpoint of that 15% to 20% when you are looking at the net profit before tax. If you then take that as what we would be paying for this year, then obviously, we have got a refund for this year in relation to last year. But in relation to this tax year, that is about the way to think about it.

Speaker #2: So it's probably sitting at about the midpoint of that 15 to 20 percent when you're looking at the net profit before tax. So if you then take that as what we would be paying for this year, then obviously you've got a refund for this year in relation to last year.

Speaker #2: But in relation to this tax year, then that's the way to think about it.

Speaker #3: Yep. Okay. Thanks, Steph. Thank you, Michael.

Nathan Lead: Yep. Okay. Thanks, Steph. Thank you, Michael.

Speaker #1: Thanks.

Speaker #4: There are no further questions at this time. I'll now hand back to Mr. Richards for closing remarks.

Operator 2: There are no further questions at this time. I will now hand back to Mr. Riches for closing remarks.

Operator: There are no further questions at this time. I will now hand back to Mr. Riches for closing remarks.

Michael Riches: Well, thanks everyone for your attendance, and thank you very much for the questions. We continue to see lots of value generation for security holders over time within the business and certainly significant opportunities. I think across the industry, there is no doubt consideration of certain headwinds that are impacting it. I think for us as a business, importantly, given where we sit within the Central Queensland coal network, the strength of our customer base and the quality of the mines that they have within the Goonyella system and our view on long-term metallurgical coal demand and the recent uplift we have seen in prices, we still see significant opportunity for the business going forward. And I think both through our NECAP program and other organic revenue initiatives, we will continue to focus on driving that longer-term security holder value.

Speaker #1: Well, thanks, everyone, for your attendance, and thank you very much for the questions. We continue to see lots of value generation for security holders over time.

Speaker #1: Within the business, there are certainly significant opportunities. I think, across the industry, there's no doubt that there is consideration of certain headwinds that are impacting it. I think for us as a business—importantly, given where we sit within the Central Queensland coal network, the strength of our customer base, and the quality of the mines that they have within the Goonyella system—and our view on long-term metallurgical coal demand, and the recent uplift we've seen in prices, we still see significant opportunity for the business going forward.

Speaker #1: And I think both through our NEKAP program and other organic revenue initiatives, we'll continue to focus on driving that longer-term security holder value. But thank you very much for all the questions and for your attention today.

Michael Riches: Thank you very much for all the questions and for your attention today.

Operator 2: That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.