Auckland International Airport Stock

Good day, and thank you for standing by. Welcome to Auckland Airport Annual Results 2026. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker today, Carrie Hurihanganui, CEO. Please go ahead.

[Foreign Language] Welcome, and good morning. With me today is our Chief Financial Officer, Stewart Reynolds, and we are pleased to be able to share financial results for the 12 months 'til 30 June '26. Overall, the year is one of steady performance amid global headwinds. We have seen resilient demand for travel to and from New Zealand as far as from an underlying perspective. And we did see strong momentum in key international and domestic markets in the first half, but certainly proved to be a more challenging second half due to increasing geopolitical instability, most notably the events in the Middle East.

The year did see a modest uplift in overall passenger numbers. It saw new capacity announced and/or commenced, continued strength in both operational and commercial performance alongside growing customer satisfaction and tangible progress against our sustainability objectives. As we navigated through these challenges, we have remained focused on disciplined cost management and delivering the resilient and fit-for-purpose gateway that New Zealand needs with $1 billion of assets commissioned in the year and strong momentum continuing on our infrastructure program.

We have currently more than 1,500 people working on sites across the precinct, and that number is set to continue to grow as we move into a peak activity period in the year ahead. We're going to get straight into it as plenty to cover today.

So if we could jump to Slide 4, I'd just like to touch on some of the key highlights of progress in the year. Total passenger movements were up almost 2% on the prior year to just over 19 million, and cargo movements were up 3%. In the year, we also demonstrated that we can deliver shorter journey times more consistently with ongoing investment in infrastructure and the strong collaboration that continues with border agencies, aviation security, airlines and ground handlers, resulting in improved processing times across all measures.

Most notably for us, the international and domestic departure median processing times improved 15.6% and 7%, respectively, in the prior -- versus the prior comparable period. But if we step back and look at FY '23 to FY '26, the international departure median processing times have reduced by a total of 27%, demonstrating the ongoing focus and effort that has gone into that area. If we turn and look at international arrivals, the median time from entering customs to exiting the arrivals hall improved year-on-year 2%.

But again, if you look at that '23 to '26 period, that improved by 47%. Alongside this, customer satisfaction, it's been pleasing to see, has continued to improve across both the international and domestic terminals, reaching 83.5% satisfaction for the year. So overall, we're pleased with these strong outcomes given the scale of change and activity underway across the airport ecosystem.

If we move to Slide 5, a couple of other call-outs. Commercial income is up 2% to $442 million. Now that's primarily driven by car park and rental income, up 9% and 4%, respectively, and retail income down 4%. Now we'll come back to the details sitting behind this a little later in the presentation when Stewart will cover those. Infrastructure delivery continues to transform the precinct upgrades across the 400,000 square meters of airfield, terminals, and transport infrastructure. I mentioned earlier the $1 billion of assets commissioned in the year and the terminal integration is now in its peak phase and over 53% complete as at 30 June in regards to spend, and we saw $700 million of CapEx in the financial year on that particular program.

We've also made tangible progress against our sustainability and community objectives, and that includes a 75% reduction in our Scope 1 and 2 emissions versus our 2019 baseline. We had an upgrade to our commercial air conditioning systems, resulting in an expected reduction of natural gas use for our heating and cooling by about 40%. We generated 12% of electricity needs from on-precinct solar, and we celebrated 10 years of the Ara Jobs and Skills Hub supporting more than 1,400 people into employment and more than 1,700 youth to access training.

Moving to Slide 6. Delivery momentum is probably what I would call out here, the infrastructure program, key assets that we delivered in the year were upgrades to stormwater systems, the 250,000 square meter Northern remote stands, the connection of what we refer to as the stitch between the international terminal and new integrated domestic jet terminal, the temporary check-in pavilion, and that enables the in-terminal check-in transformation to progress and the cargo precinct. And of course, there are many others, but those are some of the large ones that were in year.

If we move to Slide 7, I am just going to touch on headline financial results as Stewart is going to take you to a deep dive to those shortly. But the year had 2 distinct halves with the first half seeing increased capacity, improved visa settings, and a favorable exchange rate for inbound travelers that resulted in positive tourism recovery for international. However, the second half or probably more specifically the last 4 months of the second half was impacted by what were significant externalities with the Middle East conflict and fuel price spikes, resulting in measured capacity consolidation by airlines alongside a growing caution in consumer sentiment.

Full year revenue increased 3% with discipline on cost management seeing operating expense growth held at 3% during an increased activity period, which also included increased disruption across the precinct. Operating EBITDAFI of $724 million was up 3% on the prior year and net underlying profit after tax was $309 million, down 0.5% on the prior period. Capital expenditure momentum continued in line with the prior couple of years at just under $1.07 billion with $881 million in aeronautical and $187 million in non-aero CapEx. And this is the third consecutive year of $1 billion-plus capital expenditure.

If we look ahead, we are seeing airline capacity returning, including Air New Zealand indicating that its fleet is largely now back online and the Northern Winter '26 slot filings signaling that airlines continue to have a positive outlook on New Zealand as a destination. So I'll call the highlights to a pause there, and I'm going to hand over to you, Stewart, now to take us through the detail on the financial performance before coming back to talk about how we're progressing against our strategy.

So over to you, Stewart.

Thank you, Carrie, and good morning, everyone. Turning to Page 9 of the presentation. We have summarized our results in what has been, as Carrie mentioned, a big year for the Auckland Airport team. Let me take you through the numbers. Revenue for the year was $1,036 million, up 3% year-on-year, driven by increased aeronautical revenue and commercial activity across the precinct with the investment property portfolio and parking holding momentum despite softer markets. EBITDAFI came in at $724 million for the year, also up 3%. And excluding one-off items, normalized EBITDAFI was up a pleasingly 6% on the prior year.

Reported profit after tax of $335 million is down 20% year-on-year, but that is largely a fair value story and underlying profit for the year of $309 million was essentially flat on the prior year. In the year, Auckland Airport invested, as Carrie mentioned, $1,068 million of capital and commissioned just over $1 billion of assets. So our regulatory asset base is growing meaningfully. FFO to net debt sits at 16.9% at 30 June, comfortably above our A- hurdle, and we've declared a final dividend of $0.0675 per share, taking the full year distribution to $0.1325, consistent with the prior year.

Now turning to Slide 10, titled revenue growth, and this is where I'll step down the P&L. As I mentioned earlier, revenue in the year was up over $30 million or 3% off the back of higher aeronautical charges, an increase in passenger numbers in the year and stronger commercial income. This was the second year in which the company revenue exceeded $1 billion, and we were pleased to continue revenue growth on the prior year despite the slower final quarter as a result of the outbreak of conflict in the Middle East and the resulting reduction in aeronautical capacity deployed by some carriers connecting into Auckland.

Operating costs were held to a 3% growth year-on-year, and that includes $5.9 million of fixed asset write-offs in the year, showing the success of our Match Fit cost program to continue to offset the additional investment in new digital capability and the cost of managing the disruption through the build. With higher revenue and lower cost growth than the prior year, EBITDAFI was up 3% to $724 million with a margin a smidgen under 70% for the year. Associates and joint ventures contributed just over $4.5 million in the year, with Queenstown Airport performing strongly in the year and the airport hotels trading well despite the fluctuating external environment.

The hotel results were particularly pleasing and with the airport hotels continuing to outperform their Auckland peer set, they continue to demonstrate the merits of the airport proposition. The 2 lines to focus on below EBITDAFI, you'll see depreciation is up 20% in the year to just over $241 million. As assets commissioned in the prior year came into service as well as the additional depreciation from over $1 billion of assets commissioned in the year. And secondly, interest expense was broadly flat at $72.6 million with higher drawn debt offset by a lower cost of funding. The net result, as we mentioned earlier, was underlying profit of $309 million, down $1.4 million year-on-year.

Now turning to Slide 11, revenue composition, where we've outlined where the 3% lift has come from. Firstly, starting with aeronautical. The revenue rose 6% year-on-year with airfield income up 9% to $186.7 million and the income from passenger service charges up 4%. The 6% lift in total aeronautical income reflects the combined effects of passenger growth in the year of nearly 2% plus the higher aeronautical charges in the year to fund the investment program. Aeronautical income also includes $11.9 million of aircraft parking income, offset by $8 million of landing charge discounts in the year.

Retail income fell 4% in the year to $181 million, largely reflecting the staged duty-free redevelopment, the full year impact of revised duty-free concession rates and a continued shift in sales mix towards lower-margin categories. While it was pleasing to see sales, basket size and passenger spend rate all lift during the year, these gains were not sufficient to offset the combined impact of the redevelopment, concession rate changes and category mix shift.

As we noted in the interim result, the duty-free refurbishment was expected to create some short-term revenue disruption, and we are now more than halfway through that program. The works have reduced the footprint of the main departure store by around 30%, but customer metrics remain encouraging. As I mentioned, sales are up 5%, more than double the passenger growth and basket size has increased 8%, supported by the benefits of a single operator model, a broader range of SKUs and thus greater choice for travelers.

In that context, against both the short-term disruption from the redevelopment and broader retail market conditions, this is a solid result. Car parking revenue was a standout in the year, up 9% to $79.2 million on the full year effect of the FY '26 capacity expansion in the prior year. A focus on revenue management and the continuation of a shift that we commented on at the interims of a movement towards parking more proximate to the terminals and staying longer.

Investment property rental income grew 5% to $182 million, reflecting just over $7.6 million lift from the full year contribution of developments completed in the prior year with the balance of $1.7 million from rental growth in the year. In the second half of the year, I'm pleased to report that Auckland Airport concluded its insurance claim relating to the January '23 flood event, booking a further $9.5 million in the half. This final payment brings total proceeds related to the flood to just over $40.5 million and importantly, a conclusion on that matter.

Another income line moving against us, you'll note from the page is interest income, down $9.2 million from $31.8 million in the prior year, and this largely reflects a reduction in cash balances in the year as the 2024 equity raise proceeds were deployed into the build, and I'll touch on the implications of this shortly.

Turning the page to Page 12. Cost control was an area where we worked really hard in the year, with total operating expenses growing just over 3% to $311.4 million. This achievement was pleasing for the team given the result was well down on the headline cost growth of 8% we saw in the prior year and secondly occurred while activity across the precinct continued to increase. In the year, the company incurred costs of 5.2 -- sorry, $5.9 million associated with the write-off of assets no longer expected to deliver value to the business. And excluding these costs, normalized operating expenses in the year would have been $305.5 million.

With headcount up 11% in the year to resource airport operations and secondly, the infrastructure team to deliver on our build, much of which is capitalized, it was pleasing to see staff costs in the year only up 3% to $88.3 million. Asset management, maintenance and operations grew 2% or $3.3 million on higher activity-based costs like baggage handling, busing and parking operations, partly offset by some significant savings arising from improved procurement in our property and transport businesses. Rates and insurance were up 11% year-on-year.

But with insurance flat, this change year-on-year is really a reflection of higher council rating costs, which is in part driven by higher asset values from commissioning new developments. Some of this, you'll see is recovered from tenants, and you can see that in the income section of our P&L. Marketing and promotional costs fell materially in the year, down 26% after the prior year launches of Manawa Bay and the Transport Hub meant that the team could move into a more normalized run rate.

Importantly, professional services and other discretionary costs were held to quite tight limits with the team spending very judiciously in this area. Notwithstanding the above, the largest change in expenses in the year was depreciation, which I mentioned earlier, reflects the additional assets commissioned in the year and the full year effect of those assets commissioned in the prior year. In particular, $18 million relates to assets commissioned in FY '25 and $24.7 million for assets commissioned in the current year.

In addition, that figure also includes $9.3 million of assets that we accelerated the depreciation of in the year because of substantially shorter lives owing to the redevelopment program, most of these relating to the Airfield. Finally, gross interest expense was a touch under $130 million, 6% down on the prior year as the higher average debt levels was more than offset by a lower cost of funding in the year. Reflecting the significant commissioning of assets, capitalized interest fell by $8.8 million to $56.5 million in the year.

Now turning to Slide 13, where we outlined an earnings bridge for EBITDAFI, which will assist readers in understanding the trajectory of the underlying business. In FY '25, reported EBITDAFI included what we consider as nonrecurring items such as impacts from the flood, SaaS costs and interest income. In FY '26, nonrecurring side, the business incurred fixed asset write-offs, as I mentioned, plus $3.5 million of financial support to regional carriers here in New Zealand. Normalizing for these, it's pleasing to see that the EBITDAFI on a normalized basis was up 6% year-on-year.

Now turning to Slide 14. Auckland Airport, as Carrie mentioned, deployed over $1,068 million of capital in the year with the aeronautical program passing the midpoint in terms of spend. This is a pleasing full year outcome and reflects the expected lift in activity across the domestic terminal program in the second half, something that you'll recall we spoke about at the interims. Terminal integration was the largest single call on capital with $700 million spent in the year, a 38% increase on the prior year or $192 million, reflecting what is outlined on the slide here, activity across all main programs of work.

Airfield spend of $133 million in the year, whilst down materially on the prior year, largely reflecting the completion of the Northern Stand development program, were expected to remain still slightly elevated, reflecting the significant pavement and lighting renewal activity going forward. Commercial property investment was $163 million in the year, including a recent land acquisition, which Carrie will touch on shortly.

Turning to Slide 15. We've provided some new content for this year, outlining the key assets commissioned in the year and a preliminary estimate of what our closing regulatory asset base for FY '26 is. With over $1 billion of assets commissioned in the year, this lifts the estimated closing regulatory asset base to approximately $3 billion. The largest items contributing to this are outlined on the page. Whilst the actual commissioning continues to track below the original PSE4 price setting assumption, the gap seen in the prior year has reduced as the number of assets were commissioned and made available for our customers.

Just a reminder to the readers of this slide that these figures are estimates only and the definitive numbers for FY '26 will be made available as part of our information disclosure in November.

Now turning to Slide 16, balance sheet and funding. Our balance sheet remains well positioned to carry us through the peak of the investment program. Total debt at 30 June was $2.769 billion and was up 11% or just over $280 million on prior year as the last of the proceeds from the 2024 equity raise were deployed. With the proceeds now deployed, importantly, liquidity is materially stronger with committed undrawn bank facility increased to around $1.5 billion, up from the $355 million a year ago as Auckland Airport put in place a number of facilities to cater for this investment program.

During the year, Auckland Airport also repaid $250 million of floating rate notes and completed 2 domestic issues, both of which were on terms we were very pleased with. So recognizing the proceeds of the equity raise are now deployed and the elevated investment phase is still 2 more years to run, we have planned further domestic and offshore issuance for the coming year.

Now turning to Slide 17. We outlined the credit metrics, and you'll see from the material outlined on the page, we have a significant headroom in each of our metrics. Gearing at 19.7% is well below the 60% test and interest coverage is 10.12x against a 3x test. FFO to net debt on a spot basis is 16.9% at 30 June, down from the prior year figure that reflects the step-up in drawn debt through the stage of the build program, but remains importantly well clear of the 11% A- hurdle. Weighted average interest costs have come down to 5.15%, and we've increased the proportion of fixed borrowings to just over 80%, which has given us good protection given the current rate volatility.

And finally, before I hand back to Carrie, turning to Slide 18, dividends. The Board, as I mentioned earlier, has declared a final dividend of $0.0675 per share, fully imputed for qualifying shareholders, which together with the interim takes the full year distribution to the same as the prior year. This distribution equates to a payout ratio of almost 73% and continues the company's capital settings of paying towards the bottom of its dividend policy range, albeit gradually lifting off the bottom. The dividend will be paid on the 2nd of October, and Auckland Airport will continue to offer a dividend reinvestment plan for this dividend payment. But reflecting the improved outlook for headroom in the business and importantly, the credit metrics, we've reduced the discount on the DRP to 2%.

And with that, I'll now hand back to Carrie.

Thanks, Stewart. I'm on Slide 20 now, and for me on this slide really is that New Zealand has -- continues to hold its appeal as an attractive tourism destination. You can see inbound tourism has almost fully recovered to 99%, up 7 percentage points from the prior comparable period. Outbound tourism fully recovered to pre-pandemic levels, although a consistent theme through today's discussion did slow a little bit in that second half as we saw geopolitical events unfold.

Moving to Slide 21. At Auckland Airport, additional seat capacity in the financial year helped boost tourism recovery and create more choice for our travelers. Airlines have continued to identify opportunities in the New Zealand market and highlights really for us include a 4% uplift in the Trans-Tasman capacity over FY '26. Chinese visitation rebounded strongly, up 11% year-on-year, and that was helped by improved visa settings and growing airline capacity, including the launch last December of the Shanghai-Auckland-Buenos Aires service by China Eastern.

We continue to work hard to connect international airlines to Auckland, supporting them to grow capacity and opportunities for tourism, travel and trade, including delivering more choice for our customers. And the pipeline that I have talked about in the past continues as we engage with airlines and the opportunities that we believe New Zealand presents.

If we move to Slide 22, international capacity grew a net 1.3% on the prior year. When you look at the growth for the 9 months leading up to March at plus 2% -- 2.4%, excuse me, and then partly offset by capacity reductions of 2.3% in quarter 4 due to that fuel price volatility that we've talked about. Average load factors, however, have remained high in the mid-80s throughout. And so that underlying demand continues to sit there.

If we move to Slide 23 from a domestic jet perspective, capacity Auckland grew 5%, while passengers grew 4% on the prior year. And again, you're seeing the sustained high average load factors of 85%. However, similar to international, there was seat capacity rationalization in quarter 4 as a result of the fuel price implications and volatility.

Moving to Slide 24. It has been another challenging year in the regional market with declining capacity and high airfares. Regional passenger numbers have declined 4% year-on-year as a result. Seat capacity reduced by 5% in the prior year and is sitting at minus 18% versus 2019 levels. Now noting the sudden escalation of the fuel prices due to the Middle East conflict and the importance of keeping regional New Zealand connected, as mentioned by Stewart, Auckland Airport offered assistance to regional airlines in the financial year through targeted and time-boxed lease support of $3.5 million.

If we move to Slide 25, new and additional services are due to commence in FY '27, which will support the growth in the Northern Winter '26 peak season with international capacity up 4.3% on the same period last year. That means that we do see international capacity largely recovered. It is domestic that is kind of lagging behind in terms of that recovery period. And of course, you've got 2 different elements of domestic being jet and regional, which have slightly different profiles.

But internationally, it's great to see Air New Zealand increasing capacity across Singapore, Vancouver and Taipei. STARLUX announced plans to launch Taipei, Auckland via Sydney. China Southern, China Eastern and Air China are all increasing capacity in the year, and Air Niugini is relaunching Port Moresby from November. We also know Thai Airways last year referred to commencing in FY '27, and that still remains on the cards. However, I think starting a new route in the current environment with fuel price that they are looking for a little bit more stability before they launch into that.

If I move to Slide 26 and moving off capacity in airlines into the infrastructure program itself, we certainly have remained focused on delivering the right infrastructure at the right time and in the right place as part of our focus on long-term growth for Auckland and New Zealand. Significant progress was made in the financial year, advancing the integrated domestic jet terminal, and that remains on track for practical completion in 2029. The new terminal headhouse and pier structure is clearly visible. For anyone that's been out to the airport, you can see the pier extending out towards the runway and the new terminal frontage is taking shape nicely.

We've now reached the point where the steel structure of the headhouse and the headhouse is that main terminal building that will house the baggage system, main dwell spaces and airline lounges, plus what will become the arrivals area for domestic travelers. That is all now in place. Fit-out trades are advancing to the floor areas, including the installation of major plant and equipment. The facade is being installed around the main terminal building and pier construction continues to progress well with the superstructure inclusive of steel frame and cross-laminated timber decking now past the halfway mark.

And finally, on the integrated terminal in late 2025, we converted about 60,000 square meters of airfield into a land-side construction site for the airfield pavement and new domestic jet terminal pier operations. That is also progressing very well with all deep-level aviation fuel pipe work now installed on the western side, along with the start of concrete airfield pavement. So very busy indeed in that space.

Moving to Slide 27. If we then move inside the terminal, the future of the integrated check-in is underway and will transform the travel experience. In financial year '26, the temporary check-in zone or what we refer to as Zone T was successfully built and operationalized to clear the way for what is now underway with a zone-by-zone upgrade of the international check-in area for the future integrated check-in. This begins a significant change that will ultimately deliver a more seamless journey for our travelers.

Now inside the terminal, that check-in reconfiguration project that's underway, that includes the new ICS baggage upgrade that has started with its first portion of installation in check-in Zone C. And this will be an upgrade for the baggage system for both international and domestic capacity and operations when it's completed alongside the new domestic jet terminal.

Now we do want to call out the construction of the scale within a live operating environment brings with it its share of challenges. And for the next 18 months or so, we will be moving through what we see as the most intensive stage of the construction inside the international terminal. Clearly, our focus is on managing that transition safely and carefully while also trying to minimize disruption and supporting customers and stakeholders throughout that change. But there is a great outcome on the other side of that when it is complete.

If we move to Slide 28, just briefly want to touch on the regional pathway. We are tracking to plan with our airfield works. Now that's important because it will provide flexibility to support future regional and jet connectivity by adding either 4 new regional aircraft stands or alternatively 3 narrow-body jet stands. That flexibility is important as far as that future growth, and that is due for completion in FY '28.

Moving to Slide 29. Key milestones were achieved in the year towards that multiyear infrastructure delivery program. And if we look ahead to FY '27, it is another year of $1 billion-plus capital investment and the profile of activity is expected to be very similar to that of FY '26 with terminal integration again being the dominant segment of CapEx for the year.

Moving to Slide 30 and retail. Listen, Stewart commented earlier on the drivers behind retail income, noting a change in sales mix and the impacts of the reduced footprint with the refurbishment work. So I'm not going to cover that again. But what I will call out is that our French -- sorry, our partner, the French global-travel retail operator, Lagardere, got underway earlier this calendar year with a major refresh of the duty-free offering in FY '26 to deliver a competitive proposition that both provides the customer with value and future growth.

The first 2 stages of the project have now been delivered, including a new duty-free entrance, revamped walkways, a runway view tasting bar, and New Zealand's first full-format Victoria's Secret store. Alongside this, we are underway with an upgrade of the international departures Airside dining precinct.

If you move to Slide 31, just continuing on the duty-free and international airside dining precinct, it is well advanced and will bring a significant uplift in the experience when it's complete. The duty-free refurbishment is expected to be complete by the end of the first half of FY '27 and fully operational throughout the second half of the financial year. The dining precinct upgrades will be progressively completed throughout the first half and 16 new or refurbished dining options are to be delivered by December.

Slide 32. Our investment in our parking product range is delivering an improved customer choice, and we are seeing revenue growth. As Stewart already talked to, revenue was up 9%, reflecting the full year operation of the Transport Hub, the uplift in premium products and an increase in the average duration of stay. However, we did note, you'll see on the slide, the exits declined 2.5%, and that is split between international exits down 2% and domestic exits down 9% due to reduced passenger activity. Now this was partially offset, however, by the resilient performance of the Transport Hub and Valet premium products as well as the Park & Ride product offering.

If we move to Slide 33, investment property rental growth, that does continue to grow despite a more subdued market with the commercial property rent roll up 5% due to growth in the existing portfolio and Manawa Bay leasing. And softer market conditions have contributed to a slower-than-expected investment property activity during the period. However, interestingly, we are continuing to see interest from prospective commercial property tenants. If we look at some of the specifics underway, the Foodstuffs chilled distribution facility is progressing to plan and on track for completion late calendar year 2027 and activity is also underway on 2 new pre-leased projects.

Phase 6 of The Landing is in design, and that is forecast to create up to 20 hectares of future development-ready land reserves to deliver future growth and value. And so work is underway on that. If we touch on Manawa Bay, it continues to perform well. Consumers were up 3% and sales up 15% for the October to June period versus the prior comparable period. And finally, if we turn to hotels, they are seeing an average occupancy of 84.4%, which is up 4.5% from the prior period, which is positive to see. And you will recall at the interims, we were talking about the ibis refurbishment program. That has now had full project completion achieved as at the end of July this year.

Moving to Slide 34. In financial year, you would have seen the announcement that we have purchased 82 hectares of land adjacent to the precinct and the proposed future second runway location as a long-term strategic initiative to safeguard the future development. And a key consideration for us in this was managing reverse sensitivity. The planning risk that arises, obviously, if you have incompatible developments such as residential buildings, if they're established near critical infrastructure like airports, that can create challenges.

So the acquisition of the land and quarry helps safeguard the future and ensure the surrounding land use remains compatible with long-term airport operations. A scoria quarry, I have to say that slowly, is currently operating on site alongside grazing activity, and Auckland Airport plans to run the quarry operation on a more limited basis in the future, although the nature of this is yet to be determined.

If we move to Slide 35 and just touching in the regulatory space, you might recall in December 2025, the High Court declined the appeals lodged by airports in relation to the services Input Methodologies or IMs, merit review and Auckland Airport at that time elected not to pursue the matter further. Following that, the Commerce Commission did commence consultation on amendments to the airport cost of capital IMs in light of the coding errors in the 2023 IMs. In May this year, 2026, the Commission published its draft decision, which went beyond correcting the errors themselves and proposed the third materially different approach within the space of 3 years.

Auckland Airport has significant concerns about that draft decision and the uncertainty it will create not only for airports, but also their funders and investors. And as a result, we made a further submission. Now a final decision is expected on that in the final quarter of calendar year 2026.

If we look at to June 2026, the Commission also began its process to consult on the information disclosure requirements for major airport capital investment. Auckland Airport has made submissions and the Commission is targeting a final decision in quarter 3 this calendar year. If we turn to the master plan, we completed consultation on that earlier this year, and that final master plan was published in June. And then finally, preparations are now underway for PSE5 or Price Setting Event 5, which is the 5-year pricing period from the 1st of July 2027 to 30 June 2032, with consultation now having commenced.

If you move to Slide 37 and the look ahead, we remain focused certainly on delivering to our strategy of building a better future, and that includes the continued growth of our aeronautical network and the quality of our commercial offerings across the precinct, the enhancement of the customer experience in both the short and long term, and that includes minimizing the potential disruption during the peak construction activity that I was talking about earlier. We also are focused on investing in the critical core aeronautical infrastructure that underpins headroom for capacity growth and future resilience, and that clearly will be in line with our master plan. And of course, we want to continue to deepen our links with our community and our people.

So moving to Slide 38. So as we look forward to the 2027 financial year, we do remain optimistic about the future and the outlook with strong underlying demand for air travel in the upcoming summer peak period and the continued momentum in our commercial products and services. However, we do look at the current environment and anticipate the ongoing airline seat capacity constraints to continue in the near term as a result of the geopolitical instability, fuel price volatility and the broader economic conditions that may affect travel demand. This alongside the continued need for the business to operate in a live and increasingly construction-based environment.

Reflecting this, Auckland Airport is providing underlying earnings guidance for FY '27 of between $290 million and $330 million based on both the anticipated domestic and international passenger numbers of about 8.3 million and about -- sorry, 10.8 million, respectively, together with higher depreciation as a result of the investment program that Stewart was referring to earlier. With ongoing significant investment across the airport precinct, including terminal integration, we are also providing guidance on capital expenditure of between $1 billion and $1.3 billion for the financial year. As always, this guidance is subject to any material adverse events and significant one-off expenses or deterioration due to global market conditions.

So with that, I suggest we open up to questions.

[Operator Instructions] First question comes from Amit Kanwatia from Jefferies.

I'm just curious on the passenger outlook for fiscal '27. And -- I mean, you're highlighting the situation to be uncertain, which is driven by the Middle East conflict. I'm just curious to understand, what is built into your thinking around capacity growth and then the load factors for both domestic and international for '27, please?

And just -- thank you, Amit. Great to hear your question. And you were wanting to know that forward look across the board or specifically domestic?

Yes. I'm just interested domestic as well as international, both in terms of -- I mean, you're highlighting pressures in domestic, a bit more capacity growth for the Northern Winter '26. So maybe just -- maybe a bit more color around some of those?

Yes, certainly, I'll start, and I'm sure Stewart may have some points to add. Amit. I guess I'd start by saying airlines have already -- and the decisions were made in about April from memory or possibly into May, but they've already made capacity consolidation decisions domestically and internationally, and many of them go right through to the end of October. And so when you look, a lot of those are precast. Those flights haven't been on sale. It's northern summer, which mean it tends to be lower season.

So an element is we've come into this financial year knowing that airlines had made those announcements. So that's one element. If you look at quarter 1 into quarter 2. That being said, however, then we do see the slots that have been filed and what airlines intend to operate as we head into the Northern Winter or the peak summer season, and that's that 4.3% uplift I was referring to earlier as that washes through. So we're pointing to that view that some of the volatility that we've been talking about largely is impacting quarter 1 and quarter 2 as soon as we're out of the gates in the financial year, but the summer peak is looking more positive.

And then there's other elements in it that we continue to pursue in terms of opportunities, the pipeline that I was talking about of airlines and the potential for increased capacity. We continue to have those conversations, but some of those things, it's usually a long game. They may manifest later in the financial year or they may fall into future financial years. So that just gives a little bit of the thinking in terms of that why we have both a caution in terms of the way the year started, but we have an optimism with the underlying growth.

But Stewart, do you want to add anything to that?

Yes, Carrie, the only thing I would just add is just the piece to Amit's question around domestic. Naturally, we've seen and you would have seen from our monthly traffic updates is that capacity has been pulled out of the domestic system, particularly over the last quarter. And whilst we expect that will continue over the coming quarter, we do believe domestic will lag the 4.3% that Carrie talked about. And so whilst we'd like to see that capacity return, our expectations is some of the challenges that you've seen across the regional system and the domestic jet system may continue further into the year.

Sure. And then just on the retail side, I mean, the new duty-free tender, I think that's halfway through is what you're highlighting. But maybe if you can just talk to maybe provide an update on when is that expected to finish? And then maybe trading conditions, I think that seems to be positive. So that's good. But if you can provide a bit more color around different categories as well?

Yes, certainly. Again, we'll tag team on that. I'm sure Stewart will have elements that I won't have covered. But I guess if we step back generally, what we are seeing is the passenger spend rate is growing, and we are seeing sales income growing at a faster rate than passenger growth. So there's a number of things there that are positive. That mix change that we talked about earlier is playing through. And obviously, with mix change, you also differing concessions associated to those mix. So there's a number of factors that play into that.

I think you referred to halfway through the refurbishment. I think is what you're referring to. It just cut out for me, but that -- we are expecting that to be complete in the first half, which means the second half, we should have a comparatively clean run, if that's how you want to refer to it in terms of the new refurbished new operation, both across food and beverage in the dining precinct and duty-free.

But Stewart?

Yes. And just on your question around the retail performance. If you think about the year as sort of 2 halves, the second half of the year was very much impacted by the renovation of the duty-free space and some of the work that we're doing in the international departure dining precinct. Those will essentially continue into the first half of FY '27 before the completion of both of those programs are expected to see much more normalized trading for our second half of the financial year.

So from a categories perspective, the way I would sort of look at that is essentially duty-free, you could expect it and to continue in a similar shape to what we're seeing for the current year before the expected benefits of that renovation come through in the second half. Whilst other categories like food and beverage, et cetera, and some of the destination and specialty stores, we remain confident around improvements in those will flow through into improved trading through FY '27.

And then just a final question, and this is just around the regulatory stuff. And then, if I'm thinking about the asset beta in the draft decision from ComCom, that's lower. We've seen some MBIE review last year as well, which was positive. Just interested in some of your views around this. You are investing significantly in building the airport for the future. Your returns have been lower during PSE3. PSE4 is tracking below as well. Yes, just views around some of those regulatory headwinds that continue to be facing the business?

Yes. So if we think about that and you go back since the start of information disclosure, Auckland Airport has overall underearned relative to the original sort of targets for each of those pricing periods. So you talk about sort of PSE3 and PSE4. And when you look at some of those metrics, yes, we've underearned relative to most of those years in there. And as you look forward, the asset beta that's been put forward in the draft decision is essentially trying to determine what is an industry benchmark over a relatively short period of time.

And so the Commission then would use that metric once it throws it through the WACC to determine what is an appropriate return for Auckland Airport. Now Auckland Airport can then use that as a guide to how it forms its price, whether it looks to price at the 50th percentile or something different to determine essentially its aeronautical return. And that's the exercise that we're working through now with airlines. But what we want to ensure is that the risk that the airport takes is fairly reflected in the return that we price for in our aeronautical pricing.

Sure. I mean from your perspective, the current regulatory settings or the regulatory environment, is that -- does that seem to be working? Or I mean, I guess, is there any risk for a bit more heavy-handed kind of regulation?

Amit, I'll talk to that. I mean I think the -- there's been 3 reviews in 3 years, and each one of those reviews have come back to say, in terms of Part 4 and the Commerce Act and what it's intended to deliver, the regime is fit for purpose. Now that doesn't stop the noise and the headwinds in some of your question. I accept that. But our view is the regime does work as it's intended, and that's why the 3 reviews in 3 years have, in effect, come out with that.

There's been very strong response to the draft report that came out on IMs on all fronts and actually across more regulated sectors than just airports in terms of the criticality of stability for New Zealand, not only airports, but all regulated industries in terms of investors wanting to invest in New Zealand and stability is one of those key elements. So I -- my view is the breadth of the feedback on that in this latest draft decision remains to be seen. But as I said, 3 have come out with the same answer each time that it is fit for purpose, and we believe that it is.

Next, we have Andy Bowley from Forsyth Barr.

A couple of questions from me. The first will stick to the regulatory side of things and CapEx RAB in particular. Stewart, I think you made the comment that the -- well, there has been a closing of the gap in terms of the run rate RAB at the end of FY '26 versus PSE4 pricing. Now the question I've got is, what about FY '27? Do we close the gap further? I think I recall the forecast that you had for total RAB to climb to about $4.1 billion, $4.2 billion by the end of FY '27. So does the gap close further? And if not, could you talk to why, please?

Yes. Thank you, Andy. So when I look forward to FY '27. Looking at your question, we have and anticipate roughly about just under $0.5 billion of assets to commission. Now the timing of those are phased throughout the year. And so some of that will influence how close that gap is essentially closed, Andy. But you can see it will make further progress to -- if I look at sort of the page in our presentation, the overall RAB number, which was closer to $4.1 billion.

So it will still create a little bit of a gap relative to the PSE4 pricing. And when you add those sort of 2 numbers of today plus, call it, $0.5 billion, you can anticipate then if all things believe to be true, then that gap should continue to remain there, and that really reflects some of the assets that was spoken around like things like the regional headhouse won't be commenced during this pricing period. And then also some changes to the assumptions around the timing of commissioning of airfield works, particularly associated with the new domestic processor. In pricing, we planned for that to occur in late 2027 -- sorry, financial year '27, and that's now into PSE5. So I suspect the gap will continue there. But what we're showing on the page in the presentation is the gap that was there last year has closed somewhat.

Yes. Okay. No, sure. So just putting some numbers around that FY '27, I think in your PSE4 pricing, you had about $900 million of assets commissioned. So that gap does widen again over the next 12 months. But is it fair to assume that we'll see those assets commissioned that do represent the gap in early PSE5? Or are you going to see that spread across PSE5?

Yes. I think, Andy, like the change in the opening RAB will then get adjusted for as essentially those assets that were previously going to be in the closing for PSE4 then get phased in through PSE5, and that's what we're in consultation with airlines around.

Great. Okay. Let's move on. The second question around retail. So you've talked to PSR being up, which is great. You talked to basket sizes being up even a bigger rate of growth, 8%. Retail income per pax down. So that kind of suggests that concession yields are down. And I suspect there's a mix component to that. But can you give us a sense of what your best guess of the overall disruption impact is within these numbers for each of those metrics?

Andy, it's really hard to estimate that because when you've got 1/3 of the floor plate out under construction, what you're seeing from those headline figures that I gave you is that the departure retail proposition is still very much resonating with travelers. It's just there's less product there. And so if you go back and look at the sort of 1H versus 2H performance, you could probably use that to dimension some of the renovation impact, all things considered equal. But sitting here today, it's very hard for us to put a figure on that.

And Andy, we continue to -- whilst it doesn't answer your question about the number roll forward, we're very aware of that mix, too. And so there's things in terms of as we think about retailers and products and mix, what we can do to also look at that. And so things like you may or may not have seen the announcement on Aesop and Le Labo, which are 2 high-performing, high-demand premium kind of fragrance skincare. That view of -- that's launching before the end of this calendar year as part of duty-free.

So part of it is what we've currently got the disruption, but also we continue to look at the mix and the products and offering that we've got along with Lagardere to try and continue to promote, obviously, not only basket size, to your point, but also that overall income.

Sure. So in the context of the disruption, are you -- from a duty-free point of view, taking a lower concession yield during that period? Or is it effectively that's manifested in just the PSR, which I'd imagine for duty-free is somewhat pressured because of the reduced floor space?

Sorry. Andy, if I understand your question, you're saying, are we taking a different concession rate during the renovation period?

Yes. Yes. Is there any risk that you take on around that to at least provide a performance outcome for the concessionaire that isn't impacted to the extent that they need to undertake significant refurbishment to combine effectively the 2 previous concessions and create a more retail-friendly environment for travelers?

Yes. Look, the way I would answer that is when new providers take over a space, they build into the economics of the concession and the terms of the contract, what would occur during a renovation. Lagardere is very experienced at this sort of thing. And so you don't tend to have specific disruption periods where you have a different concession rate, et cetera. So it's part of the whole contract return.

Next, we have Tom Peyton from RBC Capital Markets.

Just a quick one from me. On Manawa, are you able to talk through the growth in the rent roll, the changing WALE, and I guess, when you sort of expect that to reach an optimal level of occupancy? Just to get a sense on timelines for that.

And so sorry, just cut out for me, Tom, were you -- did you say Manawa? Manawa Bay?

Yes, Manawa. Yes.

Yes. So that's performing very well. I don't have the number in front of me. But as far as leasing and occupancy, it's very high. So it's in a very good space and as far as its trading activity. So I would say the view of it is it's hitting its straps now. This is kind of our view of how it's performing kind of year-on-year in that October to December period. Generally, it's in good shape. I think the occupancy is above 99%. So we're very, very pleased from that regard. But Stewart, any other additional context you want to add?

Yes. And I would also add, Tom, that what we've seen is, as part of that initial portfolio of tenants in there. As those tenants have learned to operate within the space, and we've seen some of those work, but in a very limited number of cases, some of them not work, then they have been effectively rotated out of the facility. And so what you're seeing now is we're moving through that phase of the initial leases into periods, in some cases into that second stage of leasing, which sort of goes to your question. They're not all aligned to one particular date. So I think you can still expect those over the next couple of years to impact in terms of the rent roll as essentially we move into that more mature state.

Yes. A question about depreciation in FY '27, obviously, up 20-odd percent in '26. Are we expecting something similar in '27?

No is the quick answer to that, Tom. So in '27, there was an element of what I called out accelerated depreciation that was largely attributable to some of the airfield assets that we wrote down because of new construction activity. We're not expecting that to continue through FY '27. And also the commissioning profile is a little bit lower through FY '27 as well. And so from a depreciation perspective, you should expect only either flat to a very modest increase over the current year.

Awesome. And then one final one for me, and I'll jump back in the queue. Higher council rates you flagged in the recovery. I was having a quick look at the recovery rates, and they seem to be marginally higher year-on-year. One, is that what you're seeing as well? And two, do you expect that to continue moving forward?

Look, it's probably at the margin, I think, Tom, will be the way I'd describe it. Yes. So it really reflects essentially the valuation of those properties and what then passes through to our tenants and the change in tenancy. So any occupancy changes, obviously, it limits our ability to pass that through.

Next, we have Suraj Nebhani from Citi.

Just a couple of quick questions. So firstly, on the guidance range, it does seem a bit wider than normal. I'm just keen to unpack what's driving the top and the bottom end of the ranges, please?

Yes. So yes, similar to last year, the way I would encourage you to look at that guidance range is if we hit our passenger forecast, you could expect us to hit into the top part of that guidance range. But that would be absent any sort of other one-offs that may flow through the results. Now if those occur, then that's what would test essentially the bottom half of that range.

Sorry. So just to be clear, the passenger forecast, so the 8.3 million and the 10.8 million that assume you reached the top end, so $330 million. Is that right?

Top half. Yes. It's -- you could get into the top half, right, not the top end because essentially, what the philosophy that we try and look at this is you have an equal opportunity of underperforming as outperforming. So it's effectively a midpoint.

Understood. And Stewart, in the prior results, you've given us a bit of a steer on, I guess, interest tax overheads. Can you just help us with that, if possible?

Yes, there's a lot of moving parts below the line. And obviously, the timing of commissioning is quite material on what those 2 combined lines could be through the year. But in terms of direction, I would not be uncomfortable with something that was close to sort of $340 million as a direction for both of those items, so depreciation as well as interest.

Understood. And just one final one on the, I guess, the passenger outlook. I know, Carrie, you mentioned some stuff in response to one of the earlier questions. I'm keen to understand how you're seeing the airlines respond? The fuel price outlook has been -- it's been rocky to -- is probably the right way I would put it. How are you seeing the airlines respond? And what are your discussions suggesting on the outlook into, I guess, calendar '27?

Yes. Thank you, Suraj. It's -- there definitely isn't a one size-fits-all is how I would put that. And I think that comes down to airlines, their hedging or not. There's a number of things that come into play of how they are looking at it. Generally, I would say the consolidation to date has been rational, considered in terms of that. And they've obviously been able to put passengers on other services on those routes, which is why you've gotten the 85% load factors. We haven't seen straight-out withdrawal from routes, which again is good. That means that kind of rational approach to it.

To your question of the outlook of what would you have to see, I do think that the stability has been bouncing around so much. I think for the existing services, I think airlines will continue to ensure. I don't think we'll see necessarily exits from routes unless something changes dramatically. The reintroduction of services and potentially the desire to kick off a new route probably does come with just a little bit more stability. And that doesn't mean getting the fuel price back to what it was in February necessarily. It's probably just the bouncing around the extremes that we've seen in the last couple of months is certainly seeing a little bit more caution.

But as I said, the outlook, the intent to fly over summer peak because of the higher demand, because of those elements, we do see airlines looking through in that regard, but they're not going to rush into what is currently off-season in New Zealand, which is that through to October period that I referred to earlier.

I understand. And if you'll indulge me, just one final question from me on PSE5. I guess just keen to -- we have some good clarity on the commissioning schedule. So thanks for that. But just keen to understand the actual pricing. So let's say, you have some big commissioning around '29, 2030. Is it fair to say that the price growth or, I guess, the way it comes through the slope of that, will that be weighted to the years where the major commissioning happens? Or is that more front-ended over that 5-year PSE5 period?

Yes. Look, that's a great question, and that really goes to the heart of a lot of the conversations we're going to have with our airline customers over the next year. And so what the return tries to do is essentially determine the IRR over that 5-year period. And we are discussing with our substantial customers, not only what we anticipate is that commissioning profile, but then essentially what that aeronautical recovery will look like over the years of that commissioning profile.

So it's still to be determined. And if you look back over time, we've tended to prefer a step change at the start of a pricing period and relatively stable increases thereafter. But in this instance, the magnitude of the change over that '28, '29 and '30 period are quite different. So that's really still to be determined as part of that consultation process.

Our last question comes from the line of Rob Koh from Morgan Stanley.

Can you hear me okay?

We can.

Can I just ask a little bit into the pax outlook. If I look at Slide 49 with your kind of city pair or country pair type data, it looks like a lot of the UAE traffic did actually divert through Singapore, Hong Kong, Malaysia. Is that right?

Yes. The short answer is yes.

Okay. Cool. So -- and I guess with the new routes coming in, a lot of them are Asia-centric. So should we probably be looking for a Lunar New Year peak increase?

Well, I think -- and again, I think I commented earlier, we've got quite a bit of additional capacity coming in over the northern peak from a lot of the Chinese airlines. So China Eastern, China Southern, Air China, they've all got capacity increases over northern peak, which does include some of that Lunar New Year as well.

Yes. Okay. Great. And then moving to the purchase of the quarry. I'm probably going to screw up this sentence. How are you thinking about the cost of carry on the quarry? And does it go into the RAB?

Let me sort of answer that in reverse order. So no, it doesn't go into the RAB at the moment. It is -- if you look at where it sits in the accounts, it is split. And so at the moment, and it is sitting as essentially as land, but also in our property, plant and equipment notes, so Notes 11 and 12. In terms of the cost of carry, what we're doing is keeping the quarry operating, as Carrie mentioned, albeit in a limited capacity, which offsets some of that cost of carry. And then also the land around the quarry itself is essentially we're retaining as grazing at the moment until we determine what the future use of that is, once again, to offset it.

Okay. Okay. So if I were thinking, I don't know, well, you earn a WACC of 8-ish percent on that $20 million investment. Is that roughly the kind of income that we should be factoring in?

No. No, you shouldn't.

Okay. All right. Cool. Okay. And then just a final question. I guess with the -- you got Zone T up and running and I think C and D coming on stream, should we be thinking there's like a dual running cost during that transition period? Or is that pretty small?

It's a great question. As far as overall capacity, one of our nonnegotiable principles in this infrastructure program is retaining capacity for all sorts of probably obvious reasons in that regard. And what we've done is -- so at the point we've opened Zone T, we had Zone C closed. So much of a muchness in terms of core running support, labor costs, et cetera, Rob, but there is an element we often talk about the fact that we have to manage and minimize disruption because we continue to change, et cetera. So the way that we've sequenced it is as C needs to come back online, Zone C before we take the next zone out.

And so kind of we want to ensure we're not reducing capacity and therefore, the kind of resourcing support costs for each of the zones should hold true, all things being equal, because of the way that we've sequenced it. So the -- you might get a little bit of operational disruption management, which we've been dealing with for the last couple of years, but no, definitely not dual operating costs or anything near that magnitude.

Thank you for all the questions. I will now turn the conference back to Carrie for closing remarks.

Well, thank you, everyone. Auckland Airport certainly takes great pride in our role as New Zealand's gateway, and we would like to just take a moment to extend our sincere thanks to the Auckland Airport team, our partners and you as our investors for your commitment as we continue to build for the future. So thank you for your time today, and we look forward to connecting with many of you over the coming weeks of investor meetings, both here in New Zealand and Australia. Have a great afternoon.

Good day, and thank you for standing by. Welcome to Auckland Airport Interim Results 2026. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Carrie Hurihanganui, CEO. Please go ahead.

Thank you. [Foreign Language]. Welcome, and good morning to everyone on the line. I am joined today by Chief Financial Officer, Stewart Reynolds, and we are pleased to be able to share the interim financial results from the first half of FY '26 with you. Listen, overall, it's been a promising start to the financial year. We've seen strong momentum across the business as travel demand and seat capacity has continued to build along with increased cargo movements.

The focused cost management and solid commercial performance. Customer journey times continued to improve with robust operational performance, all while making significant progress on our aeronautical investment program with key projects delivered in the period and our new integrated domestic jet terminal firmly on track. As we look ahead to the remaining 6 months of the financial year and beyond, we're feeling optimistic, and that's based on the recent trading momentum and continued growth in demand across aeronautical and commercial opportunities as well as a pipeline of additional new air connectivity and the continued substantial progress of our infrastructure program.

Now of course, that is notwithstanding the complexity and challenges that naturally come with a program of the scale that it has in a live operating environment. Now plenty to run through today on the half year performance and outlook before we jump into Q&A as normal. So let's jump to Slide 4. We'll kick things off with an overview of the first half results. I'd summarize the half year really about reflecting a growing momentum. First half '26 revenue increased 4% to just under $520 million, reflecting the combination of an increase in aero charges, increased passenger numbers and higher commercial income. Operating EBITDAFI lifted from the prior comparable period by 6% to $371.3 million, and that resulted in a lift to the EBITDAFI margin. Net underlying profit after tax is also up 6% at $157.1 million and total reported profit after tax, which included revaluations down 5% to $177 million.

An interim dividend of $0.065 per share will be paid on the 2nd of April with total dividends declared at $110.2 million. Capital expenditure was almost $431 million in the first half with assets commissioned in the period of more than $743 million. If we move to Slide 5 and look at some of the key highlights that underpin the half year results, you can see there that total passenger movements increased 2% to $9.64 million, and that was made up of domestic passengers at 4.37 million, up 2% and international, including transit, also up 2% to $5.27 million. We also saw almost 86,000 tonnes of international cargo movements worth $20.3 billion, and that was up a healthy 37%.

The ongoing focus, collaboration and investment is making a tangible difference for our customers. We've been working together with our airport partners and border agencies, and we've seen the introduction of new technology and digital enhancements and an expanded arrivals area, resulting in improved customer satisfaction measures and importantly, shorter customer journey times. In the commercial space, we've continued to see growth across key business lines of car parking, retail, investment property and rental income, up 5% to just under $240 million. Of the $743.5 million of assets commissioned in the period that I mentioned a few minutes ago, $724 million of that was aeronautical projects across terminals, transport and airfield.

Moving ahead to Slide 7. Fundamentally, we continue to build for the long haul, and it has certainly been a busy 6 months. And that 6 months has been focused on delivery and progress in creating capacity, increasing resilience and uplifting the customer experience and business performance. Moving to Slide 8. Auckland Airport, we've been incredibly proud to serve as a critical gateway and enabler of economic growth for both Auckland and New Zealand. International travel here at the airport is an essential driver of the economy, generating over $35.1 billion in economic output in trade tourism and employment per annum with Auckland Airport serving more than 90% of long-haul flights into and out of New Zealand. Or another way to look at it is $1.4 million of economic value for every international aircraft that lands into Auckland Airport.

Now we've seen inbound tourists through Auckland up 2% in the 12 months to December at 2.4 million, and that makes up 67% of New Zealand's international visitor arrivals. Auckland also has 89% share of New Zealand's international airfreight by volume and 93% by value. In the period, that equated to $8.2 billion worth of goods exported by Auckland, which was up 75% and $12.1 billion imported, which was up 19%. Moving to Slide 9. Listen, we've been really pleased to see more seats and greater choice coming into the market for travelers. And the most significant of that, particularly in the international space, a highlight was the launch of China Eastern's Shanghai-Auckland-Buenos Aires service in the first half, and that was made possible through years of collaboration between China Eastern Auckland Airport and government partners.

Now overall, the China market growth is positive with forecast around 50,000 additional seats during FY '26 versus FY '25, and that's primarily been driven by China Eastern, China Southern and Hainan Airlines. It was also positive to see Air New Zealand growing its network from Auckland with seat capacity to Australia up 8.4% and capacity to the Pacific Islands increasing by 7.3%, primarily driven by their incremental A321neos. Now that Tasman growth was also complemented by capacity increases from both Jetstar and Qantas, which lifted seat capacity from Auckland to Australia by 4% and 7.3%, respectively, during the period.

It was great to see Qantas Group announce their new samoa and Gold Coast routes that will commence in the second half. And it's worth noting that [ CF's ] launch of Auckland samoa introduces competition to that existing route and the Gold Coast Auckland launch sees the Qantas full-service airline brand now come on to that route. Moving to Slide 10. A huge highlight for us. We were delighted to see the strengthening of Southeast Asia connectivity with Thai Airways announcement of their planned resumption of services in the back half of 2026, and that will restore a long-standing long-haul connection between New Zealand and Thailand.

And really, for us, it's an important milestone as we think about the rebuild of long-haul connectivity to and from New Zealand. It adds real value for travelers between both countries while also strengthening our connections into Asia's wider aviation network. Moving to Slide 11. There's been a tremendous amount of work underway between business and government and working together to stimulate tourism recovery. And it's really positive to see outbound tourism by Kiwis fully recovered and inbound tourism seeing a 5 percentage point lift to 90% from the prior comparable period. As New Zealand's Gateway Airport, Auckland Airport actively promotes New Zealand abroad through strategic route development and working with airline partners to launch new international services to strengthen our country's connectivity to key global markets.

And this connectivity matters. Each daily wide-body fleet to Auckland delivers annual tourism spend of more than $150 million and $0.5 billion in high-value airfreight. Now Auckland's international seat capacity was up 4% over the peak period, which was that November to March period. And this has been assisted by the gains made over the past year on tourism with business and government, both combining efforts to see things such as tangible progress on visitor visa turnaround times. What's been really interesting is the November introduction of that simplified visa requirement for Chinese travelers who already held an Australian visa, enabling them to come to New Zealand. That's driven a 44% year-on-year increase in Chinese traveling between Australia and Auckland for the months of November and December.

And finally, the announcement of the $70 million events in tourism package as well as investments in the wider regions such as the opening of the convention center, excuse me, and the City Rail Link are all key in driving economic activity. Slide 12. If we dive in a little bit deeper, growth in the domestic jet and international capacity is providing greater competition and the resulting impact of that is, therefore, travelers with more choice. Overall, it's been a promising start for international travel at Auckland as both seat capacity and passenger volumes are growing. International seat capacity increased 1.8% during the first half compared to the prior year and reached 89.3% of 2019 levels.

Non-transit pax movements reached 93.2% of 2019. In December, what we did see was the international load factors were 5 percentage points up on the FY '19 equivalent and clearly indicating that demand is not the problem as it continues to outpace supply. And it is something that we are very cognizant of. We are seeing the passenger demand trajectory as positive, but we do also see and expect the ongoing global fleet shortages to continue to weigh on the availability of new seat capacity supply and pace of growth in the near term but also have a clear line of sight that we see that washing through. Now if we turn our sights to the domestic market, first half '26 saw the largest boost to domestic jet seat capacity in a decade.

So it was up 5%, albeit I acknowledge still not at 2019 levels. But the growth is positive. The additional 181,000 seats in the domestic jet market helped to make flying just a little more affordable on key routes with the average jet airfare costs falling by around 6% during the period. Moving to Slide 13. We are continuing to invest in driving efficiency and improvements across the customer journey. Now this extends to the ongoing close collaboration with airport and government border agency partners as we look to optimize the ecosystem alongside the infrastructure improvements. And that's things such as the expanded arrivals area, the new security screening technology and the new express pathway for eligible arriving travelers. Now delivering infrastructure improvements in a 24/7 airport is highly complex.

And despite increased customer and passenger activity, we have continued to deliver tangible operational improvements, making traveler journeys more streamlined than ever. Over the summer peak period, which is that December to January time frame, median international departure processing times were 21% faster at 6.5 minutes compared to the same period last year, while international arrivals were 10% faster at 18 minutes. So from smoother passenger processing to reduce queue dwell times to providing enhanced customer experiences at airside, such as lounges and retail. These improvements are enabling the airport to both manage growing demand and do so efficiently while maintaining a reliable and positive experience for travelers. Moving to Slide 14. We are New Zealand's Gateway Airport, and it is critical that we continue to invest in greater capacity and resilience.

The first half marked a significant milestone in the infrastructure plan with over $700 million of assets commissioning in the period. This includes the $465 million Northern Airfield expansion, assets at the eastern end of the international terminal that we refer to internally as the stitch into the new domestic jet terminal, a new direct cargo airside access point, a major upgrade of the stormwater network, the Western truck dock, critical airfield pavement renewals and works associated with the contingent runway. So in short, it was a very busy but productive first half. Moving to Slide 15. The integrated domestic jet terminal remains on track for completion in 2029. We've seen steady progress achieved across both the terminal and airfield works in the first half.

And the new terminal structure is now clearly visible to all airport visitors. And in November last year, the project reached a key milestone with the physical connection to the existing international terminal building, which you can clearly see on this slide. Approximately 60,000 square meters of airfield has been temporarily closed and made available to support construction of the domestic jet terminal pier and aircraft stands with piling underway, fuel system installation progressing and airfield pavement works now commencing. The scope and scale of activity at the new domestic jet terminal will only increase further in the year ahead with more workers on site as the footprint availability in both the head house and the pier continues to increase and the structure becomes more enclosed, allowing some of the interior fit-out to get underway.

Slide 16. Looking ahead, as travelers to the airport precinct, they are going to see in the international terminal building construction activity becoming even more visible as we transform the check-in area. Travelers will experience some changes with the opening of a new temporary check-in facility and change to passenger access routes heading into quarter 4 of this financial year. This next phase of the build is an essential step in delivering the future long-term capacity, resilience and improved customer experience travelers have been asking for. And while travelers can expect some temporary disruption as it gets underway, we are working very closely with airlines and government agency partners to minimize those impacts as much as we possibly can.

Moving to Slide 17. In retail, the partnership we have with our new duty-free partner, French global travel retailer, Lagardere, ensured a smooth transition at the start of the half year and is focused on a competitive proposition that delivers both customer value and future growth. The new offering is already proving popular with travelers as Lagardere starts to significantly upgrade the store experience for customers, offering new brands and more choice. And while travelers will notice construction activity in the duty-free stores, the work is being undertaken in a very carefully staged manner throughout 2026 calendar year to minimize the disruption and travelers will continue to be able to access and buy their favorite brands.

Our retail income in the period was $92.3 million with total PSR up 2%. It's actually 5% if you excluded FX, and that's versus the prior comparable period. Income per pax of $9.76 was down 4% with a change of sale mix noted as part of that. Lower concession rates are driving higher sales volume with duty-free basket sizes increasing and sales growth outpacing the pax growth. And in a sluggish retail environment, both on the high street here in New Zealand and in travel retail more broadly, to be able to grow basket size and PSR is a pleasing outcome with the duty-free business outperforming most regional peers. Moving to Slide 18. Investment in our parking product range with the opening of the transport hub and the Park and Ride South is delivering improved customer choice and revenue.

Revenue was up 14% to $41.1 million, reflecting the full 6 months operation of the transport hub, an uplift in premium product, an increase in average duration of stay, growth of international passenger numbers and growth in total car park exits by 1%, with international up 3%. However, we did see domestic car park exits reduced by 7% due to weaker corporate demand, the ongoing domestic economic backdrop and the loss of circa 700 spaces due to the expansion of the regional airfield capacity program. This was partially offset, however, by the resilient performance of the Valet and Park and Ride products.

Moving to Slide 19. Manawa Bay celebrated its first birthday in the period and is performing well. We've been seeing increased footfall of 6% and increased sales of 18% for the comparable November and December periods. And it's providing a valued shopping amenity for around 75,000 people who engage with the airport every day, including airport workers and the Auckland community. Taking it to Slide 20. Investment property rental growth continues with the existing commercial property portfolio seeing a 9% growth in investment property rental income in the first half and a 2% increase in the rent roll to $195.4 million, which all came from growth in the existing portfolio and further Manawa Bay leases.

Now softer market conditions have contributed to a slower-than-expected investment property activity during the period. However, we are continuing to see strong interest from prospective commercial property tenants. Hotels are seeing an average occupancy of 83%, which is up from 78% in the prior period. And the ibis refurbishment program is on plan with the first of the 2 stages now complete in the period, and the second is going to kick off from April.

Slide 21, a few key updates in the regulatory space. In December 2025, the High Court declined the appeals lodged by airports in relation to the Airport Services input methodologies, merits review and Auckland Airport has elected not to pursue the matter further.

And related to this, the Commerce Commission has advised that in March, it will commence consultation on amendments to the airport cost of capital input methodologies in light of the coding errors that informed the 2023 input methodologies. Auckland Airport will be making submissions as part of this process, and the commission has indicated it is targeting a final decision in June 2026 on those amendments. Last month, the commission began its process to consult on the information disclosure requirements for major airport investment in line with the earlier recommendation by MBIE. The commission is targeting to complete this process by the third quarter of 2026. And finally, following consultation, the final master plan is expected to be published midyear 2026. So with that, I'll now hand over to Stewart to take us through the financial performance in more detail. Stewart?

Thank you, Carrie, and good morning, everyone. It's a pleasure to be sitting here today and presenting Auckland Airport's interim results for the 6-month period to December 2025. Turning to Page 23, where we summarized our financial performance for the half. As Carrie mentioned, the first 6 months of 2026 financial year has indeed been a very busy one for the company with the continued recovery in aviation activity flowing into improved financial metrics and delivering what I would describe as a good start to the financial year.

Higher tax movements, particularly international, combined with improved performance across the commercial lines of business drove a 6% lift in revenue for the 6 months, excluding interest income. With careful cost management in the period, the increase in revenue flowed through to a lift in EBITDAFI, up 6% to just over $370 million in the period. And with that, pleasingly, a lift in EBITDAFI margin on the prior period from just under 70% to 71.5%. Net profit for the year was down 5% to $177 million, largely as a result of a reduction in the investment property revaluations that we saw in the prior period, with underlying profit, that is profit excluding noncash movements associated with revaluations and derivatives in the period, rising 6% to $157 million, with the lower cost of debt and improved performance from our investment in Queenstown Airport and the hotel JVs, partially offsetting below-the-line impact of asset commissioning.

Turning now to Page 24, where we've set out a breakdown in revenue across the different lines of business. In the half, it was pleasing to see aircraft movements at Auckland Airport return to a positive trajectory with an increase in both domestic and international movements on the prior period. During the 6 months, this increase was driven by higher value, larger aircraft with the [indiscernible] increasing ahead of both PAX and aircraft movements in the period. This increase in higher-value aircraft movements, combined with the lift in PAX movements and higher aeronautical charges associated with the significant investment in aeronautical infrastructure has resulted in total aeronautical revenue up 7% in the period to a combined almost $240 million.

The increase in passenger activity was a key driver to the improved performance across most of our commercial lines of business with improved performance in car parking and the airport hotels, whilst also supporting our retail business in what has been a more challenging market for travel retail. Starting first with retail. Income declined 2% in the period to $92.3 million as the combined effects of lower concession rates to support customer value, promotional activity and a change in customer buying patterns to a larger proportion of lower-margin categories such as technology, resulted in higher sales and average transaction values, but resulted in a lower income per passenger in the period.

On a category basis, duty-free traded well with sales up on the prior period. And as indicated at the full year results, the new contract has evolved with industry trends to support more flexibility to drive greater basket size and with it, customer value. In addition, food and beverage, destination, news and books categories also traded well in the half, reflecting the attractiveness of the retail proposition. However, also reflecting the difficult New Zealand retail environment, luxury and foreign exchange continued to underperform in the period with the latter remaining challenged as the industry continued its migration to new technologies.

In car parking, income rose 14% on the prior period as the combined effects of a full period contribution from the transport hub, migration towards products closer to the terminal and pleasingly, an increase in over 20% in the duration of stays across all of the parking categories all contributed to a lift in revenue. You will recall previously, Carrie and I have spoken to the airport seeing a migration of parking to more remote, cost-effective options as the effects of the economic cycle were seen in our transport business. We are now seeing a reversal of this trend with migration from these more remote parks to those more proximate products.

The reversal of this trend and the lift in demand has enabled Auckland Airport to also reduce promotional activity that occurred in the months following the opening of the transport hub. Property and other rental income rose by $8 million or 9% in the period, driven by new assets commissioned of close to $5 million and just over $2.5 million from the growth in the existing portfolio. And finally, Auckland Airport booked $3 million in the period of income associated with the insurance proceeds from the January '23 flooding event and lower interest income as the business cash reserves have been gradually utilized to fund infrastructure investment.

In summary, the investment in commercial products in recent years has delivered an overall 5% lift in our commercial revenue in the half complementing the 7% growth in aeronautical, highlighting the continued strength and balance of our diversified revenue base. Turning to Page 25. Despite the increase in both aviation activity and also commercial and construction activity in the period, we are very pleased to report operating costs were down on the prior period as the continued focus by management on managing costs has resulted in operating expenses declining 1% in the 6 months to just over $148 million.

In particular, our match-fit program of focusing on cost management whilst carefully investing in activities that improve the operation of the airport, reduce risk or improve the customer journey is working with over $20 million in costs saved and in some cases, redeployed to higher priority areas. Key to this has been improvements in procurement, a full 6-month benefits of organizational changes made in the prior period and focus on optimizing asset management throughout the life cycle that has enabled the business to reduce costs while still supporting ongoing investment in the customer experience and importantly, investment in new digital capability.

As outlined on the page, marketing and promotional costs declined in the half, reflecting no repeat of the activities to support the launch of the new commercial activities in the prior period. And rates and insurance expenses have increased by $2.5 million or 12% in the period, reflecting a growth in the value of the asset base, a portion of which can be recovered from tenants and is reflected in our rates recoveries or other income. Turning to nonoperating costs outlined on the page. Depreciation costs rose substantially in the half, up over $19 million or 20%, reflecting the combined effects of the full period effect of assets commissioned in the second half of the prior financial year, which drove close to $14 million of this increase and commissioning, as Carrie mentioned, over $743 million of assets in the current half.

In addition, for the first half of the financial year, we also included $2 million of accelerated depreciation for assets whose useful lives were shortened due to the decommissioning required as a result of the aeronautical investment program. Finally, gross interest expense declined in the period to $68.4 million, a decline of $6.2 million or 8% on the prior period, reflecting the full period benefit of cash from the equity raise undertaken in late 2024 and lower interest rates in the half, albeit the effect of the latter, moderated by our relatively high fixed debt component.

Reflecting the significant number of assets commissioned in the half, capitalized interest dropped $3.7 million or 12% to $27 million as compared to just over $30 million in the prior period. As a result, the net interest expense that you see on the page for the 6 months dropped to $41.4 million or 6% on the prior period. Now turning to Page 26, where we outline a bridge in EBITDAF between the prior half and the first half of FY '26. Over the last couple of years, our EBITDAF has been impacted by one-off events that are not reflective of trading in the underlying business.

In particular, the financial impact of the January '23 flood event and additional interest income earned from the 2024 equity raise have colored our EBITDAF. When you strip these out, you can see from the slide the improvement in trading within the core business and with it, a lift in normalized income of 6%, supported by the reduction in costs I talked about, resulting in an 8% lift in EBITDAF. Now turning to Page 27, where you can see our aeronautical investment program is gaining real momentum. CapEx in the period spanning both aeronautical and commercial investment totaled $430 million, with spend on terminal integration of over $219 million in the half, up 21% on 1H '25 or over 8% on the last 6 months of FY '25. For those of you who have been out to the airport recently, you'll see the scale of activity continues to increase with more workers and trades on site across the head house and connecting peer with work on the airfield recently underway.

CapEx on the airfield works, as you'll see on the slide, has dropped in the period following the commissioning of the Northern Airfield in the stands and the team now is pivoting to more renewal work and upgrade of activities out on the airfield. With 229 projects on the go, 200 of which are in the construction phase of CapEx activity, we're expecting to see a step-up in activity in the second half due to several milestone payments relating to plant for the new systems as well as a full month -- sorry, full 6 months of activity on the airfield around the new domestic jet terminal after the project team took possession of the site in November.

Reflecting the step-up in activity, we were pleased to see CapEx in January come in at $86 million despite it being a short month. Finally, closing WIP at December totaled $1.1 billion, down on the $1.4 billion you'll recall at 30 June 2025 as the 6-month period saw the significant commissioning of not only aeronautical but other assets across the period that Carrie touched on earlier. Now finally, before I hand back to Carrie, on Page 28, we outline our credit metrics. Despite the ongoing significant level of capital expenditure in the period, Auckland Airport continues to maintain a strong liquidity position and robust credit metrics. Total drawn debt at 31 December amounts to circa $2.6 billion with undrawn bank facilities of just over $1 billion. And this is in conjunction with or in addition to cash reserves, I should say, of $361 million. At 31 December, Auckland Airport's key credit metrics remain strong with its FFO to interest cover and FFO to net debt on a spot basis remaining well above their respective tests.

With almost 87% of our borrowings fixed and a measured debt maturity profile, it gives us confidence and good visibility of the funding costs over the medium term. As Carrie mentioned, Auckland Airport has declared an interim dividend of $0.065 per share in the period, up from the $0.0625 in 1H '25, and we'll retain a dividend reinvestment plan for the interim dividend, offering those shareholders who elect to participate at a 2.5% discount. In the period, we were pleased to see ongoing strong shareholder support for the DRP with a participation rate in excess of 40% for the second straight period. In conclusion, the 1H '26 result represents a solid start to the year with the continued recovery in travel, improved performance across our commercial lines of business and continued success from the focus on cost control translating into strong underlying financial result. With that, I'll now hand back to Carrie, who will take you through the outlook for the remainder of the financial year.

Excellent -- thank you, Stewart. And as we do look ahead to the remainder of the financial year, we can see demand is strong, and we can also see that challenges remain with the global issues impacting the supply of jets. However, we are optimistic based on the recent trading momentum, the continued growth in our aeronautical and commercial activity. The pipeline of additional new air connectivity that we have and the continued substantial progress of our aeronautical construction program. And as I mentioned earlier, we do acknowledge that there is complexity and challenges that come with the program at scale, but we have planned and anticipated those in our look ahead.

So reflecting this and our growing confidence in the passenger forecast for F '26, Auckland Airport is narrowing its guidance to underlying profit after tax to between $295 million and $320 million with domestic and international passenger numbers of circa 8.6 million and circa 10.6 million, respectively. Capital expenditure guidance, we are narrowing that to between $1 billion and $1.2 billion in the year. And as always, the guidance is subject to any material adverse events and other criteria as highlighted on the slide. So at this stage, let's move to questions.

[Operator Instructions]. First question comes from Andy Bowley from Forsyth Barr.

A couple of questions from me. The first is on retail. So it was good to see the PSR going up, albeit average concession yields coming off modestly during the period. And the question is really around those concession yields. You both talked about sales mix being an issue that we've got to think about. But I'm kind of curious around the like-for-like concession yields that you've achieved in the new duty-free contract versus what you'd have had previously? And any discernible trends that you're seeing elsewhere in retail categories? I guess being blunt, are we seeing structural pressures on retail concession yields.

Andy, I'll kick off, and then I'm sure Stewart will love to jump into that. I mean in terms of the like-for-like, the terms of the contracts are clearly commercially confidential. So we won't talk specifically on those. But I think there's an element we had over the last couple of years, even when that RFP was out. I know we talked several times about the fact that we were seeing trending changes. We were seeing elements around trends in both regional and global travel retail evolving.

You were seeing it moving away from liquor in some instances towards fragrance, beauty and technology, et cetera. And that very much -- that trend continues. And so that's certainly in the sales mix and what you see there. But Stewart, do you want to talk more on the yield question in particular that Andy has asked?

Yes. So Andy, in terms of your question, so in short, yes, we are seeing pressure on yields and -- but this is not unique to us. You see that across the region and more broadly and some of the well-publicized departure of retailers from New Zealand is a good example of that. So I think that's how I would just answer your question.

And I guess following on from that, your desire strategically is to try and push that PSR further than what we've achieved in recent times, I mean, kind of the last 10 years or so where PSR has been relatively lackluster, but PSR to try and combat the concession yield issue?

Yes, Andy, the way I would summarize it, and look, I'm not a retailer, but I'd say we like to push activity. We don't want the airside retail to be a shop window that people walk past. So we're keen that consumers step into the store and engage. And so to do that, we are taking a more active posture that we've talked about in terms of retailing, and that involves everything from promotional activity to bundling goods, et cetera. So trying to ensure that retail remains relevant to the consumer as they move through the airport.

Great. And then second question on OpEx. The reduction in OpEx was pleasing. Now could you talk about the direction of travel here, please? And by that, firstly, the level of OpEx you anticipate through the second half? And then secondly, also the shape over the next few years as you commission additional assets leading up to the ITB in 2029?

Yes. Look, I'll touch on that, Andy, and then I'll hand to Carrie to what talks about in terms of the challenges of trying to do that going forward because there's a number of sort of bigger considerations. So in short, we've managed to effectively optimize a lot of the spend in the business by ensuring we focused on what really mattered.

And that meant that where we had greater discretion on the spend, and I highlighted some of the spend on promotional activity and consultants, et cetera, we took a very careful lens on that to ensure it made the boat go faster and redeployed that spend where it was required to higher priority areas. So that, in conjunction with some of the work we're doing on procurement, around asset life cycle management has resulted in a lot of those savings that we've talked about.

So as we look into the second half of the year, then what we expect is that not only would we bank those savings, but we'll probably see a little bit of a lift in OpEx into the second half. But I would anticipate that would be in the low single digits, and that's just naturally reflecting the greater activity that's going on in the airport. And what I mean by that is the management of the disruption that Carrie alluded to around things like the check-in, et cetera, and we're trying to ensure that we manage the customer journey through that process.

So it will be a little bit lumpy over the next 12 to 18 months. But notwithstanding that, as you then move forward into a longer period, we're trying to then normalize down and drive down that cost to serve, so to speak.

You mean on a unit basis or in absolute terms?

On a unit basis, first and foremost.

Yes. Okay. And just to clarify, single-digit increase through the second half, you mean on top of the first half in dollars or percent or what's?

Yes, in terms of dollars.

On top of the first half. So a higher level of OpEx through the second half.

Our next question comes from Wade Gardiner from Craigs Investment Partners.

A few questions from me. Can you -- given you've just given some guidance around the OpEx number, can you also sort of give a bit of guidance around what we should see around depreciation and interest given the assets being commissioned and the capitalized interest running off?

Yes, I'll take that, Wade. So yes, it's -- I think at the full year results, I guided to the full year would be sort of around $300 million, and that would be essentially net of interest income for both depreciation and interest. And so when we're looking at the result for the first half, I'm still broadly comfortable with that number, but it might be somewhere between 2% and 5% sort of slightly higher. And that's really reflecting the slight change in the depreciation number that's flowed through the first half.

Okay. Just to clarify sort of following on from what Andy was saying on the duty-free concession, is there anything structural in that contract in regards to the period we're in now where there's fit-out construction. In other words, once they have done the fit-out, will we see any sort of structural step-up in that arrangement?

Yes, Wade, I can't comment on the contract specifically. But I think if you go back previously, I think where your question is coming from is when we completed the expansion of the Phase 3 as we called it or the airside dwell and security processing area, there was a step-up as new space was deployed. And so we've tended to move away from those type of mechanisms.

Okay. While we're on retail, I mean, interesting to hear you talk about driving the PSR higher. How can you, as a management team actually do that versus just reliance on the retailers doing their thing?

Yes. So you're right. It comes from, in short, a greater partnership with the retailer. And that was one of the reasons why we selected Lagardere. And it's -- so in working together and alignment around effectively ensuring that the retail environment is one where customers want to stop dwell and with that potentially spend ensures a greater outcome for all concerned. And so we work with them around promotional activity. We work with them around bundling as an example. And so you recall in the previous results, we talked about some promotional activity that we had in the liquor category as an example.

And we also work with them around what [ Howard ] described as complementing some of the experiential elements that go on within the terminal and ensuring that travelers are aware of these sort of things before they turn up. So a big part of that is ensuring people get to airside relaxed and on time and are not rushing through that space.

And if I could add to that, Wade, I think Stewart has covered it well. But one of the things that we also talked about back, you might recall when we were going from the 2 operators to the 1 and the way that we plan that, part of this refurbishment also moves away from, in effect, what -- even though we have one operator, it's still a duplicated or dual store layout. And so part of that also is we work together with them, and that was part of the agreement of how we move to a single integrated store, how we enhance layout, the brand visibility of the customer, all the things that Stewart was just referring to, but that's one of these key elements that goes alongside that as well.

Okay. And just finally for me, just -- I mean, $34 million on property in the first half. Can you give us an idea of what you're expecting in the second half? I mean I know you did say it will be down. And also what the sort of the medium-term outlook looks like for property CapEx?

Wade, apologies, I can't quote that number for the second half, like Carrie and I have talked to what the long run rates of between $100 million and $150 million on commercial development, but that's very much on average over the longer term. And so you'll see from that number that we're expecting things to be a little bit more reflective of the subdued local market. We've obviously got some exciting developments underway at the moment, but I couldn't give you a CapEx number, I'm sorry.

Next, we have Grant Lowe from Jarden.

Can you hear me okay?

We can.

Perfect. Congratulations on a good result. It seems we all have very similar questions around retail and OpEx and the like. Just focusing on changing to the car parking side of things, quite a strong uplift and cycling some discounting and the like in the previous period. Do you see this as a new base for the car parking going forward and sort of inflationary and passenger growth from here?

Yes, there isn't anything, Grant, that will make us think otherwise, particularly when it -- because we've had the full 6 months, obviously, versus the prior comparable period for the transport hub. We've got the change in mix in premium products pipeline. So some of those foundational elements are going to carry forward. I think probably the piece that interests us and we want to continue to build is probably the increased duration of stay. That's one that's getting under the skin of that and kind of understanding how do we continue to encourage that because that's been a key element for us. But the foundational elements have us seeing that as a carry forward.

Yes. Okay. And then just looking at the route development and Thai Airways coming back at the end of the year, et cetera. I think they were sort of the key -- sort of the last of the missing pieces from pre-COVID times. Can you give us sort of any indication as to what sort of level of increase in capacity that return now gives on the international side?

Well, the -- until a little bit in terms of its -- they have announced coming back daily. So -- but we -- they haven't landed on a specific date yet. So we're not in a position is until we know the start date for F '20 second half this year, but it will be around about 200,000 seats, which gives you an idea of the quantum. And then ultimately, they will confirm in the next while when exactly they will be starting in the second half of this year, and that will give them a better play-through of the impact to the forward impact for F '27 and beyond.

That's great. And how does that compare to pre-COVID for [indiscernible] at least?

At the time they were doing daily. So we were delighted that they didn't -- some airlines return, say, 3 or 4 and then build back into it. They've committed to coming back exactly in line with what they had exited during COVID. So we're really pleased with that.

Okay. That's great. And then just going back to the retail side of things. So like I haven't been out to the international side of things for the last few months. But in terms of when exactly did that start? That was fairly late in the period, wasn't it?

Yes. It started in -- some of the work was effectively in the fourth quarter of the calendar year, but there was work happening behind the scenes. So in the -- I think the store areas that the customers obviously don't walk through. So we've been progressively doing it behind the scenes as well.

Yes. I guess where I'm going with that question is like there would have been fairly minimal disruption impact. And the second part of that question really is, are we expecting to see any sort of disruption impacts in the current half?

Listen, on that, we would...

In terms of spend and the like.

We're doing everything to minimize that, which is part of the reason it's probably a little bit of a slower burn and throughout 2026 because we do want to minimize that impact, Grant. But will there be some? I think it would be very hard for us to say there would be 0, but we're certainly going to minimize that as much as we possibly can.

Okay. So it hasn't had a big impact at this stage.

Hard to measure, Grant, but I think your initial assumption, the initial works were behind the shelves, so to speak, and we've now stepped into that. But we're not seeing a measurable difference at this point. But like Carrie mentioned, it is a close focus of the team.

Next, we have Rob Koh from Morgan Stanley.

Happy Lunar New Year. Just a question on Chinese passengers. I think you've called out that with the visa improvement, you started to see some better seat capacity. Should we be thinking that, that also flows through to the PSR results that you've seen? And then also, if you could maybe just give us any color on the timing of Chinese New Year impact this year so far?

Yes, absolutely. As far as I take the first question in terms of do we expect that will flow through. Ultimately, we'd like to think it will. And I look at things that the change to the Australian visa holders that make them eligible travelers people who come to New Zealand. We've seen a 44% increase between Australia and Auckland in the month of November and December, sorry, and that was nearly 23,000 Chinese travelers using that route. So the indicators are all positive, but early days, right? We had kind of 1.5 months, but we'd like to think that, that will play through in that space. In terms of the capacity that's come through as part of Lunar New Year, we've had a significant uptick across multiple carriers adding in capacity through to, I think it's around, I want to say, the 2nd of March as far as their schedules. And again, because that's live now, we don't have any indication of how that's performing thus far. But we certainly, at the end of February, we'll be looking at our operating statistics as to what we kind of saw come through on that, but there was a significant uplift in that capacity over that period.

And then, Rob, to your question on PSR, I think all things considered equal, yes, it should, but it's still too early to understand what we're seeing in that space.

Yes. Okay. All right. My next question, I just want to make sure I've got my kind of understanding of how to calibrate your revised guidance because you haven't changed your pax numbers that underlying that guidance, but it does seem you're a little bit more positive on seat capacity. So are you still thinking of those pax numbers as your central scenario?

Yes, Rob, we are. When we put that guidance out, gosh, many moons ago now, there was essentially a bit of anticipation of capacity being deployed into that. And so that capacity, we have more confidence of it being deployed now, some of it, obviously, you see both domestically, but also internationally. So it's giving us greater confidence that, that target will be achieved.

Next question comes from Marcus Curley from UBS.

I just wondered if we could start with the CapEx, Carrie. It looks like -- well, it has been, let's call it, rounded down in terms of the year-end CapEx. My question is, should we -- or is there any associated further delays to endpoints on the major projects that we should read into that? Or is all of the major projects still on time to what you talked about 6 months ago?

Yes. Thanks, Marcus, there's a few things, I think, in your question of trying to get an understand of that play forward, and I'm hearing beyond the next 6 months potentially as part of your question. I think if we do take this next half, the second half, a couple of things. Obviously, some of the revised guidance is that the higher levels of spend contemplated for commercial property that informed the top of that original guidance have not materialized. So that's one element that we certainly plays into the second half.

And then as far as activity that we are expecting to pick up in the aeronautical space in the second half, we've got everything from kind of milestone payments relating to plant for the new baggage handling system. They fall in the second half as does a full 6 months of activity on the airfield around the new domestic jet terminal because they only took possession of that site in November. So only had kind of a month with Christmas close down.

So we'll see the full 6 months play through that. And then we've got a number of other key projects moving from design to enabling to significant construction activity such as check-in expansion, payment renewals, et cetera. So those are things that give us the confidence for the next 6 months or so. Then I guess if your question is longer beyond that and some of the bigger projects that I'm hearing, consistent with our previous messaging, we do expect there have been some changes in that original forecast we had around PSE4 at the time of setting prices and PSE4, for example, assume that the Western stands on the new peer would be operational in the second half of FY '27, along with new regional stands. Now both of those are making great progress, but they are tracking slightly behind that period to land in that kind of first half of 2027. So -- but in terms of fundamentals of the programs, hitting the milestones and moving ahead, we have absolute confidence in those.

And completion of the domestic terminal?

Yes, that's on track for 2029.

Yes. And then just secondly, you've obviously flagged again the downward trend in revenue from FX. I just wondered if you could provide any perspective in terms of the level of revenue exposure in that category? Or how should we be thinking about that over the next, call it, 3 to 5 years?

Marcus, so I'd describe it as -- yes, I think it's just reaching that natural level now where there will always be some people who look to get foreign currency and take it to destinations around the Pacific or even into Asia. But over time, that number will reach a very de minimis number. So we described, I think, at the full year results is sort of that mid- to low single digits was the sort of revenue exposure there, and I can just see that continuing to trend in that direction.

Our next question comes from Owen Birrell from RBC. Owen from RBC.

Just wanted a question around, I guess, tourism outreach to international markets. Can you give us a sense on, I guess, what sort of activity is occurring at the moment broadly, I guess, at the government level to encourage tourism activity in New Zealand?

Yes. I mean there's a number of facets moving across it, I guess, in terms of you've got what I would call the expected space, which is TNZ, and they've obviously been provided additional funding last year and into the year to promote that. There's -- that then carries forward. TNZ works in relevant markets like Australia and like North America and otherwise to build that out. Alongside that, we engage and often work if we think about kind of last year, we did work with RotoruaNZ and Tataki Auckland Unlimited to appeal to the Australian market, for example, what the North Island has to offer. We've also sponsored kind of 15 regional tourism organizations and came together with ourselves and Tataki Auckland Unlimited to create Kiwi North and again, how do we promote North Island to external markets and encourage them to.

So there's a number of facets underway. And then you've got things like I mentioned earlier, that $70 million investment by government in terms of large events and bringing events to New Zealand, and you're seeing things like the state of origin and some of those other things starting to come through as well as the changes to Eden Park settings being proposed. And then obviously, with the convention center opening, they've got a really nice forward book in terms of large events coming. So it's a combination of pure leisure travel events and those things together that continues to gain momentum.

I mean historically, we've seen some big pushes into Europe, India, a little bit of China. Is any of that sort of activity coming back at this point?

Yes. Well, certainly, again, if you look at an organization like TNZ or [ Tosm ] New Zealand, sorry, they have offices and investment in all of the markets, so China, Europe, North America, all of those. So those are all part of that broader pace. And some of it also, I know in my discussions with TNZ things like Southeast Asia, we knew was, in particular, a bit of a missing piece of the puzzle.

I said, hence, why we're so delighted with Thai Airways returning, but there's been a bit more of a targeted focus in Southeast Asia because we knew that was an area for New Zealand that needed to recover both the connections because you can stimulate travel, but you also need the connections to enable that to have kind of a multiplier effect, so to speak. So as we start to get recovery across some of those markets that have been missing like Southeast Asia, my anticipation would be that they'll look at those broader markets as well again.

Our last question comes from Amit Kanwatia from Jefferies.

Just a couple of questions. I mean you've given kind of guidance for operating expense, finance cost and D&A. I'm just wondering, I mean, if I look at the tax expense into first half '26, I think that tax rate was a bit lower as compared to the PCP fiscal '25. Maybe if you can give us a steer in terms of the tax rate that you expect for full year '26?

Amit, what you should expect over time is we get trend back towards more the company tax rate. So I expect it will be closer to the 28% for the full year. There is obviously a number of moving parts within that, including the government's recent policy changes around the nondeductibility of depreciation on building structures. So there is a little bit of noise in that. But I think over the medium term, you should expect us to trend back to that overall rate.

Okay. And then, I mean, if I think about the guidance range and you've increased the midpoint of the range, you've narrowed the range, $295 to $320. I mean you've kept the passenger expectations unchanged. Maybe if you can speak to kind of the swing factors to the -- from the midpoint towards the top of the guidance range?

Yes. Certainly, Amit. So I think what I said at the full year was if we achieve those passenger forecasts and subject to any other unknowns that we could see ourselves getting into the top half of that guidance range. But the range really catered for the potential one-off costs that could come through in such a significant infrastructure investment program and managing the disruption with that and also some of the variability associated with as you commission assets and you disaggregate effectively what I would describe as the as built into specific assets, the variability in depreciation that comes.

And the lack of, I think, one-offs that we saw in the first half has given us comfort around lifting the bottom of the range. And so I would come back to what I said at the sort of full year results that if we can achieve that passenger forecast as well as reduce the likelihood of any unknowns that appear, then we could be in the top half of that guidance range.

Sure. That's very useful. And just back on -- I mean, if I still think back around the passenger guidance, I mean, international passenger growth, 3% for the full year. I mean the implied growth rate into second half is not too dissimilar to what we saw in the first half, slightly more. But if I think about the capacity outlook, I think that's improved over the last few months. Maybe can you talk to some of the thinking behind the expectation around the second half for passenger growth, particularly for international?

Yes. So Amit, why don't I start with domestic and then move into international. And then I'll hand to Carrie to give her thoughts as well. So -- within the domestic system, we're obviously very cautious around the regional system. And as you've seen in our presentation and some of the commentary in the monthly traffic updates, we've been a little surprised to the downside in terms of the domestic capacity and travel numbers through there. But notwithstanding that, the addition of additional capacity on the jet side or trunk activity has been pleasing to see.

And so we're confident overall of that domestic number, but it is essentially a 2-sided coin in many respects is where it's a watch on regional and positive on jet. On international, what you're seeing there is complementing some of that additional capacity that Carrie talked about in new services, you're getting additional frequency on existing routes as well. And so that's particularly the services that have been announced to date is what giving us confidence around that growth rate continuing into the second half as we get a full period effect of some of those services that turned up in the fourth quarter of the calendar year last year.

And if I could add to that, it's this balance also of kind of the first half is what was actually phone, there's slots filed. So as we look forward, it's what we anticipate airlines to fly, but sometimes everything that's -- all the slots that are filed don't necessarily get operated. So there's a little bit of that.

And then we're really positive. The optimism I talked about earlier was around things like I called out the Samoa and Gold Coast through Qantas Group. Those actually commenced in -- I think it's June. So actually, the pickup in this financial year is going to be minimal, but actually then carries forward. So we have a kind of a -- to Stewart's point, there's a mixture of things that are influenced, we have -- we're positive and optimistic about that, but there are those elements that we are just aware of in terms of those pulling through.

Thank you. That concludes our Q&A. I will now pass back to Carrie.

Well, thank you, everyone, for your time today. And as I said just before, we are optimistic is the word that I will use on the remainder of the year and beyond. We continue to be laser-focused on the successful delivery of the key enablers for growth across the business. And of course, that also includes our infrastructure investment program. It would be remiss of me not to take the opportunity to pass on my thanks to all the Auckland Airporters and our partners in terms of the positive performance in the first half has been a team effort, as they say.

And so I want to pass an acknowledgment of the work that's gone into that. But we certainly look forward, Stewart and I to connecting with many of you over the coming weeks of investor meetings, both here in New Zealand and also Australia. So with that, have a fabulous afternoon. Thank you.

Good morning, everyone. I'm Julia Hoare, Chair at Auckland Airport, and it's my absolute pleasure to welcome you all here today for the 2025 Annual Meeting, including those of you who are joining us here today online.

Before I get started with the proceedings, I do want to apologize for those -- to those of you in the room for the venue. We had actually Eden Park booked for today, but for those who are cricket lovers, we got bumped at the last minute for the T20. So we had to relocate. And I appreciate -- I think there's some racing happening here today, so it was a bit of a nightmare to try and park and actually to come through that tunnel and the stairs. So for many of you, I appreciate it would have been an unsatisfactory experience arriving at the start this morning, so for that, I sincerely apologize.

Just getting back into the proceedings. With us today are my fellow directors, and I'll ask them to put their hands up as I call their names out: firstly, Christine Spring, Mark Binns, Tania Simpson, Dean Hamilton, Liz Savage, Mark Cairns and Grant Devonport. Both Mark Cairns and Liz Savage are standing for reelection as independent directors and will address the meeting prior to the vote today. We'll also be hearing from our Chief Executive, Carrie Hurihanganui. And also here today is our Chief Financial Officer, Stewart Reynolds, our other executives and our auditors and legal counsel as well.

We do have a quorum today, and so I declare the meeting open.

First, some housekeeping points, though, and how the meeting will run today. The bathrooms are located in the hallway you would have walked past and for those of you in the room, on the right as you go out the door. And in the event of an emergency, please make your way down to the ground floor via the fire exit, which is located behind the stage here. The assembly point is on the lawn opposite the building.

We do know that some of you will have questions, and there will be time for these later in the meeting. If they pertain to the actual resolutions, you can ask them before we put each resolution to a vote. And as usual, the resolutions will be decided via a poll and will be administered by our share agency. We'll announce the results of these polls via the stock exchanges at the close of today's -- or after the close of today's meeting.

In terms of the order today, the meeting order, the notice was sent to you as shareholders on the 23rd of September to the auditors of the company, and it was also posted on our website as well. The financial statements for the year ended 30 June 2025 and the audit report are included in the annual report, which is available online; and for those in the room, there are also copies at the back if you'd like one.

Representatives of our auditors, Deloitte, are here to answer any questions relating to audit matters. And after my presentation, Carrie will give us all a review of the year just gone. We're then going to move on to the motions followed by a Q&A session. So let me start with my formal address and by providing you a snapshot of our FY '25 financial results.

I'm pleased to say that Auckland Airport delivered a strong performance and resilient performance despite the well-known challenges with aircraft availability and the softer New Zealand economy. By the end of June this year, airline seat capacity, that's the total number of seats flying to and from New Zealand, had recovered to 92% of pre-2019 levels.

Running through a few key results now. Total passenger numbers have increased up to 18.7 million, is up 1% on the previous year. Auckland Airport's revenue was up 12% to $1,005,000 (sic) [ $1,005 million ]. Sorry, I got that wrong. I left a few 0s off that one, apologies.

Operating EBITDAFI was up 14% to $701 million year-on-year and reported profit after tax, including revaluations, increased to $421 million. This includes a $127.5 million net revaluation gain compared with a $15.3 million net revaluation loss for the same period last year. The net underlying profit was up 12% to $310 million. Auckland paid a final dividend of $0.07 per share on the 3rd of October, and total dividends for FY '25 were $223 million, which equates to a payout of 72% of our underlying profit -- net profit after tax.

When aviation grows, connectivity grows, and the economy does too. It fuels tourism, attracting investment and linking exporters to global markets.

While New Zealand continues to rebuild its aviation network, international passenger numbers remained steady in FY '25. However, signs of growth are emerging and recent announcements from airline show renewed confidence in the aviation market. I'll come back to the Air New Zealand announcements yesterday in due course.

The most notable new connection is the China Eastern one, which is planning to connect Shanghai through Auckland to Buenos Aires. This will be the world's longest route, including a stopover when it launches in December this year, and it introduces another direct flight from Auckland to South America. It also positions Auckland Airport as a strategic transit point for broader intercontinental connectivity between Asia and South America. Full credit to our airline team who have been working on this important connection for a number of years.

Domestic passenger movements were also steady in FY '25, reflecting the constraints on capacity due to Air New Zealand's well-known fleet engine issues and the softer local economy. However, we have been buoyed by the announcement that Jetstar will offer an additional 660,000 international and domestic seats to and from Auckland. With high demand for domestic travel across the board and load factors that are remaining at near historic levels, this is really welcome news for travelers and for competition in the local aviation market. It also validates Auckland Airport's own capacity building investments with 75% of the announced growth to take place to and from Auckland and with Jetstar also basing an additional aircraft at Auckland Airport to support this growth.

A recent study by EY found Auckland Airport supports $35 billion of economic output each year for New Zealand. Looking ahead, an estimated 38 million people are expected to travel through the airport annually by 2047. That's around double the number of travelers at the airport today and underpins Auckland Airport's confidence in our investment to upgrade and transform the airport.

As we grow, we need to meet the expectations of modern travelers, investing to ensure the airport remains fit for purpose and provides a comfortable experience. The passenger story is well understood, but what is less known is that Auckland is New Zealand's third largest port by value. We play a vital role in the supply chain, handling over $26 billion of trade each year. And by 2047, we expect high-value air cargo to have grown by more than 40%. With this long-term growth forecast on the horizon, we need to plan decades ahead and ensure we build the right assets to support tomorrow's demand.

Resilient infrastructure is essential for us to succeed. And I'm proud to say we are well down the track in transforming Auckland Airport, making this one of the most defining chapters in our history. In FY '25, our capital expenditure was $1,090 million, reflecting the scale of our building program. We are not an outlier in investing at this scale. Major Australian airports are also making bold investments to be future-ready. Sydney, Perth and Brisbane airports are developing new terminals to boost capacity, resilience and enhance the passenger experience. Meanwhile, Melbourne Airport is working toward a third runway to unlock future aviation capacity. These multibillion-dollar investments across the Australasian airport sector reflect a shared recognition that resilient infrastructure is essential to stay competitive and to grow economies.

FY '25 saw the fully subscribed $1.2 billion capital raise from institutional investors and also the $200 million share purchase plan for retail investors, and we thank you for your confidence and support in us. Earlier this month, we also completed 2 debt issues: first, a $200 million retailable fixed rate bond offer immediately followed by a $100 million wholesale floating rate note issue. We're really pleased with the outcome of both issues, and we welcome the confidence that investors have in our business and our balance sheet and our long-term outlook. Our dividend reinvestment plan remains well supported with participation rates in excess of 40%.

We're excited to see the results of our capital investment taking some shape as we complete developments. Last month, we opened the international airfield expansion area, adding about 250,000 square meters or the equivalent of 23 rugby fields of new apron and taxiway space. This created parking for up to 11 jets and lays the groundwork for the next phase of the terminal integration program.

Here's a quick overview of the airfield project.

[Presentation]

It's just really exciting to be part of it all.

Another milestone for the team was completing the Transport Hub in November '24, and I'm sure many of you would have used the Transport Hub by now. International travelers now enjoy a modern, fit-for-purpose facility when they pull up inside a new undercover pick-up and drop-off area. Further to the east of the precinct, we're expanding the regional airfield, a project that will add 4 new aircraft stands and help growth in regional flights.

After a year of building, we're now 1/3 of the way through completing the new domestic jet terminal. The progress is advancing quickly and is on track. However, complex work lies ahead to complete the structural work for the pier and also carry out the fit-out and the digital infrastructure. And in her presentation, Carrie is going to add more depth to many of the other work streams in planning or underway across the airfield and the terminals.

Now I'd like to turn to regulation, and efficient and stable regulation plays a critical role in creating the conditions for the ongoing private investment in long-term infrastructure. In March '25, we welcomed the Commerce Commission's final report into Price Setting Event 4. We call it PSE4, highlighting how Auckland Airport's planned investment is delivering for consumers. The report confirmed that Auckland Airport's investment is reasonable, fit for purpose and had followed appropriate consultation with airlines. Auckland Airport did discount airline charges for the final 2 years of PSE4, bringing the targeted return for the period to 7.82% and within the range that the Commerce Commission found to be reasonable.

Following PSE4, regulators continued their scrutiny of the airport sector off the back of continued airline lobbying. However, in July this year, the Ministry for Business Innovation and Employment, MBIE, conducted that legislative -- concluded that legislative reform is not needed at this time, following a targeted consultation on the effectiveness of airline regulation. However, this was quickly followed by the Commerce Commission carrying out a sprint project looking at airport regulation after Air New Zealand had written to the regulator asking it to consider an inquiry into airports.

We welcomed the commission's decision to rule out the need for an inquiry as a positive outcome for investors. We welcomed the Commerce Commission confirming the government's position that legislative change is not being pursued. Instead, as we expected and was recommended by MBIE, the commission intends to review the information disclosure requirements for major airport investment, and we look forward to working with them through that process as the regulator.

We note there are continued claims over the cost of airport charges to airlines, and we feel it's important to view these claims in context. We are not the reason it is so expensive to fly in New Zealand. In the 10 years leading up to June 2023, Auckland Airport's domestic per passenger jet charges rose just $0.65 in real terms, reflecting the aging domestic terminal.

Even now, domestic jet charges per passenger remain among the lowest when compared to major New Zealand and Australian airports. Between 2023 and 2027, domestic jet charges are going to go up an average of $1.26 per year per passenger and remain lower than both Christchurch and Wellington. There is simply no incentive for us at Auckland Airport to raise charges in a way that would restrict passenger or airline growth. So I just really want to make that very clear.

Now on to some governance matters. As I mentioned earlier, this year, Mark Cairns and Liz Savage are standing for reelection as independent directors in line with the NZX listing rules. Their full biographies were contained in the Notice of Meeting. Mark is standing for election after 3 years with the Board, over here. And just a bit about Mark. You will have read his bio, but he has deep experience in building and operating large infrastructure and complex supply chains as well as significant exposure to capital markets. He serves on our Audit and Financial Risk Committee and our Infrastructure Development Committee, and the Board unanimously recommends that shareholders vote in favor of reelection of Mark Cairns.

Liz Savage is standing for reelection after 6 years with the Board. Liz has extensive experience in the airline, travel and tourism sectors and brings a thorough understanding of the airline business to the Board. Her Board committee roles include the Aeronautical Pricing Committee, the People, Iwi and Remuneration Committee, and she chairs our Safety, Sustainability and Operational Risk Committee. And like Mark, the Board unanimously recommends that shareholders vote in favor of Liz' reelection.

Today, I'd also like to recognize Christine Spring, who stands down from the Board after 11 years. Christine is a civil engineer, and she's got deep aviation experience. And she has been a significant contributor to the Auckland Airport and the Board over her tenure. So Christine, I'd just like to acknowledge you and say that we will really miss you.

We're currently in the process of recruiting a new director to replace Christine, and we look forward to being able to introduce that person at next year's annual meeting. But we're still in that process, so we've got no information that I can share with you at this time. But we will seek your support at that time.

I'd also like to take the opportunity, while we're talking about governance, to acknowledge Patrick Strange, our former Chair, who handed the baton over to me after last year's annual meeting. And I'd just like to say, Patrick, hopefully, you are online, thank you for your enormous contribution as well to the airport.

Turning now to outlook. Our management's assessment for FY '26 prudently takes into account local economic conditions as well as ongoing constrained seat capacity. And as such, we remain cautious about the outlook for FY '26, and our guidance still remains unchanged.

Stepping back, Auckland Airport takes great pride in our role as New Zealand's gateway. And I believe our achievements over the past year reflect this. As we carry out our much-needed upgrades to the airport, we remain really focused on the passenger experience.

In the months ahead, our team will begin to upgrade the international check-in hall, which is a critical project to enable us to accommodate domestic jet services in 2029. These works, located at our front door of the international terminal, are significant. While we're doing everything we can do to minimize disruption, we appreciate that travelers' patience and understanding -- we hope for your patience and understanding as we work toward delivering this next phase of the build, and we'll do everything in our power to make it as smooth as possible.

Our success is really only possible, thanks to our airline partners, the border agencies, our tenants and the countless others that work to deliver a welcoming experience for our customers. And in particular and on behalf of the Board, I'd like to actually thank the Auckland Airport team for their commitment and dedication as we build the airport for the future. And I'd actually like to finally, though, thank you, our retail and institutional investors for your continued support and your confidence in us as we focus on transforming Auckland Airport, your airport for the future.

I'm now going to pass over to Carrie to provide some more commentary over progress over the last year. Thanks, Carrie.

Thank you, Julia. [Foreign Language] It's great to see all of you here today, and I'm pleased to reflect on a year in which we built resilience and laid down the foundations for future growth. These themes, resilience and growth, are core to Auckland Airport's strategy and operations, to the value we deliver to you as shareholders and also to how we support New Zealand's growth ambitions.

Resilience is our capacity to absorb challenges, recover quickly and carry on with the mission. We've faced some significant tests in our recent history from the pandemic to the Auckland regions flooding and congestion experienced by travelers and international arrivals after borders reopened. In response, we've taken deliberate steps to strengthen our operations and infrastructure, and I'd like to take a moment to highlight a couple of them.

As New Zealand's gateway serving millions of travelers and acting as an important lifeline utility, we must be prepared for increasingly severe weather events. One of the ways we built resilience is through the newly expanded international airfield that Julia referred to. The resilience hero of this airfield system is a 4.4-kilometer extension of the stormwater network that connects to something called a coupled wetland biofilter. This is a first for New Zealand, and it involves a new stormwater pond to filter runoff for more than 100 hectares across the airport precinct. The water flows through thousands of native plants to achieve higher quality for release into the Manukau Harbour.

The new airfield boosts resilience in other ways, too. It means that we can continue to keep the country's gateway running efficiently and smoothly as we move into the next phase of building the new integrated domestic jet terminal.

Financial resilience is also important for shareholders. As Julia said, our FY '25 result is a positive outcome for Auckland Airport in the context of capacity constraints, geopolitical challenges and a subdued domestic economy. Operational resilience also matters. As part of our continued focus on creating a better experience for our customers, our leadership team, our workforce and government agency partners have worked tirelessly to enhance the departures and arrivals experience.

These improvements have translated directly into faster processing, shorter queues and a smoother journey for every passenger. For example, since FY '23, so over the last couple of years, we have seen a 46% improvement in median processing times in international arrivals, and that's thanks to the collaboration with Biosecurity New Zealand, the New Zealand Custom Service and ground handlers. It now takes just 17 minutes on average for a passenger to pass through customs and exit into the international arrivals area, which is down from previously an average of 31 minutes.

We were also delighted to be recognized in the global Skytrax customer satisfaction survey, placing fourth for best airports in the world with 10 million to 20 million annual passengers and 46th for customer satisfaction across all airports globally. 46th you say. For context, there are approximately 1,200 international airports globally in almost 200 countries.

Now these improvements in the traveler experience, supported by a concerted communications program, saw Auckland Airport recognized in the top 10 in this year's Kantar Corporate Reputation Index that measures public perception of New Zealand's top corporates. Auckland Airport scored its highest placement ever, moving up from 42nd to 9th place with high scores on trust and leadership, which are the biggest drivers of reputation.

Overall, I'm confident we have markedly improved our resilience over the past year. And now I'll turn to the second key theme of my address, which is fueling growth.

Now in this section, I want to talk about how Auckland Airport is building capacity and connectivity for the future. FY '25 saw Auckland Airport release its refreshed draft master plan, which provides an initial vision for the airport out into the late 2040s, noting that it is dependent on growth triggers. The document sets out a high-level view for our core operations, the airfield, terminals and other aeronautical assets, and that reflects changes in customer expectations, technology, climate resilience and the growing needs of Auckland and New Zealand.

Stakeholder feedback is an ongoing and critical part of the process, helping to shape the important decisions we need to make, often years in advance of actually delivering complex infrastructure. We have extended the time frame for finalization of our master plan to the first half of next year to allow for additional and targeted consultation on certain key matters, including ground transport.

We're very mindful that Auckland Airport is not only a national airport. It is also Auckland's airport. By 2050, Auckland's metropolitan population is projected to grow by approximately 700,000 people, reaching about 2.5 million or around half the population of Melbourne. This level of expected growth brings with it significant challenges and responsibilities. Major infrastructure must be guided by a clear trigger-based demand to ensure the right investments are made at the right time. While delivering large-scale projects is never easy, it remains essential for New Zealand to stay connected, competitive and ready for the future.

Internationally, the long-term outlook is positive. Our team is on the road year-round speaking to airlines, championing New Zealand and working to ensure we remain a destination of choice for both airlines and travelers.

International airlines tell us they have aircraft deliveries on the way and New Zealand is firmly in their sights. Ongoing strength in the North American market continues as the second highest source of inbound travelers for Auckland Airport with a record 322,000 visitors from the U.S. in FY '25. There was a strong recovery of visitors from Australia in the financial year, which is the source of 43% of all visitor arrivals to New Zealand during the period.

As part of our role in attracting visitors, Auckland Airport actively works with regional tourism organizations to generate greater visitation from our key tourism markets of Australia, North America and China. In May, we announced an alliance of 15 North Island tourism organizations to leverage our collective tourism pulling power. We are seeking to better connect the dots for international visitors to help them experience everything that is wonderful and unique about the North Island. In September, this grouping took the North Island Kiwi North Showcase to Australia, and that enabled more than 60 North Island tourism operators to connect with key Australian travel sellers at 2 events in Sydney and Melbourne. Julia referenced in her presentation the new route from China through Auckland to South America, and we are really looking forward to its launch in December.

In other positive South America news, LATAM Airlines from the end of October will be ending their previous Santiago via Auckland to Sydney services, and we will move to replace that to offer up 5 weekly dedicated Santiago to Auckland services. If we look across the Tasman, we are looking forward to Qantas' upcoming launch of 2 new Trans-Tasman routes in late 2025 being Perth to Auckland and Adelaide to Auckland. In December, Sichuan Airlines will return year-round services on the Chengdu to Auckland route. And with Sichuan Airlines return, Auckland Airport will have direct flight connections by 5 airlines to no less than 8 cities in China. Other existing carriers adding notable seat capacity this summer include Malaysia Airlines, Cathay Pacific Airlines and China Southern Airlines.

On the air cargo front, a milestone was achieved in July this year when China Southern Airlines launched New Zealand's first dedicated freighter from Guangzhou to Auckland. All told, that means there will be 42 weekly flights linking Auckland and China this coming summer.

Trade is a key focus area of our growth strategy, reinforcing Auckland Airport's position as a leading port, as Julia had mentioned earlier. The vast majority of high-value airfreight is carried in the belly hold of international passenger jets. Examples include high-value manufactured products such as electronics and machinery, pharmaceuticals and medical equipment, and fresh produce from the fields of New Zealand's regions destined for export markets. Every new plane we can add to our international schedule expands export capacity for New Zealand.

The 2024 EY economic impact report forecasts that by 2032, the value of annual freight movements through Auckland Airport will top $41 billion. In line with this, we are developing a new cargo precinct on Manu Tapu Drive as part of the airfield expansion to centralize freight operations from across the precinct. By creating an efficient integrated cargo hub, we are helping New Zealand businesses grow with more destinations, faster turnaround times, greater security and closer coordination between airlines, freight companies and ground handlers.

Still to come, however, is our brand-new integrated domestic jet terminal with construction now in full swing. You may have seen a crane or 2 if you've been out to the airport. And with the opening of the international airfield expansion and the extra space, we can now get underway on the new domestic pier that goes along with it. Almost quarter of a kilometer in length, it will have 12 aircraft gates with 6 of those that are flexible and able to take 2 narrow-body or 1 wide-body aircraft.

Capacity-wise, the domestic jet terminal will have 44% more processing space and 26% more seat capacity when it opens, along with an additional 10% capacity for busing ops that allows you to manage peaks and special events. This ultimately is good news for consumers because unlocking capacity is key to enable not only future growth but also competition.

Our next big project is transforming the check-in area of the international terminal. Over the next 4 years, our check-in hall will completely transform into a 13000-square-meter departures area that's modern, digital and intuitive. New self-service kiosks and automated bag drops will replace traditional counters, freeing up space, easing queues and improving flow. And for more information on the project, we thought we'd share a quick video.

[Presentation]

The transformation of our check-in hall will be another complex and highly visible project. We are modernizing right to the core of our 24/7 operation, and that means change for travelers and everyone that operates at the airport. There is simply no getting around that. But the work is essential for us to grow and bring together domestic and international travel into one common check-in hall.

Now rest assured, our priority continues to be delivering a smooth experience for travelers during the project. We are committed to keeping people informed, minimizing disruption as much as possible and managing the build safely. But I do promise it will be worth it once it's complete.

We were very active also in FY '25 commercially with a well-balanced diversified portfolio of activities. The opening of Manawa Bay was a major milestone in FY '25. It's brought a new standard of premium outlet retail shopping for Auckland, and today, the center employs up to 750 people at peak season working across the center's 117 stores.

At Manawa Bay, long-term environmental performance is a priority. It achieved a 5-star Green Star rating for its design, incorporating features such as solar panels, rainwater collection and carefully managed waste streams.

Another FY '25 milestone in the airport's retail business was French global travel retailer Lagardere taking an 8-year contract to operate our duty-free stores from July 1 this year. We are delighted to partner with Lagardere to bring the next evolution of duty-free shopping to Auckland Airport, which will include a phased refurbishment of the stores starting later this year.

You might recall there was a lot of public attention focused on IKEA opening their Sylvia Park store in December. Less well known is that Auckland Airport's aviation logistics and distribution precinct is the site for IKEA's local and national distribution center. The 20,000-square-meter 5-star Green Star design building opened in December to take about 8,000 to 10,000 cubic meters of inventory annually.

FY '25 also saw the completion of a temperature-controlled pharmaceuticals facility for DHL Healthcare, which now operates 5 buildings at Auckland Airport purpose built for the company. And 3 months ago, New Zealand's biggest supermarket business, Foodstuffs North Island, committed to a long-term lease of a new 30,000-square-meter chilled and frozen food distribution center at the landing across the road from the cooperative's new support center. That building was also developed and is owned by Auckland Airport.

More broadly, Auckland Airport's investment property portfolio ended FY '25 very strongly. It has a total value of $3.4 billion, a commercial property rent roll of $192 million, occupancy levels at 99% and a weighted average lease term at just under 9 years.

[Foreign Language] We make it happen here. This is language that binds all of us who work for and at Auckland Airport. It's a spirit that extends to our wider South Auckland community. And we thank all 734 employees of Auckland Airport who put their backs into the results that we have presented to you today. We acknowledge the diverse skills and passions that they bring to work every single day.

A new BusinessDesk survey of New Zealand's most productive companies in 2024 validates the efforts of our whole team. Auckland Airport topped the list from a selection of 20 companies from the NZX 50, representing a cross-section of New Zealand's core industries. We also have 1,500 people currently working on the construction of the terminal integration and infrastructure program, and that is set to grow to be 2,500 jobs at its peak.

Ensuring worker's safety is a key priority as construction intensifies for us. The airport lowered our lost time injury rate for contractors from 1.5 in FY '24 to 0.31 in FY '25, a reflection of our focus on strong and effective safety management practices. The international airfield project team was actually a standout. They worked more than 1.3 million hours without a single lost time injury.

Auckland Airport's contract with Hawkins on the integrated terminal achieves social, economic and environmental outcomes alongside delivering the infrastructure itself. It considers broader outcomes when making procurement, employment and operational decisions. Although early in project delivery, benefits are already flowing back into the community. We have adopted environmental outcomes, provided students with work experience and spent more than $2 million with Maori and Pasifika businesses so far.

In support of the South Auckland community, which we call home, FY '25 saw us contribute $0.5 million in cash and kind to the Ara Auckland Airport Jobs and Skills Hub located on our precinct. Since 2015, when it was stood up, Ara has graduated 1,230 students who leave with experience, vocational direction and hope for the future.

So whether building resilience or fueling growth, my message is that Auckland Airport is future-proofing to serve the needs of travelers, of airlines, of Auckland and New Zealand. My address last year was about what was to come. This year, it is about demonstrating delivery. We are doing what we said we would do. We have the momentum, the team and the drive to continue delivering for New Zealand and for you. [Foreign Language]

Thank you very much, Carrie. And now to the resolutions. You may ask questions on each matter being put to the shareholders either in person here or through the virtual meeting website. And I'll ask for any questions for each director standing for reelection after he or she has spoken. If you're going to ask a question, can I ask you as shareholders to please give your name when you're speaking to the resolutions and confirm if you are a shareholder or a proxy holder?

There are going to be roving microphones available in the room. It's really critical for those in the room that you wait for that microphone to get to you so that everyone that's also online as well as those that are present here today can actually hear your question.

Shareholders who are participating in the meeting online have the ability to ask questions and also vote through the virtual meeting platform. A member of our legal team will read out those questions at the appropriate time at the meeting, and so everyone at the meeting can actually hear the questions. If you do require assistance, please refer to the virtual meeting guide or call the helpline, which has been specified.

We may also amalgamate questions of a similar nature. So if you have asked a question and it doesn't sound like you exactly your wording, if you find that 2 or 3 others have asked the same question, they will be linked together. And if we haven't actually answered your question clearly enough, do feel free to contact us via the Investor page, and we can clarify things further.

As I mentioned earlier, all the voting on the resolutions will be conducted by way of a poll. So if you are voting as a shareholder, proxy holder or a corporate representative, please use the voting paper handed to you at the registration in the meeting. And those of you online, you'll be able to cast your vote using the electronic voting card, which you have received when your online registration was validated.

To vote, you'll need to click the Get Voting Card within the online meeting platform, and you'll be asked to enter your shareholder number or proxy number to validate that. Please then mark your voting card as you wish to vote either for, against or abstain on the voting card. And once you've made your selection, please click the submit vote on the bottom of the card to make sure that you've actually lodged your vote. As I say, please refer to the virtual meeting guide if you've got issues or alternatively, you can call the helpline, which is 0800 200 220, if you require any assistance.

Proxies have been received from 837 shareholders, which is about 1.3 billion of our shares, which represents approximately 76% of the shares on issue, but we will not be releasing that information right now. Shareholders, the company's constitution allows for a maximum of 8 directors. And as I mentioned, we have 2 directors offering themselves for reelection today and 1 that is retiring today. We're going to ask the directors who are standing for reelection to address the meeting first, and then I will open it up to questions immediately after they've spoken. We will then ask shareholders to cast their votes for each of the resolutions at the end of the resolution piece. As usual, there will be the opportunity for shareholders to ask general questions as well. And I propose that we'll do that after the reelection questions.

So firstly, I'll turn to our ordinary resolution #1, which is the reelection of Mark Cairns. Mark was appointed a director of the airport at our 2022 Annual Meeting and the Board unanimously recommends that shareholders vote in favor of Mark's reelection. He's considered by the Board to be an independent Non-Executive Director.

And I'd now like to ask Mark to address the meeting. Thank you.

Thank you, Chair. [Foreign Language] Good morning, ladies and gentlemen, and fellow shareholders. I feel privileged to stand before you today seeking reelection to the Auckland Airport Board. You have details on my background and qualifications in the Notice of Meeting. I'm an engineer by profession, holding degrees in engineering and business, and I'm a fellow of Engineering New Zealand and a Chartered Fellow of the Institute of Directors. After 16 years as Chief Executive of Port of Tauranga, I retired 4 years ago to pursue a full-time governance career. I'm also currently Chairman of Freightways and a director of Briscoe Group, having previously served on the Boards of Meridian Energy and Sanford. I bring extensive commercial experience from previous Chief Executive roles and business operations at scale, including significant exposure to capital markets.

Over my 40-year career, I've completed numerous large-scale infrastructure construction projects within time, cost and quality expectations, both as a contractor in the earlier stages of my career and lately as a principal or owner-operator of the infrastructure. I consider these to be highly relevant skills and experience to bring to our Board table in view of the airport's multibillion-dollar capital development program over the next few years.

Auckland Airport is an excellent company that has a great future. Our airport is more than just infrastructure, though. It's a critical enabler of tourism, trade and connection for all New Zealanders. As we look to the future, Auckland Airport must continue to evolve as a smart, sustainable and customer-centric hub, investing in fit-for-purpose, future-ready infrastructure and strengthening our partnerships across the aviation and logistics sectors. Serving as a director on this iconic gateway to New Zealand has been an honor and a responsibility that I take seriously. I seek your support today to continue to serve you as a director. [Foreign Language] Thank you, ladies and gentlemen.

Thanks, Mark. I now move that Mark Cairns be reelected as a Director of the company. But before I ask you to cast your vote, are there any -- I'll start with those on the floor. Are there any questions from those of you on the floor? No? None. Louise, are there any questions from those online?

There are no questions online.

Thanks, Louise. That's great. Well, if there's no questions online, I'm going to move to the second ordinary resolution in relation to the reappointment of Liz Savage. Liz was appointed as a Director of the company at our 2019 Annual Meeting. And the Board, like Mark, unanimously recommends that Liz be reappointed as a director. She is considered by the Board to be an independent nonexecutive director. So I'd now like to ask Liz to please address the meeting. Thanks, Liz.

Thank you, Julia. [Foreign Language] Good morning to you all. It's my absolute privilege to stand before you today as I seek reelection to the Auckland Airport Board. Over the past few years, I've seen firsthand just how important this organization is not just as an airport but as a gateway that connects New Zealanders, supports thousands of jobs, fuels tourism, trade and growth. And I'm genuinely motivated by the opportunity to help guide the airport through this next stage of its growth and development.

I've spent 30 years in senior leadership roles across airlines, tourism and airport governance, industries that really live and breathe that connectivity, that customer experience and our resilience. I'm based in Australia, which remains New Zealand's largest visitor market, and I bring that external perspective to the Board, ensuring we stay close to our partners and our customers across the Tasman. I also Chair the Board's Safety, Sustainability and Operational Risk Committee, which oversees, on behalf of the Board, how we protect the value of the company and the well-being of everybody who interacts with it.

And right now, as you've heard, our risk landscape is changing fast. We're in the middle of one of our biggest infrastructure builds in the airport's history. Cyber threats are becoming more sophisticated, and climate change is shaping how we plan and how we operate for the future. Through all of that, my focus has been and will continue to be on keeping the airport and its community safe, sustainable and forward-looking, while ensuring we deliver long-term value for you, our shareholders and for [ Aotearoa ]. Auckland Airport has an exciting chapter ahead, and I'd be proud to continue to contribute to the team guiding it to success. [Foreign Language] Thank you for your support.

Thank you, Liz. And I move that Liz Savage be reelected as a director of our company. So I'll turn to the floor first. Are there any questions from anyone on the floor here? No, it does not look like it. So I'll turn, Louise, in terms of online. Are there any questions from anyone online?

There are no questions online. But Chair, I'd just like to note that we are aware that the video has gone down online. Our online audience can hear us, but they currently can't see us. Our technical experts are working to resolve this problem.

Look, thanks very much. And our real apologies to those of you who are online because that's a pretty difficult and unsatisfactory position to be in right now. So we truly apologize for that. And hopefully, we can get the video piece up and running soon.

I'd now like to turn to ordinary resolution #3, which is to do with director remuneration. And we are seeking to increase the total quantum of the directors' fee pool by 6% from $1,593,350 to $1,688,951. The last increase in the directors' fee pool was 6 years ago, so directors' fees have remained unchanged since 2019. So the current fee pool request is really to increase effectively directors' fees by 1% per year since 2019.

Since that time, the regulatory landscape has changed, and therefore -- and we've also actually embarked on a very significant infrastructure program. What we did earlier in 2015 is we undertook a really detailed review of the skills we felt that we needed around the table to take us through until at least the commissioning of the new build. And we undertook a skills matrix and really looked at which directors sat there. This resulted in a skills matrix, which really confirmed the critical skills that we feel we need around the table and the general skills that are going to create long-term value for you as shareholders.

It was really clear when we did this and looking at the huge breadth of activity that we've got going on, that until at least the commissioning of the domestic jet terminal, we needed to keep the number of directors around the table at 8.

And obviously, a number of companies are moving down to 7 at the moment, but we have really felt that to actually serve you properly, 8 is the right number. We commissioned independent expert PricewaterhouseCoopers to undertake a benchmarking exercise for us. And as we do with strategic people we have targeted, and it's a target only because, obviously, the resolution doesn't come near that target, but we've targeted the 75th percentile policy given the scale and complexity of what we've got ahead and the transformational agenda we've got ahead, and we want to be able to appoint the right directors to give the maximum value to you. And I can say around my table here, I think we've got a fantastic Board.

So -- and we also have the necessity from time to time to recruit international directors who we add -- consider add real value. So we've actually considered this quite robustly and considered that the proposed director fee increase of 6% is fair and reflective of the current market considerations and the size of the Auckland Airport Board and as I say, also appropriate given the breadth of the company's activities and investment program.

Should the resolution be approved by shareholders today, the increase would take effect from the 1st of November 2025. So I'd like to move that the director fee pool is increased from $1,593,350 to $1,688,951. And I do open it up firstly to the floor. Are there any questions from those of you in the room today that you'd like to ask in relation to this resolution? I've got a question down here in the front. Thank you.

[ Paul Ford ], a shareholder. I note the beneficiary of the proposed increase is greatest for the Chair, and there are a number of other fee reductions for other Chairs of the Board. Can you explain the rationale of that, please?

Yes. That's a very good question because on -- first look, I do appear to be that beneficiary. What we did was we did an independent benchmarking piece to look at not only the size of the pool but actually, what the respective fee should be for directors and also -- or Chairs, directors and also the various subcommittees, including the Chairs of those committees. And we found some quite big anomalies. So the Chair -- so I attend all of the meetings, so all of the subcommittees of all of the Boards and participate in all of those. So we found that there was quite an anomaly there.

So in terms of the benchmarking at that stage, I think I was around about 69%, I think it was or something like that of the average for the Chairs. In terms of our audit and financial risk, the committee and Chairs were actually above the average. So what we did was we used the benchmarking to actually try and align what -- not only thinking about the pool but what individual directors should be receiving to be comparable with directors across the market, and that did result in some overs and unders. And yes, you're quite correct that as a result of that, the Chair amount has moved quite a bit. Hopefully, that answers your question. Thank you.

Are there other questions in the room? There's one down here toward the back. Just -- could you just wait for the mic so that those online can hear you? Thank you.

[ Ab Nehti ], shareholder. Well, you said there are 8 directors?

That's correct.

So with the increase, it will raise to about $211,000 a year. That's an increase of about $26,000 for each 1.

In the Notice of Meeting, we show the actual amounts per director. So if you just turn to that, you'll have the detail of the individuals. We don't allocate the full pool to directors. We have an ad hoc aeronautical pricing committee, which we stand up -- when we're dealing with all of these regulatory issues, we will stand up that committee as required from time to time. That committee is generally quite busy in the lead up to a price setting event or alternatively when there's other strong regulatory matters that we need to deal with at a committee level before it comes to the Board.

And we also, from time to time, will stand up other subcommittees of the Board if we're needing to crunch through some quite detailed issues. So for example, the capital raise last year had a subcommittee working quite hard there, too. So we keep a part of the pool available for that subcommittee work. So -- but the actual increases per director and per role are set out in the Notice of Meeting. So it doesn't equate to the numbers you've used, but that's probably because we've got this pool aside for the APC and other ad hoc committees.

Yes. I just added the number and just the number I came out with, $211,000. It was not a reflection on you guys, but just to highlight to the shareholders that that's the pay you get. That's all. Thank you.

Thank you. Are there other questions in the room? No, I don't think so. So I'll turn online. We do have a pre-submitted question -- do you want me to read that or -- from shareholders [ Dipendra and Anil Anasi ] and it said what is the basis for the increase in the directors' fees.

I trust I've covered that in my address beforehand, but it is really just trying to -- nothing -- there's been no increase since 2019 and really trying to align the directors' fees with market norms for businesses of our scale and complexity. And so we've really tried to move that and so have taken the position this time to actually try and address the matter. But I hope that having talked about the infrastructure program, the regulation and other issues and the need for 8 directors, which means that, that takes us to a higher pool has been explained. So thank you. Are there other directors on -- other questions online?

There are no questions online. And Julia, I note that the video has returned online.

Brilliant. Well, welcome back, and apologies to those of you online that had that happen.

I'd now like to turn to resolution 4. Deloitte is automatically appointed -- reappointed as our auditor of the company under Section 207T of the Companies Act 1993. And I move that the directors be authorized to fix the fees and expenses of the auditor.

So are there any questions from the floor in relation to this matter? No? None. Louise, are there any questions online?

No, there are no questions.

Thank you. No questions online.

Okay. Well, let's move to the actual formal piece in relation to the poll. So we will now conduct the poll in respect to the motions put to the meeting. The poll is being administered by MUFG Pension & Market Services, and they're going to act as scrutineers. So for those of you, please can you complete your voting papers by ticking for, against or if you wish to abstain, abstain when you're casting your vote. And anyone in the room who has difficulty, please do feel free to raise your hand, and assistance will be provided. So share registry staff are going to move through the room in a minute and collect your papers.

Those of you that are participating in the meeting online through the virtual meeting website, you should now submit your votes if you have not already done so. The results of the polls will be announced to the NZX and ASX later in the day.

So I'd now like to turn to other business, and I'd like to invite shareholders to raise any questions, comments, any discussion, anything in relation to the presentations today, the financial statements or any other topic, which might concern you in relation to governance or management of our company, so any matters at all that may lawfully be considered as part of this meeting.

Again, those of you that are participating online, you're able to ask questions through the virtual website, but please keep your questions short and clear. For those of you in the meeting venue if, for some reason, you don't feel you get enough chance to ask your question, please talk to one of us afterwards. We're going to obviously invite you to join us for refreshments afterwards, and we can hopefully help you with that. And all of the Board and staff are wearing a sort of black badge like mine, so you'll easily be able to identify any of us by our name badges.

I ask shareholders, corporate representatives or proxy holders wishing to speak, as I said before, make sure you use a microphone. And as you do, could you please identify where you're from before you address the meeting. So firstly, I will turn to the floor and then I will go online. Are there any questions from the floor that you would like to raise with us? There's one down here.

[ Michael Shrof ], shareholder. I missed the Auckland floods. In fact, I was flying out the night before to Vancouver. So I just saw the images on TV and everywhere else. What specific measures have you taken to prevent a return of the floods that you saw in the main terminal building?

Yes. No, thank you. We've taken quite significant measures, and Carrie showed you the video today, but I'm going to turn to Carrie. But we've done a huge amount of work in relation to stormwater to make sure that these sort of events can be dealt with in the future because, as we know, there are more and more increasing climate events, and we need to be resilient. But Carrie, would you like to comment in detail?

Yes. So just testing, can you hear me? Yes? Great. Great question. And no, I certainly would not want to do that again. What we have done is the international airfield expansion that I had referred to, the 4.4 kilometers of stormwater network that has gone into that, that storm -- those pipes are almost 2 meters in diameter, so we've upsized those pipes. It was already planned. But across all of our developments, we've reviewed post that flood to ensure that we do have, I guess, upsizing of those pipes to meet that on a future basis.

The 100 hectares actually runoff that had contributed to that flooding in 2023, that's what I was referring to on the video. That's the 4.5 kilometers plus the coupled wetland biofilter. So that -- a repeat of that would not happen again with that new additional stormwater put in. But again, across all of our projects, we're taking -- we've taken the opportunity to review to ensure that we are thinking ahead.

And if I may, it's interesting, we had a study done, I think it was 2019, that indicated about flooding and it said that Auckland Airport was set up well until the 2040s. And what's changed, clearly, that wasn't the case, is the intensity of the weather events. So one is sea level rise and those elements. What we're seeing is these intense weather events across New Zealand has changed, and so we've taken that into account.

A comment about the queues. I was the person that described arriving at Auckland Airport as being akin to a zoo a couple of years ago at one of the meetings. And I can report that in the few times that I've returned to Auckland Airport, the queues have been significantly reduced. So whatever you're doing seems to be working.

Look, thank you for that. And look, the team have worked incredibly hard, and I've got to thank the team for putting the customer first, working -- we are the conductor in an orchestra of a number of different parties and really bringing together all of those parties, the border agencies and others to really try to deliver for passengers. So I'm glad you've had a good experience. And hopefully, we've taken good learnings from your earlier questions. So thank you. A question over here.

[ John Somner ], shareholder, international traveler. One of the things I've noticed at international passenger terminals is the best experience is when you go from the terminal directly to the local train underground system, straight to your hotel, 1 or 2 baggage changes. I came to a meeting here of Auckland International Airport probably 15 to 20 years ago when they were doing another grand plan, and they had a corridor set aside for a train link to Pauanui. Now we have used the Pauanui bus link, and it's pretty good. But you do have to take your bags off, and the buses are tighter than the train.

The trains in Auckland now are fast, efficient, clean, and you feel very safe. If you haven't used them lately, they're free, yes, if you're senior. Does the corridor still exist? And how are we pushing Auckland Transport to get a good link because traveling straight to your hotel is a wonderful passenger experience?

Look, thanks for your question. I will pass to Carrie in 2 secs to make some additional comments. But corridors do still exist, and it is part of our longer-term plan. And we've actually got plans behind what is the existing Transport Hub as well to accommodate in the future that public transport that no longer exists. But I'll just ask Carrie to make a few more comments.

And I love your question because it's really important. The master plan slide that I had up before, that looking through to 2047, those corridors, as Julia said, do exist both to the north and to the south, so not just Pauanui and working very closely for us that multi-stakeholders we talked about, Auckland Transport, NZTA, we spend a lot of time working with on the greater regional connectivity, roading trains and those elements because it's really important.

Earlier, we talked about, in Julia's address, that passengers are due to get to 38 million by the mid-2040s. Modal shift is fundamental for that in terms of whether that be busing, public transport, trains, et cetera, as part of that planning. So we're working very closely with all of the agencies to think about it from an Auckland regional perspective because we can't do it alone at the airport nor can they do it alone. So I'm on the same page as you, sir.

Thank you. There's a question down here.

[ John Clearwater ], a shareholder. I have a great respect for the analytical capabilities of the big international reinsurance companies. And I'd like to know how the insurance premiums of the airport are tracking and any comments that you may have had from these big international companies.

Look, thank you. And Stewart, I might pass to you. So you've got the detail?

So Auckland Airport's insurance costs, if you look back over recent years, have trended upwards, and that's not unique to us. It's consistent with really high cost of insurance right across the system. But what we're seeing now is essentially some improvement in pricing and coverage levels in relation to insurance. And so whilst the overall cost is going up, so is our asset base as well. And so when you think about it on a sort of per square meter basis, actually, we're getting improved efficiency and coverage out of that, as the market started to normalize post COVID and post some of the disasters that we've been seeing both internationally and locally.

Thank you.

[ Jen Kemp ], shareholder. It's 2 or 3 years since I've been to Sydney, but I'm going to go again soon to see a son. And I seem to recall that I had to face the digital kiosk when I went last time, and I nearly completely stuffed up the sticky baggage thing. I don't know how they read it when it got on the plane and I did get off at the other end, thank goodness. But what I really -- I've printed out. I've printed out my booking. I've booked online. I've printed it all out, and I'm going to face the digital kiosk and my eyesight is not great.

So I'm really, really hoping that you will have nice ladies like they've got at Sydney to help me come back and put my baggage ticket on to make sure that I do everything right at the kiosk and the bag goes in the right place and I go in the right place. Digital is fine, but I'd still like somebody there to make sure I've done it right.

We're certainly trying to work towards smoother journeys. But do you want to be more specific, Carrie, or...

And I hope you actually get -- that we have 2 options for you to get help. The first being that airlines generally staff those, and so you have airline staff that should be helping you, but we also have customer experience staff that are more roving around the airport and tend to have a blue coat on and otherwise. So hopefully, between the airline and the airport, you are looked after because digital is great, and it does provide things, but the human touch is something, from a customer's journey, that's really important.

Just one other trite question. When I got through last time to the area where you put your bags through the scanning, I had not known that you shouldn't wear a money belt under your shirt with a couple of credit cards and a small amount of cash that I thought couldn't be snatched in between getting from the airport to the -- and they picked it up in the scanner, made me take my coat off. And then I got ticked off by this really bad tempered woman for having dared to wear a money belt under my T-shirt and in my pants.

And my shirt was all lifted up and she was saying you can pull your shirt down now, and that should have gone through the scanner. I said, oh, for God's sake, I said my bags are going through the scanner. Just open it. I've taken it off. Open it. You're fine. Okay. And she said, in the future, she said, don't you waste our time like that. Now these are probably not people that the airport employs. They're probably government people or customs people. But she was horrible.

Well, I'm sorry for that experience.

So is it true that you can't wear a money belt?

It is absolutely true that you can't wear a money belt.

And I haven't found that in the instructions anywhere for my new flight, but maybe I...

So it's clothing only. Anything that's got metal on it, so often the belt will trigger the machines. If you're wearing boots, so you might have a really lovely pair of heeled boots, if it touches your ankles, you've got to take them off as well, coats as well. It's just...

I look forward to having a much nicer experience going through this time.

Save your money belt for when you've gone through and then pop into the bathroom and you can do it then. But yes, it's just one of those international security requirements, so -- but I empathize with what happened. I think there's another question here.

Again, [ Ab Nehti ], a shareholder right from the beginning. Now what I want to with -- not disrespectful to any of your directors, but you had your raise up to about $26,000. Now when you look at -- I've taken some data from the Morningstar or one of the reputable bank companies that I deal with as my broker. The share price, the net return taking from 2017 to present, now the best year was 2018 when you retain a net return of 3.25%. Now you might give excuse, COVID came and destroyed everything and you can't get on your feet. But it has been a while.

Now [ take ] year 2024 and 2025. Now your return is still -- net return is 1.67%. Any reputable, good, established company, we're not asking -- I'm not asking a return of 10% or 7%, but at least we should deliver a return of at least 3.5% to 4% net return with the present climate -- financial climate. So how would you respond to that? I mean, say you look after yourself. You gave the raise. What about to the shareholders? Shareholders, please wake up. [ I'd say ] you get a 1.6% return, net return. It's very nice to have a glamorous airport, 20 best airport in the world and then all the facilities for the passengers, incoming passengers, nice red carpet and all of that. Who's paying for it?

You, the shareholders are paying for it. You just -- because let's face it, you just look around you, 60% of the people present here [ wouldn't ] be around, including me. So what's the benefit for me getting a high rate later at 5 years, which is no good to me? I want it now. I'm not asking too much. All I'm asking is a reasonable amount, about 4% return. That's my question.

Look, thank you for your question, and I appreciate your comments, and I appreciate your honesty to stand out and make those comments. Yes, I will turn to that COVID period where, clearly, the airport was virtually closed, but we still were required to maintain an airport, keep it going, and there was a huge amount of work that actually needed to occur during that period.

Post COVID, we've got the largest infrastructure build that we've got -- that we've had since the airport opened. And that is actually necessary to position the airport, to actually take that, not only the passenger growth but also the cargo growth that both Carrie and I spoke about today. And it's just not possible to continue without having that growth.

There are no red carpets. We're being really very, very careful in relation to how we do the build and the staging of the build to manage that growth in the most reasonable way while actually being fit for the future.

As part of the growth and timing of the growth as well, one of the pieces here is also a contingent runway, which we need in Auckland for both safety and also to be able to do the much needed runway repairs that we'll be required to do in around about 2030. All of that takes an enormous amount of time, brainpower. It takes some really good people around the table that work with management. We can challenge, we can share ideas and really trying to get the best outcomes.

Also, from a New Zealand perspective at the moment, we're obviously in a very difficult situation where Air New Zealand has fleet constraints, both in terms of number of aircraft and also in relation to the engine issues, which is dampening the situation in the very short term for Air New Zealand. So that is an issue that we need to face as well. We've also got a soft domestic economy that's had some flow-through effect as well. But we do think that the outlook is really, really positive.

I appreciate that you're looking at a short-term piece, and I appreciate where you're at in relation to that. We need to think about also the medium- and long-term value because if we curtail activity now, there will be no medium or long term because we just won't be fit to be able to handle what we need to handle. But look, thank you for your question. It's a good one.

Are there other questions in the room? Yes, there's one at the back here.

[ Ken McClaude ], shareholder. My question is to do with the holding of aviation fuel at the airport. Now I believe there's an agreement among airports that they must hold a certain amount of fuel in case of emergencies. And it's been pointed out that Auckland Airport is not taking the figures required to keep flights in the air in the case of an emergency. Now is there any reason this is happening? Because all our aviation fuel comes from Singapore.

Look, I'll pass to Carrie for the actual specific detail.

Thank you for the question, and fuel resilience is incredibly important for all airports, but clearly, Auckland Airport is the gateway. There has been a law change this year that does require so that you've got a combination of fuel companies. You've got the 3 major fuel companies and at Wiri here in Auckland is where you have a lot of the stock holding.

You then have a pipeline that comes to the airport. We have holding at the airport. And then obviously, you've got Marsden Point in those elements. So you've got multiple elements of holding, but that regulation change requires a minimum of 10 days holding to a certain percentage. And so that's a change just in this last year to ensure that there is a resilience element.

And so we spent a lot of time in that space.

There will be a future state in our infrastructure program where we will be moving where our current hydrants are that hold the Auckland Airport's component, but it is a combination. Auckland Airport holds required fuel. It was actually the fuel companies, I think you might be referring to in that change in legislation, which we certainly welcomed if we think about some of the challenges over the last 6 or 7 years from the pipeline to other elements that will make a difference.

Thank you. Look, I'm going to turn to the online group because I think there are a number of questions online. I'd like to give you the opportunity as well for questions. So I'll pass to you, Lou, to read them out, please.

Thanks, Chair. At this stage, we have 2 online questions. The first is from [ Grant Plymouth ]. The annual report has very little information about what percentage of land is still available for commercial development. With a growing commercial property income, together with a substantial uptick in the valuation of these properties, this has had a significant positive impact on the bottom line. Please outline available space for more development and what projects are on the horizon.

Look, thanks, Lou. I actually might pass to our Head of Property, who will be able to give us a really good response to that. So Mark Thomson is down here in the front.

Thank you for the question. We have about 1,500 hectares of land in the airport. And we have around about 80 hectares of developable land reserves in what we call the Landing Business Park, which gives us a good program and runway for future development.

I think an important thing to understand is that, as the airport develops, we're also recycling assets that were in the right location 3, 4 years ago into locations that more appropriate now. So our development program will also be about recycling assets, having better assets in the right location and also creating efficiency for our core infrastructure. So I think the way to think about it is around about 80 hectares of land available for development but a considerable pathway to ongoing development, asset recycling in our core so that our assets are in the right location for aviation and in the right location for efficiency in the areas that are more appropriate for them.

Thanks, Mark.

The next question is from [ Alan Turner ]. Why so many directors?

Okay. Well, I think I did, Alan, answer that question, but I'm very happy to explain again. In New Zealand, I think the average number of directors is normally around about 7. Some boards have 8. We have 8 directors. We conducted a really big exercise earlier this year independently to actually think about really seriously what sort of skills you require to have sitting around our Board table to make sure that we're addressing all of the different things that are going on at the airport. Obviously, we've got the very large infrastructure build, which is quite unusual if you compare back to previous generations of directors and the sort of activities that were happening at the airport.

In addition to that, we've had a lot of regulatory activity. And then on top of that, we have our business-as-usual aviation business. We've got a commercial property business. We've got a retail business. There's a lot going on. And to really service you, our shareholders, properly, we felt that we needed a Board of 8.

As I mentioned earlier, when we get through the commissioning of the domestic jet terminal, we will revisit that piece because with that very large infrastructure build behind us, we will revisit whether the number is right, and we'll obviously keep looking at that as we move forward. But at this particular point in time, we genuinely believe that 8 directors serves you best for us to be able to robustly carry out the governance that we think we need to. But thank you for your question.

There are no further questions online.

Thanks, Lou. Are there any other final questions? There's one over here in the room and one here as well.

Yes, [ Michael Shrof ], shareholder again. I just thought something. Am I right in saying that you've lost or you're about to lose 1 of your duty-free firms because there were 2? There's only going to be 1. Am I right in saying that? And that's not a particularly satisfactory situation for us, travelers.

We are moving from 2 to 1. A lot of work that's been done around that. But Carrie, I think we're still -- with one now, still the cheapest prices in Australasia. But Carrie, over to you.

Yes, absolutely. So the 1st of July this year was the 8-year contract that signed with Lagardere that I was referring to in my presentation. It was a year ago prior to that, that we had an interim contract to move from the 2 to 1. And what's fundamentally changed is a couple of things, one in regards to digital anymore that people can price check very easily in terms of that competitiveness and understanding, and we work very hard and as part of our agreement, have things around price competitiveness as part of that.

And the other is around trying to broaden the offer. We have had considerable feedback from travelers around the view of the breadth of products. Instead of having, I don't know, Sauvignon Blanc on the right of the aisle and the same Sauvignon Blanc on the left of the aisle by 2 different providers, you could actually take that footprint and broaden much more into things like New Zealand Provenance, electronics, and other elements. So we have broadened that, and that also was direct off the feedback from travelers and consumers of looking for that.

We are relatively early. And as I said, 1st of July, they've come into place, and that expansion and refurbishment will be happening over the next 6 to 8 months in 2026 to ensure that it's set up appropriately and we've got the maximizing the breadth of offering for our travelers.

Thanks, Carrie. There was a question over here. Thank you.

[ Kevin Tait ], a shareholder. Could you comment on the success or otherwise of the retail center? I think you called it the outlet center. It seems to be a very lonely place to visit if my experience is...

I'll start and then I might get Mark to talk to it. I don't know, as a shopper, I'm not lonely when I'm shopping. I'm straight in there. No, just kidding. It has performed very well. And the concept of having a retail premium outlet next to an airport is not a new concept. We shamelessly looked at other airports that had those overseas as models and examples because there's a nice fit as people are coming potentially to drop family off to the airport that you've got those opportunities.

Also remembering we have a workforce of 25,000 employees that work at the airport precinct not for Auckland Airport but across all of the providers. And so it's like a small city and the ability. They have needs and services and shopping that they require as well. But it is performing very well. Of the 117 stores, our vacancy is 1 store is vacant. It's been open 13 months. Retailers are incredibly pleased. And as part of that proposition, there were 20 first of type stores to New Zealand. And it's meta-niche in the market a little bit if we think about -- we know that the economy has been subdued.

Because it is a premium outlet center, we are finding that, that niche of people wanting some of those nicer items, but not necessarily wanting to pay full price for them, that it is giving an option. And we've done the hours. I'd be interested when you were there. We've purposely also done the hours. It doesn't open until 10 in the morning and it closes at 7 in the evening, and we've designed it that way to avoid the peak traffic traveling.

Our core business is an airport, and so we want to ensure the roading network and those elements are focused on that. And so it complements very nicely, but we've been very, very pleased with the performance as have been the retailers themselves. Anything, Mark, that you want to add that I haven't covered? Great. Thank you.

Look, thanks for that question. I don't think there are any other questions in the room. So look, thank you, everyone, for your questions today, and that brings to an end this year's annual meeting. I really thank you all for your participation. And also thank you, as our shareholders, for your ongoing support of Auckland Airport.

And on that note, I invite those of you who are in the room today to please join us, the directors and also the management team, the company's auditors for some refreshments, which you'll see down at the end of the room. For those of you online, thanks for joining us today, and apologies again for the dropout of the video piece during today's session.

And I declare the meeting closed. Thank you very much.

Good day, and thank you for standing by. Welcome to Auckland Airport Annual Results 2025. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, CEO, Carrie Hurihanganui. Please go ahead.

[Foreign Language] Welcome, and good morning. With me today is our Chief Financial Officer, Stewart Reynolds, and we are pleased to be able to share the financial results for the 12 months to 30 June 2025.

Well, it's been a year of positive performance against what has been a backdrop of ongoing aircraft fleet challenges in the global aviation sector, growth constraints in the domestic aviation sector, and the subdued local economy. And with that, ongoing soft recovery in travel volumes delivering a modest uplift in our overall passenger numbers. Now as we've navigated through these challenges, we have remained focused on both prudent cost management and delivering the resilient and fit-for-purpose gateway that New Zealand needs with 18.7 million travelers and more than $33 billion in high-value airfreight last year, our infrastructure program is a critical investment, delivering nationally significant assets that will have decades of ongoing use and deliver the uplift in the experience travelers are seeking.

FY '25 has seen us continue our positive momentum on our infrastructure program with over 1,500 people already working on sites across the precinct. Alongside that, our investment property portfolio has maintained its strength with the completion of key projects in year and continued developments in the pipeline.

As always, there is a lot to cover today, so we're going to get straight into it and move to Slide 4. It's been a year of strong and steady progress against that backdrop of modest passenger growth that I referred to before. Total passenger movements were up 1.1% on the prior year to 18.7 million with international up 2.5% to 10.3 million, including transits. However, domestic was down 0.5% to 8.4 million.

Full year revenue increased by 12% from the prior year to just over $1 billion, reflecting increased passenger numbers in aeronautical charges combined with growth across commercial and interest income. Operating EBITDAFI of $701 million is up 14% on prior year, seeing an EBITDAFI margin of 69.8%, up from the 68.6% in the prior year.

Reported profit after tax was up significantly to $420.7 million, and this is a result of investment in property fair value changes and no repeat of last year's tax charges relating to changes in government policy and depreciation of building structures. The net underlying profit after tax sees an uplift of 12% from the prior year to $310.4 million. And a final dividend of $0.07 per share will be paid on the October 3, and this will see total dividends for FY '25 equating to just over 71.8% payout of underlying profit after tax.

Capital expenditure momentum continued in the prior year at just under $1.1 billion, made up of $878 million of aeronautical capital and $212 million of commercial infrastructure and other capital.

If we move to Slide 5. We are continuing to deliver our strategy to build a better future with both tangible and positive progress against our 5 value pillars that you see outlined on that slide. We have ongoing customer commercial capacity, construction and community initiatives well underway. You'll see some of the examples called out on the slide, and we will touch on these later in the presentation.

Jumping to Slide 7. Now aviation connectivity, I think we all agree that, that is critical to New Zealand achieving its economic growth ambitions, and we have worked incredibly hard to bring back international airlines to Auckland and grow capacity and along with it, opportunities for tourism, travel and trade.

International airlines do have to continue to prioritize their available fleet in the short term, but we certainly are focused on ensuring we are well positioned for growth, and that has been boosted by several airline partners announcing new routes and expanded capacity for the upcoming summer. And a standout in this space force has been China Eastern announcing its connection between Shanghai through Auckland to Buenos Aires launching in December this year, something that we have been working on for a number of years, and it will provide an important connection between China and South America for travel and trade.

Moving to Slide 8. 27 airlines are flying to 42 destinations, to and from Auckland Airport in the 2025 financial year. Saw international airline seat capacity stabilized at 92% of 2019 levels. So clearly, recovering and growing airline seat capacity remains 1 of our top priorities. We continue to work to connect international airlines to Auckland through supporting them to grow and relaunch services and ultimately deliver more choice for customers. We do remain confident that travel will continue to recover with ongoing positive feedback from international airlines about New Zealand's desirability as a destination and the very strong outbound travel demand from Kiwis.

Jumping to Slide 9. The ongoing global backlog of replacement fleet orders that we have seen over the last year or 2 has seen airlines prioritizing their available fleet on higher-yielding routes rather than necessarily a full return to all previous long-haul destinations. And as a result, we have seen overall international capacity reduced year-on-year by 2.2%, primarily driven by North America that you can see there, but demand does continue to grow with passenger numbers up 2.5%, resulting in load factors up 3.8 percentage points.

Slide 10. International passenger growth, I talked before about the strong load factors, with passenger movements recovered to 89% of 2019 levels and 88% of the capacity, that has seen a 2% year-on-year lift for inbound tourism to 84%. Over the summer, we saw more New Zealanders head off on short-haul international trips than ever before, setting a record in January of this year for resident travel arrivals. The more than 300,000 visitors from the United States make it Auckland Airport second largest source of international visitors behind Australia. And we also saw an encouraging increase in passengers visiting from across the Tasman during the year. You might recall last year, we did talk about that gap. With Australia, that is now over 782,000 passengers, which is up 9% on the previous year. And finally, visitor numbers from China continued to rebound with the trend emerging of smaller groups of premium travelers staying for longer. Overall, there were around 210,000 visitors from China, an 8% increase from FY '24.

Slide 11. When we turn our attention then to domestic, it has been another challenging year in the domestic market with constrained airline capacity and we are seeing that recovery lagging major peers in New Zealand and Australia. A highlight, however, in the year was Jetstar growing its capacity by 14% but overall, capacity remains steady, affected by Air New Zealand's well documented and ongoing engine issues and fleet constraints and the overall economic environment.

Slide 12. FY '24, we were really pleased actually it marked a strong year for customer experience improvements. Enhancements in infrastructure, digital technology and airport operations boosted resilience and delivered improvements in the experience supported by strong collaboration between Auckland Airport operations, border agencies, aviation security, airlines and ground handlers. And a good example of this is the improvements we've seen in the international arrivals with median processing time of 15 minutes in June 2025, which is an 8% improvement in the same period a year ago. Now these tangible improvements were also recognized in the Kantar Corporate Reputation Index, with Auckland Airport ranking as New Zealand's ninth most trusted company, the airport's highest placement ever.

It was also pleasing for Auckland Airport to be named fourth for the best airport in the world in the 10 million to 20 million annual passengers category in the Skytrax's 2025 Global Airport Satisfaction Awards.

We have more to do and we acknowledge that, but we are confident that we are on the right track. I'm going to hand over to Stewart now to take us through an overview of some commercial performance before coming back to expand further on how we're progressing against our strategy. Stewart?

Thank you, Carrie, and good morning, everyone. Turning to Page 13 of the presentation, where we have summarized what has been a big year for our retail team. Against the backdrop of a subdued local economy, we've been pleased with how our retail performance has undergone this year. Across the entire business, the increase in passenger numbers continued to flow into retail activity with transactional data indicating that excluding foreign exchange transactions, retail transactions actually outpaced tax growth in the year.

In addition to the increased volume of activity, it has also been a busy one in terms of concessions with almost 10% of concessions replaced during the year as part of the ongoing focus to refresh and update our retail proposition. This has included adding exciting new retail brands such as Soul Origin, [ AG Express ], Rip Curl, Boh Runga and Tost, ensuring our retail precinct remains fresh for customers when they visit the airport.

As I indicated at the time of the interims, the travel FX market remains challenged, and we've continued to see this in the second half of the financial year. And this challenge has occurred because of the digital developments as passengers opt for alternatives such as digital wallets. Following a competitive tender in the period, we have put a new operator in place for foreign exchange focused on optimizing walk-up demand and a competitive online offerings to activate sales in this category.

Through better retailing, we've seen retail income per PAX increase in the year with income per PAX for the core terminal retail categories. That is excluding FX, our collection point and lounge offerings, et cetera, has actually increased by 7% from the prior year but is still 13% lower than what it was in FY '19.

Similarly, excluding FX and these other categories, PSR has increased 8% versus the prior year and increased by 7% versus FY '19. Notwithstanding this, due to the significant impact of FX, we are seeing the overall PSR for retail decreased by 9% on last year, and income per passenger only increased by 1% when this is included.

FY '25 saw a strong year-on-year performance in the key duty-free and food and beverage categories. Within duty-free, we've seen improved retail performance as a result of a combination of a broader product range, product bundling and promotional activity. What we saw was promotional activity not only driving category sales but it also had the halo effect of improving sales in other duty-free categories as well.

Near the end of the year, a Lux for less category was also introduced as part of the broader offering, this category appeals to a wider range of customers such as those who may normally purchase at lower price points. The combined effects of these activities saw duty-free sales rise 16% on the prior year.

With the commencement of the new duty-free contract on the 1st of July, the focus now shifts to further reinvigoration of this category. As part of the strategy, new brands and SKUs will be added as well as a phased refurbishment of stores beginning in late 2025, including a major redesign of the departures experience, purpose built for a single operator. This redesign is still under development and includes some exciting concepts, tasting bars and more customer engagement displays that will optimize the foot traffic layout. More of this will be revealed in the coming months. Separately, we also saw some strong performance in our food and beverage category, with sales tracking 7% higher than the prior year and well above PAX growth, benefiting from food court refurbishments and new service offerings.

We have introduced some first to New Zealand offerings such as Soul Origin, as well as a new Asian food operators that have contributed to increased sales. Looking ahead to FY '26, it will be another busy year for retail with further developments in the international food court and terminals and a full trading year of duty-free, plus watch the space regarding new concessions.

Now if we turn the page now to Page 14, it has also been quite an exciting year for our parking business. Following the significant investment in capacity in recent years associated with Park & Ride South and more recently, the Transport Hub, these have combined with the rise in international passenger numbers in the year, driving performance in our parking business, up 9% on the prior period. For those of you who have used the Transport Hub, you will know it provides a fantastic parking experience proximate to the terminal precinct and we're seeing that in customer feedback. By the end of the financial year, over 470,000 exits were recorded utilizing the Transport Hub and over 2/3 of short-stay customers are now using this convenient location. Very pleasingly, occupancy in the Transport Hub has grown steadily since it opened back in November last year. And in June, even reached close to 100% on key days in the long-stay car parks on the upper floors. This new facility alongside the other complementary international parking options saw international exits rise over 5% in the year, ahead of international PAX growth of 3% and showing our strategy to get people back to parking has worked with fantastic promotions like 7 days for $79. Importantly, as we start to pull back on these promotions, we're seeing the demand for parking remaining sticky.

As mentioned at the interims, we continue to see weakness in the domestic parking business with exits down 7% on the prior year, reflecting the ongoing weak corporate segment and the challenging domestic economy.

Finally, alongside improving the physical space, you'll recall that we've been looking at the customer journey and removing points of friction throughout our business and parking is no exception. The license plate recognition rollout across a number of our car parks is providing customers with a convenient ticketless access to the parking solutions, whilst also improving flow and our ability to analyze individual car park performance.

Now turning to Page 15, where I'm pleased to report that commercial property business continues to provide strong rental growth and revenue diversification for the airport. With the completion of new assets in the period, growth in the existing portfolio and new development activity, it's for our commercial property business go from strength to strength, with rent roll increasing 18% in the year to $192 million.

Ongoing rent reviews and the impact of decreasing interest rates throughout 2025, on cap rates led to an increase in the investment property valuation to $3.4 billion at year-end. Whilst the commercial property market in Auckland remains subdued, the team's commitment to developing world-class facilities is reflected in occupancy rates of over 99% and a weighted average lease term of almost 9 years, 1 of the longest amongst its peers, and provides a diverse source of stable inflation-linked income to our business.

Manawa Bay has set the benchmark for premium outlet shopping in New Zealand with the introduction of first to New Zealand brands such as HOKA, GES, Gant, Ariat and Lindt, as well as having iconic global brands such as Michael Kors, Kate Spade and Sporsky.

Through third-party research throughout the year, we've seen Manawa Bay take substantial market share in the segment, and importantly, maintain this post the first few months of opening. Footfall has exceeded our expectations with sales also above plan. Manawa Bay's offering of luxury and everyday brand offerings continued targeted marketing and new brand offerings continue to provide a bright point for the current domestic retail market.

Finally, on the cargo side, we were pleased to report progress in the year on the creation of a new cargo precinct with airside access opening later this calendar year. To date, Swissport has established a presence in the facility with both Menzies and New Zealand Post relocating by calendar year-end, and we continue to work with Air New Zealand to finalize arrangements for their development as part of this precinct.

Turning to Page 16 and reflecting on the success of commercial property business. A couple of weeks ago, we were delighted to announce partnering with Foodstuffs North Island to develop a new chilled and frozen distribution center. Set to complete in late 2027, the facility will spend 28,000 square meters with space for over 27,000 pallets and featured 27 state-of-the-art loading docks. The initial lease term is 25 years, and the building will incorporate sustainable design features and target a 5-star green rating. This development continues our long-standing partnership that Auckland Airport has with food stuffs and further anchors our income in the domestic economy, providing important diversification against aeronautical risk.

Now turning over the page to Page 17. The hotel portfolio has also seen improvement in the year, and is currently outperforming the wider market. Following the opening of the Pullman Hotel midway through the previous financial year, there have been over 780 rooms available across the precinct throughout the current year. The ibis Hotel, which originally opened back in 2011, continued to perform strongly throughout the year. And whilst occupancy fell slightly, the average daily rate continued to grow in a very soft Auckland hotel market.

With the hotel about to turn 15 later this month, our refurbishment will take place during FY '26 in a progressive manner to minimize the impact during the peak summer trading period, whilst importantly, providing an important upgrade to the facility. The works to the hotel will include a reconfiguration of rooms and upgrades to bathrooms to ensure it remains the first choice for travelers in this segment.

The 2 hotels situated in close proximity to the international terminal here at the airport, both 50-50 joint ventures between the airport and Tainui Group Holdings also continued to resonate strongly with passengers during the year. And Novatel continue to trade very successfully and recorded an increase in occupancy in the year, while the average daily rate fell around 6%, a smaller drop than what was seen against its peer set. Pleasingly, the Pullman has continued to grow its occupancy throughout the last 6 months of this year, with average occupancy up 10 percentage points half-on-half to over 71%. And now consistently trades through that 70% threshold. With customer feedback continuing to be very positive, we are very confident in the hotel's outlook.

I will now hand back to Carrie.

Thanks, Stewart. On Slide 18 now, Auckland Airport is focused on ensuring that we are driving the right infrastructure at the right time and in the right place to support the long-term growth of Auckland and New Zealand. In the last financial year, we carried out consultation on our draft master plan, which was the first major update to this key planning document in more than a decade. Strong interest meetings with more than 100 stakeholders together feedback and a final version of the plan is due to be released at the end of this calendar year. It was also a year of real momentum across the infrastructure program and the transformation of the wider precinct, strengthening the resilience of our operations, attracting new businesses, supporting hundreds of new jobs and significantly enhancing the customer experience.

Slide 19. If we jump to terminal integration, we've talked before about how it will transform the future traveler experience. When it opens in 2029, the new integrated terminal will provide a 26% uplift in domestic seat capacity with a further 10% capacity in dedicated bus lounges and the ability to handle 44% more departing passengers per hour than the current terminal due to increased space for security screening. Not only that, it will also enable seamless connection under the same roof between domestic and international jet flights and support efficient airline operations. All of this means great outcomes for travelers.

If we move to the next slide, we've been really pleased with the continued significant progress during the financial year towards the new domestic jet terminal with almost 450 piles installed more than 1,700 tonnes of structural steel and 5,100 cubic meters of concrete poured to date, the project is proceeding at pace and 2 program and is now over 35% complete.

Moving to the next slide. We also made great progress in the year with key enabling projects, such as the 250,000 square meters of international air field expansion, which is set to open early in quarter 4 of this calendar year. It's made up of more than 3,700 individual concrete slabs and will create the essential airfield headroom needed for aircraft parking with extra taxi ways and 6 remote stands, which will allow for the construction of the domestic jet peer and apron. And it is also providing the critical stormwater resilience upgrades that we've talked about previously.

On the next slide, there were several key milestones that were achieved in the financial year towards the multiyear infrastructure delivery program. In September 2024, we signed the contract with Downer Group subsidiary Hawkins Limited, to manage construction and delivery of the domestic jet terminal. In November last year, the Transport Hub became fully operational, and traveler is heading for the international terminal now experience a modern and fit-for-purpose facility when they pull up to the new undercover curbside drop-off and pickup area.

Since being fully commissioned, customer feedback on the facility has been consistently positive, highlighting the standard to which the precinct transformation will be delivered. Then we jump to June 2025. We marked the completion of significant improvements at the western end of the international terminal, delivering a new loading dock and expanded international arrivals hall, a new nonpassenger screening point and a new purpose-built baggage tracing unit to support passengers needing assistance with lost luggage. Now these facilities will strengthen border processing, improved logistics and operational efficiency and provide better workspaces for the people working at Auckland Airport.

If we look ahead on that time line, we're also now underway with an expansion to the regional air field that will improve operational resilience, adding 4 new regional aircraft stands.

Next slide, please. Sustainability. It's something that remains central to our investment program with key milestones also achieved in FY '25. We completed a program to lay 3.5 kilometers of pipes to capture stormwater flows for more than 100 hectares of land north of the international terminal. These pipes measuring up to 2 meters and diameters direct stormwater into an innovative treatment system new to New Zealand, which can treat up to 3x the volume of water compared to traditional stormwater ponds, and that project completed in July this year.

Auckland Airport is now also generating its own energy with 2 major solar arrays now supplying energy on the airport precinct from the 1.2 megawatt rooftop solar array on the Transport Hub and the 2.3-megawatt array at Manawa Bay, which also happened to open New Zealand's first fully electric food court in the financial year.

Next slide, please. Now in March this year, we received the Commerce Commission's final report into our price setting event for, it did confirm that Auckland Airport's infrastructure investment program was reasonable, benchmarked well internationally, had cost rigor applied to it and was properly consulted on. Now following that report, Auckland Airport discounted airline charges for the final 2 years of PSE4, bringing the targeted return for the FY '23 to '27 pricing period to 7.82% and within the range, the commission found to be reasonable. In April this year, the Ministry for Business Innovation and Employment or MBIE asked the industry for viewpoints on the effectiveness of airport regulation under the Commerce Act and after receiving submissions in August, MBIE confirmed no legislative reform was being pursued at this time.

And Auckland Airport actually supports those findings at the current legislative framework provides the Commerce Commission with the ability to amend the information disclosure regime to provide further insights of major capital investments. Finally, the input methodology merits review appeal was heard at the High Court in July this year. Airlines have filed for a judicial review of the IM determination with a hearing due in September of this year. And the High Court ruling on both of these is anticipated to be in early 2026.

Now we all love numbers, Stewart. Why don't I hand over to you, we can get into some of these numbers in more detail.

Thank you, Carrie. Turning to Page 26, where we've outlined once again a summary profit and loss for the year. As Carrie mentioned earlier, we are pleased to report a positive financial result for the year ended June. Revenue grew 12% to just over $1 billion from passenger volume lift, higher aeronautical charges and the benefits of increased commercial development in the year, outpacing expense growth of 8% in the period. This combined to deliver importantly, EBIT margin improvement to 70%. And I will touch on these further in the coming slides.

But before I do, looking below the line, Auckland Airport's total share of profits from associates in the year was $3.4 million, reflecting another strong result from Queenstown Airport and the improved performance outlined earlier across our hotel portfolio. Alongside the growth in revenue and EBITDA, we've seen a significant increase in the depreciation expense in the year, up just over $32 million year-on-year, driven by new assets commissioned, accelerated depreciation for assets whose lives are being shortened as part of the infrastructure upgrade and the impact of higher depreciation arising from the revaluations that were undertaken in FY '24.

Tax expense in the year has fallen significantly as the prior year was impacted by the change in government policy on depreciation for building structures. With reported profit of $420 million, benefiting significantly from the investment property fair value change, which once removed and that of the government tax policy change, underlying profit grew 12% in the period to just over $310 million, a growth in line with what we saw in revenue.

Over the page to Slide 27, we've laid out here a breakdown of revenue across the different lines of business. As can be seen on this page, the increase in aeronautical activity mentioned earlier and the higher aeronautical charges arising from the investment that's been underway for some time in the precinct have resulted in total aeronautical revenue up 15% in the year to a combined $491 million. Despite the 0.5 percentage point reduction in aircraft movements in the period to 157,000 movements, passenger movements actually rose just over 1% in the period to 18.7 million with international passenger movements driving this overall increase.

The rise in higher-earning international travelers combined with the uplift in the aeronautical charges, delivered a passenger service charge income increase of 15% to just over $278 million in the period. In addition to driving aeronautical revenue growth, the increase in international passenger activity also contributed to improved performance across our commercial lines of business, with retail and car parking as well as hotels up, respectively.

Retail income grew 3% in the period to $189 million, resulting from the increase in international travelers combined with an enhanced income per passenger that I touched on earlier, despite headwinds with the foreign exchange category, in particular, and what we saw with consumers shifting their spend to lower price point categories in the period.

Increased public parking capacity up just over 2,180 spaces, saw revenue grow 9% in our transport business to just over $72 million with the second half showing a 12% growth, despite ongoing domestic demand challenges resulting from the subdued economic environment, and reduced business travel, particularly to Wellington.

As mentioned earlier, investment property rental income grew significantly and was a strong performer in the year, growing 15% in the period to $173 million, driven by a combination of newly completed developments in the period, the full year contribution of developments in the prior year and rental growth from the existing portfolio. Auckland Airport also booked a $4 million of income in the year associated with the insurance proceeds from our January 2023 floating event, well down on the $19 million booked in FY '24. Now excluding the interest income, revenue increased 11% year-on-year compared with the 12% growth once the interest proceeds are included.

Turning the page to Page 28. Auckland Airport has continued its focus in the year to invest in enhancing the passenger experience right across the precinct, reflecting the increase in both aviation activity and also the commercial and construction activity in the period. Operating expenses rose 8% year-on-year.

Cost management remained a key focus for the team throughout the year and we're pleased to have kept expenses broadly flat across the last 3 6-month periods at approximately $150 million. During the year, we established our Match Fit program to drive improvements across both income and expenditure through simplifying our business, leading efficiencies through digital prioritization of discretionary spend and enhancing procurement. The program delivered benefits in excess of 8% of our cost base or over $25 million in the year enabling us to absorb some inflation seen elsewhere in the business, together with enabling us to invest in other parts of the business to support growth.

As you can see on Slide 44 in the appendix to the presentation, our cost growth has been driven by the retail and car parking as well as property operating segments of our business with our aeronautical segments seeing the benefit of our match-fit initiatives. This will be something very important for our airline stakeholders.

Looking at the breakdown of costs by category. Staff costs increased by $8.2 million or 11% in the period, as the full-time equivalent employees at Auckland Airport rose 13% in the year to just over 740 employees. This compares to 655 the prior year. The increase in headcount reflects additional resourcing to manage airport operations during the ongoing investment program and the in-sourcing of roles in the digital function to reduce cost.

Asset management, maintenance and airport operation expenses increased by $17.5 million in the year or 15%. This increase reflects the scaling up of activity-based costs such as outsourced operations, including baggage handling, bus services, parking and lounge operations to support the ongoing investment program, the launch of new commercial lines of business such as Manawa Bay and the Transport Hub, but also to improve and manage the customer service during the periods of disruption.

This category also included an increase in our PFAS remediation provision by $3 million in the period. Rates and insurance expenses increased by close to $6 million,, or 16%, reflecting higher counsel and insurance costs that reflect also a larger asset base.

Expenses relating to professional services and levies decreased by $3.5 million to $8.2 million, reflecting a prudent approach to cost management with investments directed at driving improvements in operating processes and customer experience.

Flood-related expenses of $3.1 million were incurred in the year in relation to the January flooding event. And other expenses increased by $5.3 million, primarily reflecting one-off SaaS charge that was incurred as part of the upgrade of several key aeronautical systems.

As I mentioned earlier, depreciation rose $23 million or 19% to $201 million in the period, reflecting a substantial amount of new assets commissioned, the full year effect of assets commissioned in prior years and the increase in book value of assets as a result of the revaluations of the building and services asset class in June of the prior year.

In addition, accelerated depreciation of close to $12 million occurred in the year associated with a reduction to the useful life of assets due to the decommissioning required to facilitate the build of new infrastructure.

As we turn the page to Page 29, where we've outlined a bridge in underlying profit between FY '24 and this year.

As you can see from the chart, the increase in aeronautical activity in the period, together with contributions from the commercial activities, helped drive an increase in underlying revenue in the business, up just over $70 million in the year. This improvement was partially offset by additional depreciation associated with the investment in infrastructure, the accelerated depreciation I talked about earlier and the higher operating costs touched on to provide a high level of service that support our commercial lines of business.

As mentioned in the prior year results, the increase in tax reflects the higher effective tax rate in the year following the change in depreciation on building structures. And finally, higher interest income, partly offset by the one-off costs helped contribute to the 12% lift in underlying profit we talked about earlier.

Over the page to Page 30. The increase in aeronautical activity alongside the commercial growth drove an improvement in operating cash flows before interest and tax to $623 million in the year, up over $30 million from the prior year. As can be seen from the chart, the significant investment in infrastructure and new commercial lines of business totaling over $1 billion in the period was funded in part by these higher operating cash flows but also the proceeds from the $1.4 billion equity raise undertaken in the first half of the financial year.

With significant cash reserves, management took the opportunity in the year to repay borrowings, reducing debt by over $240 million where it was seen as prudent to do so.

Over the page to Page 31. FY '25 was another pivotal year in the company's investment program, with almost $1.1 billion of capital expenditure in the year, spanning both aeronautical and commercial investment.

For those of you who have been following the airport for a few years, you'll recall airlines lobbying for more investment. While you will see from the chart on the right-hand side of this page, Auckland Airport is now well into its investment program, upgrading critical infrastructure for the gateway to our country.

This investment incurred right across the precinct with the majority of spend on Aeronautical upgrades, including terminal integration, airfield works, a series of related infrastructure programs, including utility, roading and importantly, digital system upgrades as well as complementing this, the airport continued to invest in a range of commercial projects, which I touched on earlier.

And finally, before I hand back to Carrie. On Page 32, we outline our credit metrics. On this page, you'll see that despite the significant capital expenditure in the period, reflecting the capital management initiatives undertaken, Auckland Airport maintains a strong liquidity position and robust credit metrics.

Total drawn debt at 30 June amounts to circa $2.5 billion with undrawn bank facility headroom of just over $350 million and cash in the bank of $560 million. Post-balance date, Auckland Airport has put in place additional bank facilities of $650 million, providing additional liquidity support for its investment program and in the next 6 months, anticipates looking at further debt issues.

At 31 -- at 30 June, Auckland Airport's key credit metrics remain strong with its FFO interest cover and FFO to net debt on a spot basis remaining well above their respective tests. Auckland Airport has declared a final dividend of $0.07 per share and equates to a payout ratio of close to 72%, continuing the company's capital setting of paying at the bottom of this dividend policy range.

With that, I'll now hand back to Carrie to take us through the outlook.

Thanks, Stewart. We are on Slide 34 now. And certainly, we remain focused from our outlook perspective on delivering to our strategy, which is building a better future and that includes the continued growth of our aeronautical network and the quality of our commercial offerings across the precinct. We're focused on the enhancement of the customer experience in both the short and the long term.

We are investing in the critical infrastructure that underpins headroom for capacity growth and future resilience and that is in line with our master plan, and we are deepening our links with our community and people.

So if we jump to the next slide. As we look forward to the 2026 financial year, we are pleased to see the ongoing demand for air travel and the continued growth in our commercial products and services. We do see, however, the ongoing airline seat capacity constraints are expected to continue in the short term. And alongside this, there is a global geopolitical environment that we are uncertain in terms of its impact on travel demand.

We have the softer New Zealand economy. And as a business, we are needing to adjust in -- operating in a live and, dare I say, ever-increasing construction environment as we get to the point end of things like integrating the terminals and all of those create a level of uncertainty in that outlook.

And so reflecting that, we are providing underlying earnings guidance for the year ahead between $200 million (sic) [ $280 million ] and $320 million. And this is based on both the anticipated domestic and international passenger numbers of 8.6 million and 10.6 million, respectively, together with the higher depreciation as a result of the investment program.

And from a capital perspective, with the ongoing significant investment across the precinct, we are also providing a guidance on capital expenditure of between $1 billion and $1.3 billion for the year. And as always, this guidance is based on the current expectations on the operating outlook and prevailing market conditions and is subject to unforeseen events as part of that.

But let's, at this stage, open it up to questions, I'm sure there will be a few.

[Operator Instructions] Our first question comes from Andy Bowley from Forsyth Barr.

Now first question is around that outlook guidance. So the NPAT range, $280 million to $320 million, can you give us a sense of what that translates to from an EBITDA point of view? I'm conscious that impact from an investor's perspective is becoming kind of less useful in the context of how the P&L is being reshaped by various line items, which are becoming quite material.

Andy, why don't -- I'll take that. And I'm conscious we don't want to create another reference point for guidance, but to help sort of answer your question, we are not uncomfortable with market consensus when it comes to below-the-line items. So when you aggregate all of those, I think you can effectively add that to our underlying profit guidance and we're not then uncomfortable with what EBITDA for you would look like.

So maybe just digging into a couple of those numbers then. Depreciation, what kind of uplift that you're thinking about, just to make sure we're clear what kind of consensus you're looking at?

Andy, I don't want to be drawn on exact forecast for depreciation nor interest for the next year. So if you look at market consensus and bucket those 2 together, then I'm comfortable with that. And if you look at that market consensus from what we see, together those categories add to sort of circa $300 million.

Brilliant. That's helpful. The second question I've got is digging into the retail income line. Now there's a fair few things going on when we're talking about PSR and retail income per PAX, et cetera, and I appreciate you referenced the impact of ForEx in the full year, which clearly had a significant negative impact on PSR. Now if I go back to the first half presentation, PSR was pretty steady on the prior year.

So it appears that ForEx issue is very much a second half issue. So I guess the question here is, could you talk in a bit more detail about how that unfolded and what it means from a concession yield perspective and how we should be thinking about retail income over the next 2 to 3 years?

Yes. So Andy, look, I think that's a good summary. And so that ForEx issue, I think the business was trading hard during the first 6 months of the period, but what we saw is the position substantially deteriorate during the second 6 months of the financial year. That then also combined with what I mentioned in terms of consumers moving off sort of the luxury categories as well, together they sort of combined to drive down that PSR in the second half.

And so what we saw was then a swap out of the FX provided during the back part of the second 6 months. And so you end up with not an operator for a small period or in the final months of that, that you get a disproportionate impact from adverse trading.

And then on a go-forward basis, how do you think we should be thinking about retail income? And I'm kind of conscious around disruption that is likely to be a feature through this financial year in light of the refurbishment. But what's incorporated into your thinking, particularly, say, around guidance around retail income because of the various movements that are taking shape in that retail space at the moment?

And Andy, I might kick off and then Stewart will talk about that forward. Look, I mean, we do know with the appointment of Lagardere kicking off from the 1st of July this year. And Stewart alluded to it in his summary in the presentation that there will be redesign and refits and things happening.

Now of course, we'll do everything we can to minimize that impact, but it is common that when you are doing those, you do see an element during that period, but we are going to very consciously manage it. But Stewart, in terms of the look ahead for the year knowing that we kind of have 9 to 12 months of redesign and refit along with the airport?

Yes. So I think, Andy, what I would sort of encourage you to think about is that there will be a disruption once that work continues because we will be reconfiguring, particularly if we sort of focus in on the departure outbound in the international terminal there, a store layout that was really built for 2 operators, and we're going to reconfigure that to one that's purpose-built for a single operator.

We will progressively undertake that during the sort of second 6 months. So you should expect reduction in retail income during that period. But once that process is complete, we'd like to see then retail performance in the first 12 months post the completion of that back on where it was in the current year.

And so it's difficult to put a number on what that disruption will look like because I think there's a combination of factors in there, including consumer trends as well. But I'd like to think within a year, we're back to where we were.

And just to clarify, Carrie made the comment there 9 to 12 months refurbishment disruption. So this is kind of a calendar '26-type refurbishment time frame and it should be completed by the end of next calendar year, is that what the message is?

That's what the plan is. I mean the design and those things are still being finalized, but that's -- at this point, that's what we're targeting. We'd like to maintain kind of any disruption in the year, if we can, that's what the target is.

Next question comes from Rob Koh from Morgan Stanley.

May I just ask a question on the aero side. I guess there's lots of routes, and I know it's not the whole picture, but obviously, the U.S. routes are the ones suffering. Do you have any feedback from your airline partners on forward capacity there? And if you're looking at, I guess, offsetting that with other routes, can you share any color on your willingness to enter into discounts and incentive plans with airline partners, please?

Absolutely, Rob. I think what we have seen is some of the year-on-year change was that, you would have seen there was that, you might recall, kind of enormous surge actually in FY '24. I can't remember, but we were something like 112% or 114% of 2019 capacity into FY '24.

Now after a year of operating, you hit a little bit of a normalization out of the U.S. I think at 1 point, we had 5 -- 4 or 5 carriers. So that's normalized, a little bit more seasonality, but messaging we're getting out of them is that it has normalized. So they are happy with kind of this past year and how they performed, albeit down a little bit on '24, still up on '19. That being one.

I think on the other hand, if we look recently, we had the announcement of Qantas lifting their New York service to daily in 2026. So there is still -- North America is strong and performing well, but I would define that as normalization. I guess, to the rest of your question around other routes, we are -- we remain positive around that the demand is there.

We do acknowledge that there is the capacity challenges with some of the global fleet issues. But if we look standouts for us, obviously, was the China Eastern announcement to kick off in December going through to South America. It was great. This year, China Southern kicked off in July this year, for example, it's first dedicated freighter with 3 times a week services from Guangzhou to Auckland and Sydney.

Normally, air freights in the belly hold were passenger aircraft. They are seeing demand on the cargo space to dedicate a freighter. Again, we've had other announcements around Perth flying, Perth-Auckland, Adelaide-Auckland out of Qantas as well as an uptick on the 3 -- the East Coast of Australia.

So we are seeing that continued growth. We will also -- that it's an always-on posture, I guess I would say our aeronautical team continues to go out globally and chase that capacity growth. We've made no secret of the fact that we would love to get a direct connection with India.

Obviously, the Prime Minister's visit there, there was the announcement with Air New Zealand and Air India. We're also in market talking to airlines just to understand those opportunities because there's a 300,000-plus number of residents that live in New Zealand between an international schooling. So there's a great opportunity there. So we will keep chasing. But hopefully, that's answered your question on North America.

In terms of what we do to support them. We do provide on new routes, in particular, launch funds and things to help. It's in our interest for their services to stand up positively and well and with the seats filled. So similar to our historic posture on that front, we do provide support in regards to marketing, and Stewart, that features in the cost line as part of that.

Yes.

Okay. Great. Maybe just to drill into one aspect of -- a very comprehensive answer. Can you maybe talk to cargo trends with the U.S. as well as the PAX side? And I guess, we're all thinking it's very difficult to predict the U.S. That's, I guess, the background for the question.

It is -- Rob, as far as -- I don't actually have the latest stats for North America specifically on that. However, cargo has been performing positively generally as far as the year-on-year stabilization. And certainly, other routes, if I think about places like China that I've just talked about well, we might actually grab that and come back to you through Stewart's team, Rob, because I just don't have the breakdown in North America, but cargo overall is performing positively.

What we're seeing come through and fits very well with part of our infrastructure program over the future cargo precinct as that's progressing as well. So let us take the cargo North America question, and we'll look back to you.

Yes. Yes. Appreciate it. Okay. Maybe a question for Mr. Reynolds, just so he doesn't get bored. I guess with the gearing obviously looks very comfortable, but the absolute amount of debt is increasing for obvious reasons. I wonder if you could just give us an update on how you're thinking about hedging that debt? And if there's any kind of incremental thinking on that, please?

Yes. So we are constantly looking at our risk position when it comes to managing that debt level. And so we've, you see over recent years, progressively relaxed the amount of debt that we had essentially fixed as we rode the interest curve down and then progressively added more as fixed as we saw the interest rate environment changing.

So where we sit now with the majority of debt sort of fixed as we go out to do further debt issuance, we will more likely then fix or lock that in, so reduce the inherent volatility in that line, as where we see in the current interest rate cycle rates are sort of trending towards the sort of lowest level from our internal analysis. And with that, margins have also come in as well, and so you'd expect that sort of fixed number to increase.

Next question comes from Amit Kanwatia from Jefferies.

Maybe if I can start on the NPAT guidance, and I appreciate your comments earlier on the depreciation and finance cost. If I look at the EBITDA, I mean that's that increased 14% on the PCP in '25. I mean you're saying passenger volumes to be increasing, aero charges higher, commercial activity kind of reasonably strong as well. Maybe if you can speak to how should we be thinking on the growth rate of EBITDA into next year; should be similar, more or down than what you saw in '25?

Yes. Good question, Amit. So in terms of EBITDA, and I'll come back to sort of Andy's question around depreciation. And where we sit today, we have a combination of higher depreciation charge flowing from the increased investment in aeronautical infrastructure and some of our commercial lines of business.

So you're seeing a step change in that going forward as that infrastructure commissions. And whilst we're doing a good job of sort of managing that interest line together, we can see a scenario that essentially has both of those towards that sort of $300 million number that I talked about earlier.

And so when you bring it back to the sort of EBITDA, whilst we're going to see essentially margin expansion because the cost of funding that revenue that flows through is below the line, it will be more progressive over the next couple of years before we commission or should I say some of that infrastructure ultimately turns up in aeronautical revenue from PSE5.

Right. Okay. That's useful. Maybe if I can move to the passenger growth outlook. And I think recovery is around 90% of pre-COVID levels, which is obviously improving few percent into '26. I mean previously, you spoke to full recovery around '26, '27, and I know you do a very good bottom-up kind of thinking into this. Maybe if you can give us a sense of how do you see passenger recovery to be hitting back to pre-COVID levels?

Yes, absolutely. Amit, one of the things earlier this year when we took our master plan out for consultation, that was really key that we understood some of the -- that passenger forecast as part of that. What that showed us is that really -- a couple of things, you're going to get international recovering before domestic is our view and a lot of that is tied to, as I was saying before, whilst we've seen 14% growth, for example, from Jetstar for Air New Zealand in those -- as their proportion of flying until the engine issues are resolved.

So that's going to see that hamper them based on, obviously, outlooks that they're providing around that engine issue washing through. So domestic will be slower than international, but it's looking to be FY '28 based on what we're seeing on our master plan assumptions of forward forecasts.

And is that for international and domestic be after '28, is that?

No. We're saying FY '28. That numbers are back to 2019, we don't have absolutes, but our view of what we're seeing on the trajectory, international will recover before domestic. But your total numbers, we believe we'll be back to 2019 levels in FY '28.

Right. And maybe just last one on the retail. And obviously, you mentioned some pressures around the FX sales. But I think in your speech, you mentioned some concession, recontracting and benefits. Maybe if you want to elaborate on what's happening there as far as your concession retendering, please?

Yes, Amit. So what we're doing is got quite a comprehensive program of essentially refreshing our in-terminal retail proposition to ensure that essentially underperforming retailers are then swapped out for ones that would better resonate with the traveling public.

And this work stream effectively looks at all the different categories from destination, food and beverage, et cetera, to ensure what we're providing is fit for purpose for the traveling public. And whilst it's not particularly focused in 1 category, what you see is it starts to go in waves. And so over the next -- essentially the next 12 months, we'll do some further work in food and beverage, we'll do some further work in the destination categories.

And what you'll see from that is just the constant update and reinvigoration of that in-terminal retail proposition. So as the traveling public comes through, it still is an exciting place to spend time, and with that, hopefully spend.

Sure. So the way to think is it's more about the terminal retail refreshed offering, and there should be some associated benefits on back of that refreshed offering from higher spend rates maybe?

Yes. And so it's a good example of that, we're seeing that in food and beverage. We're -- and we're not alone in this. As a category, we've moved to more fresh products rather than sort of the quick service, and so what you're seeing is having that greater choice with some fresh and healthy alternatives is really resonating with the traveling public and the breadth of offering then resonates with the wide range of passenger mix that we have here in Auckland and so that will continue. And that was something that we've seen not only in FY '24, but also over the last 12 months as well.

Right. And maybe just last one. I mean just last one on the duty free. And -- I mean you touched on the new operator starting, I mean there is a period of transition. But maybe if you can speak to -- I mean how the new duty-free contract compares to the old one?

I mean also in terms of the potential kind of risk, retail risk you're undertaking, but also the potential upside from some of those? I mean the point is how much -- I mean, I'm just curious, like how much role can you play to improve passenger spend rates into the new duty-free mix?

Yes. Amit, it's difficult for us to get into the details of it because it's obviously a commercially sensitive contract. But what I can say is the airport is prepared to take more risk when it comes to passenger volume.

And also as part of that, look at its terms to ensure that they're aligned with the retailer when we want to do things like product promotions, bundling, et cetera, to ensure that the retail proposition continues to resonate. And you'll recall a year ago, we were talking about promotional activity in in-terminal retail where through reducing our concession rates in certain categories, we drove higher revenue.

And what we will look at going forward is further work in this area to ensure that, that retail proposition resonates with the traveling public. So our lowest price point promotion in Australasian in relation to certain spirit categories really resonated with the traveling public, and we'd like to ensure that, that continues to do so.

Our next question comes from Marcus Curley from UBS.

Just a couple for me. Just on the CapEx, Stewart. You came in at the low end of the range that you provided at the beginning of the year. Looked like commercial CapEx was pretty robust, so could you talk to a little bit on the progress on the investment plan? Is it right to assume, given that levels of investment at the moment, that things are a little slower?

I know you pointed at Stewart, and he'll have something with say on this, Marcus. But again, of the capital this year, $878 million was aeronautical. So in terms of significant forward progress on this. And yes, there was also some of the commercial elements. So I think the -- we are actually pleased with the progress of how things are going, but there are some changes if you look in a year.

And probably the example I could use would be the airfield, international airfield that I talked about, that 250,000 squares that we'll be opening in quarter 4 this calendar year, that was originally programmed to open in FY '25, June, I think, is where we originally had that.

Now that has moved by 3 to 4 months. So some of that's tipping over into FY '26 in the tail end, obviously, of that spend. In terms of doesn't impact critical path for the integrated terminal -- it's connected, obviously, because that's where we'll decant some of the aircraft for the stands.

But in terms of the way it's being managed, it doesn't have an impact on the critical path. Things are still moving. It performed well in terms of kind of what we were thinking at budgeting levels and otherwise. So there is overs and unders. We do have some movement, but that would be an example of we do see things moving, but not moving where we are concerned that the program is not going to deliver to our 2029 opening date, if that makes sense. But Stewart, you might want to...

Yes. I think that's a really good summary, Carrie, there's other projects, which like the cargo precinct we had phased earlier. Now that's still happening, but that's not on the critical path of terminal integration. And so that's moved more to the right, but it's still underway. And so you get these unders and overs as you go through that. And overall, as Carrie mentioned, we're still comfortable with the progress of the program.

Because when you refer back to the original aeronautical pricing, the year just finished was supposed to be aeronautical investment of 1.1. This year coming was 1.2. So there are obviously relatively meaningful differences in how much you're spending relative to the original proposal. So are you saying that this is just all going to catch up in 2028 and 2029?

In short, what you're seeing is just slight changes in some of the deliveries. And so there's a combination of, what I would describe as, smaller elements, whether that's the inner terminal road, some of the work we've done around the Western Forecourt, the work that's currently now underway in relation to regional stands, which in themselves are not big numbers in terms of spend in FY '25, but they've moved slightly to the right.

And so we believe that those projects either have completed or will do so in a time frame that fits with the overall program, but you're just seeing, as you'd expect, with a program of over the hundreds and hundreds of projects, a little bit of flex when it comes to timing.

And Carrie, you mentioned the domestic terminal opening. So by looking at the slides, is it right to assume late 2029, so FY '30, for the opening of the domestic terminal?

So in terms of, we are looking calendar year for practical completion and then the operationalizing of that. And so the practical completion in the first half of '29 is what we're targeting. The operationalizing, obviously, as you get closer to that, Marcus, in terms of -- we have standing all right processes or operational process, that's probably the ones got a little bit of flex in it, but you'll have practical completion and then operationalizing of it, yes, it'd be second half of 2029, most likely.

Yes. So where I was getting with this is, so where should we put the increase in the airport charges associated with domestic terminal? Is that now looking like FY '30 or should we still be comfortable assuming that the charges lift in FY '29?

So Marcus, what we are looking to do is ensure, as elements of the program are completed, that we commission those and make those available for our airline customers as soon as practical. So when it comes to the domestic terminal itself, it's difficult to operationalize a head house and appear without doing all of it.

And so I'll come back to Carrie's comments in the second half of '29 is, I think, a fair estimate, but there's other elements associated with the airfield that we'd like to, to the extent that's possible, potentially commission that earlier, but it's still work in progress, how we do that.

Okay. And then just switching over to passenger volumes. The guidance at international, I think, is the 3% growth. Like I do believe the schedule at the moment would suggest more like 5% seat growth. Is there -- outside of, let's describe it as conservatism, is there anything else that you're calling out in terms of demand versus supply heading into FY '26?

Well, I said as far as the work we've done, if we look ahead and some of the work we did on demand and master planning, you tend to -- capacity -- you tend to get 100% load factor, so you will always have a delta between potentially what your capacity is versus what your passenger loads are, but from our perspective, that we think internationally, at 4 26, the 3%-odd is appropriate based on what we know is coming through in that supply side.

We know that capacity is down even with load factors up. It's not going to tip up into -- you just don't get international flights into kind of 95% load factors. So there will be a difference between those 2.

Our last question comes from Grant Lowe from Jarden.

Just first question around the retail side of things. So just looking at the passenger spend rates, there was a number of different sort of measures quoted there. And if I think about the first half versus second half, I appreciate these numbers are on a different basis, so we had a full year PSR down 9%, where that number was more or less flat in the first half, albeit on a different basis.

So if we think about on a consistent basis, how would you describe the PSR change first half versus second half?

Essentially, the first half '25, Grant, versus second half '25, a reduction in PSR reflected really reduced spend in the luxury categories and the impact of further underperformance in the foreign exchange category.

Yes. Okay. So -- yes, momentum down. If we strip out the FX side of things, though...

If you strip it out...

What's sort of underlying...

It's the opposite. It actually goes up. So improved performance, and that reflects I think the improvements the team has done in relation to food and beverage and the work that's also been done in duty-free around promotional activity, product bundling, et cetera.

Yes. Okay. And then just around the OpEx side of things. So as you sort of called out, like more or less flat around the $115 million per half for the last sort of while. How do you see that developing on the go-forward? Obviously, cost out program or managing costs, I should say. But do you see any sort of key areas of pressure on that in terms of inflationary or any conversely sort of there was a couple of one-offs in the current year, how do you see the OpEx developing over the next 6 to 12 months?

Yes. So if you look underneath it, and that's why we sort of added that information in the supplementary section of the presentation, staff numbers or cost was relatively flat half-on-half. And where we saw the significant increase was in the asset management, maintenance and airport operations category, where we do import a bit of inflation in there.

And part of that is driven from higher R&M spend as our asset base grows and further work is done. And we've got some, what I'd describe as, assets that are reaching the end of their life, and so requires a higher spend to maintain that quality offering that we pride ourselves with.

You're seeing further inflationary pressure in the rates in insurance as the asset base grows. And so that's starting to still, unfortunately, increase up, but it is being moderated by, what I would describe as, improvements in the insurance market. So the prices are holding, but our asset base is growing.

But notwithstanding that, I'm quietly optimistic of -- around the work that the team is doing on our cost reduction. And with that, we're managing to ensure there's efficiency in the cost base and further work is going to be done on the digital side of the business to help drive that and ensuring we're spending in the right place, but it is a constant focus of the team.

Yes. Okay. So I mean, should -- we should expect cost growth going into the next year, though?

I wouldn't like to think it's significant, but as a business where there's a significant part of our cost base is outsourced, what we need to do is ensure we not only maintain that level of service, but we've contracted some of those operations and so then you will see cost growth in that. But our challenge is to ensure our revenue grows or, should I say, outpaces any cost growth.

Thank you for all the questions. I will now turn the conference back to Carrie for closing remarks.

Well, listen, thank you for your time today. I am conscious of the time. We've gone longer than we necessarily intended to. We certainly look forward to connecting with many of you over the coming weeks of investor meetings, both here in New Zealand and Australia. So we will wrap it up there. Thanks, everyone. Have a great afternoon.