Thank you for standing by, and welcome to the CSR Limited Half Year Results Briefing. All participants are in a listen only mode. There will be a presentation, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Andrée Taylor, GM Investor Relations. Please go ahead. Thanks so much. I'll just kick off with making our introductions about the team joining us this morning. We've got CSR's Managing Director, Julie Coates, and our CFO, David Fallu, who will go through the various sections of the agenda to leave plenty of time for your questions. Also joining us is Sara Lom, CSR's Group Financial Controller, to assist with questions following the presentation. Before handing over to Julie, I'll just confirm that CSR will be holding an Investor Day on the tenth of November, starting at 9:00 A.M. Sydney time. Webcast and details for this presentation will be able to be found on CSR's website next week, or if you have any questions, you can get in touch with me directly. With that, I'll hand over to Julie. Thanks, Andrée, and good morning, everyone. Just looking at the agenda on slide two, I'll kick off with an overview of our financial results, as well as our safety performance and sustainability agenda. David will then take us through our financials in more detail and talk to property and aluminum. I'll then cover the performance of building products and provide an update on our outlook for the rest of the year before opening it up to you for questions. Moving on to slide three, and before getting into the results, I wanted to highlight some key themes. The first is how well the business has performed to deliver for our customers. While we continue to operate in a high demand market, the operating environment continues to be complex, with ongoing supply chain disruptions, more variability in trading patterns, and increases in input costs. Our work on supply chain continues to make an important contribution to our ability to support our customers, particularly the work we completed earlier in the year to establish strategic transport partnerships. The work we've done to improve business planning processes to ensure we are optimizing capacity and managing demand with ongoing supply constraints has been valuable. We've managed the inflationary environment very well, with a clear focus on pricing discipline as well as cost control. Overall, this has led to a very strong financial and operational performance over the past six months. Let's turn to the overview of our results on slide 4. As you can see on the slide, we've achieved a good result for the half year. Our revenue was up 14% for the group, and EBIT increased 29%. The 11% growth in revenue in building products reflects good execution by the team to deliver into our end markets and good pricing discipline across all of the businesses to manage inflation. The 15% growth in building products EBIT highlights the benefit of this improvement in revenue flowing through to earnings with continued cost discipline and improved product mix. NPAT before significant items and EPS were both up 27%. The board have declared an interim dividend of AUD 0.165 per share, fully franked, which is up from AUD 0.135. We've also progressed the share buyback announced at the end of June, which has now bought back AUD 22 million in shares during the half. Now on to slide five, and before going through the financial results in more detail, I wanted to talk to our safety performance. Our work over the last few years on embedding risk reduction plans at all sites has led to significant improvement over the last six months. Importantly, we are seeing a reduction in high consequence incidents across the business. We know we have more work to do, and in the last few months, we've launched a major new initiative around Never Walk Past. This is led by our operational and safety leaders to help everyone to build a mindset to never walk past an unsafe act or condition. Turning to sustainability on slide 6. Our focus on sustainability is a strategic foundation for our strategy with the main focus over the last two years on progressing our 2030 targets. Two years in, we're seeing good improvement with reductions in our emissions and energy and water use, providing us with real confidence in the delivery of our 2030 targets. During the year, we developed a more comprehensive sustainability framework, which will include the refinement of our current goals and metrics. This work will be finalized over the next few months and integrated into our sustainability strategy in 2023. More details across all of these areas will be included in our sustainability report, which will be published in December. Now turning to slide 7, which summarizes the EBIT performance across our three divisions. In building products, we delivered an 11% increase in revenue and 15% increase in EBIT. The team worked hard to deliver for our customers in a high demand but disrupted market while managing our costs and optimizing capacity. The AUD 28 million EBIT from property reflects the completion of the next tranche at Horsley Park, which was delivered on time and on budget. The completion of the Warner sale positions us to capture a further AUD 29 million of EBIT in the second half. We have a number of projects in the pipeline, and we will continue to optimize our network, which will extend this over the next 10 years. In aluminum, EBIT was down slightly to AUD 17 million. As we flagged in May, we've seen increased volatility in pricing and costs, and this has escalated in the last six months. The benefits of higher aluminum pricing has been offset by higher raw material and input costs. I'll now hand over to David to talk more about our financial performance, property and aluminum before I cover off our building products results in more detail. Thanks, Julie, and good morning, everyone. Looking at our results for the half, slide 9 summarizes our profit and loss. In terms of revenue, it was up 14% for the half-year to almost AUD 1.3 billion. As we will talk to in greater detail, the increase in building products revenue reflects disciplined pricing outcomes, volume and mix. We also delivered good cost management with our total SG&A spend flat compared to the previous half. Building products performance, together with improved property results compared to last half, contributed to an increase in EBIT, with EBIT before significant items of AUD 171 million, up 29%, and our net profit before significant items up 27% to AUD 110 million. Statutory net profit after tax of AUD 104 million was down 34% as significant items last half recognized the benefit of AUD 71 million in carry forward tax losses. In terms of cash flow on slide 10, our working capital balance increased from Aluminium due to timing of shipments, an increase in debtors due to higher building product sales and an increase in building product inventory, primarily associated with higher input costs. Debtor performance continued to be managed well through the period, with no changes in debtor days, and overall inventory volumes are ensuring we support customer demand. We saw the unwind of prior period hedging prepayments during the half, and our strong balance sheet position continues to support business investment and distribution to shareholders. In terms of CapEx investment, this improved in the half as we saw less restrictions from COVID in the period. Whilst this is an improvement, the environment to execute CapEx projects is not yet normal, and based on run rates, we would expect capital expenditure excluding property for the year to approximate AUD 80 million. Property capital expenditure of approximately AUD 50 million will support the pipeline of projects for both contracted and future property opportunities. Looking at dividends for the period on slide 12. As Julie noted, the board has declared a dividend of AUD 0.165 per share, fully franked. The strong growth in our dividend is reflective of our performance this half and the confidence we have in the pipeline of detached activity extending into next year. In addition, we've completed AUD 22 million of the share buyback during the half. Turning to property. Over the last five years, we've been focused on developing, embedding and extending our property strategy, which we highlighted at our July 2019 Investor Day and updated in November 2020. Through the team's capability, deep knowledge of site management and proactively managing our network, we're now well-positioned to unlock substantial opportunity over time. On slide 14, you can see the stages of opportunity that the team works through. Most of the activity you see in our P&L results come from work undertaken at stages 1 and 2. However, due to the very long lead times in property, the team need to be working across all stages in parallel to ensure we can take best advantage of value-creating opportunity and minimize any operational disruption to the business. To ensure we are informed in how we manage across these time horizons, we undertake an in globo valuation review of our freehold property. Historically, we have shown the key Western Sydney sites due to the scale of those land holdings. These valuations are done on a more conservative as is basis as opposed to a best use basis. As you can see, the overall as is valuation has been independently valued at AUD 1.5 billion, excluding our long-term operational land holding. We've always maintained our job is to improve the as is value, which we typically do through our rehabilitation and remediation capability. You can see on slide 16 how the team's great work continues to translate into results. Our EBIT for the half of AUD 28 million was delivered despite challenging weather conditions, with the ongoing works at Horsley Park remaining on track. In addition, taking advantage of the strong property markets, the team have secured additional contracted EBIT expected to settle in 1H 2023, increasing total contracted EBIT for 1H 2023 to approximately AUD 68 million. We continue to work on projects to extend pipeline visibility of contracted property opportunities in future periods, which is really exciting, and we'll provide more detail on the CSR group property approach at our Investor Day next week. Now turning to aluminum on slide 18. You can see from the results for the half that the environment for Australian smelters continues to be challenging, particularly from an operational and input cost perspective. Despite significant increases in modulation and power interruptions, which limits the opportunity to drive efficiency and production, the team did a great job to maintain volumes versus last half. While we received the benefit of our historical hedging compared to last half year and compensation for power disruption to support national electricity market stability, this was more than offset by cost increases during the half. Overall, EBIT of AUD 17 million was down from AUD 18 million in the prior period. Of particular note are the substantial increases in carbon-based input costs, notably coke. With tight supply from key markets and a limited ability to secure long-term contracts, these raw material costs were AUD 29 million higher compared to last year. We remain in a volatile period, we expect the elevated cost environment for our key inputs to persist over the next 12 to 18 months. The material change in Tomago's cost base when flowed into 2023 results in a full year EBIT range of between AUD 8 million and AUD 24 million. However, we should note the volatility of the operating environment obviously makes forecasting a challenge in this period. We continue to see Metricon in reducing risk where we can, and as a result, continue to take opportunities for future hedging at levels that represent strong pricing, as you can see on slide 19. This hedging program will insulate against high costs and also provide strong earnings during periods with more normalized cost levels. I'll now pass back to Julie for a review of building products and outlook, and we'll be here for questions at the end. Thanks, David. Before we look at our results in more detail, let's talk about the environment across the building and construction market on slide 21. As expected, the cycling of home builder demands has led to lower housing commencements compared to the first half last year. The commencements are still at historically high levels. It is well understood that there are delays in completion times for housing due to supply chain and labor constraints, in addition to weather issues during much of this half year. Commencements continue to exceed completions, with the size of the detached pipeline remaining over 50% higher than historic averages, supporting strong activity well into 2023. Multi-res is starting to pick up, but the long lead times to completions will take time to work through and will contribute to future periods. The outlook for the non-resi market remains positive, with approvals continuing at near-record levels. Turning to slide 22, our 11% revenue growth highlights the benefit of our execution into our end markets, the diversity of our business across the building sector, and a pickup in volumes in a couple of key areas, including in Hebel and in our Gyprock Trade Centre sales. This slide really helps to bring together the depth and breadth of CSR's unique position with the quality and range of products and systems, and our ability to serve customers across a range of projects and through all key components in the life cycle of their build. This is a key area of competitive advantage and sets us up well as the market is managing increased requirements relating to a range of issues across sustainability, supply chain disruption, installation, regulation, and compliance. Looking at the results in more detail on slide 23, you can see a record performance in both EBIT and EBIT margin. Earnings benefited from pricing discipline, cost management, and improved product mix. Costs benefited from the work we have been doing around streamlining the organization and ensuring we manage our cost base as we resume a more normal working environment post-COVID. Our return on funds employed is strong at 28%. Now turning to our strategy. We continue to be focused on ensuring we deliver our results while making the investment required to drive improvement for future growth. Our strategic priorities are progressing with work on safety and sustainability, customer focus, streamlining the organization, and supply chain optimization. Let me take you through this progress by looking at the performance of our three building product divisions and the work we've been doing in custom solutions and supply chain. Starting with masonry and insulation on slide 25. We delivered 7% revenue growth, reflecting strong price management as well as an improvement in mix. Bradford performed particularly well with a strong increase in revenue and earnings given by good price discipline. The team have also been doing significant work optimizing the Bradford range this year. They've now deleted around 100 lower margin SKUs, which is unlocking capacity in higher margin products through longer runs and reduced changeovers. PGH and Monier are two businesses that were most impacted by some of the weather issues this half, but they have also been disciplined on price to manage the impact of costs which increased during the period. Our priorities are continuing across key areas of investment to improve operational efficiency and unlock incremental capacity with investment underway at 2 sites in Queensland. The Bradford investment will deliver a 10% increase in capacity, improve safety, and support an improvement in our cost position. This is also an important part of how we will be addressing additional demand arising from the adoption of the 2022 National Construction Code, and we look forward to talking to you more about this at our session next week. Overall, revenue for Interior Systems grew 12%, which reflected the strong demand and the team's ability to deliver into its diverse end markets. We're seeing the benefits of improved pricing discipline and product innovation coming through with Gyprock as we continue to invest in our range, including our highest impact resi-resistant board, as well as improvements in our accessories and compound ranges. This is a great outcome for customers, but is also driving a higher value product mix, supporting revenue and margin. For Gyprock, we've been focused on improving in-store experience, which is driving a strong connection with our customers. Moving on to slide 27. In Construction Systems, we delivered revenue growth of 17%, reflecting strong growth in Hebel and AFS and good price discipline to offset increases in key input costs. We're really starting to see the benefits of diversification as we build a greater share of the external cladding market in housing for both Hebel and Cemintel. Customers are seeing the value of this combination due to its speed and ease of installation compared to masonry products. We're starting to see improvements in commercial and apartment sector demand, with increased opportunities for all three of our brands to be specified on new projects. This is enhanced by our project tracking capability, which was launched last year. It really is an exciting time for the business as our customers are facing increased requirements on compliance, regulation, installation and labor availability, with more product applications and sustainability requirements. Hebel is well-placed across all of these areas. Again, we look forward to going through the business in more detail next week. On slide 28, in relation to delivering customer solutions, we've spoken previously about some of the key initiatives including project tracking, which is part of our strategy to increase diversification across segments, particularly in the commercial market. A key area we've progressed in the last six months is through our digital tools for architects and designers. In August, we launched our System Selector tool, which provides over 20,000 compliant system solutions to support building design. This really highlights the depth and breadth of our product offering in an easy-to-use system to customize the right solution and support ease of adoption for our customers. As I mentioned earlier, the benefits of project tracking are becoming more visible, with new commercial opportunities specifying multiple CSR products, such as the new Frasers Midtown project at Macquarie Park, which includes Gyprock, Bradford, Hebel and our Cemintel Barestone product. Now turning to slide 29. As I highlighted earlier in the year, we've now established strategic partnerships with key transport providers, which has been crucial to ensure delivery for our customers while managing numerous disruptions during the year. These relationships with transport carriers continue to enable us to mitigate transport shortage risk and minimize cost inflation pressures. We also launched our Transport Management System, or TMS, in July, with a CSR-wide approach on internal stock transfers, with TMS helping us be more responsive to our customers and more cost efficient. We're also embedding integrated business planning on a more consistent basis across CSR. As an example, based on a more robust and accurate forecast for our Cemintel business, we identified an opportunity to better handle imports through the Port of Sydney by establishing a dedicated imports distribution center. Importantly, this has established a whole of CSR imports capability that can service all brands. Finally, let's look at the outlook for the year ahead on slide 31. In Building Products, the business has entered the second half with good momentum. There continues to be strong underlying demand for Building Products and good pipeline visibility. CSR remains confident in the ability to manage the inflationary environment across product categories. The diversified nature of Building Products across product, build cycle, geography and end markets positions the business well for the second half and into 1H 2024. This is supported by continued focus on executing strategy and maintaining cost and operational discipline. The strategy work continues to enable the business to become more responsive to customer demand, improving efficiency, and capture opportunities across more products and building segments. In Property, contracted EBIT for 1H 2023 is expected to be approximately AUD 68 million, which includes completion of the sale at Warana, Queensland, in addition to the likely realization of other smaller transactions during the balance of the year. In Aluminum, the ongoing cost volatility makes forecasting challenging. However, the best estimate for 1H 2023 EBIT is currently in the range of AUD 8 million-AUD 24 million. The current elevated cost environment is likely to remain over the next 12-18 months. In summary, given the outlook for Building Products for the full year and the improvement in Property earnings, CSR expects to deliver a strong group result for 1H 2023. With that, I'll open it up for questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up a handset to ask your question. Your first question comes from Niraj Shah from Goldman Sachs. Please go ahead. Hi, good morning. Firstly, just within Building Products, are you able to quantify the split between volume and price mix in that 11% growth you reported? Yeah, sure, Neeraj. Thanks for the question. Obviously, we were really pleased with the revenue number. The majority of that is actually in price, as you would expect, given our commentary, and the rest of it is a combination of both volume and mix. Got it. Thank you. I guess a sort of similar type of question, but can you sort of provide any color or quantify the benefits of sort of TMS and the transport partnerships in mitigating the level of transport inflation that's out there at the moment? Yeah, look, I think that's a really important question. Obviously, given the disruption in the supply chain and the inflationary environment that we're operating in, a lot of what we've done is, first of all, enabled us to deliver for customers, which is the first thing, but secondly, there's an element of cost avoidance in that. There's also building an enabling capability for the future. I guess what's important for this audience is the investment in TMS, et cetera, that you point to is really being delivered in the context of these results. We're very conscious of making the investment to improve the business for the future, but also conscious of needing to deliver results, and that's what we've done. It's obviously been compounded by the complexity in the supply chain that we've been dealing with. It's really important that we've done that work, but we think quantifying the benefits will start to flow through more from year 25. Understood. Thanks for the color. Mm-hmm. Thank you. Your next question comes from Lisa Huynh from JPMorgan. Please go ahead. Hi. Morning, team. I guess just on the strong margin result, can you talk about, you know, similar vein to Neeraj's question, to what extent price mixing, just the efficiencies you've talked about drove the margin improvement? Just qualitatively comment on how sustainable you think this margin result is going forward. Yeah. Look, the margin improvement is partly due to the drop-down or drop-through from the revenue line, right? Most of that is in price. That's been quite a bit of the margin improvement. We've also, as I said, focused quite consistently on cost. Coming out of a COVID-impacted environment, we were conscious that there would be a requirement to elevate our expenditure, but we wanted to do that in a very disciplined way. I'm really pleased with the cost outcome because not only is our SG&A flat to the last half last year, it's actually, as a percent of sales, it's actually improved. It's a combination of all of the above, but price has been a really important factor. Yeah. I mean, just following on from that, Julie. I mean, how long do you think SG&A, as a percentage of sales, can stay flat for? Just given, you know, I think last time we spoke, you flagged that would be stepping out as we came out of the COVID disruption. Yeah. We said that we would look to maintain SG&A as a percent of sales at flat, and we've done better than that this half. We continue to be really focused on that, Lisa. Okay. Sure. Thanks. Just one quick follow-up. Can you just talk briefly about the cost inflation outlook for the Building Products business? I think you flagged gas hedging out to 27. Just what exactly that hedge profile looks like within the next five years would be great. Maybe I'll kick off and then hand to David for the more specific part of your question. The first thing I'd say is that our results indicate our ability to get ahead of inflation. There's no doubt about that. We've seen the lag coming through in other places, so we've managed it in real time. That's been important. It is something to your point that we will continue to focus on. In terms of your energy hedging question, I'll throw to David. Yeah. Lisa, look, I think the important thing is to actually have visibility of these things so that you can manage them proactively rather than reactively, and that's our approach to energy. The environment for gas is pretty well documented, right? That's gonna be an inflationary impost for all energy users. You know, we're working through the process of ensuring that we're able to manage that in the context of our P&L. I mean, we've got a broad portfolio. What that will result in is those products that have a higher gas intensity are gonna need to put through higher pricing as a result. I think, you know, bricks is clearly an example of that. You know, we've got other cladding alternatives as well, which are less gas intensive and, you know, that creates an opportunity as well. We're confident that we're able to manage through the inflationary environment that we see in front of us, and we've got good visibility of what that's like moving forward. Okay, thanks for that. Sorry, just quickly, David, on electricity, is that hedged as well? Yeah. Your electricity exposure? We do. We typically try and get around 12 months visibility of that moving forward. We do that through a hedging regime as opposed to specific supply contracts. Okay, sure. Thanks. I'll leave it there. Thanks, guys. Thanks. Thank you. Your next question comes from Lee Power from UBS. Please go ahead. Morning, Julie and David. Julie, is it possible, just thinking about your comments about variability in trading patterns increasing, can you maybe talk to kind of the skew that we should be thinking about in the second half, given those comments? Sorry, just help me with the variability of trading patterns. I think in your opening comments, the last time we heard you talked about increased variability in trading patterns, supply chain issues. Obviously, we've seen weather in the first half. I'm just trying to think about normal seasonality and what we should be thinking about this year. Okay. When I talked about the disruption, it was more about supply chain. I mean, the pipeline of demand has not been variable, it's been strong, albeit to your point, it was disrupted for some of our categories with weather. We've got good momentum going into the second half, and we see that continuing as we move forward. I think, as I said, you know, there's delays in completion times, which is actually elongating demand, and the pipeline in detached housing is pretty strong. We're envisaging that to continue into the second half. Yes. I guess, should we just apply normal seasonality, like traditional seasonality, or should we think about something else this year? Well, hard for us to predict that, but we've seen good momentum, and we know that people are working hard on the pipeline in order to get houses completed so that, you know, there may be less, but I wouldn't, you know, I would let you make your predictions about that. We just think it's gonna continue to be strong right through the year. Yeah. Okay. Lee, maybe to help, right, like, you know, if you look at first half last year, we obviously had the COVID-related shutdowns. Yep. You look at the first half this year, you know, that's probably been replaced by, you know, sort of labor availability, supply chain, and weather events. To the degree that you see, you know, an improvement in sort of labor availability and those sort of disruptions that have impacted the first half, then, you know, that's obviously should be a net benefit moving forward. You know, I wouldn't wanna make a prediction around what the weather's gonna be in the second half. You know, we don't normally manage the business around weather. Okay. No. Yep, that's just good information. Thank you. David, maybe given you asked before around gas prices, I've noticed that you've signed an agreement with Shell Energy for gas supply until 2027. Yeah. Can you maybe talk about what, like, to the degree that you can, the pricing of that contract would be useful? Thanks. Yeah, no, look, the pricing is subject to terms of confidentiality. Lee, I guess, you know, as I sort of say, I think the dynamic around gas pricing in Australia is pretty well documented. I think all people entering into contracts, whether you're entering into it today, you know, next year or FY 2024, you're gonna be entering the same environment, which is a challenge. As I say, we've got visibility as to what that looks like, how that plays out for us by product, and, you know, we'll manage accordingly. Okay. Thank you. Thanks. Thanks, Lee. Thank you. Your next question comes from Brook Campbell-Crawford from Barrenjoey. Please go ahead. Yeah, thanks for taking my question. Julie and David, just one on plasterboard pricing here too. Competitors on the East Coast have put through very material increases for January 2023. I think it's high teens, even 20% increases. Yeah, are you planning to, or have you put out increases for January 2023 as well for plasterboard? What I'd say is the Gyprock team are very focused on what they need to pass through in terms of price. They've demonstrated their ability to do that, which you know they started to do last year when we said we would see the benefit of flowing through to this year, which we have. They've put through an additional price increase this year. In addition to the normal March, April timeframe, there was another one that just went through in September and October, and I'm sure they're looking at what's appropriate for early in the new year, given inflationary pressures and the market context. Yeah. Okay. That's good. Thank you. Thank you for that. David Baillie, just one on land. It looks like the as is value for the Western Sydney is sort of AUD 1.1 billion still, which is unchanged, and the uplift is from additional freehold sites as you've flagged. I guess my question really is, the AUD 1.1 billion, is it unchanged despite movement in interest rates? Do you mind sort of just stepping through why you're confident and why you're getting the feedback about an unchanged valuation there? Yeah, I'm on a like-for-like basis, it's reflective of the work that's been done, and also bearing in mind that there are stages of Horsley Park that come out progressively from that 1.1 as we complete each of those stages. I wouldn't describe it as an exact replication of like-for-like. You know, all factors are sort of taken into consideration by the independent valuer and, you know, that's what they produce for. We obviously have our own view as to how we want to best improve those valuations that sit there, but we just feel it's a helpful disclosure for you. Yeah, no, it's very helpful. I guess just one more, David, for you. On slide 15, you have this sort of staged timeline, I guess there, and you flag number 2 there, short-term opportunities, AUD 400 million. How short-term is short-term? If you can provide some color there. Also what's the plan for use of those proceeds? Yeah, look, in terms of how short-term is short-term, look, we've used a rough approximation of 5 years in that space. There's obviously a degree of you know, uncertainty in those spaces where you're looking at rezoning applications and things like that. I am encouraged by what we're seeing at both the state and federal level in terms of acknowledging the challenge around land supply, particularly within the Greater Sydney north, west, and south regions, which will be you know, beneficial if that comes to fruition. That's sort of the timeframe around what short-term looks like. I think in terms of you know, what's the plan with the proceeds, you know, that will be a function of how we take these various opportunities. You know, these are large scale opportunities. I think how we take that forward will be one of the options that we have with the proceeds. Obviously, you know, the other is to invest within the business or distribute to shareholders, which is what we've been doing. Great. Thank you. Thank you. Your next question comes from Simon Thackray from Jefferies. Please go ahead. Thanks. Morning, Julie. Good morning, David. Just a quick one straight out of the gates, Dave. Aluminum, just noting in that first half, there was a AUD 16 million power disruption payment. I assume that's obviously in your guidance for the AUD 8 million-AUD 24 million. Backing that out, you're basically saying it's -AUD 8 million to +AUD 8 million. Is that the way to think about it? Yeah, look, that is the way to think about it. Yeah, that's reflective of the high cost environment. I guess the only point I'd make around that as well is, you know, it remains an uncertain and unstable electricity environment as well, and kind of the team at Tomago proved that, you know, they are the most efficient, effective, and scalable battery in New South Wales, and I think people are starting to recognize the value of that. That's excellent. While we're on Tomago, and then the discussion before, I think with Lee on gas. The gas contract that you've struck to 2027, is that across the building products portfolio or the entire business, including Tomago for the one PJ, I think it's one petajoule? Yeah. That's around the building products portfolio. Tomago manage their own gas supply, and execute their own contracts in that space. Yep. Okay, that's helpful. Thanks for your update on property. That's very helpful. Yep. No, no dramas at all, Simon. Happy for any feedback, as always. Just on that property update, where we've now separated Western Sydney from the broader portfolio, which is valued at AUD 1.5. We don't get too carried away too quickly, what would be the estimate net of the Viridian capital losses? What would be the estimate of the kinda tax liability against that property valuation should it be realized? Right. Is it, you know, teen percentages or single-digit percentages? What, how should we think about that? Yeah, no. In terms of the tax liability associated with that, what you would typically see is that where it's on capital account, we'll be able to utilize our carry-forward tax losses and the total amount for that offsetting it is the tax effective amount of that is approximately AUD 325 million. Which isn't. Right. That's. at the moment, but we'll progress. As what we've been doing is, we've been progressively booking that as we get certainty and visibility of the capital gains to offset against that. Yeah. That's the total amount of potential tax benefit that could occur if against those capital returns. Does that answer your question? I think so. I think so. I'll have to process that, but I might come back to you on that one. If I can lead you this way, I know this is a bit sensitive, but maybe I can do this across the whole portfolio. If we talk about the increased gas costs, the uncertainty of electricity, rising labor costs and every other bit of inflation that seems to be apparent in the system, if you compare that gas cost in the contract to what you were paying and the, you know, other inflation across the building products portfolio, what kind of pricing would you need to keep margins stable? You know, assuming flat volume. I mean, is it low single-digit%, high single-digit%, double-digit%? You know, we're just trying to understand the scale of the inflation against the pricing that's required to keep margins stable. Look, it'll depend by product across the portfolio. Sure For you know, the higher gas intensive products, you know, the scale of the most important impact into that is actually the energy cost. That is going to require, you know, double digit price rises to maintain margins in that space. In terms of the other portfolio products, you know, the majority of those core products are far less gas intensive. You know, the requirement to offset inflation in that space will be lower. Okay. No, that's terrific. Thanks for that. Appreciate it. Thank you. Your next questions come from Daniel Kang from CLSA. Please go ahead. Oh, good morning, everyone. David, just wanted to ask on the working capital increase in the first half. Yeah. Do you expect a reversal by the second half? I guess along those lines, can you comment on how you are seeing channel inventories? Yeah. Look, I think in turn I would expect a reversal, I guess, you know, just of note, about AUD 40 million of that working capital increase related to timing of shipments. That's, you know, those boats have all sailed since the half year is closed. You know, that's really a timing implication. The debtor increase is a reflection of sales, so I'm not I wouldn't expect that to be reversed in the half. You know, the most important thing I focus on there is how the performance of the debtor book and that's been maintained really well with DSO staying stable. The increase in inventory as a result of higher input costs. There will be an element of that that continues to flow into COGS as input costs continue to increase. From a volume perspective, I think I would describe as a general rule, yeah, sort of no challenges from a supply side perspective. We've always been focused on working capital management. I'd argue that through the period of challenges within supply chain, we've needed to carry additional stock. That may be a feature that changes as we move forward, but you know, I don't think that will be a material impact as we flow through to the end of the half. That's great, David. Just on building products margins, I guess it's similar to Lisa's question on sustainability of margins. I mean 15% is clearly a record level, I'm pretty sure. Maybe I can ask it another way. If we look forward in terms of normalized through cycle margins, where do you see the range would be? Because in the past, at the low point of the cycle, we've seen margins fall to as low as 6%-7%. Where do you think that low point is and the high point is going forward? Look, I think from my perspective, that's really going to be a function of activity. What I would say is we've got far more options of variabilizing our activity, you know, that I think you've seen when activity has reduced over the period and the ability to insulate the impact on margins. Now, clearly, there will be an element depending on that level that flows through to margin. You know, I think the reality is, when you start and I do agree with you, it is a record building products margin. When you're starting from that level, you know, the businesses, you know, it would not be going back to those single digit numbers because the business is fundamentally different to how it was set up then. You know, we consolidated the brick business. You've seen how we can manage that high fixed cost network as we've done within Queensland. You know, businesses that were much smaller contributors at the time at which you were quoting those margins, you know, are much more established and have continued category and geographic expansion opportunities with the likes of Hebel. I think you will see an elevated and outperformance of our margin through the cycle from what you've seen historically. Thanks, David. I'll pass it on. Thank you. Your next question comes from Keith Chau from MST Marquee. Please go ahead. Good morning, David and Julie. Just the first question I have is on a follow-on on price increases. I mean, certainly Gyprock price increases have gone through and continue to go through, as Brooke mentioned. You know, if you look across the other portfolio, across the portfolio, insulation prices have gone up as well. I think Bradford recently announced price increases. Bricks are certainly going up as well. This is all in the environment where, you know, some home builder margins are getting pressured. I'm keen to understand to what extent have you seen pushback from your customer base on price increases. You know, where do you think the elasticity and demand starts to bite if, you know, prices do indeed have to go up double digits to recover costs. Thank you. Yeah, thanks, Keith. I'll kick off with that. I think the results show that we've been able to land price increases in the current market, and then we've always said in a high demand market, you can at least recover CPI and a little bit more, which is what we've been able to do. I think a lot of the benefit of those price increases will continue into next year as the ones from last year have continued into these. In terms of you know, the ability to continue to do that, we're very mindful of that in terms of the market. The biggest issue for our builder customers, and actually, of course, they always push back on price increases, but the bigger issue for them right now is getting supply and labor constraints. The labor constraints in the market is actually what's causing some real challenges. You see that in the extension of the pipeline, which is what's causing a lot of the congestion. That's the bigger issue. Okay. Thank you, Julie. Just a quick follow on, you know, focusing on the risks in the operating backdrop. David, perhaps if you know, you've mentioned your days sales for debt has remained pretty consistent. Can you give us a sense of how your bad debt has moved? I mean, there's again plenty of press speculation that builders are really struggling and, you know, you're seeing that in the asset data. There continues to be, you know, some comments around Metricon and what could eventually happen to them. Just keen to get an understanding of how your bad debt book is looking and whether you've seen any material increase in your customers' ability to pay. Thank you. Yeah. No, no problem, Keith. Yeah, no, we obviously stay close to it and manage it really closely working with our customers. We haven't seen a deterioration in our bad debt experience as we stand here today, Keith. It's something we continue to watch and manage, but yeah, no, no change. The commentary around bad debts would be exactly the same as the commentary around DSO. Okay. That's great. Thanks very much. I turn that over. Thank you. Thank you. Your next question comes from Matthew Abraham from Credit Suisse. Please go ahead. Morning. Thank you for taking my question. Might just start with a query on property and the guidance increase specifically. So you've called out these, you know, surplus additional sites that are the source of this positive delta against the prior guidance. Could you just provide a bit more color in reference to, you know, what these sites and projects are and, you know, if there are any others that might reflect upside to the guidance material in the out years as well? Yep. Look, they're reflective of sales of surplus land. They were actually rehabilitated former quarries. That was, you know, the opportunity we were able to take advantage of in the current half. We continue to work through those processes. You know, I think the surplus land is the canvas the guys can work with, and through work that they do to effectively rehabilitate those sites, that continues to give the opportunity to continue to add sales to the, you know, FY 2024, FY 2025 and beyond. We'll keep you updated as we work through that process. That's the nature of those two additional contracts that have been executed in the FY 2023 period. Okay. That's helpful. Thank you. Next one, just on the pipeline. So at the last result you mentioned that the pipeline, I mean, you sort of have the ability to reach out through to the end of this calendar year. Would you be able to just provide a bit of an update in terms of the duration of the pipeline on hand right now and where you think that gets you to? Well, I think, as we said, we see it extending well into FY 2023 for detached housing. But we also see multi-res starting to pick up as well. We think that will be important as we move forward. The outlook for the non-residential market is also pretty strong as well. We also think, you know, there's a couple of tailwinds that will play into our results moving forward. I'm well aware of some of the, kind of, key indicators that have been reported, lead indicators around the housing market. You know, we've got the National Construction Code coming through, which will have a significant and important positive impact on our insulation business. you know, net overseas migration will start to come back, and that again will have an important contribution to demand moving forward. We think there's a couple of tailwinds that'll start to flow through, and we're pretty confident about the housing market more broadly as we head into, you know, FY 2022 and well into 2023. And maybe- Okay. That's helpful. Sorry. The pipeline is effectively, you know, as we were seeing it in the last results. You know, based on, you know, commencements and completions, there hasn't been a reduction in the pipeline. Okay. Would you say the duration of the pipeline is longer and more extensive than that last result, or it's pretty consistent? I'd say it's consistent. Right. Okay. That's helpful. Great. Thank you. Just one more last one on Aluminium, if I may. So the cost pressures that you're talking about, do you? Is there a view that those pressures might worsen as you push into that 12- to 18-month period that you flagged? Or, you know, is there the view that it's a consistent cost pressure that you're likely to face over that window? It's a difficult answer to the question. I might talk to some of the drivers. You know, 50% of our coke supply is from China, and obviously the Zero-COVID policies that are in place there are having an impact on production. That creates limited supply and increased landed costs for us. I'd like to think those features are, you know, more temporary than permanent, but it's difficult to guide as to where they will go from here. Okay. That's helpful. I'll pass it on. Thank you. Thank you. Your next question comes from Samuel Seow, from Citi. Please go ahead. Morning, all. Congrats on the result. Just wanna frame the margin question a different way. I think the majority of the expansion, this result was price related, and it looks like you had some fairly material price rises across your whole portfolio in September. Now, I know you won't comment on actual numbers, but it looks like that they've accelerated or doubled what you did before at a time, I guess, when the delta inflation is slowing. Would it be safe to say you can build on expansion going forward? Yeah. I think maybe the way also to think about it is that while the delta of inflation may be slowing, I'm not seeing that in energy. You know, as people roll onto new contracts, you know, there's gonna be a supply side impact on costs that continues as people's tenures continue to roll, and I think that'll need to be reflected in price. I think the other component to bear in mind is that through the course of the half, you also have the full year run rate of prior period price rises, which weren't coming through in the results in prior periods as you need to roll through various contract renewals, and that's a feature of what you're seeing within the results as well. Great. Maybe would you hazard a guess on how many homes or any work resulting from the floods? It looks like it was the most expensive kind of flooding disaster ever, likely to be, you know, Gyprock or high margin, work intensive. Just your thoughts around there and maybe product mix or expectations going forward. Well, the first thing I'd say about the floods is it's tragic for the people that are impacted, that are requiring to do the work. We're, kind of, focused, 'cause we operate in a lot of those areas that have been flooded. We have people who work there and we have customers that operate there. We're, kind of, working with each of the communities as we have done since February, March this year with the northern rivers flooding to provide some alleviation to those communities and those people needing products. That's the first thing I'd say. The second thing I'd say that in terms of quantum in our overall result, it's not material. It's probably not something that we would factor in as an upside for us. It's more, for us, it's more about how do we help those people in those communities. Sure. Then I guess, you know, with the backlog, you know, where it is and quite extended, then I guess last week the budget, government talking about. Yeah, the Housing Accord, do you have any views around how much work will come out of that and whether or not the backlog will get cleared before these 1 million homes start getting built? I think in terms of the quantum, it's over a five-year period, so you've got to remember that as well. It starts, I think, in 2024, not 2025. Sorry, not 2023. While it's an important kind of tailwind for us, they'll only start to come through potentially as the current pipeline is not at the same extent as it is today. I think it's actually good timing for the federal government support on housing and actually is one of the, kind of one of the bridges to continuing performance that we think is quite important. We're not worried about it in terms of the current backlog. I think the other aspect that can help, Sam, from the Housing Accord perspective is, you know, if it simply assists in the release of land supply from a state perspective and in conjunction with working through environmental regulation on development from a federal perspective, that will be a very important component of releasing supply into what is an undersupplied market. Great. I'll leave it there. Thanks, guys. Thank you. Your next question comes from Anderson Chow from Jarden Australia. Please go ahead. Yeah, good morning. Thanks. I just have two questions. I just want to get a little bit more color on this production cost inflation and also pricing discipline. You know, we have good pricing discipline, and from what I can observe, our competitors also have been quite disciplined, until, like what Brooke was saying, you know, Knauf is talking about a 21% increase in January. So I wonder if you could talk, number one, if you could talk about the number three or number four biggest costs. You have a broad portfolio, but I wonder if you can talk about the number three or number four, outside of energy, labor, how those costs are tracking and this huge price increase in plasterboard. Assuming, you know, they're still disciplined, maybe they just haven't done a good enough job in terms of production costs increase. I mean, does that present kind of a market share gain opportunity from our perspective? Just wanted to- The first thing I'd say is I'm not gonna comment on the rationale behind a competitor's price increase. It's not appropriate for me to do so. We remain disciplined in what we do and, you know, we ensure that our price increases in this market can at least offset CPI, and that's what we've done. That's what we'll continue to do. In addition to that, if you take Tipra as an example, the team have worked really hard to drive ongoing efficiencies in each of the production plants over a long period of time. You know, we haven't called it out specifically this half, but I've called it out, I think, every half for the last three years of some of the initiatives that we've put in place there. Paul and the team do an absolute terrific job in ensuring that we continue to drive those operational improvements. You know, we've got a job to do. In addition to passing price through, we've got a job to do is to offset cost increases as much as we possibly can, and we're very focused on that as well. Okay. Just a very general question, you know, obviously we're seeing strong organic growth going forward, with the you know high inflation environment and very challenging operation in multiple sectors. Do we see any potential growth opportunity from acquisition, external acquisition? Anything within our existing portfolio or maybe a new product that we may be interested to get into but never really had the chance but now, you know, maybe the opportunity is coming up? Yeah, look, I think it's a good question, and we remain live to any opportunity that presents itself in the building products or building materials sector. Obviously there's some key criteria that's important to us in assessing that because we need to be able to, you know, create more value than currently exists in those opportunities. We assess it on that basis. You know, one of the things that's important to us is we're very good manufacturers of long-run, you know, automated processes, and that's one of the things that we would look at in looking at any kind of building materials opportunity. Okay. Thank you. Thank you. Your next question comes from Andrew Scott from Morgan Stanley. Please go ahead. Thank you. Good morning, guys. David, just a couple of questions for you. I just want to focus in on the Aluminum business if I can. If we look at the first half, ex the electricity disruption, it looks like it would have been sort of a kind of break-even result. The bottom half of your guidance for the second half implied guidance is potentially loss-making. If we look at the waterfall where most of the things you've called out are externalities and commodities, just interested in the levers you think you have within that business to pull. I know you've been pretty hard on your continuous improvement for a long time in that business. Is there much that you can control within that around the cost environment? Oh, look. I think a lot of those impacts are external. I think the main piece we can control is how you know the team are able to continue to efficiently produce in an environment where their requirement for modulation is high. That gives us a ability to you know continue to add back value to network stability. In terms of the other components, I think the reality is, you know, continuing to take advantage of pricing that will enable us to cover those costs during an elevated period and earn strong returns during a normal cost environment is the main approach for us to take so that we can take as much risk off the table as we can in relation to a smelter that's, you know, performing well, but as a result of electricity prices, sits within the fourth quartile of the cost curve. No. Okay, that makes sense. You kind of led me into my second question. When we were here six months ago. I regret my answer then. It's probably an easy one. Six months ago, you were guiding us or you were 95% hedged at AUD 3,000 and change Aussie. Your average realized price is, you know, AUD 3,700 now. I know the premium is not including your hedging, but I don't think it's anything that remarkable. Is the delta the electricity disruption payments there? Oh, no. The delta's a component that remains unhedged in order to balance off those cost items that are linked to the LME. Our hedging levels refers to what we call what's available to hedge, which excludes the component that's used as a physical hedge against inputs like alumina. Oh, got it. Okay, that makes sense. Thank you. Again, you've led me in the next one. Alumina, can you remind me where we are on your contracts, and in particular around the linkage and where you think that may be if you were to have to roll any there? Yeah. Look, we've moved away from having a cliff at one particular point, and the team continue to work to effectively build the tenor out across one, two, and three years. We're progressively in the market around maintaining that engagement for alumina supply. You know, we've seen that linkage rate continues to improve the further we go out and, you know, I'm not seeing anything that's really changing that at this point. Great. Just to be clear, when you say improve, you mean from your benefit, your position? Yeah. Yeah. We obviously at the time at which we rolled from our prior ten-year contract, you know, the alumina market was particularly indigested, and sort of as we, you know, sort of progressively roll off those contracts onto new supply contracts, that's typically at an improved linkage rate from our perspective. Great. I'll sneak in one more. David, in your comments, to one of the questions earlier, you mentioned weather. It's hard to ignore. Just interested, you know, you're usually a lot of your products at least are after lockup, are certainly reliant on the slab. Are you getting feedback that you're kind of seeing the difficulties that the construction materials had six months ago? Look, I think that component's been insulated a little bit, but that dynamic's probably more as a result of the way HomeBuilder was structured, where the start was so critical for qualification. As a result, you probably had people getting further ahead on starts than work done or in terms of moving through the completion process. We have not seen that as an impact. Where we would see more of that as an impact is when we have challenges around supply chain for things like timber framing and a number of our products go on the, you know, obviously go onto that, and it would be more of that component rather than any implication from heavy side delays as a result of weather. That's helpful. Thanks very much. Thank you. You have a follow-up question from Simon Thackray from Jefferies. Please go ahead. Oh, thanks. Julie, I forgot to ask. We didn't sort of get the update on Hebel, and I don't want to spoil the party for next week. Just in terms of you know, proposed increases or the pending increases in pricing for bricks and the substitution to Hebel, how's the penetration at the moment on Hebel in the residential market in particular? What's the sort of status on where Hebel penetration is in resi? Yeah. Look, as I said in the results, construction systems revenue was well up, and a lot of that was due to increased volume in Hebel and increased penetration in the housing market to your point, Simon, so you're quite right about that. You're also right about the fact we plan to take you through that in a bit more detail next week. Andrew Ronninger, who runs that business, is gonna give you a full update on what we think is the opportunity in Hebel, 'cause we think it's significant for all the reasons you highlight. Thanks for the question. No, you're welcome. To summarize, the pricing in bricks that we're gonna see across the industry, 'cause no doubt it'll be industry-wide, should accelerate that substitution effect. That would be the plan anyway, right? Well, I think that the thing is, we'll also, we've also got price increases going in in Hebel as well. There's the cost piece, but the more important opportunity here is about the labor to install and the ease of doing that, and that is actually a reason for customers to convert. We'll talk more about that next week, and we're No problem. If you get on the bus, we'll take you out to Hebel at Somerset and show you how it's made. All right, good one. Thanks, Julie. Thanks, Simon. Thank you. There are no further questions at this time. I will now hand back to Ms. Coates for closing remarks. Oh, thank you very much, and thanks, everyone, for your time. It's been a long session. Really appreciate your interest. Look, David and I are really pleased to be able to deliver the results that we delivered to you today, and we've done that really on behalf of the team who continue to be focused on delivering every single day for our customers. At the same time, they're doing the work in order to set this up, this business up for future growth. We're pretty excited about that, and as I said to Simon, I really look forward to talking more to many of you about the opportunities for our future next week. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.