Infratil Limited (IFT) Earnings Call Transcript

[Foreign Language] I'd like to call the meeting to order and welcome you all to Infratil's 28th Annual Meeting. I can confirm that under Infratil's constitution, we have a quorum, and this meeting is properly constituted. In the interest of encouraging shareholder participation, this year, shareholders were given the option to join the meeting in person or online. And it's so pleasing that COVID restrictions haven't prevented us from offering the physical meeting, but in addition to those of you in the room today, I'm very pleased to welcome those who are participating online through our virtual meeting platform, which is provided by Link Market Services. For those of you online, I'd like to note that you're also eligible to submit questions. Slide 3 of the presentation is a picture of the virtual meeting platform, and the arrows show where to collect to get a voting card and how to ask a question. But if you need any help, you can call the number which is displayed in the blue bar at the top of the platform. I'd also like to advise the meeting that members of the press and non-shareholders may be present. At the completion of the meeting, I invite those of you who are here in the room with us today to join the directors for refreshments. Before progressing onto the business of the meeting, I'd like to introduce you to your directors. I'm Alison Gerry. I'm the Independent Director and Chair of the Board and a member of the Audit and Risk, the Nomination and Remuneration Committee, which we refer to as the [ NAMS ] Committee, and the Management Engagement Committee, which we call the MEC. I'm also seeking reelection as part of today's meeting. Jason Boyes is a Nonindependent Director and was appointed Chief Executive of Infratil last year. Andrew Clark is an Independent Director. Andrew is a member of the Audit and Risk Committee and the MEC. Andrew joined the Board in June this year and is seeking election at today's meeting. Paul Gough is an Independent Director and is a member of the [ NAMS ] Committee and the MEC. Kirsty Mactaggart is an Independent Director. Kirsty is the Chair of the MEC and a member of the Audit and Risk Committee, and Kirsty is also seeking reelection at today's meeting. Peter Springford is an Independent Director and a member of the MEC. And Mark Tume as an Independent Director, our former Chair, now Chair of the Audit and Risk Committee and is a member of the [ NAMS ] Committee and the MEC. Phillippa Harford is our Chief Financial Officer; and Brendan Kevany is our Company Secretary, and Phillippa and Brendan are both in the room with us today. We have Gavin Silva joining us from KPMG, and KPMG are our auditors. We've got Josh Blackmore and Bradley Kidd from Chapman Tripp, who are here today in the room with us and are our external legal advisers. And in addition to your Infratil directors, we've also got with us directors and managers from our businesses. We've got Jason Paris online for Vodafone. We've got Peter Coman for RetireAustralia and Qscan; Matt Clarke for Wellington Airport; Paul Ridley-Smith for Manawa Energy; Terry McLaughlin for HRC Healthcare; and of course, we've got Jason Boyes here today also as the Director of CDC Data Centers and as the Chair of Longroad Energy. So now moving to the meeting proper. Are there any apologies, please? As the notice of meeting has been sent to all shareholders, I'll take it as read. Proxies have been lodged by 894 shareholders holding 370,475,787 shares, and this represents 51.05% of the ordinary issued capital. I advise that the Board has confirmed that the minutes of the last annual meeting, which, if you remember, was held online on the 19th of August 2021, are a true and correct record of that meeting, and copies of the minutes are available to all shareholders. Before progressing onto the formal matters, I'd just like to take a little bit of time and reflect on another fantastic year of accomplishments for Infratil. But to start, I'd like to thank Mark Tume for his outstanding tenure as Chair. Mark has served as Chair from 2013 until earlier this year and has been on the Board since 2007. And what stands out for me has been his leadership, his constructive challenge, thoughtful debate, humor and collegiality. He's brought an analytical focus and a relentless drive to add value. And it's also a testament to his tenure as Chair that Infratil was recognized as Company of the Year in the Deloitte Top 200 awards earlier this year. This will be Mark's last annual meeting, but he will remain on the Board as a director until the end of the year. And Mark will certainly leave big shoes to fill around the Board table. Andrew Clark has recently joined the Board, and we're going to hear more from Andrew as part of the formal proceedings, and a search for an additional director is currently underway. Kirsty Mactaggart has been appointed as the Chair of the Management Engagement Committee. And this committee comprises the independent directors and is tasked with monitoring the managers' performance and compliance with the management agreement as well as managing any potential complex or perceived conflicts of interest between Infratil's shareholders and the managers. In recent times, there have been changes in the CEO, the Chair and the Board, but we believe we've managed these transitions well. And my message to shareholders is they should expect consistency of approach, discipline and a continued focus on execution. With the Tilt sale and more recent transactions, shareholders have seen investment returns, which accrue from being at the forefront of trends. While the transactions may reflect particularly well in a single annual year, they are often the result of a clear strategy, careful planning and quality execution over many years. The fact that the Tilt sale took over 2 decades to realize demonstrates this. Having said that, I'd like to briefly touch on 2 outstanding transactions, which we've announced since the end of the financial year, which have actually had much shorter gestation periods, but are also only at the beginning of the Infratil investment stories. The first was Vodafone sale of its passive mobile tower assets and Infratil's reinvestment in the new TowerCo Business. Shareholders will remember that it was actually only in May 2019 that Infratil acquired just under half of Vodafone New Zealand for about $1 billion. And based on the March 2022 independent valuation, Infratil expects to have generated a 26.7% per annum return on its investment in Vodafone following the tower sale. The Towers deal was a fantastic result, reflecting an incredible effort and exceptional swift execution and action by both the Board and management to achieve the best result for shareholders. It's also worth noting that no incentive fee was payable to the manager in relation to this transaction because Vodafone is a New Zealand asset. The second transaction was the new capital and co-investor for Longroad Energy. I'm going to leave it to Jason to focus more on this transaction, but the key soundbite for shareholders is that from an original investment of USD 100 million, together with $100 million from NZ Super, the business is now actually worth USD 2 billion in just 6 years and is well positioned for the next phase of its growth. At the completion of the transaction, Infratil will have invested a net USD 112 million in Longroad since 2016, and we will have achieved an internal rate of return of 59% per annum based on the pre-money valuation of our stake, which is implied by this transaction. The level of return is a real testament to having identified an opportunity early, built-in support of the right team and relentlessly executed on the plan. We really look forward to seeing the Longroad story progress further as well as its new sister renewables. I don't know why they don't talk about brother renewables, but sister companies, through Galileo and Gurin Energy, Galileo in Europe; and Gurin Energy in Asia. Taking a longer-term approach to value creation is key to delivering outsized returns. It takes us time to transform an idea that matters from a single asset into a wider next-generation platform with strong long-term value creation potential. The long-term nature of those investments requires conviction. By their very nature, early investments involve analysis and insights which are ahead of the curve. Before I conclude, I wanted to mention that this isn't the only time that we actually meet with shareholders. We have this formal annual meeting, which is managed in quite a prescribed way. But in addition to the normal investor and stakeholder investor activities, we remain one of the few NZX listed issuers that undertakes an annual retail roadshow. This year, we undertook 16 meetings in 15 cities and towns across the length of New Zealand over a 2-week period starting at the end of May. And we had 1,400 people attend, which was fantastic. We feel that it is important and a worthwhile investment of time and resources to help our shareholders wherever they love to have an opportunity to firsthand interact with the management team and get a better understanding of our strategy. I'd like to conclude by reiterating the key message for how we deliver on our strategy of investing in ideas that matter, through consistency of approach, discipline and a continued focus on execution. I'd like to now hand over to Jason to present the Chief Executive report.

Well, thank you, Alison, and [Foreign Language] everybody here and online. It's great to be here for the first time in person for an AGM. Last year at last minute, I ended up having to do this in my study, which wasn't ideal. So lovely to see you all. I will do a few things in this review. I will look at the last financial year, which feels, as always, at this period of time, like ancient history, but we may as well do that. I'll talk a little bit more about the recent development since then, which have had quite a material impact on the share price, which everybody in the room will have seen and enjoyed. And then I think I'll take you through the kind of material companies and areas we're investing and give you an update on our latest views on them 4 months into the year. And hopefully from that, you'll get a sense of where we think there are opportunities for further investment as well because we're in a pretty good position to do that. So 3 parts. Bear with me. This slide, you would have seen at the full year results announcement, and we don't adjust it at all. But just to pause for a second on the year that was to 31 March. This year, it was a record net parent surplus, well over $1 billion, and that was materially as a result of that Tilt Renewables transaction that we've talked about a lot. Significant impact on that number. There was also a really high level of investment last year as well, $1,400 million, and there were some new businesses that we started in that period, which contributes a lot to that number, and I'll talk about that in a second. At that time, we were talking about $1,600 million of available capital. That's changed a little bit. I'll give you an update on that. But you should roughly think that Infratil has sort of $1 billion of capital at the moment available for investment within our existing businesses or in any other platform we choose to start that hasn't changed too much since that time. And the shareholder return and dividend numbers there showed a really strong performance over that period, again, materially contributed to by Tilt. So that feels like a long time ago, but worth reminding ourselves of. And if you look at how the portfolio was last year, it's quite an interesting snapshot actually, with digital infrastructure and renewables roughly the same size in the portfolio, 40-odd percent. And we had started the healthcare platform, which is Diagnostic Imaging, of course. At that time, we had only invested in Qscan in Australia. So quite an interesting shot. What happens over the period, a strong skew towards digital infrastructure has happened in that period, right? So from 40% to 60% over that time. How did that happen? A couple of things happened in that period. One was obviously that sale of Tilt Renewables, quite a big investment in the portfolio dropping out. We also had really strong valuation performance in digital infrastructure generally as a sector, but CDC and Vodafone as well. So they grew really quickly. This -- these numbers actually now reflect that valuation uplift in Longroad that Alison talked about before. So this is sort of actually very current, that before even that valuation uplift, there was actually an even stronger way to digital infrastructure. What I would say about the weighting between those 2 sectors is that future growth and digital infrastructure is turning up more in the valuations at the moment than you're seeing in the renewables part of the portfolio. So Longroad, I think, is the start of a series of things you should see happen in renewables where more and more of the forward growth in that sector should turn up in that valuation over time as those businesses mature. And so actually, if I sort of fuzz my eyes and roll ahead a couple of years, I don't think that skew towards digital infrastructure is actually as strong as it might appear. What else do we do in the period? So we materially increased our investment in scale in healthcare or Diagnostic Imaging. So over that period, Pacific Radiology, the RHC Group joined and they made further investments in alongside Auckland Radiology, the group of doctors who are very strong in that Auckland market where Pacific Radiology didn't have a presence and also in Bay Radiology in and around [indiscernible]. So that effectively doubled the size actually of our investment in Diagnostic Imaging in that period. So you sort of see a strong scaling of the percentage of the portfolio that's in healthcare. A couple of other things to mention. So we started an early-stage investment in digital infrastructure, Kao Data, you see out there. That's our London-based data center business where we invested $100 million, $200 million, I think, in that period. That looks like a CDC, maybe even a couple of years before we made that investment in Australia. So an early stage platform, developer of data centers and a really big, strong market where we think they have a niche that will enable them to grow and become even more and more relevant. We also started earlier stage investment in Gurin Energy, which is on there, which is that Asia renewable development entity. Last of all, we dotted on the Manawa Energy, which was Trustpower. I think at this time last year, of course, they sold their retail business to become a focused generation owner and now developer. And actually, funnily enough, looks a lot more like all the other logos under that renewable slot now, and they're all focused in on that renewable generation ownership and development piece, which we think is really attractive. If you track the flags down the bottom, and we don't show this at this time of year, but at our Investor Day, you can see it. You can see the geographic diversity of the portfolio is increasing as well with platforms across a number of different jurisdictions now. The big ones are still at this into the world, although I'd argue Longroad is now one of the big ones and is obviously based in the U.S. So pretty big shifts in the portfolio. Some nice early-stage investments and the things that we know a bit about. And I would flag, I would expect that renewables to sort of catch up to digital over time. Two quick things before I go into the businesses that we currently own and give you an update on them. As Alison mentioned, since the end of financial year, Vodafone announced the sale of its Towers business. And Alison described nicely, I think the financial metrics of that, which were quite incredible really when you think we acquired that whole business for around 7x its earnings, and we're able to sell that Towers business for well over 30x its earnings, in line with exactly what's factored. I often get asked why did we choose to reinvest in that business. It's actually quite a nice stable business. When we acquired Vodafone, part of the thing we liked about it was the embedded infrastructure within that business. And so having an ongoing exposure to that is actually quite attractive as part of Infratil's portfolio. Remember, Infratil tries to blend a balance of core, reliable, defensive assets with more high-growth assets like a CDC or a Longroad. We expect that business to earn sort of around 8% type returns, which I think sits really nicely alongside some of the core defensive parts of Manawa or some elements of the airport as well. So it fits quite nicely in the portfolio. I think it gives us interesting insight into an industry we really like as well, and we obviously have another dog in that game in Vodafone. The last thing I would say about the Towers transaction is it does, I think, really exemplify the types of things we're thinking about when we talk about assets having embedded options within them. So these are things that we -- either give us an option to invest or that we can do with those businesses that we don't have to do, but that we think if the conditions are right, can create a lot of value to us. So the downside of those sorts of businesses, they tend to be quite complex with lots of things going on in them. The upside is there are lots of things you can go to in those businesses to create value as and when opportunities arise, and this is a really classic example. And then the Longroad capital raise, I think, again, Alison described really well. It is a phenomenal success story really, Longroad, to take our USD 100 million initial investment into something that's now worth over $1 billion. And I wouldn't disagree with anything Alison said about how we went about that. It's a very deliberate strategy. And across the business, we're trying to recreate new versions of Longroad. I would say with this transaction, it seems like an unfathomable number, right, with 40x forward earnings as representing that $2 billion valuation. But I don't think it's out of line with the way Tilt was valued or other businesses in the sector we see being valued as well. And I would also say that this is a valuation that was really set before the latest legislative moves in the U.S. to encourage even more renewable investments. So I would not say that this business is ex growth at all. We see good further returns from it in that market. So sort of a couple of victory laps. The last victory lap, I promise, that share price performance is something we put up every year. It's obviously been significantly influenced in recent periods by that Longroad transaction announcement. You can see it right at the end, but also the Towers transaction as well. I think those 2 together have contributed to that 1 year total shareholder return of 26.4%. It's quite interesting when you look at Infratil over a long period of time, you should -- we tend to see sort of flat or slow growth periods punctuated by these blips, right? And those blips tend to come as the value of all that work that gets done over a period of years often suddenly gets recognized in the market. And that just so happened, we've had a couple of those this year because if we do a couple, every you wouldn't it, but I'm not sure we can necessarily achieve that. So that profile is actually the way the Infratil share price tends to behave. And somebody described it to me once, I haven't come up with a better description, Infratil as defensive with growth. So you should see really good, solid, stable core performance in the portfolio and then every now and then some growth investments coming off. We traditionally put this up often for the analysts, but I think the main message around our debt and liquidity is that we're in a historically very strong position, obviously, with those Tilt proceeds in the bank and not fully invested yet. This still doesn't take into account yet, I think, the Towers transaction proceeds. Obviously, that hasn't settled yet. But our share of that is roughly $800 million. I think net of our reinvestment is about $600 million, and we would expect that to find its way back to its shareholders in some shape or form that's Infratil as a shareholder over time. So never better. On guidance, we're only 4 months into the year, we're maintaining guidance at the range we set at the full year results announcements. As you'd expect, there's some unders and overs in the year, but no reason to change that at this time. We'll update that at the half year. So let me take us through the portfolio. Remember, we're a digital infrastructure, renewables, healthcare and in the airport. Digital infrastructure is dominated by CDC, our biggest asset by far. Now our interest is well over $3 billion in value. I was lucky enough to visit the 2 new Auckland Data Centers earlier this week. Actually, 1 is open and 1 is about to be opened this weekend, which was an amazing feat really through a pretty difficult COVID-affected period, together with the new one in Canberra, which is going to be commissioned in September, so nearly this month, next month, and a new facility in Eastern Creek 4, which is our biggest ever 40 megawatts. They'll be adding 100 megawatts of capacity, which has happened over the last 18 months. That's of a total of 260-odd megawatts of capacity. So a massive effort for that team to get those sorts of infrastructure out of the ground through a really tough period, more or less within budget, more or less a little bit on time. And it really does, I think, underscore for us the quality of that team and what we're seeing as a result of that is customers acknowledging that as well. And for critical load, they will tend to gravitate towards CDC because they have a demonstrated track record of delivering in even the hardest of conditions, right? So we continue to think it's a differentiated platform. Even though you probably can't go a week even in this country, right, seeing someone announce a new data center. Quite a big difference between announcing one and building one. And we're finding that in Auckland, in particular, for example, we're actually having the capacity available is quite a differentiator from others who are talking about capacity coming next year or the year after. As a result of that, we continue to feel really good demand signals from our existing customers and new customers. And really, the business is getting set for another big round of investment as what I would flag to you. So Melbourne will be starting this year, as I flagged at the full year results, and there should be more to come. I think it continues to be a really strong investment place for us to be. Vodafone New Zealand, we've talked about already, probably the biggest thing that has happened in this business since that period. It did underscore, as Alison said, what an excellent investment really has been for Infratil shareholders and a sector that hasn't traditionally been a happy hunting ground for 20% plus type investments, right. We're still investing quite a lot in customer experience and the network. And as we flagged at the full year and I think we're still saying now, we expect that elevated level of investment to continue for a period that's not going to be done in 1 or 2 years. That's a 2-, 3-, 4-year type project. We think there are great returns to be earned by doing that over the long term. Businesses like Vodafone will need to have made that investment to be relevant in the future. And for the long-term value of the business, we need to keep making those investments, which we're happy to do. So that's in IT, obviously, but also lots of things in the network, buying back our own store network to make the customer onboarding process smoother and better we can control it better that way. A lot of little things that are done to improve our customer proposition, and you should expect that to continue over the period. Just from an operating perspective. Roaming has recovered quite well. I think everybody has seen travel return quite quickly, not only domestically, but certainly Kiwis heading offshore, which has been nice for us, and I see Spark yesterday and their announcements noted the same effect. So we'll be updating more formally on their performance later in the year, but in a good spot, we think. So it's digital infrastructure, let's switch to renewables. And it's now with that tightening of Manawa's focus that I mentioned before, I think very appropriate to put all these businesses on a single map because they're all really focused on this generation of renewable development now. And although it might be nice to have a few more countries colored in, actually, these countries that we've colored in, which are the ones that are addressed by all our platforms in the U.S., Asia, Europe and in New Zealand, that actually constitutes about 80% of the addressable development market in the world. So if you take out China, which only Chinese developers can develop in, these countries will produce 80% of the projects that are going to be developed over the next 10 or 20 years, which is a really great place to be, obviously. Let me run through some of the bigger ones. So Manawa, a big congratulations to the team completing the sale of that retail business this year. I know it was a massive job for the team. It took quite a lot of focus and effort but well worth it because we like the position that the business now finds itself in. They are making good steps towards focusing on generation enhancement of their existing portfolio and new development. Where I think the signs are that there's actually a decently sized addressable market for Manawa to seek its fair share of. We're happy with the progress they're making there as a tech, our partners in that investment, and we support it. We're really happy to have Deion Campbell join that Board. Deion's obviously the ex CEO of Tilt Renewables, and there are some -- another member of the Tilt team working with him at Manawa. And so I think as Infratil shareholders, we can be comfortable that whatever that team produces and proposes as a project will look and feel familiar to us right from those Tilt executives being involved. So in a good spot as well. Longroad Energy, we talked about before. One thing I did want to mention to give people a sense of because we often forget it is the scale of that business. It's really hard to get your head around it. I went saw some of the projects in Arizona recently, and they are phenomenally big. They're talking about 1.5 gigawatts of generation capacity for the next 3 years every single year. If you add all that up, that sort of adds up to, in generation hours term, about the same as Manawa. So sort of building a Manawa every 3 years to give you a sense of, it's quite a lot of megawatt hours of electricity. The things to watch there, I think, to track its performance is that we're able to execute that level of transactions in the cadence we expect. So obviously, the Americans call the Inflation Reduction Act or Build Back Better bill. It doesn't really matter what you call it, it's a phenomenal shot in the arm for renewable development. That wasn't factored into that forecast. So we've got a nice little tailwind, I think, to help us make sure that we do, at least, hit those targets. That's the thing to watch there. Because remember, it's still a development company, right? Development risk is not hydro generation. It's quite different. And things can happen to developments that mean they don't happen, but that's why you get paid a higher return. Inflation reduction here, just to give you a sense of that, I mean the teams are still working on exactly what it means for the margins on our developments. But I've seen sort of independent reports talking about up to 40% to 50% improvements in margins as a result of some of the new effectively subsidies but incentives that have been put into that package. So whether that comes in terms of margin or whether it comes in just improved numbers of projects you can achieve, there's no doubt it's a really material tailwind for that business. And then Gurin and Galileo, the newer ones, right. So Galileo is about 3 years old based in Europe. I think the team has come together really nicely there, and we should see the first projects actually coming out of that platform later this year in Italy, some solar projects 200-odd megawatts to be a really nice moment for the team to know that they can actually take something from [indiscernible] to a project. And we'll get a sense of whether our predictions of the margins for that business, which are not that different from Longroad are actually really achievable. So good progress there. Gurin is obviously a bit newer. We only invested in that last year in Southeast Asia. But already, they came as a ready-made team, if you remember, there were 30 of them that were -- had already been working together for 10 or so years. But still, you've got to get into a new environment and a new cadence, right? Already, they've signed up quite an interesting set of solar projects in South Korea, and they're looking across Asia. Again, if you roll forward a few years, these businesses shouldn't be that different from Longroad. Actually, the way you develop isn't so different. The margins tend to even out around the world and tend to be relatively stable. I mean the world can change a lot in a few years, but I would say the plan is clearly to build more Longroads across the globe. That will mean, obviously, there'll be individually quite interesting investments on a stand-alone basis. But what you should get is a kind of a global scale that should -- that they should all benefit from, whether it's in terms of buying things together jointly or even just ways of working together, which you can learn from at a size that individually, they don't really have. So one really good example of cybersecurity. It's a big issue in all industries, right? But they are working together on what best practice is across the world and bringing that into their own businesses. Just 1 example. Wellington Airport is bouncing back well from COVID. So domestic travel, we've all experienced it, has been really strong and some certainly outbound international travel has come back really well. The team is continuing to do a fantastic job, we think. We shouldn't get too excited, I guess, as shareholders, we're still a couple of years away from getting dividends going again, right? So that is important from an Infratil perspective, that's the important role Wellington Airport -- one of the important roles Wellington Airport plays in our portfolio is that ongoing cash flow, but it's heading, definitely, in the right direction. Yes. Diagnostic Imaging. So remember, this is Qscan in Australia in RHC in New Zealand, which is Pacific, Auckland and Bay Radiology. And in a nutshell, why we invested in this space was, obviously, we like the long-term trends. But we felt that -- and the doctors involved in these businesses felt as well that there are real benefits to patients and outcomes and achieving larger scale than they're able to achieve on their own. And so you've seen that obviously through us contributing capital and being able to bring together for those 4 businesses under a roof. But investing alongside the doctors is a really important part of that thesis. And so -- and we're seeing some of that scale benefit starting and so we do believe in that thesis. It is important to note, I think that in terms of our portfolio in this post-COVID period, probably the Diagnostic Imaging platform is one of the more affected. Wellington Airport is bouncing back well and Vodafone as well. But I think this is one of the ones where the effects have lingered longer. And a little bit of that's to do with people not going to their GPs as much, a little bit that's to do with how the referral pathways work when people are seeing their GPs through telehealth-type platforms. So we do expect that to even out over time because we all know that the underlying incidences of illness and the things that we need these diagnostic imaging services for haven't changed at all. And we've seen that in the past when we've had people not being referred that people just present later with more serious illnesses. So we do expect that to lessen over time. We're taking this time to make sure that we're still executing on the growth investments that we expected to be making when we made these initial investments. So we've been really happy with the teams rolling out the new clinics that we expected to be putting in place when we made our initial investment over Australia and New Zealand. There are more to come. That's new machines and doctors and all the teams that go with that coming into areas that are previously underserved because they didn't have any local access to these facilities. So we're happy to be making those investments because we do have conviction in the long-term volume bounce back. And we're starting to work on the teams working together, right, to try and use their scale to make investments in things like IT, doctor training and all those things we talked about before that were really hard to make when they were smaller, separate businesses, and we expect that to continue over the medium term and produce benefits. There are other growth opportunities that we've explored and that we'll continue to explore. But I think there's plenty to be doing within the businesses we have as well. RetireAustralia, just quickly, that is undergoing a strategic review. So we've launched a formal sales process on that. We should have news on that later in the year. Ironically or not, actually, it's performing better than it ever has or certainly as good as it ever has. One of those kind of post-COVID things we didn't really expect was people appreciating how well these businesses performed looking after the residents in that period. And so there's definitely a bay of delayed demand being seen by those businesses. So look out to see how that strategic review process goes later in the year. So to sum up, I mean, it's hard not to get excited about the last 18 months. The performance has been, obviously, very strong, probably stronger than we would have predicted, I would say. That's not through lack of work, as you can see. At the start of the year, we talked about 3 things for the business. Look out for Tower sales, the capital raise in Longroad, and we believe the growth in CDC continue to be strong. And I think we've delivered on those things so far. The portfolio, and we've talked also about how we're thinking about the embedded growth options within our existing portfolio, right, when we think about the future. So whether that's Diagnostic Imaging investments in new clinics or investing in things within Vodafone that we think will preserve and enhance the long-term value of it. Longroad is definitely not ex growth, and we've got our new renewables platforms in Kao Data as well. So a really healthy set of options within the portfolio. So the portfolio remains, we think, really strongly positioned. We're seeing good diversity in our earnings. Some unders and overs through this period is exactly what the portfolio is supposed to do. We have got a ton of capital available to excise and address those embedded growth options as we choose when we choose. And also capital available to address any new opportunities, which we continue to scan for as we always have to try and stay ahead of the curve on what the new infrastructure of the future is going to be. Happy to take questions related to what I finished.

Thanks, Jason. So there is now an opportunity for discussion of the annual report of Infratil for the year ending 31 March 2022. And I'm, first of all, going to take questions or comments from those of you who are in the room with us today, and then we will move to the questions which might be submitted online. And if you're going to ask a question, I would like you to make sure you put up your hand and wait for the microphone to come with you. When a question also relates to one of our businesses, I may call on one of the director or management representatives here in the room today or online to provide a response. For the questions submitted online, management will collate the questions. And if there are multiple questions on the same topic, we might aggregate them. And at the appropriate time, we'll seek to address them in an orderly way. So if you'd like to ask a question, now it's the time to put your hand up and we will bring you a microphone. And for any of our director representatives who are sitting in the front row, if you were going to be answering a question, if you could turn your back to the directors up here and face the cameras because you've got to remember, we've also got a hybrid meeting underway. So I welcome any questions from the floor. Okay. I think we will now move to any questions that have been submitted online, and Mark Flesher is going to read the questions out. Are there any questions, Mark?

Thank you, Chair. The first question is from Donald [ Fallon ]. Is it time for the company with such great expansion plans to reward long-term shareholders?

Great. Thanks for the question. The Infratil Board is always seeking to act in the best interest of our shareholders. And we are very focused on growing value. And I think there are 2 ways that shareholders are rewarded. One is through our dividends, which we know are important to our retail shareholders. And we are looking for the dividends to remain stable and increase over time. But also, we're very focused on capital growth in the share price. And I think, as Jason has already shown us, we've seen some fantastic returns in the last 12 months. I think it was in 26.4% over the last 12 months. So I think we have delivered great returns to shareholders. Is there a second question, Mark?

Next question comes from Andrew Watson. Why has Vodafone decided to retire Vodafone TV?

Great. Thanks for that question. And I think we're just, again, our hybrid meeting, but I think we have Jason Paris, the CEO of Vodafone Online. So I'll hand it over to Jason to answer that question.

[Foreign Language] Alison. Hello, everyone. It's a great question, and I've got 2 Vodafone TV devices myself. So I was disappointed as anyone that we're retiring the product. This is a product that we had a really good crack at scaling, but we just didn't get there. And it was losing us around $10 million a year that we've decided to reinvest in other areas that customers care about, like network upgrades, bringing more of our service agents back home to [indiscernible] New Zealand. The reason it didn't work, we launched it 4 years ago, and technology changes quite quickly as everyone knows. And smart TVs now have the ability to aggregate the applications on the smart TVs themselves without the need to have a box that does it for them. And so although it went pretty well at the start, it didn't get to the size of the customer base that we needed to breakeven. We're ensuring that we don't put any of our customers at risk because we know how important entertainment is to our customers, and we've made sure we've done the right thing by reimbursing customers who have bought devices. And also, we've got a strong partnership with Sky should customers not want to use their smart TV and have another device that provides them entertainment in sport and content. Sky is a little bit behind its own device rollout that was supposed to be in September. It's now looking more like October and November, but is hopefully anyone with a Vodafone TV device has been communicated to, we're continuing to provide that service until Sky is in a position to transition and our customers over. That's it for me. Hopefully, that answers the question.

Great. Thanks, Jason. Mark?

Next question comes from Peter Newfield. How secure is energy supply to the New Zealand Data Centers?

Great. Well, I'll hand that one to Jason, who is on the board of CDC Data Centers, but it is also great having renewable energy platforms in our portfolio as well as data centers. Jason?

Yes. You get to hear the word megawatt a lot when we talk, whether it's generating them or using them in the data centers. So all the data centers that we build, including the ones in New Zealand, have multiple pathways for electricity into them. As you'd expect, we would want and our customers would want and that New Zealand ones are no exception. So they do have multiple redundant sources of energy. They obviously also have on-site diesel backups of both or more of those redundant sources of direct for off-grid energy fail as well, and they are able to operate the data centers, actually, forever if you really wanted to switch them over. So yes, they're pretty secure, I'd say.

Great. Thanks. Mark?

Next question comes from Vicki Lam. Does Infratil hold a view on wave technology as part of its renewable energy strategy in New Zealand and internationally?

Great question. So I am probably going to hand it to Paul Ridley-Smith, who is the Chair of Manawa to answer this.

[indiscernible] We're much more interested in good scale solar, wind and perhaps geothermal.

That's right. And I think offshore -- there will be offshore wind as well. But the wave is not in our future yet anyway, unless it improves a lot.

That technology changes quickly.

Yes, exactly.

Are there any more questions from our online audience, Mark?

There are no more questions.

Okay, great. Thank you. So given there are no more questions, we're going to move to the formal part of the meeting. My fellow directors and I intend to vote all discretionary proxies we've received and for which we are permitted to cast a vote in favor of the resolutions as set out in your notice of meeting. And I'd just remind shareholders that none of Morrison & Co, its directors, related companies, the direct or indirect shareholders or any staff of Morrison & Co may vote their shares in respect of Resolution 4 and 5, but they may vote as a proxy or voting representative for a person who is qualified to vote on Resolution 4 and 5, in accordance with that person's express instructions. For those of you in the room, you should have your voting card, which was given to you when you registered. But please do put up your hand if you haven't got a voting card and someone will come and assist you. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution and must be approved by a simple majority of the eligible votes cast by shareholders. The first set of resolutions for shareholders to consider is the election of directors. The listing rules require that directors must not hold office without reelection past the third annual meeting following the director's appointment, or 3 years, whichever is longer. And so accordingly, Kirsty Mactaggart and I, both retire, and being eligible, offer ourselves for reelection. In addition, as Andrew Clark was appointed by the Board following the 2021 Annual Meeting, Andrew is also required to retire and stand for election at this meeting. So the first resolution is in respect of my reappointment. So Mark Tume will Chair this part of the meeting.

[Foreign Language] Alison. We now come to the first resolution. The reelection of Alison Gerry as Director. Alison is retiring by rotation and is putting herself forward for reelection. The Board unanimously supports her reelection. Alison's credentials are outlined in the notice of meeting, and I now extend the opportunity to Alison to say a few words.

[Foreign Language] So it is a real pleasure to be here today in person, finally, at our Annual Shareholder Meeting. And I'm putting myself forward for reelection on the basis that I can make a positive contribution to Infratil. I feel I have the relevant skills, appropriate experience and importantly, the capacity to help Infratil achieve its many goals and objectives. I joined the Board in 2014, and I've Chaired the Audit and Risk Committee for the last 8 years. And in my executive career, I've worked in finance, treasury and risk roles for both corporates and financial institutions for more than 20 years. And this experience has been invaluable in my role as Chair of the Audit and Risk Committee, which I'm now handing over to Mark. After living overseas for 17 years, mainly in Asia and Australia, I moved back to New Zealand with my family in 2007. And since then, I've built a career in governance. I've been really fortunate to have had governance roles with many high-performing New Zealand companies, including Spark, Kiwibank, [ Inditex ], Queenstown and Wellington Airports and Pioneer Energy, many of which I think are highly relevant when I consider Infratil's diverse portfolio. And currently, I'm a Director of Air New Zealand, ANZ Bank and I'm the Chair of Sharesies. Having broad governance experience gives me a deep understanding of how companies can make a positive difference to the world, delivering great outcomes for shareholders, stakeholders and our people. And one of the reasons I'm really excited to have been elected as Chair of Infratil is because I believe so strongly in our purpose to invest wisely in ideas that matter. Our purpose helps guide our investment philosophy and is a great example of this as Infratil's recent move into the healthcare sector. I'd also like to assure you that I feel a key responsibility as Chair to ensure we have highly capable directors at the Board table with diverse skills and capabilities. And as a Board, we're very conscious of how important it is to build an environment where directors can constructively challenge each other and challenge the manager to ensure we make the best possible decisions for all stakeholders. So I humbly seek your support for my reelection. I'm up for the challenges ahead, and I'm committed to work hard on your behalf. [Foreign Language]

Thank you, Alison. I now propose that Alison Gerry be reelected as a Director of the company. Are there matters for discussion or questions concerning the motion relating to Alison's election? Being none, thank you. Please mark your voting cards in the way you wish to vote by ticking for, against or abstain next to resolution 1 on the voting card. Welcome back, Alison. [Voting]

Musical chairs. So Resolution 2 is for the reelection of Kirsty Mactaggart as a director. Kirsty is retiring by rotation and is putting herself forward for reelection. The Board unanimously supports her reelection, and you'll find Kirsty's credentials are outlined in your notice of meeting. I'd now like Kirsty to address the meeting.