Channel Infrastructure Nz Lt Stock

Thank you for standing by, and welcome to the Channel Infrastructure Half Year Results 2026 Call. [Operator Instructions]

I would now like to hand the conference over to Mr. Rob Buchanan, Chief Executive. Please go ahead.

Good morning, everyone, and thank you for joining us. I'm here today with our Chief Financial Officer, Alexa Preston, and we'll speak to the presentation disclosed on the NZX and ASX earlier this morning.

There's a lot of detail in the presentation pack, but Channel's story is actually pretty straightforward. Our business continues to perform well. We're delivering the projects we said we would safely, on time and on budget. And we're finding new ways to put the infrastructure we already own to work. That is delivering growth for Channel and increasingly helping strengthen New Zealand's fuel supply chain resilience. The past 6 months have been another fantastic demonstration of what this business can do.

If you have the presentation pack in front of you, I'll start on Slide 3. I'm not going to take you through every line on this slide. There are really 3 things I'd like you to take away. First, we continue to see strong performance from the business. We continue to operate our assets at world-class levels. Fuel volumes have held up well despite global fuel supply disruptions. And financially, we've delivered another strong result. Second, we continue to execute with excellence. We delivered 93 million liters of diesel storage for the government in just 9 weeks.

We completed Z Energy's jet fuel storage project 6 months ahead of the original schedule and within budget. The Higgins bitumen terminal is on track to complete late in the fourth quarter of this year. And just this morning, we announced a significant new jet and diesel storage project with our valued customer, BP, that will generate a further $130 million of revenue over 15 years. Third, the delivery of projects is now translating into earnings growth. We've created good commercial outcomes for shareholders while solving a genuine infrastructure need for the country. That's a combination we like, and we'll keep doing as we move forward.

Moving to Slide 4. You'll see the key financial highlights for the half. Alexa will take you through the numbers in detail, but I'll just highlight revenue is up, EBITDA is up, and the Board has declared a $0.0725 per share interim dividend. This is up an impressive 16%, reflecting our strong free cash flow generation and successful execution of growth. Normalized free cash flow and free cash flow conversion are down slightly, a reflection of the phasing of maintenance CapEx. And we're investing considerably more into growth. That is growth with a contracted revenue stream and above WACC returns, which is exactly how we want to grow this business. Disciplined capital, contracted earnings and assets we know how to operate at world-class levels.

On Slide 5, we turn to safety and operational performance. There is a lot more activity happening at Marsden Point right now. More projects, more contractors and a lot more moving parts. So maintaining our operating standards through that increased level of activity is massively important to our world-class aspiration. It's also critically important at a time when fuel supply chains are under pressure that New Zealanders know they can rely on us to keep our facilities working safely and reliably.

Pipeline and tank availability remained at 99% in the period. We handled 30 ships during the half with a larger number reflecting smaller fuel parcels coming in during the fuel crisis. We also continued our strong process safety track record with no Tier 1 or Tier 2 process safety events. We did have 2 recordable injuries, and we're not satisfied with that, noting the significant construction activity on our site. Our expectation remains very simple to get everybody home safely every day. But overall, the team has done an excellent job managing a very high standard of operational performance while delivering a much larger program of work.

Turning to Slide 6. This looks specifically at jet volumes, where we saw some good growth across Q1 prior to the start of the Middle East conflict. First half throughput was broadly where we expected and the strong quarter reflects growth of international services at Auckland Airport. As you would expect, Q2 was affected by high fuel prices and reduced schedules, particularly from some Middle Eastern carriers. But those services were already beginning to return towards the end of the quarter. As you know, Air New Zealand has had a number of their aircraft grounded over the past few years due to engine availability issues, which has impacted jet volumes over this period. So it was pleasing to see the early return to service of Air New Zealand's full wide-body fleet in June. This will support international capacity and growth in jet demand going forward.

And finally, for now, Slide 7 covers petrol and diesel volumes, which have remained stable. This is broadly in line with the advisory outlook. Given where fuel prices have been, that's worth highlighting as it reflects the resilience and cost efficiencies associated with our Marsden Point import terminal supply chain system. Clearly, transport will change over time, but the transition won't happen overnight, and New Zealand will continue to require reliable fuels infrastructure for a very, very long time yet, as demonstrated by the fact that diesel and petrol fleet has remained stable since 2017.

Our advantage is that the assets we have in operation today can continue to evolve as that demand changes, and we are focused on building out contracted revenues that are independent of fuel throughput. It is exactly what we are doing with the Marsden Point Energy Precinct, which I'll touch on a little bit later on.

I'll now hand over to Alexa to take you through the financials before we come back to the precinct and our wider growth plans.

Thanks, Rob, and good morning, everyone. As Rob has outlined, this has been another strong half for Channel. Starting on Slide 9 with the profit and loss. Revenue for the half was $72.9 million, up 4% on the prior period. EBITDA was $48.8 million, up 1% on HY '25, and our EBITDA margin was 67%. On an underlying basis, excluding the impact of the legacy Wiri lease, revenue was up 5% and EBITDA up 3% on HY '25. So overall, another strong and stable result that provides a good base for the additional contracted revenue coming through in the second half from the Z Energy jet storage project and government diesel storage.

Turning to Slide 10 and looking more closely at revenues. Variable terminal fees increased 5%, reflecting PPI indexation and higher wharfage revenue with 30 import vessels received during the half. Contracted storage revenue increased 15% due to PPI indexation and the first revenue contribution from the government diesel storage contract. Other operating revenue increased and includes the revenue contribution from the Somerton Pipeline joint venture. These increases more than offset the loss of the legacy Wiri lease and the contracted reduction in fixed terminal fees. We are seeing the benefit of the investment we've been making in building out new contracted revenue streams.

Moving to Slide 11. Operating costs increased 11% to $24.1 million. However, excluding the addition of the Somerton joint venture expenses, underlying costs increased by around 6%. That reflects cost inflation across the board with efficiencies in the admin and other cost lines offset by significant increases in energy and utility costs and increases in materials and labor expenses where we filled vacancies and added capability to deliver world-class resilient operations. We remain very focused on cost discipline across our controllable cost base as the business grows, whilst ensuring a resilient supply chain for New Zealand, which includes world-class asset availability and reliability.

On Slide 12, you can see the increased level of investment going into the business. Total capital expenditure was $41.5 million for the half compared with $19.1 million in FY '25. Maintenance CapEx includes investment in terminal control systems, scheduled jetty and pipeline upgrades and statutory tank inspection. For the full year, we remain on track for maintenance CapEx of between 8% and 10% of revenue. Growth CapEx includes Z Energy jet storage projects, the government diesel storage conversion and the Higgins bitumen terminal. We are investing in the resilience of the existing asset base while also investing in projects that grow contracted revenue.

Turning to Slide 13. The business continues to generate strong operating cash flow, supporting stable and growing dividends. Normalized free cash flow from operations was $33.6 million, representing an EBITDA to free cash flow conversion of 69%. That was slightly below FY '25, largely reflecting the phasing of maintenance CapEx during the half. The Board is pleased to have declared an interim dividend of $0.0725 per share, a significant increase of 16% on HY '25, reflecting the commitment to a stable and growing dividend for shareholders.

Moving to Slide 14. Our balance sheet remains strong. Net debt at the end of June was $346 million with $93 million of liquidity headroom. Leverage was 3.8x net debt to EBITDA, which remains within our target credit metrics consistent with the shadow BBB flat to BBB+ credit rating and comfortably within our bank and bond covenant requirements. Interest cover remains strong at 5.7x. We are also reviewing options for refinancing the $100 million retail bond ahead of its maturity in May 2027. We retain balance sheet capacity to fund the growth opportunities ahead of us while remaining disciplined around our target credit metrics.

Finally, on Slide 15, as you will recall, we upgraded our guidance in May at the Annual Shareholders' Meeting to $97 million to $105 million of EBITDA. With the benefit of 8 months of trading behind us and greater certainty around fuel throughput volumes, we have further upgraded that guidance today to $103 million to $108 million of EBITDA. In addition to greater certainty around fuel volumes, the upgraded result also reflects the successful on-time delivery of the government diesel storage contract and the earlier than planned completion of the Z Energy jet storage project. Maintenance CapEx and normalized free cash flow conversion guidance remain unchanged.

In wrapping up, we've delivered another strong result, continue to generate good cash flow and maintain a strong balance sheet while increasing our investment in contracted growth. Importantly, a number of our investments are now moving from capital spend into revenue. 2027 will benefit from a full year contribution from the Z Energy jet storage and Higgins bitumen contracts as well as a full year contribution from the government diesel storage contract. Inflation continues to be a feature of the New Zealand economy, and this will likely be reflected in the PPI indexation factor that applies to our revenues next year.

Over the last 3 months, Channel has increased the in-service contracted storage volume at Marsden Point by 40%, reflecting the significant expansion, the material new BP contract we have just announced and acknowledging the significant pipeline of potential growth opportunities ahead of the business, Channel will invest an additional $700,000 to $900,000 per annum in operating expenditure to support resilient import terminal operations and the execution of our growth pipeline.

I'll now hand back to Rob to take you through the growth opportunities in more detail.

Thanks, Alexa. I want to spend the next few minutes talking about growth. You've seen Slide 17 before, but let me remind you of the 3 key areas of growth we're focused on. The first is Marsden Point with the Energy Precinct with the BP deal today, another great example of what we can do there. The second is opportunities along our existing supply chain, particularly around Auckland Airport. And the third is selective acquisitions in New Zealand and Australia.

We're very focused on growth, but selective and disciplined growth. It needs the right customer proposition, the right risk allocation and the right return for our shareholders. Where we have an advantage is that we bring genuine operating capability to the table. We understand high hazard fuels infrastructure. We know our customers, and we have a demonstrated ability to get projects delivered. That gives us a strong platform to grow from.

The next slide is probably my favorite slide in the deck because it shows just how much optionality and opportunity there is at Marsden Point. There is operating infrastructure here today. There are assets being repurposed right now, and there are projects under construction. There is land available for even more new development, opportunities in fuel security, future fuels and other energy infrastructure. The deepwater port access, pipeline, tanks, land and operating and development expertise already exists. This is very difficult to replicate, and it provides significant opportunity for us to create further value for shareholders and New Zealand.

I'll just take a moment to point out some of the key changes to this slide since you saw it last. Firstly, you can see how much room we will create from the sale and removal of the CCR Platformer, which forms critical enabling works for the biorefinery. Secondly, you can see we have identified 45 million hectares (sic) [ 45 hectares ] of land available for greenfield fuel storage. We've now completed a scoping study into the feasibility of conversion of existing tanks and construction of new greenfield tanks, reflecting increased opportunity for strategic storage in New Zealand. Thirdly, we have added 123 million liters of diesel and jet storage in just the last 3 months, significantly increasing the total in-service capacity of our site. And just today, we announced another new and material contract with BP to deliver significant new jet and diesel storage.

Slide 19 is probably the best evidence of what 6 months of delivery looks like for our business. Z Energy identified supply chain efficiencies and improving the volume of jet storage on our site. To meet this need, we converted existing infrastructure and delivered it for them 6 months ahead of schedule. The government needed additional diesel storage at incredibly short notice following the outbreak of the Middle East conflict. We identified a solution in 3 weeks and delivered 93 million liters of storage, 9 days of New Zealand's diesel demand, just 9 weeks later. This was the only option in New Zealand that could be provided at such short time frame due to Marsden Point's existing assets and capabilities and our connection with the existing fuel supply chain.

This project highlighted our proven infrastructure turnaround capability and how we are well positioned to respond quickly to unplanned conversion opportunities. Our team has some unique skills and capabilities for delivering complex projects at pace, and I'm incredibly proud of the way they rallied together to provide this resilience for New Zealand at a critical time of need. In relation to Higgins, they needed a more resilient bitumen import terminal solution. That project is on track and in fact, has been expanded. Taken together, these projects show the progress we have made towards the Marsden Point Energy Precinct: find the customer problem, use our infrastructure advantage, contract the revenue and deliver the solution. That has become the formula for what we do best here at Channel.

And importantly, we still have plenty more to come, as you can see on Slide 20. There remains more than 350 million liters of existing storage capacity potentially available for repurposing. We have also identified 45 hectares of land available for new greenfield storage development. There are opportunities around SAF and biofuels. One exciting development is the memorandum of understanding we have signed with LanzaJet, for -- a U.S.-based sustainable fuels technology company focused on producing sustainable aviation fuel from ethanol. They are at very early stages of considering an alcohol-to-jet facility at Marsden Point.

Then there are further energy security opportunities and potentially other infrastructure uses. I often get asked, will every one of these things happen? And the short answer is no, and they don't need to. One of the benefits of having a large opportunity set like we do is that we can choose the projects that make sense strategically and commercially at the right time for us and our shareholders, and that discipline is important to us.

Moving to Slide 21 and the potential biorefinery. At over $1 billion of proposed investment, this would be a significant project for Northland and for New Zealand, producing 400 million liters of biofuels annually. The proposed project has been expanded and is now expected to include biodiesel, sustainable aviation fuel and fertilizer production. Channel's role remains to provide the consortium with the site and the infrastructure, operating as a landlord and infrastructure services provider. The sale of the decommissioned CCR Platformer enables the redevelopment of that part of the site. You would have seen that indicated on the earlier precinct image slide.

The consortium's equity raise process is taking a bit longer than originally anticipated. It's an incredibly complex process, but credible potential equity providers remain actively engaged and due diligence is very well progressed. At this stage, we continue to see the proposed biorefinery as the highest and best use of the decommissioned hydrocracker assets. That said, the equity raise is a key condition precedent to the final investment decision. And our current assessment is the completion of that process will likely delay the final investment decision into 2027.

But if it proceeds, the benefits extend well beyond Channel and has the potential to bring substantial investment into Northland, create skilled employment opportunities, support lower carbon fuels and importantly, strengthen domestic supply chains. And in times of crisis or a constrained fuel supply, it would provide an important backup source of fuel for the domestic market. And of course, it would provide another productive long-term use for Marsden Point's infrastructure. By any measure, that would be a fantastic outcome.

Slide 22 is about accountability. We set ourselves targets at the beginning of each year, and this is how we're tracking against them in 2026. I won't read the table out, but there are 2 numbers that are important. We've added around $22 million of incremental contracted revenue from the government diesel storage announced in the first half of this year and today announced the new BP contract. And we have upgraded FY '26 EBITDA guidance again. Those are good outcomes for shareholders.

So let me finish with some closing remarks on Slide 23. We've delivered a strong operational and financial performance in the first half, alongside continued progress on project development and delivery. The contracted revenue associated with the jet and diesel storage projects we've now completed will support revenue growth in the second half of '26 and into '27. At the same time, we're continuing to monitor the impact of higher fuel prices on demand. The broader backdrop remains one of geopolitical uncertainty and pressure on global supply chains, which continues to highlight the importance of the infrastructure we operate.

We're seeing renewable fuels projects, including the Marsden Point Biorefinery, increasingly viewed through a security of supply lens as well as a sustainability lens. And we continue to evaluate both organic and acquisition opportunities in New Zealand and Australia. We believe Channel is really well positioned for continued growth while playing an important role in strengthening New Zealand's energy resilience.

And with that, we'll take some questions that you may have. Thank you.

[Operator Instructions] Your first question today comes from Andrew Harvey-Green with Forsyth Barr.

Great results and good to see another contract being signed. A couple of questions from me. I guess I'm not quite sure how to phrase this to be honest, but it is probably around the biorefinery. And I guess just given your past sort of experiences, Rob, with these sorts of processes, is there anything in there we should be getting concerned about with the equity raise process? Or is it -- you think it's just a function very much a function of, I guess, the increased scope and complexity, and we shouldn't be particularly concerned about the financial side of the project?

Yes, very much the latter, Andrew. So look, again, having seen the returns on offer, we think it's a financially attractive proposition for folks to invest in. I can't speak to names, but there are some very large and significant international investors that are doing a comprehensive diligence on that project. So far, that's validated everything that we've seen in it, which is great. But we don't control the timing of when they get there on that. So ultimately, we're signaling that risk that the FID moves into '27 on the basis that those guys will need to take the time they take to get to close.

Yes. Okay. That's good. Next question I just had is, I guess, following on from around conflict and there is particularly seeing what's happened in Australia and expectation, I guess, that MSO obligations may step up. Is there anything going on, any sort of initial discussions around that? Or should we effectively expect this to be parked until post-election?

Look, I think -- so we've all seen what the Australian government has done around fuel security and fuel resilience and that significantly lift minimum stockholding obligations as well as looking to put in place a strategic reserve. I think we've been paying a watching brief on that here in New Zealand. We are going into an election. I know it's something that's on the mind of ministers and the government, but I probably won't speak to it much more than that.

Okay. All good. Next question I just had was just around the CapEx side of things, stay in business CapEx comfortable with what's going on there. Growth CapEx, I guess, was a little bit lower than what I was expecting in the first half. Is there more to come? I guess, is it going to be weighted more second half? Or I'm just sort of wondering if you can give us a little bit more color about what we should expect on the growth CapEx side of things.

So Andrew, the growth CapEx actually includes the conclusion of the Z Energy growth CapEx. So all of that's in the first half. Bitumen is progressing as planned. And so that should all conclude in the second half. And otherwise, it's largely government diesel storage. So from our perspective, as signaled.

Yes. Okay. And last question I just had was just thinking about sort of OpEx going forward. You just signaled a little bit of an increase coming through. It kind of looks like if we think about probably FY '27 new contracts coming in, circa $50 million. Is that a reasonable sort of ballpark to be working with as sort of underlying OpEx going forward?

I've probably got 3 things -- 3 pieces of color to add to the OpEx. One is we're continuing to see those cost lines where we don't have any control like our transmission and distribution charges experience significant inflationary pressure. The cost increases that we've signaled today is really the magic of the model that we're running here. We've added $130 million today of contracted revenue over the contracted term and increased the storage capacity of the site by 40% in the last 3 months, and that's a very modest increase in our cost base that we've signaled today.

And you'll recall also that when we announced the bitumen terminal, we indicated that would come with some direct OpEx as well of $200,000. Again, very modest. So those are sort of the 3 trends that we're seeing that add to the cost base. We do continue to be incredibly disciplined on the cost line that we do have control over though.

Probably the other element I'd add to that in terms of color, Andrew, you'll see we completed a scoping study this year or this half, which indicates 500 million to 700 million liters of greenfield storage capacity on the site. And obviously, we've got the existing brownfield conversion opportunity. And as you've seen with the BP contract today and the government contracts, which frankly, we didn't expect to be doing when we started this year, there is a pretty significant opportunity ahead of us, and we need to make sure that we've got the ability to execute on that. And so we've got a -- we're running the total business with around a little over 100 heads, and we're seeing significant growth come at us delivering projects really well, but we need to be able to continue to do that.

Your next question comes from Wade Gardiner with Craigs Investment Partners.

Just a few questions first up on the BP contract. What's the split between jet and diesel? And is the diesel essentially we should view that as that lift in the MSO from 21 to 28 days? And how many days would that add?

Yes. Look, I think one of the things that's important that we do, given we've got 3 highly competitive customers is that we protect their confidential information. So that information is frankly, sensitive to them. It's a combination of jet and diesel. My suspicion is there's a portion of it to help that customer's MSO requirements. But ultimately, that's a matter for them.

So you'd still expect potential MSO deals to be done. This doesn't necessarily change that outlook?

Well, I think every 6 months at the results, I get the question about whether there's going to be MSO deals. And we talk to the fact that actually the commercial opportunity is as significant as the MSO opportunity. And we, kind of, highlighted it again actually on the last page of our investor presentation where we've said in writing, we continue to see a strong pipeline of storage opportunities. So yes, there's MSO opportunity, but there's also commercial and strategic opportunity. And I think it's important to not lose the context of the other 2 because if you think about the jet storage we've delivered for Z, and obviously, the BP deal includes jet storage as well, that's commercial opportunity.

Yes. Are there any rights of extension on this beyond the 15 years?

Yes. Yes, there are.

And can you provide color on that?

No, no further color on that, but on the same terms.

Okay. And I noticed on your CapEx numbers on Page 12, was it wherever your guidance was that you didn't have anything in there for the BP contract, I don't think.

No, that's right. So in terms of the outlook for CapEx, is that your question?

Yes, yes, you say growth CapEx includes new government diesel and Higgins. But I assume there is some given that you're kicking it off in September, there will be some in there for BP as well?

There will going forward, that's right. The growth CapEx that we've reported year-to-date doesn't include costs associated with that.

No, no, I'm more talking second half.

Second half, yes, we're kicking that project off straight away. Absolutely. Yes.

How much should we assume in the second half?

Well, there's only sort of 3 or 4 months in which to really get after that project. And so it will be a very small portion of the overall cost with the largest component of that CapEx for BP being spent next year.

Okay. Can you give some color on the Somerton contribution?

Yes. So again, this is one that we have to be a little bit careful about exactly what we disclose because we've got counterparties there, and we're, kind of, one part of a joint venture. What I'd say is it's -- the business has performed as we would expect it to. The only point is that Melbourne Airport is quite exposed to the Middle Eastern routes. And so throughputs and volumes during the second quarter, in particular, were a little bit off where we had thought they would be, largely attributable to those Middle Eastern carriers. But I think importantly, again, it's a 50-year asset. So from our perspective, we're pretty relaxed about that given what we've also seen at Auckland Airport.

Your next question comes from Cameron McDonald with E&P. We'll move on to Vignesh Nair with UBS.

Rob and Alexa, can you hear me?

Yes, absolutely.

Amazing. Congrats on the strong results. Sort of 2 follow-ons for me. First on the BP contract, just want to get some understanding of the exact work required, I suppose, on site to facilitate the longer-term deal. And also as a follow-on to that, if you're starting works immediately and you do end up completing a touch ahead of schedule, will that mean the sort of the customer in terms of BP would be willing to sort of start that contract ahead of time before Q3 '28?

Yes. Thanks for your questions. So the nature of that work will be brownfields conversion, so exactly along the lines of what we've done before across a range of tanks. And so we feel really comfortable with scope of work. We've got a contractor that's performed really well on our site and delivered well for us, and it's work that we know well and understand and we obviously have a really good understanding of the assets. So that's probably the first part of the question.

I think the second part is, look, I think from your perspective, from the market's perspective, you should be expecting this one sort of on budget and on schedule rather than ahead of schedule. We've got to manage some tank outages and contracted terms in some of these tanks. And so I see that project being delivered on budget and on time rather than ahead of schedule.

Okay. That's helpful. And I suppose just loosely following on from that, I think historically, you've mentioned one of the operators were previously using 50 mega liter MR tankers instead of the larger LRs? Are discussions with that operator still ongoing? Or have they now concluded?

Look, again, I won't speak to the kind of commercial rationale behind the storage opportunities that we deliver, like that's a matter for our customers, and we keep those discussions confidential. So I'll probably leave it at that.

Okay. And just one more. I suppose just on the news around Exxon exiting New Zealand. I suppose I just wanted to get some color on sort of potential interest in the Wiri terminal and some more sort of details around potential timing if sort of the deal does sort of go through, if you've got any comments?

Well, I think the important place to look at is Slide 17 on our deck. And basically, if it's on that page, we'll be doing it. And if it's not on that page, we won't be doing it. I won't speak to specific acquisition opportunities because you can understand that I can't and wouldn't do that. But I think that page gives you a pretty good guidance of the things we're looking at and where we would look to deploy capital in M&A.

[Operator Instructions] You have another question from Cameron McDonald with E&P.

Sorry, I'm trying to get off mute before. The -- just in terms of that BP contract, can I just confirm a slight sort of nuance in that. The $130 million is prior to PPI indexation. So if we roughly take $8.7 million in the first year, that will then be increased with PPI every year after that. So the notional -- the nominal value is actually a lot more than the $130 million?

That's exactly right, Cam. Yes.

Okay. And Alexa, just in terms of -- well, and even for Rob, actually, talking about the decision on the dividend, but you haven't actually increased your -- the dividend payout ratio as a percentage of the normalized free cash flow. The normalized free cash flow for the period was actually slightly down on the PCP and yet the dividend is up 16%. How do we feel about or think about the dividend payout going forward with that change that's occurred in this period?

So the Board's stated dividend policy is very clear, and it's to pay 70% to 90% of normalized free cash flow and to provide shareholders with a stable and growing dividend. I think what you're seeing there is an acknowledgment from the Board that 2027 has a material uplift in contracted earnings that we know will come. The Z Energy jet storage contract is now in service, and that year we'll see a full year contribution from that, government storage, et cetera. And then obviously, we've announced BP today. So the long-term contracted revenue profile is growing materially. The free cash flow result for the first half is associated with the phasing of maintenance CapEx. And so I think you can read through from that to full year cash flow.

I think probably the other bit to add to that, Cam, is if you think about the balance of the year, we were doing the work to complete the jet storage project and the diesel storage project. Both those things are done and now we've got the revenue to benefit from it for the rest of the half and the full year of it next year.

Your next question comes from Nathan Lead with Morgans.

Just 2 or 3 for me, if you don't mind. So on the biorefinery, you were talking about how the equity raise is taking a bit longer than expected. But can you just talk about the debt funding? Is that secured? Or are we still waiting for that to be locked down?

So look, I think the way I would articulate that is if the equity funding gets in place, the debt funding will follow. And so like it's -- it will be there, presuming that the equity gets there, if that's the right way to answer it, it will help you with that.

Yes. Okay. Great. Second question is on the government storage contract, is that capacity available for re-lease elsewhere post Dec '27? Or is there some sort of contract tie-up that means it's always got to sort of remain available if needed?

No. So the reason that the tenure of that contract is December '27 is because there was some work that we needed to do on those assets to extend the life beyond December '27, so compliance-based work. And so to answer your question, yes, they are available in the future for re-leasing or recontracting to others, but noting that whatever contract we put in place would need to cover the costs that we would incur to extend the service life of those assets.

Okay. And then third question for me, I suppose, I'm just interested in the continuation of the DRP. I mean you're cranking up the dividend a lot. Why not retain more cash flow and not have the DRP and dilute shares on issue?

So the DRP was introduced by the Board just over a year ago now from memory and is seen as an important lever for or an important acknowledgment of the large retail base that we have. They are very partial to a DRP. The discount is very modest at only 1% and the option with each dividend payment is to retain the DRP for that payment or not.

Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to Channel Infrastructure's Annual Shareholders Meeting. I'm Chris Bougen, General Counsel and Company Secretary of Channel Infrastructure.

Before we begin, a few practical matters. Should the fire alarm sound at any point, please follow the instructions of the Maritime room staff. We'll exit through either the main front entrance over that way at the balcony doors behind you and through the Maritime Museum via the loading bay that's out that way. We will need to congregate below St. Ellis, which is just across the road on the other side of this building.

Bathrooms can be found at the back of the main entrance over that way. And of course, can I please ask that you all take a moment to ensure your cell phones switch to silent mode.

As a reminder, this is a hybrid meeting. So there are some shareholders joining us today online. For those logging in online via the Computershare online platform, if you have a question, please select the Q&A tab on the right of your screen and type your question in the box. This function can also be used to request assistance from the Computershare team online. Your question will be read out during the Q&A section of the meeting later on.

For those in the room, when it comes to question time, please raise your hand and a microphone will be brought to you. Please do wait until the microphone comes for the benefit of those shareholders who are listening online.

Shortly, James will declare the meeting open. And at the same time, voting will open for those shareholders wishing to submit votes today. James will close all voting at the conclusion of the consideration of the resolution on today's agenda.

For shareholders online, once voting opens, a tab will appear on the screen. You may select your voting direction on the resolution from the options shown on the screen. If you have any questions, please contact one of the Computershare team via the Q&A tab online.

For those in the room today who are entitled to vote, you would have received voting papers on the way in. Please mark your vote as we discuss the resolution and a member of the Computershare team will collect the voting forms at the end of voting. Once collected, these will be combined with the votes already received ahead of the meeting and any votes received online during the meeting. These will be audited, and the results will be released to the NZX and ASX shortly after the meeting.

With that, I will now hand over to James for the formal part of the meeting.

Thank you, Chris. And good afternoon, everyone, and welcome to the Channel Infrastructure Shareholder Meeting. And I'm James Miller, and I'm Chair of the Board. We have a quorum of shareholders, and the meeting is now open.

This afternoon, I'll talk about the critical role Channel plays in supporting New Zealand's fuel security, our focus on growth and the returns we have delivered for our shareholders. Chief Executive, Rob Buchanan, will then run through our 2025 operational and financial performance. Rob will also discuss the growth projects we are currently executing on and those that lie ahead of us. We'll then complete the voting on the resolution as set out in the Notice of Meeting.

Following the meeting, we invite shareholders to join the Board and management team for some light refreshments.

Our Board has the right mix of skills and experience aligned with our strategy being a world-class midstream energy infrastructure company across Australasia.

Joining me here today are my fellow directors: Andrew Brewer has deep global experience in the leadership of a world-class fuel terminal and petroleum operations and is instrumental in championing our company-wide safety culture. Andrew is Chair of the Health, Safety, Environment and Operations Committee.

Angela Bull brings a strong understanding of large-scale commercial land, property and infrastructure development, so it's crucial to our energy precinct ambitions.

Andrew Holmes, also brings global experience in downstream energy industry and a deep knowledge of aviation fuel supply chains, helping connecting us with our global customers. Andy is Chair of the People and Culture Committee.

Anna Molloy serves as the Audit and Risk Committee Chair, brings strong analysis and investment experience and her background as a chemical engineer.

And Felicity Underhill, who has deep experience in future fuels innovation and commercialization of energy projects.

We're also joined today by our channel's executive team, including our Chief Executive, Rob Buchanan.

Before I begin, I'd like to take a moment to thank the wider Channel team who continue to deliver outstanding results for our customers and shareholders. Channel has developed a proud reputation for its ability to deliver large and complex capital projects safely, on time and on budget, delivering financial results in line with or above what we had promised to our shareholders, safely and reliably operating New Zealand's largest fuel import terminal 24 hours a day, 7 days a week and showing New Zealand as we can be trusted to keep them moving, particularly when fuel supply chains are under added scrutiny as they are at the moment.

Recognizing the strategic opportunities ahead for the company, the Board is pleased to have retained Rob as Chief Executive through the remainder of the decade to continue to lead the team's delivery of the opportunities and long-term value to shareholders.

We're living in an increasingly uncertain world and the role of companies, like ours in supporting national fuel security is more crucial than ever. We have seen this played out in recent months with the Iran conflict causing disruptions to global fuel supply chains that we felt for some time.

Our team takes very seriously the important part we play in keeping New Zealand's economy moving. That is why they work so hard every day to operate the critical assets safely and reliably for New Zealand. At the same time, I'd like to remind shareholders of the importance of having more fuel stored in New Zealand.

This aligns with the government's own fuel security study, which was completed last year. The fuel security study found that one of the most cost-effective ways to increase New Zealand's fuel security is to increase the in-country storage of the fuels.

In recognition of the importance of Marsden Point to the New Zealand economy, we continue to advocate for a designation of the area as a special development zone alongside our neighbors Northport Group and others who operate in the area.

As you all know, our vision is to be a world-class energy infrastructure company. Shareholders will be familiar with this slide. that shows our strategic priorities, and we are well underway executing against this ambitious strategy.

I'd now like to play a short video, which shows who we are today and our vision for the future.

[Presentation]

I am pleased to report, we have made great progress towards becoming a infrastructure partner of choice for our customers. Over 2025, we continue to improve reliability and resilience of the import terminal system. We made it easier and [ Technical Difficulty]

We continue to demonstrate strong financial discipline and to be a good neighbour and a good citizen, which is essential to our license to operate. The progress on the first and third pillar of our strategy allows us to focus on the middle pillar, which we're incredibly well positioned to continue to execute on our growth ambition.

The Board is firmly focused on providing stable and growing dividends to our shareholders, reflecting our confidence in the business outlook alongside our growth to be efficient with shareholders' capital. Last year, we increased our dividend payout ratio from 60% to 70% normalized free cash flow to 70% to 90%.

We're also pleased to introduce the dividend reinvestment plan during the year. This has had excellent offtake of over 20% of our -- as investors opted to receive additional channel shares rather than cash for their dividend entitlement.

Following a stronger-than-anticipated normalized free cash flow generation in the second half of last year, the Board was delighted to have declared a total dividend of $0.13 per share in 2025. This exceeded our guidance by 0.5% and represented an 18% increase in total dividends for the year.

If you had held your channel shares since 2021 vote on the transition to a dedicated import terminal, you will have received an impressive cumulative dividend return of around 50% of the share price at the time of that decision.

The Board continues to focus on stable and growing dividends as well as an equitable treatment for all shareholders, which include having supported a fully pro rata method of capital raising in 2024.

While the company has no current intentions to do so, if we raise capital in the future for a significant opportunity, the Board will use its best endeavours to maintain this approach to ensure our existing shareholders can continue to have equal opportunity to share in the company's success.

Looking ahead to the 2026 financial year, we indicated back in February that we expected EBITDA of between $95 million and $100 million. This increase on 2025 reflects the early commencement of the Z storage project and the completion of the Higgins bitumen import terminal, good cost control and the PPI indexation of our storage contracts.

Since we provided this guidance, we have agreed to bring online a significant amount of new diesel storage for the New Zealand government, which will provide us with additional $8 million in revenue this year.

The Board is also pleased to announce today that the Z Energy jet tank is expected to be ready for commissioning in July 2026, 6 months ahead of schedule. With the revenue from this project scheduled to commence early at commissioning, Higgins has also expanded the original scope and capabilities of the bitumen import terminal, resulting in total revenue over the 15-year contract term increasing to $57 million from $45 million and the total cost of the project increasing to $25 million to $27 million.

Our business model was very intentionally set up for stable cash flows with the customer contracts structured with an index take-or-pay mechanism and around 50% of our revenue that is completely independent of fuel volumes. This makes our company relatively resilient to significant demand or supply shocks. However, uncertainty remains around New Zealand's fuel demand in the current high fuel price environment.

Reflecting the additional revenue balanced against an uncertain outlook, the Board today slightly increased Channel's EBITDA guidance between $97 million to $105 million.

As I said earlier, we continue to drive performance to deliver our strategy, a testament to the hard work and dedication of the Channel team. We have continued to significantly outperform the NZX50, delivering a total shareholder return, which includes dividends and share price performance of 63% last year.

Alongside significant investment in our import terminal and the execution of growth projects, we have delivered a total shareholder return of 213% since we converted to a dedicated fuels import terminal in April 2022.

Channel's primary listing remains -- proudly remains on the NZX. However, late in 2025, we listed on the ASX with a foreign exempt ASX listing. This important milestone provides access to a broader pool of institutional and retail shareholders to support Channel's continued growth and reflects the significant opportunities for growth that are ahead of us.

I'll now hand over to Rob to say a few words.

[Foreign Language] Hi, everyone. Welcome. I'm Rob Buchanan, the Chief Executive of Channel Infrastructure, and it's so great to have you all here today.

With me today are members of our leadership team; Alexa Preston, our Chief Financial Officer; Jack Stewart, our General Manager of Operations; absent today, Peter van Cingel, our Business Development Manager; Steve Levell, General Manager of Independent Petroleum Laboratory; and you've already met Chris, our General Counsel and Company Secretary.

Before I update you on our financial performance and growth opportunities, I'd like to talk about our continued strong safety and operational performance during 2025.

We handled 3.5 billion litres of fuel through Marsden Point, approximately 40% of all of the country's fuel, including 80% of the country's jet. As many of you will have been aware, recent years have seen industry-wide aircraft engine reliability issues and maintenance delays, which have also impacted Air New Zealand and forced some of the aircraft fleet to be temporarily grounded. Despite this, we saw jet volumes up year-on-year with the fourth quarter of 2025, the highest since Q1 2019.

Our petrol volumes were higher than anticipated and diesel remained stable year-on-year. In part, we believe this is because our customers are taking advantage of the supply chain efficiencies and scale offered by Marsden Point. This includes additional storage brought into service and our investment in world-class operations to helping create efficiencies for our customers' supply chains.

Reflecting on the first quarter of 2026, Diesel, Petrol and Jet volumes were in line with or above our expectations. Whilst the Middle East conflict significantly impacted fuel prices in New Zealand in March, during the month, throughput overall remained strong.

Our team continues to work hard to ensure that there is -- that the availability of our assets remains at world-class levels, and we are proud that our assets have delivered over 99% availability consistently over the past 3 years.

Moving from our operational to our financial performance in 2025. Our underlying revenue and earnings grew by 4%. This reflects the PPI indexation of our contracts with our customers, slightly higher levels of fuel going through the terminal and the Transmix storage infrastructure, which became operational in December 2024.

Our free cash flow is strong and increased by 5% last year, and our free cash flow conversion ratio increased from 67% to 72%.

As James mentioned, we have proven our ability to execute on large capital-intensive projects safely, on time and on budget. The ongoing conversion project at Marsden Point started with the conversion of Channel's operations to an import terminal back in 2021 and is now nearing the end with only bunding work remaining.

The $220 million project has been undertaken over 6 years and throughout we have kept everyone safe while staying on plan and to budget. I challenge anyone to find a comparable project of this scale and size that has been executed so successfully and all the while continuing to run an active and busy fuel import terminal throughout the duration.

We have also embarked on 4 new growth projects over the past 2 years. These 4 projects will deliver approximately $180 million before PPI indexation and additional revenue over 15 years. Again, all of these projects have either been completed or are almost completed on plan and to budget.

In addition to this, we announced 2 weeks ago that we entered into an agreement with the New Zealand government for significant additional diesel storage. Our channel team created a unique and expedient solution to provide additional diesel storage at massive scale in a highly compressed time frame of 2 months. This project, which is close to completion, has been a heroic effort from our team and wider Northland contractor base and is a clear demonstration of our ability to deliver when it matters.

Last year, we also completed our first strategic acquisition in Australia, acquiring a 25% interest in the Somerton jet fuel pipeline to Melbourne Airport. I'm really proud of the number of achievements outlined on this slide in such a short space of time.

Due to the great work of our channel team and contractors, the new jet storage tank will now be available in July, 6 months ahead of schedule. This means we received the income from this agreement earlier than expected. But importantly, it also means a significant and much-needed boost to New Zealand's jet fuel supply chain earlier than expected and right when it's needed.

The bitumen import terminal will enhance New Zealand's bitumen supply chain, providing a strategic location for Higgins to supply the wider construction industry in the upper North Island. This is also currently under construction and on track to be finished in the fourth quarter of this year.

As New Zealand's largest fuels import terminal, the critical role that we play in underpinning resilience for New Zealand has been highlighted following the recent conflict in the Middle East.

For a tangible example of what channels resilience means, we have more than 290 million litres of tank capacity in service today at Marsden Point, which represents enough fuel for about 35,000 flights between Auckland and Wellington, 1.5 million average car refills and around 1 million diesel SUV fills. This is the equivalent of around 30 days' worth of demand for Auckland and Northland of 12 days of New Zealand's total fuel demand.

In addition, the new jet storage project will add around 8 days of jet capacity in early July and the government diesel storage project will add an additional 9 days of capacity in the coming weeks for New Zealand.

This highlights how Channel's infrastructure solutions help make New Zealand's fuel supply chain more secure, enhancing New Zealand's resilience to supply chain disruption and supporting the company -- the country's economy. It's also why we've invested in our infrastructure, including new safety and product quality equipment such as firefighting systems, floating suction hoses, quick flush tanks to ensure we meet world-class standards.

Channel will continue to focus on growth, but let's be clear, this growth must add value for our shareholders, align with the company's strategy and add to the overall quality of our business.

Our first priority is the Marsden Point Energy precinct. Delivery of the precinct will be transformational for Channel and Marsden Point, enabling us to unlock the significant potential of our existing site and assets. But it will also be transformational for our local community with independent analysis from PwC finding that it could generate GDP of around $3.3 billion and contribute around 20,000 full-time equivalent jobs in Northland over the 10- to 15-year construction phase.

Once fully operational, the projects could generate around $290 million annually in GDP and contribute around 1,150 full-time equivalent jobs. Delivering the energy precinct would cement Marsden Point as the home of New Zealand's fuel resilience.

Our second growth priority is consolidation along Channel's current supply chain to Auckland Airport. Channel already owns a premium suite of assets in the New Zealand fuel supply chain, and it makes sense to see where else we might be able to add value, particularly in aviation fuel, which is resilient to the energy transition.

Our third growth priority is to look for measured growth step-outs focused on adding to the quality of Channel's assets. This may include acquisitions in New Zealand or Australia, where there is an opportunity to add value through our proven operational capability, supporting customers or targeting growth markets. The first example of this strategy in action is the Somerton pipeline we acquired last year, servicing Melbourne Airport's jet supply chain.

The Marsden Point Energy Precinct, as shown on this slide, was never going to be static. And with market opportunity evolving, the final shape of our precinct will change over time as we pick the opportunities that bring greatest benefit to our shareholders and New Zealand.

Reflecting our confidence in the Precinct, we have started the process of relocating the import terminal control room and construction of a new administration building. This will not only support the Marsden Point redevelopment plans, but will also be an important improvement to the environment our people work in every day.

Last year, Channel completed front-end engineering and design for a potential 72-megawatt diesel-powered electrical peaking plant. This project would be relatively fast to construct and benefits from the significant fuel reserves already stored on our site, providing for a near immediate start-up as required.

Channel was in advanced discussions with several parties regarding a long-term capacity contract to underwrite the development cost of the project to be funded by Channel. The project is currently paused awaiting the outcome of the New Zealand government's review of its previously proposed LNG terminal.

Fuel supply chains have been a theme today, and the Marsden Point biorefinery project provides an example of potential for our site to do even more for New Zealand's long-term fuel security.

The key fuel security benefit of this project in the context of the disruption incurring in the Middle East and the Strait of Hormuz is that the feedstock for the biorefinery is domestic. And the only body of water that feedstock would need to cross is the Waitemata Harbour.

This very significant project is continuing to progress, and we continue to expect a final investment decision later this year. Air New Zealand has now joined the projects consortium alongside Qantas, Renova, Kent and ANZ Bank.

Finally, as mentioned, Channel made its first measured step out into the Australian market last year with a $14 million investment in a 25% stake in the Somerton Jet pipeline to Melbourne Airport.

The pipeline is operated by ExxonMobil, a proven safe and reliable operator of critical infrastructure, and the acquisition enhances the overall quality of Channels business while supporting existing and new customers.

Melbourne Airport delivered the largest total passenger month on record in December 2025. Further growth is expected with continued route development and the addition of a third runway in the early 2030s.

The real value in this small acquisition is in the embedded growth opportunities that come along with it. Opportunities include potential consolidation along the Melbourne Airport jet fuel supply chain or through upgrading the current infrastructure. Of course, realizing these opportunities will take time and are subject to further feasibility work and investment approvals.

And with that, I'll hand back to James to cover the resolution voting and the general business in the meeting.

Thanks, Rob.

Now we move to the formal part of the meeting, which is -- which this year is a vote on just one resolution. As a reminder, shareholders attending online can vote under the vote tab, while those shareholders in the room who are entitled to vote today can either use the online voting or the proxy voting forms already provided to them by Computershare.

As required by the NZX listing rules, all voting on the resolutions tabled at this meeting will be by way of poll. The resolution will be put to the meeting in the form set out in the Notice of Meeting.

I'd like to move quickly through the voting on the single resolution on the agenda before we call for general business questions, which will be addressed at the end of the meeting.

For those here in the room, I ask shareholders wishing to speak, please raise your hand and a microphone will be brought to you. When asking a question, please state your name and whether you are a shareholder or a proxy holder. Please do wait for the microphone as this benefits the shareholders joining us online today. For online questions, we will endeavour to group these by subject area. And if the question has already been addressed in the room, we will not be taking repeat questions.

So with that -- so that everyone who wishes to ask a question has an opportunity to do so. Please only ask one question and be mindful of everyone's time.

Resolution 1 relates to the authorization of the auditor's fees and expenses for the 2026 financial year.

Is there any discussion or questions relating to the resolution on auditor's fees? Oh, good. Right. I've got one that goes for quite a while. This one is from Stephen David Mayne. Under the Australian Corporations law and the ASX listing rules, there must always be a director elected at a company -- is it for now?

Yes. At the company's AGM, New Zealand AGMs are already boring enough with few resolutions up for vote. But why didn't you at least give us a director to vote today as opposed to serving up the sparse agenda with nothing more to determine than a procedural order to pay resolution. Can the Chair comment on whether our company will move to annual elections of directors at next year's AGM.

Okay. There's a lot in that. But directors come up every 3 years under the NZX rules. Last year, I'm not sure if you were here, Stephen, we had 4 directors up. And so this year, there happens to be -- there's only 6 on the Board. So this year, just by coincidence, there was 0 under the rotation, and there's probably quite a few more next year. I guess, we could put someone up every year just to lower the boring factor. That's not something I thought of.

So can I take that on consideration or advisement. And what's the last bit? Can the Chair confirm we'll move to annual elections? No, look, we would just follow the stock exchange rules on that issue as we should do. Yes. Is there any other questions?

Okay. So can I now ask shareholders to please vote on Resolution 1 on their papers online.

Ladies and gentlemen, that concludes our discussion on the formal items of business. Please ensure you've cast your vote on all resolutions online via the Computershare's online meeting platform. I will now pause to allow you to finalize these votes before we close the voting system.

Thank you, ladies and gentlemen. The voting is now closed. And for those in the room, Computershare will come around and collect your ballot papers. Our registrar, Computershare will act as scrutineers. Once they've completed their review, the final results of the poll will be released to NZX and posted on our website later this afternoon.

Now that we've completed the formal part of the meeting, I now invite questions relating to general business that shareholders wish to raise.

My name is Michael Connor. I'm a shareholder. I have a few questions. Just one technical question. The gentleman sitting on the end -- sorry, I can't remember your name, who's a non-independent director. Why is he non-independent?

Do you want me to answer that?

Sure.

Yes, yes. The stock exchange requires us to do an assessment of every director, whether or not they have potential conflicts that may -- and there's a few other tests that we have to look at. And Andrew has interests that pertain to Ampol, which is one of our largest customers and was one of our shareholders at one stage.

That's fine. No problem.

Yes.

When the company stopped being a refinery, took a very large write-off to its books like, I don't know, $500 million, it was a very big number. As time has gone by and you started to repurpose things that were written off, then value comes back into the books. So my question is, the things on the map there that aren't currently used, can you go back to the map of the whole.

Somebody drives that?

So you can see what I'm talking about. That footprint here. So see some of the things looks like an orange. Are they -- do they have a value in the books? Or are they still written off at 0?

Do you want to go? Yep.

Hi everyone, Alexa Preston, Chief Financial Officer. The assets that were written off as part of the refinery have a scrap value in our books. I believe the numbers around $22 million at present. So the assets that were written off as part of the refinery closure in our books at about $22 million of scrap at the moment. If they bought back into service, they will be written off.

[ indiscernible ]

The assets are in our books at scrap value because that's their current market value. If the assets are sold, they will be written back up. I might just let the other shareholder finish his question. I believe he had another one to follow.

That's exactly what I was asking. So if new stuff gets repurposed, it's worth more.

It could be, yes.

Well, you would think so?

Yes. So what we do is we have an independent valuer who values the assets, and that's where it would get picked up when the independent valuer comes through.

In effect, something with an orange there is like an empty building with no tenants. But when you put tenants in, it's going to be worth more. Is that the right sort of logic?

That's the plan. Yes, yes, yes.

I have another question. A lot of the larger oil company shareholders have progressively sold out. And the company's tax losses depend on the enough continuity in shareholdings to remain in place. Is the company restricted from raising more capital by issuing shares if they're going to give away tax losses? I don't know the answer to this. You're going to have to tell me.

Yes. No, no. There's been extensive reports on this very issue. Alexa, do you want to give the detail?

So you're right. The principal test is a continuity of the ownership test. That test is still met, and we have good advice that, that remains to be the case. In the unlikely event that test is not met, there is a secondary test, which is the same business test and we continue to meet that. We've always operated as an import terminal during periods where the refinery was being worked on.

So then you're free to raise capital as you see fit.

If we needed it, yes, the default setting is not to, but yes.

Fair enough. That's good. You guys are doing a great job.

Thank you. That's very kind.

Could you just repeat some of what he was saying? Because a lot of people didn't hear.

So I guess, there was 2 primary questions. One was around the -- where the assets have been written down to. And Alexa answered that it was -- it's called scrap value and it's $22 million on the books. And then there was a question around if we develop as per the plan on the precinct, what would happen to the value of the assets going forward? And I mentioned that what we do is we have an independent valuer come in who looks at all the assets, what the worth, cash flows, et cetera, and then comes up with the valuation. So that's independent of us. So yes, Michael was 100% right that we would be writing up value at that point, if that happened.

And then there was a -- additional question on -- we take -- by the way, we take extensive advice on our tax position because we do have significant tax losses. And obviously, we don't want to lose them. And there is the question that our oil company shareholders exited the register. And so obviously, we don't want to lose that because of this continuity test -- sorry, let me finish. And so the answer that Alexa gave, which gave reassurance to everybody that we are still -- we've taken advice and we still meet both tests as it currently stands with the IRD. I think, we've had an audit, haven't we as well. Yes. We've also have an order from the IRD as well to confirm that. So I think we're fine on that.

All the oil company shareholder are not there anymore, apart from Z Energy?

No, no, no, they're not there.

Why do you think they are not there?

No. Well, they're all gone, including Z, by the way.

Could you use the microphone when you say something.

The shares are held by the oil companies are not there anymore. The Z ones have gone under Ampol's name, which is the guy over the end here knows about it. Andrew Brewer, who used to be our CEO of the refinery is also on Ampol's Board. Are you also some do Z Energy as well?

I'm not on Ampol's Board.

Yeah. So Z sold out. Ampol's never had a holding in us -- so that's incorrect. All oil company shareholders have exited the register. They don't own anything, do they? No, there's no shares whatsoever. So they, to us are extremely important customers, but it's a customer relationship that we have with them.

You're saying Ampol's got no shares?

Correct.

Yes. It's on the -- if you look in the annual report, you'll see it. Yes. Okay. There's questions that way, but I'll just check the room one more time. Coralie?

Yes. Coralie van Camp, shareholder since the refinery was operating and had that massive upgrade, and we all went up there and had a lovely day. First comment, it hasn't escaped my notice that if the refinery was still running, we could get a deal with Venezuela of food for oil.

Could get what?

We could get a deal with Venezuela of food for oil. But my question is, now I can't understand why you would pay $14 million and buy 25% of the fuel pipeline to Melbourne's Airport when the huge areas set aside at Marsden Point for the still aspirational manufacturer of hydrogen and biofuel. I mean, every meeting I've come to for the last 5 years, I've heard about that. And there's still that huge big area up there. So I'm just speculating, is Channel diversifying into buying overseas infrastructure in the hopes of selling later at a capital gain the way Infratil operates? I mean, why have you bought it?

So there's a lot, do you want me answer some of that? Yes. So the Seadra deal which is the biorefinery, it does take a long time, putting together the consortium. Every meeting, it marches forward positively, but we haven't quite got there as yet. But it is a big deal for us as a company, and it's a massive deal for Northland if it comes off. So we do mention it.

With respect to Melbourne, we have a strategy which we outlined before, and it's centered around the precinct at Northland. That's our #1 priority. As I call it, we're about making Northland great again. But -- and we're very, very proudly a Northland company. And so that's the area that we will always get the highest value returns if we develop at Marsden because we already own the assets, et cetera.

We have got a level of confidence that if we acquired additional assets in New Zealand, particularly down to a fuel line through to Wiri, and through to the airport, which we've been very public that we've got interest in if we would -- if that was ever to come available from the joint venture that currently owns it.

And then thirdly, we've got, I'll call it, aspirations at this stage to expand in the midstream. That's the terminal pipes area of the infrastructure area of the oil and gas industry, just that narrow focus across Australasia. We think we can be the preeminent play for investors that are looking for exposure in the midstream part of the market.

We're particularly interested in jet and diesel as fuel types that we've got to focus on. And the reason is we've got very high confidence of the long-term value for the company. And so the Melbourne pipeline, which is Jet through to the airport, it's step 1 of many. If we can secure something that looks like what we currently have got through to Auckland we would be delighted.

That's a toe in the water. What you're saying is that you might go to Sydney and do other things around Australia as well.

Yes, that could happen.

Just remember when Air New Zealand bought the second half of ANZ Airways, so make sure that what you're doing is going to actually be as wise as what Infratil does.

Yes. I hope we will be, thank you for that comment. Okay. There was another question in the room. I saw it, yes, just here.

My name is Peter Spencer. I'm a Chair of an investment group that's a shareholder. I had one question, which is a little bit in the weeds, but it really relates to safety and safety culture. I'm curious to know what you guys do in relation to keeping your staff -- contractor staff safe on site. So it's a little bit in the weeds.

Yes. I actually would encourage Jack Stewart, our GM Operations, to stand up and answer that question. He's been leading a huge program of what we call world-class safety. And Jack, why don't you?

Thanks, Rob. So you can see in our strategy, we have committed to being a world-class operator of our infrastructure and the safety of our people and our facilities is really at the core of that. And it's really important to our customers as well.

So in order to have their confidence to grow, it's fundamental for us. Some of the work that we've been doing more recently, we've engaged with global consultants who are experts in this field. Their expertise has been developed within DuPont, who is a global industrial facility operator, well known, and we're working a really extensive program at the moment.

Both around safety culture with ourselves and our contractors, but also in terms of the strength of our safety systems and making sure that we operate in a way where we prevent serious injury on our facilities.

Key consideration for us is also the safety, inherent safety of our facilities. Some of the products that we handle do have inherent risks. And so as a major hazard facility operator, we take that responsibility very seriously. A number of upgrades have been completed as part of the conversion program to make sure that the terminal operations that have been established at Marsden Point meet the best practice in that regard.

My name is [ Micheal Gerwen ]. I'm a shareholder. My interest is in competition. Where are the other facilities, storage facilities in New Zealand? And is there a word in the industry that not only Channel, but others will also be increasing their capacity. And perhaps the final bit of that question is maybe groups would come together to do their own storage. And is that a real possibility?

Yes. So you may or may not know, but most ports in New Zealand have some kind of storage for their local region that have been there for a very long period of time, whether you go to Christchurch or Dunedin or Wellington. And then -- so that's where -- and then, of course, we are the bulk of that in New Zealand.

You really need to be able to take the big oil tankers that come in and have a serious draft available in your harbor to be a candidate for storage as we are in a very privileged position. So the very incumbent assets that are unlikely to get direct competition like that. I can't imagine anyone building side by side. You'll find there are multiple terminals in Tauranga, I think, from various different operators.

But each port essentially is operating to a physical constraint of how far you can drive the product that comes from -- come through that port. And so the unique advantage is that we're directly connected to the Auckland market through the Mars and Auckland pipeline that comes out of Wiri. And so yes, there was a second part, wasn't that?

Other companies getting to build the facility on the basis of what we've just been going through now an opportunity for storage in the future.

It's really hard to do that this game that you've got some cost assets that you're competing against that would make it -- would just make it impossible to do it from a new build in my view. So it's unlikely. But never say never. Sorry, I'll go to you first, sorry.

McLeod Shareholder. My question relates to aviation fuel. An agreement was made a few years ago, both here in New Zealand and Australia to carry sufficient fuel in both countries to cover any emergency. An agreement was made. It appears everybody -- well, everybody, most governments were happier that this figure would be achieved. But on the examination, they found out it was below what they expected. Has that changed?

Yes.

So the minimum stockholding obligation in relation to jet fuel for New Zealand is currently 24 days. I can tell you, as of the MBIE about an hour ago, there was around 34.4 days of jet fuel in New Zealand and 55.1 when you add stock on the water that it's on its way. So I believe the agreement you're referring to is the minimum stockholding obligations that both the New Zealand and Australian governments have separately put in place. And as you've seen from the reporting from government stocks have been consistent with or above those levels.

Yes,[ Edmund Stranahan ], I'm a shareholder. A question that I have. I understand the pipeline that goes through to Wiri, is that owned by Wiri Oil Services Limited? And are those tanks also owned by the refinery at that end of the pipeline or are they owned by someone else?

Yes. So that was what I was talking about before. So we own the tanks at Marsden and the pipeline that takes it to Wiri. And then for the people who don't know, just outside Auckland Airport, you can see it as you fly over. There are quite a few tanks down there. You can clearly see them. They are owned by a JV between the 3 oil companies. So it's a separate ownership to us.

As far as the fuel going through that fuel line is concerned, is that really just for Auckland and Hamilton areas?

Do you want to go on that?

Yes. So we supply 100% of the jet that Auckland Airport utilizes. So it's the first product. In respect of diesel and petrol, we provide fuel for Northland through the truckloading facility at our site and then Auckland and sometimes the broader Waikato through the pipeline to Wiri in respect of petrol and diesel.

Another question on a different matter. There seems to be a new company that's emerged in Auckland called Tasman Fuels Limited. Is Tasman Fuels actually bringing fuel in through Marsden Point or somewhere else?

That's not right. No, that will be probably coming through Tauranga, would that be correct? Yeah.

So those Auckland service stations are being supplied out of Tauranga.

It could well be. We don't know where they're doing it from. There was another question down that way.

Yes. There appears to be an increasing....

What was your name again?

Michael Bowden. There appears to be an increasing electrification of both public and private transport. I'm just wondering, over time, do you anticipate a reduction in demand for diesel and petrol.

Yes. So we get an independent company called Advisory to do long-term forecast for the company, both on jet, obviously, diesel and petrol. And you're correct to highlight an area. Well, first of all, you can have high confidence on jet. Diesel is more of a flat forecast that they have. And then on petrol, they forecast longer term that it will decline because of the substitution that you just talked about. How long that happens and what's the tale? No one knows. But Advisory, they do their best estimate for that, and we cater to that. So yes. Okay. Here, Karl?

I'm back again. I've been on this case for 4 years since this place closed down in April 2022. I've been on the road since '24, encouraging patriotic Kiwis around New Zealand to buy shares in Channel Infrastructure. I've tried twice now to get on the Board as a Director representing those shareholders. The shareholders now are 61% as of today, general public shareholding with 252 million shares valued at $780 million. With a capital value of the company of $1.3 billion leaves -- take that $750 million out, these $540 million are the shareholders. So we are the major shareholders, and I've seen a video that says that.

I want to know, do the shareholders in New Zealand want to reinstate this refinery and get our fuel security back, get high-quality fuel back, good bitumen and good CO2 back in this country with $8 billion a year turnover when we had the refinery operating. We should be bringing in the crude oil ourselves, manufacturing it and selling the finished products to the fuel retailers around New Zealand.

We've got enough of them. We don't need BP and Mobil or Z Energy here. Z Energy is part of Ampol. The reason the refinery shut down was Z Energy was sold to Ampol under the conditions signed by the government, Megan Woods and Grant Robinson was that the refinery had to shut down. This guy on the end shut down the bitumen plant to start with. All he had to do was say, we're going to double the price of bitumen. We would have been 1/3 of the price of the rubber we got now, which is stuffing every road in New Zealand.

Then COVID come along instead of saying we'll fill up every tank in New Zealand and put this refinery on a maintenance mode and just supply emergency services at a low speed. And as soon as COVID was off, we would have been back into it. In the meantime, these guys took over our refinery, our assets, paid for by taxpayers through New Zealand and fuel users through New Zealand and have turned this thing into a joke. They want to make it into an energy precinct. This is the refinery. This is all the assets. We can buy 120 hectares of assets including Te Mahi Hou, built in 2018 for $365 million, they are trying to sell these assets for $56 million people. They are stealing our Te Mahi Hou, they're stealing our future. Without fuel in this country, what's going to happen. I've got a few other questions.

Looking at Channel Infrastructure, I come across another site called NZRFF, and it comes up with an American $1.62 share value at USD 730 million. Are we listed on the American Stock Exchange?

No.

So why is that what's this company?

I've got an idea.

Well, it's under Channel Infrastructure's name. When you look it up, it comes back to you guys.

It's not us.

So what's the fuel shipments after the middle of May? Are we guaranteed shipping coming to this country?

Yes. So the fuel companies, I think, has been discussed quite...

Are you watching the ships coming to this country? That's what I'm asking.

Perhaps you could let me answer the question, Karl, before you interject. I'm very happy to answer your question, but just let me finish answering it.

So the fuel companies, I think, has been well covered by government and the media in the context of the concerning events in the Middle East, operate a 3-month forward shipment plan to match demand and supply through the import terminal system at Marsden Point. Bear in mind, we don't own the fuel. It's the fuel companies that own the fuel. It's the fuel companies that source the fuel and bring it down here. We have visibility up to the supply chain in those forward 3 months.

What we've seen through the fuel crisis is MBIE has released twice weekly fuel stocks in New Zealand and on the water. And at all times, those fuel stocks in New Zealand have been above the minimum stockholding obligations and significantly above when you add in fuel on the water.

Obviously, the benefit that Marsden Point has in the context of what's going on is a very significant amount of storage that we've got that acts like a shock absorber if there was to be a delay in shipments.

Okay. I get back to the storage at Marsden Point, another issue. We've gone from big large storage tanks that used to store 60 days of crude oil, which gave us 60 days of production. Those tanks are now full of either jet -- are they all jet fuel or they've got petrol and diesel in them as well?

We store a combination of petrol, diesel and jet.

Okay. So we've got a large -- huge large storage tank. Before we had 14 days of smaller tanks as production came out day 1 build out until day 14 and about day 12, they started shipping them around New Zealand, either pumping them through the pipeline here to Auckland or cutting around New Zealand on 2 coastal tankers.

Now we have this large tank, petrol or jet fuel or diesel. Another shipment comes in. It goes into that same tank. What happens if that shipment arrives contaminated. It contaminates a huge amount of fuel that needs to be taken offshore and re-refined. We don't know the safety.

So all fuel before it comes off the ship is tested before it goes into the import terminal system. So actually, that doesn't or can't happen because IPL, Independent Petroleum Laboratories, of which Steve is the General Manager, has 25 laboratory technicians at Marsden Point that do all the fuels testing in New Zealand and actually across much of the Pacific.

In respect of jet fuel, in particular, that is tested around 6x across the chain of custody between when it comes in on the ship and gets loaded in the plane. So no, that can't happen.

So explain to us how often are the fuel filters being changed either at Marsden Point or at Wiri as the fuel arrives to be transported through to New Zealand's major fuel suppliers.

I couldn't tell you off the top of my head, but I think the important point is that the fuel that is going into New Zealand has been tested and certified as being on spec.

Well, I've been told by people in the industry that those filters were changed once a month, every 6 months as just a maintenance thing. Now, they're being changed every Wednesday. Is that correct or incorrect?

Yes, I couldn't give you an answer on that, Karl. As I would say to you, the critical piece here is that every drop of fuel is tested every drop, but every shipment is tested before it comes into our storage facility and it's tested upon release. So you can be confident that if it's come through our import terminal system, it's on spec.

Well, I've been told by somebody that works at Auckland Airport and loads planes for the last 20 years, he's still getting fuel onto the planes that's got to stain in it. I've been told by somebody that works for -- or used to be in the defense force, he said jet fuel that's got to stain is because it's old stock. It's not fresh stock like came out of Marsden Point over a 14-day period.

I'd be very worried if somebody actually saw jet fuel if it was at the airport. It should always be contained in a container safely because it's a highly explosive product. So I just don't think that's consistent with what we see, Karl.

This chap drives the trucks that fill the planes. He sees what's going into the planes for the sight glass and through the filtration, the blockages. I talked to a company that deals with the petrol tankers around New Zealand. He's concerned about the contamination in the bottom of the tankers, delivering fuel around New Zealand. He's never seen it before. The other issue is how many days storage do we need in this country for emergency services?

Yes. So again, the government sized the minimum stockholding obligations for petrol, diesel and jet off a pretty significant piece of work that they did around that. And so that's actually a question for them because they set those minimum storage.

You should know you're the 40% of New Zealand fuel, 80% of our jet fuel, that jet fuel is needed for our defense force, our Air Force.

As I said, that's something that's set by government and not Channel.

That's the cop out. We've got a government that says it's the industry. Then we've got an industry that says it's the government. I want the people in New Zealand to stand up and take this refinery back.

Are you asking a question or are you at the meeting?

I'm just telling the meeting what the concerns are to the people in New Zealand. If you're not concerned about the concerns in this country, just wait and see what happens. I'll end it there. I've started a new company called Kiwi Refining Company after last year's Annual Shareholders Meeting, advised by one of the directors to do that. We'll raise the capital to buy these assets back and see what happens because we don't want to see this refinery destroyed. I don't think the rest of New Zealand do neither. Thanks very much.

Best of luck. A question behind.

It's Gordon Wallace, just to say, we understand where you're coming from, but you've got to really go back to what really happened some years ago when it was changed because of you know yourself, we were too small, even you're saying the -- at Marsden Point. Today, you got to realize to like this chap here, things are a lot bigger now, massive bigger.

And funny thing about now is whoever believe we would have problems with oil in a way where you could say it all becomes connections, knowing the right people so that you can get the supply. And to put another massive point, I'd hate to think what the cost is. At this stage, you could say you're right, you go for it as a person, and I understand where you want to be. But you got to say at this stage, think Christ these people through the government, we are on top of it. And you seem to think it's not, and you can have your own company to do so and no one's stopping you.

Thank you for those comments. I'd have to agree. Okay. Yes, we go to online. Do you want me to read that out or?

No, I'll read it.

You'll read it.

Yeah.

Okay.

Apologies here. Given the long tenure of Ernst & Young, when did Channel last tender the external audit? And when are we next intending to tender the audit? The question is from Stephen Mayne.

Yes. Stephen, we did that 6 years ago, and we moved from PwC to EY at that time. Also at that time, we introduced an audit independence policy, and that requires Anna as Chair of the Audit Committee, to tender the audit every 10 years. So that's like 4 years away.

Thank you, Chair. Again, from Stephen Mayne. If one of the larger ASX-listed competitors such as Viva Energy or Ampol launched a takeover bid for Channel, what, if any, barriers would they face besides offering a compelling price? Does the Chair and CEO agree that a foreign takeover of Channel would be unlikely to be supported by the New Zealand government?

Obviously, we can't really speak for the government. But the one thing I have noticed and I interact with the government regularly is the government's understanding of the importance of the Marsden Point site and how strategic it is to the nation has got more and more amplified. That would be an understatement to say.

And I would be extremely confident as regarded as strategic to them. And so -- and they're aware of what happened at Darwin and various things with foreign ownership. So I think it would come to the highest levels in government before anything was to change here. Yes. Have I got anything else?

Thank you, Chair. One more.

Yes. One more, good.

Sorry. Let me go to the floor. No more, Chair. Thank you.

Okay. I'll go to you next to Karl, but there's a chat down there. Yes.

Edmund Stranahan again. You're talking about the Melbourne pipeline. does the Melbourne pipeline run from?

Yes, Rob, do you want to do that?

There's a mobile terminal called Yarraville, and it runs from there to the Summerton depot close to the Zhuhai at Melbourne Airport. Just to speak to that acquisition opportunity, that's the only jet pipeline that serves Melbourne Airport. And if you think about growth drivers for that location, it's Australia's second largest city, but will likely become the largest city, growing strongly. And so seeing so much aviation growth that they've committed to building a third runway at Melbourne Airport. So I think it's important when you do M&A that you're not just buying something to own it, but you actually see a real long-term opportunity, and we see very significant opportunity on that supply chain.

How long is the pipeline?

It's around 34 kilometers.

Is It transporting jet fuel only?

Jet fuel only.

Is it coming from Geelong or from the port?

It comes from Yarraville terminal. It's not coming from Geelong. There is a connection to the Geelong refinery, yes.

In that pipeline?

A separate pipeline.

Which you don't own?

Correct.

It's directed to you, James. Is Fletcher still doing work at the refinery at Marsden Point.

Yes, I know where you're going. No...

Fletchers actually has done, I don't believe any work for us. So no, they have not been a contractor on our site.

So they're not there anymore?

They were never a contractor at our site us over the last -- in the last years, no.

Oh, really.

That's right.

I thought they won the contract to build the bitumen storage facility.

No. The bitumen storage terminal is being built with Higgins as our customer.

Yes. All right, Fletcher.

No. Worley is constructing that terminal.

Worley is building that?

Correct.

Okay. I was just going to ask because James is a Deputy Chairman on Fletcher's Board, which seems to be a conflict of interest.

Yes. So how we handle any conflict, whether it's me or anybody else, most people on the Board will have come from the industry. That's where we get our expertise. And so all directors are expected to disclose their conflicts to the Company Secretary, Chris down there. And if there is a conflict that comes up, he will exclude that director from the meeting when it is discussed, and that includes me, of course, and somebody else would Chair. Yes, you might laugh, but we take this really seriously.

The conflict of interest because Higgins is part of Fletcher or was.

It was is the answer, but yes.

A final question from Stephen Mayne. If Xero and Fletcher Building can voluntarily put up a remuneration report for approval as law requires in Australia, will Channel Infrastructure commit to doing this next year given that you've recently listed on the ASX and many of the Australian shareholders would like to see such a move. New Zealand looks like a governance backwater by rejecting a say on pay. So why don't you show more respect for your shareholders and get with the program by doing a voluntarily.

Thank you for that, Stephen. We intensely respect our shareholders. I would like to just push back on that part. But for the people who don't know, disclosing remuneration is part of agency theory. Stock exchanges or regulators take this very, very seriously, and so do we. I think we've got 8 pages in our annual report just on Rob's remuneration alone, which everything is outlined there in detail.

And so in Australia, and I think it's under the Australian Corporations Act 2001, if you're an Australian company, we're a New Zealand company. And so it's slightly different for us and proudly so. They have a requirement to produce a separate report. It does take a certain amount of administration to do that.

And of course, we try to focus on running a fuel crisis, first and foremost. But -- and that report can be put -- it's put to shareholders, I believe, in Australia and can be voted on whether or not shareholders are happy with remuneration levels with inside the company. I think it was originally driven out of the banking sector, which had excessive bonuses, et cetera. And so we've not had that asked before, just so you're clear.

In New Zealand, we look towards a New Zealand Stock Exchange who has NZX Regco and the Corporate Governance Institute, and they put out submissions on, let's say, how we should disclose on remuneration. The likes of the Shareholders' Association is also very, very active in this space. And when they come back with their views, we adopt them totally. And we regard that as best practice. It's better than us trying to think it up.

As for adopting Australian rules, that may be something that could happen down the track as we became more and more larger in Australia, but I think we're getting well ahead of ourselves at this stage.

Okay. Any other questions? Okay. There seems to be no more questions. And there being no other matters of business, I'd like to thank you for attending in person and virtually today. I'll declare the meeting closed and invite shareholders to join the Board and management for refreshment, and thank you.

Thank you for standing by, and welcome to the Channel Infrastructure FY '25 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Rob Buchanan, Chief Executive Officer. Please go ahead.

Good morning, everyone, and thank you for joining us as we run through our financial and operating results for the 2025 year. I'm joined here today by our Chief Financial Officer, Alexa Preston, and we will speak to the presentation we disclosed on the NZX this morning. As usual, I'll cover off our company highlights and the operational update before Alexa talks to the financials in more detail. I'll then take you through our strategic highlights before we have some time for questions at the end. Let's start with our financial highlights on Page 3.

Excluding the one-off impact of the Wiri lease, EBITDA grew 4%. This reflects CPI escalation and increase in throughput and the benefit of the full year contribution from the transmix contract. Normalized free cash flow increased by 5%, and our free cash flow conversion [indiscernible] increased from 67% to 72%. Today, the Board declared a final dividend of $0.0675 per share. With a continued focus on stable and growing dividends, the Board remains committed to our dividend policy of 70% to 90% of normalized free cash flow, paying this equally between the interim and final dividend.

However, this year, we had higher than anticipated free cash flow, reflecting stronger jets and petrol throughput than anticipated, and we now have good visibility on the finishing line for our jet storage and bitumen projects. As such, the Board decided to declare a dividend higher than we had guided to, recognizing the need to continue to be efficient with shareholders' funds. We've listed the 2025 highlights on Page 4. I'm very proud of every project Channel team has done this year. To say it's been a busy year would be an understatement. We continue to execute, deliver and drive shareholder value year after year.

This is reflected in our 2025 total shareholder return of 63%, which significantly outperformed the NZX 50 over the same period. Our safety track record continues with consistent safety performance. We delivered a strong financial result in line with the guidance we provided at the beginning of last year. Marsden Point reliably delivered over 3.5 billion liters of fuel through our infrastructure. And while throughput was relatively stable as we had anticipated, Q4 was the highest throughput since import terminal operations began and jet fuel, the highest since 2019 despite the New Zealand's well-known aircraft issues.

The Z energy jet storage project is on track to be delivered in Q3 ahead of schedule. The new bitumen import terminal is well underway and expected to be operational in Q4 this year. As we announced in August, we signed another storage contract. This was a contract extension, which adds $50 million of revenue prior to PPI over the extended 9-year contract period. We'll start seeing the benefit of this from Q1 2028.

In November, we made our first steps into the Australian market with the acquisition of a strategic position in Melbournes jet fuel supply chain. Reflecting our confidence in the Marsden Point Energy Precinct, we've committed to and started the process of relocating the control room and construction of the new administration work. This will not only support the energy precinct redevelopment plans, but is important for improving the safety and environment our people work in every day.

We updated our capital allocation framework and importantly increased our dividend payout ratio. We listed on the ASX, which is a real milestone for our company, reflecting how far we've come and the growth opportunities ahead of us. Lastly, but definitely not least, we've been progressing growth and development opportunities, and I'll come back to this later in the presentation.

Moving to Page 5. Starting with safety. There are no Tier 1 or Tier 2 process safety incidents and three recordable cases through the year. Looking at asset availability chart at the bottom of the page, our pipeline and tank availability remain at world-class levels, which is something we're very proud of. As you can see, the number of ships in our [indiscernible] continues to fall. Our customers are bringing in larger ships utilizing the contracted storage on our site and the supply chain benefits our high throughput facility offers. These ships are carrying more product on average, so revenue received continues to remain steady.

Moving to Page 6. Jet throughput was relatively flat, in line with our expectations at the beginning of the year. In New Zealand aircraft challenges are still anticipated to continue for some months. However, we saw Q4 jet throughput the highest since Q1 2019 despite many of the new New Zealand plants being on the ground. This chart excludes the volumes going through the Somerton Pipeline that we recently acquired. But it's worth pointing out that Melbourne Airport, which get it's significant amount of its fuel through Somerton Pipeline is undergoing significant growth. The third runway is being built and will be operational in the early 2030s. And in December last year, we saw the largest number of passengers on record going through Melbourne Airport.

Moving to Page 7. Diesel remained stable year-on-year as forecast by advisory. Petrol was slightly ahead of the advisory forecast. In part, we believe this is because our customers are taking advantage of the supply chain efficiencies offered by our highed throughput at Marsden Point site, along with the payoff of our world-class work, which is helping create efficiencies for our customer supply chains and boosting our resiliency as an operator. And now I'll hand over to Alexa to take you through the financials.

Thanks Rob. Looking at the P&L on Page 9. We have delivered yet another solid result in line with our guidance reporting EBITDA of $93.4 million and an EBITDA margin of 67%. The pro forma table at the bottom of this slide shows our results adjusted for the impact of the expiry of the legacy Wiri lease. Excluding this, we have delivered EBITDA growth of 4%. The higher depreciation charge reflects the revaluation of the import terminal system assets in 2024 and the capitalization of a number of new assets this year. Lower financing costs for the half reflect the benefit of interest rate hedging and the successful refinancing in November 2024, which lowered the all-in cost of drawn facilities by 0.6%.

Moving to Page 10. Overall, revenue for the period was broadly flat. We saw the contracted $5 million nominal step down in the annual fixed terminal fee from 1 April 2025 and the impact from the expiry of the legacy Wiri Lease, which ended at the end of February. These were offset by CPI indexation and a full year contribution from the transmix contract. Revenue for the year also includes one-off earnings of around $700,000 and a noncash investment property revaluation of $200,000.

Turning to operating costs on Page 11. Channel continues to exercise operating cost discipline, delivering flat underlying costs for the year. However, we have an ambitious growth strategy and some investment is needed in order to execute growth opportunities and grow the value of the business. In 2025, we incurred $1 million of costs associated with our Foreign Exempt ASX listing and $1.5 million of costs relating to the pursuit of growth, which included the successful acquisition of a 25% interest in the Somerton jet fuel pipeline to Melbourne Airport. Going forward, we will incorporate the revenue and operating costs associated with our share of the Somerton pipeline in the relevant lines in our P&L.

Page 12 provides the detail of our investment in resilience and growth. I just wanted to take a moment to talk to the photo on this slide. Earlier this month, the Z Energy jet storage tank achieved a significant milestone with the geodesic dome roof being constructed inside the tank and then lifted up on top of it. The tank is now fully enclosed and [ hydro ] testing has been completed with other compliance checks scheduled over the coming months, [ with ] anticipated early commissioning in Q3 this year.

Maintenance CapEx for the period was $12.3 million and growth CapEx was $27.1 million. The growth CapEx program for the year included completion of the private storage fund program, ongoing work on the Z Energy jet tank conversion and the initial construction works related to the Higgins bitumen and terminal. Conversion CapEx includes the last remaining work stream in the overall program being the bunding upgrades, which will be completed over the period to 31 December 2027.

Turning to the cash flow on Page 13. Net debt as at 31 December closed at $330 million. Normalized free cash flow was $66.9 million and free cash flow conversion was 72%, up from 67% last year. The Board declared a final dividend of $0.0675 per share. As Rob spoke to earlier, we aim to split our dividends equally between interim and final dividends. However, this year, we had higher-than-anticipated free cash flow. As such, the Board determined to declare a dividend higher than guidance and return the surplus to shareholders.

Page 14 shows our strong balance sheet position. Leverage sits at 3.6x net debt to EBITDA, up from the prior year, reflecting the acquisition of the Somerton jet fuel pipeline. Gearing and interest cover ratios remain well inside our covenant levels. We have no debt due for refinancing this year following a 1-year extension to our banking facilities in 2025.

Let me finish up with the outlook for FY '26 on Page 15. We are expecting EBITDA of between $95 million to $100 million. This reflects the early completion of the Z Energy jet storage project and the bitumen import terminal being ready for service in late 2026. The producer price index applicable to 2026 is 3.25% and approximately 95% of Channel's revenues are indexed by this factor in 2026. Whilst positive signs of growth emerged in jet fuel throughput in Q4 last year, Auckland Airport continued to anticipate only modest passenger growth, some of which is likely to be absorbed by available seat capacity on existing flights.

In addition, Air New Zealand has outlined disruption it is expecting from its aircraft availability issues. And as a result, channel anticipates modest jet fuel growth of 2% from 2026. Lastly, it's worth noting that only $23 million of the conversion budget remains to be spent, spread evenly across 2026 and 2027. I'll now hand back to Rob to give an update on progress towards the delivery of our strategy.

Thanks, Alexa. Moving to Page 17. We've talked for some time about our ambition to become a world-class operator. The reason why we've relentlessly pursued this work is to demonstrate our operating capability, current and new customers who are generally global organizations that expect outstanding operational performance. Ultimately, our expectation is that this will help us to unlock growth opportunities that attract product flow to Marsden Point. We're already seeing the benefits of this work, not only through our fuel volumes, but the wider growth we've already unlocked.

I wanted to give you an update on the significant progress we have made towards our world-class ambition. We are a significant way through this piece of work. On the infrastructure and performance front, we've taken a number of steps to improve the reliability and resilience of the import terminal system for our customers and for New Zealand. This helps entrench Marsden Point as a key import location, an integral part of our customers' supply chain. In terms of systems and processes, we've made it easier and cheaper for our customers coming to Marsden Point by, for example, seeking to reduce ship alongside time at AG.

And in people and capabilities, which is critical to the successful operation of the high hazard facility, we've seen a significant increase in overall staff engagement over the past few years. Through building organizational culture, we're seeking to drive improved safety, operational and efficiency outcomes as well as align our people with our company strategy and delivery for shareholders.

Page 18 is the strategy that we announced back in October 2023. As I just mentioned, we have made great progress on becoming the infrastructure partner of choice for our customers and demonstrate strong financial discipline while being a good neighbor and good citizen. This is now positioning us well to drive harder on the middle pillar of the strategy, which is growth.

I won't spend much time on Page 19 as you've seen on Slide 4 of the August results, but this is a reminder that we are very focused on our growth ambitions and disciplined with how we allocate shareholders' capital. Our first priority is near-term opportunities identified for additional product storage and fuel and energy security projects at Marsden Point. Beyond Marsden Point and the Auckland supply chain, we're taking a measured approach to incremental growth, and you saw this action with the acquisition of a 25% share of the Somerton pipeline.

Moving to Page 20. The purpose of this slide is to demonstrate our proven track record of delivering growth and large projects safely, on budget and on time. The conversion project, which is a significant 6-year project with a budget of $220 million remains on track and will be completed by 31 December 2027. On top of this, we've executed an impressive 4 new growth projects over the past 2 years. This will deliver an additional $170 million before PPI indexation and incremental revenue over 15 years. And we completed our first measure step last year in Australia.

Moving to Page 21. We announced to the market our Marsden Point Energy Precinct concept back in October 2024, which was the framework for how we saw a wider use of our sites in the way we want to maximize the significant opportunities of our highly strategic and unique assets. This plan is never going to be static with market opportunity evolving, and we always knew that the final shape of our precinct would change over time. Therefore, it's no surprise there have been a few updates to this image, which I wanted to draw your attention to today.

All of you will have noted the New Zealand government's announcement regarding LNG procurement and a preference for a facility based in Taranaki. We've been clear for some time that LNG was unlikely to be the best option for Marsden Point, although we remain open to considering viable projects should the market [ heading. ] From our perspective, we see better uses for our site than LNG and therefore, removed it from the plan. We have now completed the conversion works for increased jet fuel storage amounting to a total of 120 million litres capacity in the new jet compound, which supports the energy resilience in New Zealand by enabling our customers to increase the size of the ships they bring to New Zealand and the amount of fuel held here.

You will note that the jet compound is now in blue with only 2 tanks left to contract, and we continue to see opportunities for these assets with projected growth [indiscernible] in the long term. We've previously spoken to a potential eSAF plant at the Marsden Point site. With the time lines for this project now looking longer, we are now supporting several new scoping studies by international parties considering further biofuels opportunity as well as hydrogen production and export location.

Lastly, the more contested geopolitical environment we live in means energy security is becoming more and more relevant. As New Zealand's Prime Minister has said, energy security is national security. While we previously thought the use cases for our largest oil crude tanks would be limited, we have reconsidered this assumption in light of changing potential customer interest. I do want to stress, however, that any opportunities for these large tanks are long dated.

Looking at our potential projects for the Marsden Point site. Marsden Point biorefinery project is progressing well. New Zealand has now joined the consortium enhancing the project's offtake profile. This project would make the jet supply of renewable fuel more accessible for New Zealand and domestic fuel manufacturing capacity using domestic feedstock would also further enhance New Zealand's fuel security. Engineering work has progressed and the final form of the feedstock supply and key product offtake agreements have now been procured.

A select group of lenders have been shortlisted to participate in formal debt process and a preliminary information memorandum has been developed and when finalized will be issued to financiers. Channel continues to support the consortium and progressing the project in its capacity as a landlord and ancillary infrastructure provider. We continue to anticipate a final investment decision by the consortium later this year. Channel has completed a FEED for the 72-megawatt powered electricity peaking plant with the cost borne by two electricity market participants.

Electricity market participants with whom we have engaged so far see this project as a useful resilience asset for firming renewables. Channel's project will be relatively fast to construct and benefits from significant fuel reserves already stored on Channel's Marsden Point site, providing for near immediate start as required. Channel was in advanced discussions with several parties regarding a long-term capacity contract to underwrite the development costs of the project to be funded by Channel. Following the New Zealand government's announcement that is considering proposals relating to a potential LNG import facility, development of the project has been paused, pending the outcome of the government's work on the facility.

This decision to pause development reflects Channel's disciplined approach to developments and prioritizing growth spend. In November, we acquired a 25% share in the Somerton jet fuel pipeline. We went through all the details at the time of the acquisition, but just to remind you, we talked about this asset not only being attractive on a stand-alone basis, but also the significant growth opportunities we see in the jet supply chain. One of these is a significant major capacity in the Somerton pipeline that is constrained from use by downstream pipeline capacity.

Parties to the JV have several options for debottlenecking, which are currently being considered. These opportunities will take time to unlock. Pleasingly, we are already seeing throughput for the pipeline late last year exceed our base case assumptions. Melbourne Airport had a record total number of passengers in December and a record number of international passengers in January. Just this week, the airport announced $4.5 billion of investment to expand its international terminal to complement the third runway, which will be complete in the early 2030s.

Slide 24 is our investor scorecard, which you're all familiar with by now. We set ourselves ambitious targets every year. During 2025, we had one lost time injury, which was a minor back strain. We didn't quite achieve our ambition with regard to our customer assessments, reflecting that our customers have demanding expectations. But I'm confident that our world-class work will see us meet this year's target.

However, all of our other targets were met, reflecting the number of achievements we've discussed in this presentation. Another outstanding year for Channel and I'm incredibly proud of what our team has delivered. And with that, I'd like to open the phone line for any questions you may have.

[Operator Instructions] The first question today comes from Andrew Harvey-Green from Forsyth Barr.

Rob and Alexa good to see delivery continues. A couple of questions for me. First one, just around the dividend and I guess, the comments that the increase related to the fact there was better cash generation than anticipated. Should we consider there is an element of a special dividend in there? Or are we setting a new benchmark for the dividend going forward?

You've seen our Board before pay special dividends and the choice to make this an ordinary dividend was intentional.

Okay. I think that's pretty clear. Second, a couple of questions just around, I guess, the biorefinery, and that looks like that's going ahead, should I say, progress has been pretty positive. I'm just trying to get a sense over the last sort of 6 months or so relative to your expectations, has there been any slippage in the timetable? Or is pretty much everything continued to progress on track?

Look, I think from my perspective, broadly, it's on track. I think this is a big year for that project around an FID decision, and there's still a lot of work to do to get to that point. but we're happy with how the project has been progressing. And I think one more thing to say, obviously, you'll have noticed that we paused work on the [indiscernible] we're pretty rust about applying our resource to projects that we think are viable. And so that's why we are continuing to see that as a good opportunity for us.

Yes. Okay. Good. And the second question I just had related around that was, I guess, in terms of the information that you've provided to the market, I think October '24, you gave a little bit of a sense of what the revenues, et cetera, could be. Are you able to sort of give any update given how things have progressed since then, sort of the upsides and I guess, the revenue streams that we can expect if the biorefinery goes ahead?

So Andrew, there's been no change to the update we made in October and that update just for those on the call was lease revenue of between $6 million and $7 million for the site biorefinery will occupy. And then we indicated that any avoided demolition costs as a result of the transaction would need to be in incremental storage. So our role will continue to be as landlord ancillary infrastructure provider. We've got an established pattern of how we price storage assets. And so as I said, no change to that guidance, but those are the indications that we've articulated today.

Okay. And just the last question, I guess, which I think you kind of alluded to a little bit, but the -- I guess, the government's security of supply storage requirements, are you able to give us sort of any update on that and your current thinking on that?

So it's a question in relation to the minimum stockholding obligations, Andrew?

Yes, that's right. Yes, that's right.

Yes. Look, when we've got an update, we'll give it. I think we're still engaging with customers around opportunities to convert those tanks. I will note every time I get asked this question, I talked about the fact that we see as much, if not more opportunity for commercially driven storage contracts that we do for government ones, and we continue to have some of our commercially driven ones. And so there's plenty of those discussions on.

The next question comes from Nevill Gluyas from Jarden.

Very good. I pushed the mute button. A couple for me as well. Just a question with Air New Zealand sort of joining the Seadra consortium, does that change any way the timetable it does bring forward? Or I have in my mind that I should think about this as sort of a late calendar 2026 decision. Should I keep that in mind?

Yes. I don't think any change to the timetable driven by that. I think it just demonstrates kind of building momentum for that project.

Yes. That's useful. And obviously, a bit of discussion already about the OpEx in FY '25, which obviously includes some of those one-off items. What are you guiding for OpEx this year? What commentary can you add? And I guess to add to sort of the two one-offs you noted last year, there's also a question of what kind of level of Seadra-related OpEx was built in '25 and how much we might expect in '26 or whether perhaps that's been capitalized instead. Can you offer us any thoughts there?

Thanks Nevill. So our guidance statements are pretty clear, but I'll give a little bit more color around what you've just discussed. Effectively, the biggest impact on the outturn for FY '26 will be this growth spend category. And so optically, whilst the guidance range is in line with what the market is expecting, we don't normalize out any growth investment from that number. And so that's embedded in that range. You've seen the sort of spend levels that we are undertaking each year in growth. Those are just flowed through our OpEx lines, and we can highlight transparency.

FY '25 number was higher because ASX listing fees are significant. But the baseline level is around that $1.4 million to $1.5 million for the last couple of years. As we move forward, I think you can expect us to continue to exercise discipline around our costs. It's quite challenging to deliver an underlying cost outturn that's flat, and we are with the prioritization of our spend. The costs are all expensed. And then obviously, we signaled that some of that one-off growth spend for FY '25 related to the acquisition, you'll be aware of due diligence costs will flow through that line.

Okay. That's helpful. And I guess the sense I'm taking part of your answer there is that while we might identify some of these one-off items, Seadra, for example, or Somerton JV, there's an element of the sort of continued growth focus you've got that means that you will have outlays for other projects that we may not know the names of yet.

That's right.

Yes. Good. Okay. That's useful. And the last one for me, and there's sort of a brief allusion to it in the pack is about the Somerton JV sort of debottlenecking options. And can you give us just a rough idea of timing? Could we think some of those options might come in front of your desk sort of in the course of this calendar year? Or when you sort of talk about long dated, should we be thinking about options that might be coming across for you to consider next year or later?

I think the thing to do here is to work backwards from what the demand will be for at Melbourne Airport. And so we've got a new runway, which is scheduled to be going around 2031 and the airport had announced, I think, yesterday with aim for around $4.5 billion worth of [indiscernible] particularly around reconfiguring their international terminal and other enabling infrastructure to support what they expect to be quite strong growth. And so that's the sort of back end around what the jet fuel supply chain needs to deliver.

I think one of the things that I'm not sure has been picked up is there are actually multiple opportunities for debottlenecking, which have pros and cons and different costs and benefits. And so there's a bit to do to work through all of that and in particular, obviously, the complexity of the JV structure where different parties have different views. So I think the headline I give you is we've owned the asset for about 13 weeks. And be assured that we are working on these things, but I think it's going to give us time to be ourselves with the other parties and work through [indiscernible].

[Operator Instructions] The next question comes from Cameron McDonald from E&P.

Two questions from me. One sort of detailed one for you, Alexa. Just the tax rate for the -- and how we should be thinking about that given the first half tax rate looked to be sort of 28.8%, same as last year, but the full year result ended up in excess of 34%. So there was a big step-up in that second half. What drove that? And how do we think about that going forward?

I think the key thing to remember with our tax is we're not a cash taxpayer at present. And so these are all accounting metrics. The variance really is around some adjustments to do with taxes from previous year, so washups of various findings from our internal reviews and other matters. We did have the a binding ruling for our tax losses, which involves factual review from the inland revenue department, which can drive some of that variability as well.

Okay. So we shouldn't be thinking that, that $34 million is an ongoing. That's just one-off.

Yes. That's right.

Okay. Excellent. And Rob, can I just delve into -- I'm always interested in incentives and LTIs, et cetera. And it's been an announcement today that you've been granted some additional shares with some hurdles that relate to the successful execution of the Marsden Point Energy Precinct designated projects. Can we just get some clarity about what the designated projects actually include and then what the targeted -- and then they've also made a comment about the M&A sort of opportunities and activity as well. So interested in what makes the definition of designated, please?

I think there's quite a bit of detail in that in the annual report. So I encourage you to just spend a bit of time going through that what I'd say at a high level is given the thresholds and hurdles are pretty challenging, and we're talking about some pretty significant projects and opportunities, some of which we've talked about today.

[Operator Instructions] At this time, we're showing no further questions. I'll hand the conference back to Rob for any closing remarks.

Thanks, everybody. I really appreciate you all dialing in and the interest you show in our company, and we look forward to catching up with you as we further engage with investors over the next couple of weeks.