Auckland International Airport Limited (AIA) Earnings Call Transcript & Summary

Good morning, and welcome to today's 2023 Annual Meeting. I'm Patrick Strange, Auckland Airport's Chair. With us today are my fellow directors, Julia Hoare, Tania Simpson, Christine Spring, Mark Cairns and Dean Hamilton, along with our CEO, Carrie Hurihanganui. Director, Mark Binns, most of you know well, is unable to be with us today, and he sends his apologies. Julia is standing for re-election and will address the meeting a little later. Also today, we have our General Counsel, Ian Beaumont; our CFO, Phil Neutze, and other members of the senior team, also our auditors from Deloitte who are in the front here. Thank you. We have a quorum of shareholders so I declare the meeting open. First, a few house rules. In the very unlikely event of a fire or the fire alarm sounds, please follow staff directions towards the nearest exit and continue to the assembly point outside on Reimer's Avenue. Toilets are in the pre-function area at the back where you entered the room. And finally, Eden Park is a no-smoking venue. And if you could all just put your cell phones on silent, including the directors, that would be great. If you do need to smoke, you can do so in the car park outside. When later, shareholders get a chance to speak, please give your name when speaking to the resolutions and to confirm whether you are a shareholder or a proxy holder. As usual, during question time, roving microphones will be available to ensure that your comments or questions are conveyed to everyone present here and those online. So please wait for the microphone prior to asking your question. Those of our shareholders participating online will have the ability to ask questions and vote through the virtual meeting platform, a member of our legal team will read those questions out at the appropriate time of the meeting. So everybody attending the meeting can also hear them. If you require any assistance online, refer to the virtual meeting online portal guide or call the helpline which is specified. And just a note, we may get similar questions online, so we may amalgamate the questions with very similar nature. If at the end of the meeting, you don't feel your question was addressed or you'd like to discuss it more, please contact us via the investor page on our website. And those in attendance, of course, hang around for a coffee and everything and bug our executive management team, they usually know a lot more than the Board. All of the resolutions put to shareholders today will be decided by way of a poll. The polls will be administered by our share registry, and the results will be announced by both stock exchanges some time today after the close of the meeting. Now the meeting order. The notice of meeting was sent to shareholders on the 18th of September and to the auditors, and it was also posted on our website. The financial statements for the year ending 30th of June 2023 and the audit report are included in the annual report, which is available online. And I think there are some hard copies out the back. Representatives of Deloitte are available to answer any queries that might relate to audit matters. Now following my address, Carrie will provide a review of the year, after which we will consider the motions and then receive questions. Now first, an apology really to those in attendance here at Eden Park today. Last year, I stated my ambition to hold the next meeting at the airport, if possible. We did try, but the logistics just particularly with all the construction going on proved too difficult, particularly making it easy for you, our shareholders, to get there. So it remains an ambition that we might have to wait a few years. Now looking at the last year. We moved 15.9 million passengers through Auckland Airport terminals. That was up 184% on the year before. Though still short of the 21 million we achieved in 2019, the last pre-COVID year. And this lift in passengers is reflected in our financial performance. Some key numbers for the 12 months to the 30th of June, our revenue was up 108% to $626 million. Operating EBITDAFI was up 175% to $397 million. Reported profit after tax was down 77% to $43.2 million, but that's due principally to non-cash asset revaluations, which, of course, fall as interest rates go up. Similarly, earnings per share were down 78% to $0.029. If you remove those one-offs, we recorded a net underlying profit after tax of $148 million and an underlying net profit per share of $0.101. We also paid our first dividend in 3-years. And that dividend was based on the second half earnings, not the full year, consistent with our understanding with our lenders, the banks. And we introduced our dividend reinvestment plan for the dividend. And we're really pleased to see shareholders representing almost exactly 1/3 of our shares participate, which was very high for the first time through. Now Aviation. Coming out of COVID, there was worldwide uncertainty as to the speed of passenger recovery. And initially, there was a very strong bounce. I think people call it revenge travel as people made up for deferred travel. But pleasingly, demand has just continued to grow strongly since that has passed through. By June 2023, passenger numbers through your airport, were running at 88% of the numbers we recorded in June 2019, the key pre-pandemic reference month. Domestic passengers saw a near doubling, 90% to 8.1 million passengers in the last financial year. However, it was the volume of the international passengers that really moved our needle. Numbers are up more than 4x to 7.2 million. This is despite international airlines and Air New Zealand here being limited by a global shortage of aircraft and crew and some very high fares on many of our key routes. We still have some catching up to do, but in big picture terms, we are really pleased with that passenger trajectory and can feel optimistic about continued growth. Just to note, we do have to work really hard to encourage international airlines to fly here because they're sitting looking at many options for those scarce planes. And they look for where they're going to get lots of passengers and where they're going to make good margins. And the company's success in getting some really key international operators to choose Auckland is really pleasing, and it's great for New Zealand Inc. and for our economy and Carrie will cover this in more detail. Longer term, forecasting is less sure but the common consensus worldwide of the experts is an international travel to places like New Zealand will continue to grow. And really, the industry's success in addressing the greenhouse gas issue is one factor on how strong that growth will be somewhat lesser versus somewhat greater. Now with the return of travel, comes a responsibility of looking after our customers. And we'd like to acknowledge that the year threw challenges at us and that this impacted travelers, including probably some of you's airport experience. First up, global aviation staffing shortages and some pretty nasty Northern Hemisphere weather saw lots of passengers arriving last year around at Auckland without their bags over the summer, which is a real problem. Then close on that, we had the historic floods which closed our international terminal for 37-hours. And then as you'll be aware, more recently, we've had unacceptable delays clearing international passengers at peak times of the day and as someone who comes back from Australia, occasionally that peak time, 1 of the big peak times is between 1 a.m. and 3 a.m. in the morning, which might surprise you. And we certainly apologize to travelers who have been affected. The job of bringing passengers across the board is critically important, and it really requires a smooth running of a whole ecosystem, which the teamwork between all the players, the airlines, the ground handlers, customs, biosecurity in New Zealand and Auckland Airport. Carrie will discuss it in more detail, but I'd really like to thank her and her team, particularly those on the front line for the around-the-clock efforts in recent weeks. And I know Carrie personally has been in that whole sort of experiencing into the dark hours of the night, et cetera, which is setting a great example for everybody. While some operational challenges do remain, clear improvements have been made, meaning a better experience for travelers. And this will continue as we look forward to our summer peak or Northern Winter as aviation [ goes ]. And last on that issue, look, thanks to our customers who have been really generous in their understanding but it's not the way we or the airlines or the government border agencies like to do things at Auckland Airport. So it's getting massive attention to fix it. Now talking about the future. With the return of international routes and services and growing passenger volumes, we are really focused on our strategy of building a better future and serving the New Zealand community as best as we possibly can. And we are our country's principal and easily the largest gateway and we, the airport have a responsibility to make the right long-term investment decisions, so we can deliver the critical assets needed to support travel, trade and the well-being of our wider economy. So I'm really pleased to be able to say that we are underway with our most important journey year, which is delivering a major infrastructure development program, which will bring greater resilience and sustainability to the airport for the next generations. It is a prudent investor that will uplift the traveler experience for everyone, ensure a better service to our airline partners and most importantly, avoid capacity constraint in New Zealand's key gateway while protecting the value of your asset as our shareholders. That development centered around the replacement of the aging, which is probably a kind word, domestic terminal with a new terminal integrated with the existing international terminal. That development is totally consistent with our long-term development plan agreed over a long time and fully agreed with the airports pre-COVID. Unfortunately, COVID cost us several years. And post COVID in infrastructure worldwide, there's been a step change in infrastructure costs. You see it everywhere, to which we are not immune. And principally due to the increased cost, Air New Zealand and the Board of Airline Representatives, ultimately decided not to back the plan for a new domestic terminal. But our current plans are clearly the best alternative and delaying or doing nothing is simply not an option, and nobody has put up an alternative. We acknowledge that transforming the infrastructure will be not easy amid a very busy working airport, and it won't be cheap. So we'll continue to listen and engage -- listen to and engage with the key stakeholders, including our customers, but it's a challenge we, your Board and management will not shy away from. I think Auckland and New Zealand have had enough of deferred infrastructure. And if it weren't for the pandemic, that build would already have been well advanced with some opening dates starting that we talked about. Any further delays just add to the cost for future generations and make it harder to build. And you can be assured that we are taking all efforts to redevelop in the most capital-efficient way we can and with the least impact on traveler experience. And I'm going to say the team is doing really well. Now that feeds through to aeronautical pricing and new pricing took effect on the 1st of July of this year after extensive consultation with the airlines. And after we had a 12-month freeze post COVID to help the airlines get going after the pandemic. Now in Aviation jargon, that's called Pricing Setting Event 4 or PSE4 if you want [indiscernible]. An enterprise to fiscal year '23 to '27, during which we are building some north of $3 billion worth of regulated capital assets. The increased capital plus the increase in global interest rates, which do have a strong impact when they go up, our prices go up, when they go down, our prices go down. They see our domestic charge, which is per passenger rise by $3.50 from a low base of under $7 to about $10.25 over the 2024 year. By 2027, they will be at a very similar level to the current charges at Wellington and Christchurch. And those new charges are being reviewed at the moment as normal by the Commerce Commission to make sure we followed the rules, which is scrutiny, we welcome. There will be further changes in the next pricing period from 2028 is that new capital is commissioned and it's probably going to be a further increase, but the volume of the increase, I mean, it's impossible to forecast now because it's also dependent on what the interest rates go around and what [indiscernible] are doing by then. And if anybody has got the answer to that, please come and tell me afterwards. And also any changes that comes through in the Commerce Commission methodology. They are -- the commission is undertaking a periodic review of this methodology called the input methodologies. And they did publish a prelim paper earlier this year. We and all the other airports and all their expert advisers very strongly disagreed with certain elements of their prelim paper and very strong and consistent submissions were made to the Commerce Commission to point out areas of concern, and we would say faulty logic in their prelim work. Not those setting methodologies are necessarily very technical, but the impacts of getting them wrong is very real. And we would hope and believe there will be significant changes before they are finalized. Now the airport's focus is providing a very safe, secure gateway for New Zealand, but the company's activities, as you know, as shareholders, are much wider than that. And now building a better future strategy seeks to expand a thriving aviation precinct of travel, hospitality, business, retail and trade alongside the critical aviation infrastructure. And we've made good progress over the last year. We already have over 250 businesses operating across our wider precinct and that is set to grow. The retail business is recovering strongly as passengers return. And we have importantly transitioned to having only a single duty-free operator rather than the 2 competing ones, which makes better use of space and, frankly, a much better experience for our travelers. Our 2 hotels owned with our joint venture partner, Tainui, have performed extremely strongly over the last year. And our new hotel, Pullman, just right next to the Novotel there is on target to open in just a few weeks. Our Business Park and Mark Thompson and his team The Landing has had another great year with new facilities for Kerry Logistics and Healthcare logistics completed and two more new facilities where we can -- at least will be completed over the current financial year. And as Carrie will share with us that team has made huge progress on the construction and leasing of the new fashion-led retail destination Manawa Bay, and also the $300 million transport hub at the front of the -- right at the front door of the international and what will be the new domestic terminal is well down the track and will open up next year. Now just -- talk about safety for a moment. With so much construction underway and a lot of new faces around the precinct post COVID. Safety is a huge focus for us. Up to 20,000 workers come to work at the airport precinct each day, and we are really focused on ensuring their safety. We've actually recently established a completely new executive leadership position, Chief of Safety and Risk Officer to bring even more focus to that, particularly through the heavy construction period ahead. But that focus starts at the -- start at the Board level and particularly our senior leaders who regularly get out across the precinct with the sole purpose of getting personal insights into safety, be it at a retailer or a subcontractor, see how different teams are managing health and safety as well. It's getting a fresh eye on work sites. And this, alongside with sustained diligence and hard work of our teams has seen reduced employee and contractor injury rates and some really good safety enhancements across our precinct. But we're not satisfied. We've got ways to go. The other big push is sustainability goals. And as we invest with the future, sustainability is at the front of our mind. And our new investments will help us close in on our climate change goals and create a more sustainable airport. We're targeting a 90% reduction in Scope 1 and 2 emissions from 2019 baseline to achieve Net Zero carbon emissions by 2030. And we've already moved the needle in fiscal year '23, we had a 27% reduction against the 2019 baseline. And we've got a bold program of work to deliver the rest, and Carrie will talk some more on that. But wrapping up, it's been a big year. I'd like to thank our 580-strong team of employees, ably led by Carrie and her management team. They have risen to the challenge of caring for our customers, a flood event and recovery, numerous projects around the airport, to build the better future. And I think they've done extremely well under a lot of pressure. I'd also like to thank my fellow directors and our investors for sharing our vision of the possibilities at the airport and for your support. Now one note, as most of you will be aware, Phil, our Chief Financial Officer, will be moving on to a new challenge at the end of the year after 14 great years, a long time, Phil, at the Airport. And we thank him for all he has done and wish him really the best for the future. And lastly, thank you, our shareholders, for your continued loyalty, particularly through some pretty difficult COVID years with no dividends, I know. Look, better times are ahead -- and I think it's hard to conceive of a more exciting and critical period for Auckland Airport. So thank you, and I'll hand over to Carrie.

Well, thank you, Patrick. [Foreign Language]. It is a pleasure to report back to you on a year in which we saw a vibrant return of activity to Auckland Airport. We've loved seeing the multitudes of returning families and friends, sports teams, holiday makers and business travelers to the airport. Now hybrid combinations of these travel groups are also flourishing such as the new found drives of the bleisure traveler, those clever people who seek to combine business and leisure travel together. Now after the ups and downs of the 2022 financial year, we had been forecasting conservatively for the return of travel over the 2023 year. So we've been very pleased indeed to see domestic travel and international routes and services rebound more strongly than anyone had anticipated. Now overall, by year's end in June, international seat capacity have recovered to 90% of pre-pandemic levels and domestic recovered to 89%. Now the return of passenger flights also restored international freight capacity to 95% of pre-pandemic levels. Now as Patrick has already pointed out, I'd also like to acknowledge that the journey back to operating at full capacity has not always been smooth. And on behalf of the management team, I too would like to thank travelers and you for your patience. I can assure you, however, that bringing a better experience to customers is our absolute priority to ensure less stressful and more enjoyable journey for travelers. And I'd like to take a minute just to give a little more context here. Most of the recent challenges have been experienced in the international arrivals area. Now that's a system that is made up of airport, airlines, the airlines ground handlers and government agencies, customs and biosecurity New Zealand. Now it takes teamwork and cooperation to get the system working efficiently. And we've experienced more bumps certainly than we would have liked in recent times. Patrick mentioned, global staff shortages and aviation continued to impact the smooth running of airline services and organizations are experiencing issues with the recruitment and training of employees. To our own part of that system. We also have construction taking place in the arrivals hall, and we know that, that constrains the space efficiency in the short term. Now we've pulled out all the stops alongside our airport partners to deliver improvements through a range of initiatives, and I am pleased to say that we've made great gains over the past month, while ensuring the integrity of those very important border processes. Now we've increased our frontline customer experienced staff by 103% with over 30 new staff in the last 6-months. Staffing in these roles is now 41% higher than it was in 2019. During the summer period, we'll be bringing in an additional 45 holiday hosts to help with that peak period. We now have separate lanes for Australian and New Zealand passport holders at MPI and we are supporting the ground handlers to more efficiently use the baggage system for a faster return of checked bags to travelers. Now I can assure you that we will keep working on this until we get it right for our customers. These disappointing system issues alongside soaring passenger numbers, however, do underscore the need for the long-term improvement projects we now have underway across nearly every aspect of airport infrastructure and operations. Now globally, airports and airlines have rebuilt their workforces. New routes are coming on stream. Aircraft load factors are high, and we are looking at a busy summer period ahead. In the 2023 financial year, we had 25 airlines flying to 40 destinations to and from Auckland Airport. On both counts, this is nearly a doubling from the toughest days of the pandemic where we had 12 airlines, servicing just 21 destinations. Now the North-American routes have been a standout feature of this recovery. Air New Zealand now flies into seven North-American cities, including its flagship New York service. And this is a leap forward for aviation that actually was not imaginable, sorry, before the new generation of planes. Yet, it's not just about the big apple. The addition of direct routes from Auckland to Chicago and Houston too have brought Middle America closer to the average Kiwi. Now in June this year, Qantas joined the New York route, building strongly on the momentum as Hawaiian Airlines, Air Canada, United Airlines and American Airlines reconnected into Auckland with Delta Airlines to follow later this month. Now we're forecasting a 29% increase in flight capacity over the November 2023 to March 2024 compared to the same period prior to the pandemic. There is now a promising recovery on routes to and from China also after a slower start due to the protracted COVID response. Now this is a key trade in tourist market for New Zealand and Auckland Airport now has 27 flights per week operated by 5 airlines to 4 cities in Mainland China. Overall, capacity between China and Auckland had recovered to 78% of 2019 levels by the financial year's end. And in September, this has jumped up to around 93% of pre-pandemic capacity. And by the end of December, it will be 103% with the recently announced Auckland-Hangzhou Services which really highlights the velocity of this come back over the last year. Now here in our own backyard, trans-Tasman connectivity is back to 91% of pre-pandemic capacity. Veterans on the route, Air New Zealand, Qantas and Jetstar have been joined by Air Asia X, flying between Auckland and Sydney with Batik Air starting on the Auckland-Perth route in August 2023. And finally, we also welcomed Jetstar starting a new daily service between Auckland and Brisbane. So overall a healthy and growing picture for supply and demand for aviation and the winners in all of us are all of us. Intrepid New Zealanders with a hunger to see the world and offshore visitors with the desire to see our amazing country. Now alongside the return of airlines, we are investing in the airport's long-term future, as mentioned by Patrick. As New Zealand's international gateway, we need to build in greater capacity and resilience, so we can enable our country's prosperity rather than hold it back. Our commitment to new infrastructure lies across 3 key areas: our terminals, our transport hub and on our airfield. We're not hiding from the fact that our 57-year-old domestic terminal is reaching capacity by the end of this decade or actually right now, travelers will demand a lot more than the experience it currently offers. While airlines also have much to gain by this investment from capacity growth to sustainability outcomes and more resilient infrastructure. Now when it opens in 2028, '29, the new domestic terminal will improve the customer experience. It will have things like built-in facilities for self-service check-in, shorter queuing times driven by the 44% more capacity per passenger processing per hour and a 5-minute indoor walk between domestic and international terminals. And I get a lot of feedback on the green line in the rain, hail and shine that currently is the experience. Now we'll also build necessary resilience into our air field with a 26% uplift in domestic seat capacity by providing additional gates to cater for larger jet aircraft. It will actually be the first time since 1977 that domestic travel and international travel will be together under the same roof at Auckland Airport. We're also well down on track constructing a new $300 million transport hub at the front door of what will be the new integrated international terminal. This will create a seamless arrival and departure experience for customers, offering an undercover connection to the international terminal and vehicle lanes that will flow through the ground floor of the building to create a modern pickup and drop off zone for commercial and public transport. With ongoing change in construction inside the terminal, the new transport center will smooth the overall experience, with a new pickup and drop-off expected to open in March 2024 for a more streamlined arrival and departure experience. Now the third leg of the trifecta is a historic expansion of the airfield. We're strengthening storm water systems and converting an area of the size of 23 rugby fields, west of the current terminals into an aircraft parking area capable of taking the weight of A380 aircraft. It will provide extra taxiways and 7 remote stands for layover aircraft, including 5 stands with in-ground jet fuel reticulation and other services. Now in time, this airfield expansion will connect to the integrated terminal, our planned cargo precinct and potentially to a future second runway. Now 3-years down the track in reducing scope 1 and 2 carbon emissions, our processes for measuring and making decisions which affect the environment are maturing and beginning to make a measurable difference. In 2020, we actually set a target to reach Net Zero Scope 1 and 2 emissions by 2030, as Patrick mentioned. Now to reach this target, we've had to map out a pathway to achieve a 90% reduction in these emissions from our 2019 baseline. Now we plan to reduce the residual emissions around 10% through permanent carbon removals and the reason those are permanent carbon removals in some of our emergency services, firefighting otherwise, there aren't alternatives at this point in time, but we are certainly tracking ahead of our planned pathway. As mentioned by Patrick, this financial year, our Scope 1 and 2 carbon emissions represented a 27% decrease from the baseline year of 2019. Site redevelopment also creates opportunities to introduce far more carbon-efficient technologies. For example, we're in a phased process to electrify the country's largest air conditioning system that cools and heats our international terminal. Now this will be the equivalent of 3,000 household air conditioning units moving to electric power rather than gas. Now when we transition over from those 6 natural gas boilers that currently keep the system pumping, it will make a significant difference. This move alone will reduce our Scope 1 emissions by 1,500 tonnes of carbon per year. That's more than 1/3 of our current total Scope 1 and 2 emissions in one fell swoop. A 2.3 megawatt solar array and the roof of our new premium outlet store shopping center, sorry, Manawa Bay, will generate enough electricity to power around to 80 of the 100 stores inside. Now like the smaller array on the roof of the transport hub, it will provide a resilient supply of renewable energy as we evolve for future growth. Now of course, Scope 1 and 2 emissions make up only a small part of our total inventory of greenhouse gas emissions. We are working closely with airlines to understand their needs and future requirements as they invest in larger, more efficient domestic aircraft and future low-carbon aircraft technology. We're also installing ground power units at each gate to supply power to aircraft, to reduce fuel use and provide charging for electric ground handling equipment and vehicles on the airfield. We will maintain our active role in sustainable aviation Aotearoa Group, which is -- sees us working with industry peers and government agencies to further decarbonize the aviation industry. Now my brief overview of sustainability would not be complete without touching on our community support efforts. We have continued our long-standing support of community organizations in South Auckland. This included distributions to the Auckland Airport Community Fund to assist with flood relief and providing funding to support the ARA education -- sorry, education charitable trust, which creates pathways into workforce school leavers not going directly into tertiary education or training of any sort. Now over the past 3-years, travel disruptions owing to the pandemic had a devastating impact on the retail outlets operating within our terminals, they just simply did not hit the footfall that they rely on. We've been delighted to see vibrancy return to these operations with a strong return of passenger numbers over the past year. Now 1 of the largest is Aelia Duty Free, which is taken on the role as Auckland Airport's duty-free operator after winning a short-term extension of their contract until mid-2025, after we move to a single operator model. Now as part of this transition, around 90% of the existing duty-free staff were able to transfer across to Aelia Duty Free. Within the next year, we expect to get a tender process underway for a long-term Duty Free contract at Auckland Airport going into the future. Now in the wider precinct construction of the Manawa Bay premium outlet shopping destination is on schedule and on track to open at the end of the 2024 calendar year. More than half of the 24,000 square meter of retail space, which is around 100 stores, have been pre-committed by sought after international brands such as Kate Spade, Coach, Fila and Under Armour to name just a few. We also remain very active in the commercial and industrial development at The Landing. We've been appointed to develop new stand-alone facilities for IKEA, DHL and Reece Group, all of which target a 5-star green sustainability rating and will begin construction during the 2024 financial year. Ahead of that, we'll be opening our new 5-star hotel in mid-December this year. That's a 311 room hotel, the Te Arikinui Pullman Auckland Airport Hotel, which is a joint venture with Tainui Group Holdings. This super premium hotel will be a welcome addition to the 2 existing hotels in the airport precinct, which have recently enjoyed nightly occupancy rates of around [ 90% ]. And it simply would not be possible to manage this breadth of projects without a strong and committed team. And I want to warmly thank the whole airport team and the airport community for the progress we have made during what has been a challenging year. During the year, we reinforced our management team with the appointment of Melanie Dooney as Chief Corporate Services Officer in November last year. Chloe Surridge as Chief Operations Officer in May this year; and Richard Wilkinson, as Chief Digital Officer in August. And Darren Evans will join us in the newly created role of Chief Safety and Risk Officer role next month in November. I'm incredibly proud to have such a strong team around me, and I wish to also thank the Auckland Airport Board for their guidance and support amid a period of both challenges and the exciting transformation for our airport. Now looking ahead, we continue to see a positive recovery in the aviation industry. And in line with this, we are providing guidance of underlying profit after tax of between $260 million and $280 million for the 2024 financial year. We expect capital expenditure of between $1 billion and $1.4 billion for that period. And based on international air travel associations outlook for global air travel, we do still expect our total passenger numbers to recover to pre-pandemic levels during calendar year 2025. For the full 2024 financial year, we anticipate international passenger numbers will be around 92% of pre-COVID levels with domestic passenger numbers at around 89%. Now this would mean overall passenger numbers of around 19.1 million for the 2024 fiscal year or an estimated extra 3.2 million passengers through our terminal doors for this financial year compared to last. We are in the midst of once in a generation major reinvestment in the infrastructure in Auckland Airport to set us up for the decades ahead. As travelers continue to return in substantial numbers, we are reinventing the travel experience and working hard to achieve ambitious reductions in carbon emissions. Most of all, we are strongly committed to delivering a new connected national gateway that does justice to our beautiful city of Auckland and the expectations of our global visitors when they come to Aotearoa New Zealand. [Foreign Language] We are working for New Zealand. Thank you.

Thank you, Carrie. Now we move to the resolutions. And as I mentioned earlier, voting on all resolutions will be conducted by way of a poll. You may ask questions on each matter being put to shareholders in person or through the virtual meeting website. If you're voting as a shareholder, proxy holder or as a corporate representative, please use the voting paper handed to you at registration to the meeting. Those of you joining online will be able to cast your vote using the electronic voting card received when online registration is validated. To vote, you will need to click Get Voting card within the online meeting platform, and you'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish, click for, against or abstain as you choose on the voting card. And once you've made your selection, then you click Submit Vote on the bottom of the card to lodge your vote. Please refer to the online virtual meeting portal guide or use the helpline number 080-0200 220, if you require assistance. Now we've received 1.08 billion valid proxy votes, which represents 73% of the ordinary shares on issue. Now moving to the Board, shareholders, the company's constitution allows for a maximum of 8 directors. And as I mentioned earlier, we have 1 director offering themselves for re-election. I'll ask Julia Hoare to address the meeting first, and we'll take any questions from the floor or online after and will then ask shareholders to cast your votes for each of the resolutions. So ordinary resolution one is the re-election of Julia. She was appointed as a Director of the company at our 2017 Annual Meeting and the Board unanimously recommends that shareholders vote in favor of Julia's re-election. She is considered by the Board to be an independent Non-Executive Director. So Julia.

[Foreign Language] Thanks, Patrick, and good morning to all of you here in the room and also to all of you online. I'd like to say a few words this morning in support of my reelection, and I'm really delighted to be here with you and very, very proud to be associated with Auckland Airport. It's been a real privilege to have served you as shareholders in this great company. When I reflect over the 6-years that I've been on the Board to date, which includes my role in sharing our Audit and Financial Risk Committee, I can really break my time down into 3 phases. The first was a period of huge growth in aviation and tourism globally, and this delivered enormous benefits for the economy along with our shareholders and our business. The second phase was, of course, the COVID years when we experienced border closures and a decimation of travel just as we were starting to ramp up our infrastructure development program. We had little choice but to suspend much of our capital program. And as you will recall, we subsequently undertook one of the largest capital raises in New Zealand, despite the huge uncertainty which was prevailing at the time. As we come to the end of 2023, we're clearly in our third phase, and it's a really new and exciting time, I feel, for Auckland Airport. And I'm really delighted in the way that our business has rebounded, that we're open to the world and that we're moving forward to create the gateway that New Zealand needs and for all Kiwis to be really proud of. As I think to the future, though, and where I think I can contribute and take Auckland Airport to the next level in addition to the skills that you would expect of me as a Director and also Chair of the Audit and Financial Risk Committee. I feel it's really important to also strongly focus on a couple of areas, they being sustainability and our social license to operate. There's been some discussion this morning around sustainability, and it isn't optional and nor is it just an add-on, it's going to have to be central to everything we do as we move forward. The nature of travel and the role that airports actually play is changing and consumers and other stakeholders push for a less carbon-intensive and more sustainable future. And as a result, sustainability is going to ultimately and fundamentally change our industry in the future. No one knows quite how, but it's going to be enormous and inevitable and we need to be ready to stay ahead of whatever those changes may be. In terms of maintaining our social license, we've also discussed that this morning. As we've seen play out in media lately, Auckland Airport, and Carrie talked about this is at the center of a vitally important ecosystem. And we have a very important role to play as the conductor of that ecosystem. We're the nation's principal gateway to the world, both for people and for valuable freight. We partner with key stakeholders who are independent of us, but whose actions can influence how the public sees Auckland Airport. We're conscious of how we conduct our role in this ecosystem, and we must balance everything we do alongside the interests of stakeholders, including, of course, you, our shareholders. I'm incredibly excited to be continuing to contribute to Auckland Airport's ongoing journey, and providing governance that helps ensure positive outcomes for you as shareholders and also positive outcomes to others, our stakeholders and the community. I've got the capacity to provide all of the support that I think I can bring to the table. So I hope I have your support in continuing to serve this wonderful business. Thank you for your time today.

Thank you, Julia. I now move to Julia Hoare, who retires and who is eligible for reelection, be reelected as a Director of the company. Are there any questions from the floor on that resolution? There being none, are there any online?

There are none on the line.

Okay. So there are no questions. So I'd ask we now move to Resolution 2. Deloitte is automatically reappointed as auditors this year under the Section 207T of the Companies Act 1993. I move that the directors be authorized to fix the fees and expense of the auditor. Are there any questions from the floor on that resolution. Being none, online?

There are none online.

Thank you. There being no questions, we will now conduct the polls in respect of those 2 motions put to the meeting. The poll will be conducted by our share registry, Link Market Services and they will act as scrutineers. So please complete the voting paper by ticking either the for or against box or if you wish to abstain. Anybody who has any difficulty here, just pick your hand up and assistance will be provided. And Link will now move through the room to collect your voting papers. Those of you participating through the virtual meeting website should now submit your votes. And as I said earlier, we'll announce the results to the NZX and the ASX later in the day. So now we can move to other business and questions. So probably the most important part of the meeting. I now invite shareholders to raise any questions. Just before I take them, they do need to be related to the presentations or the annual report and the financial statements or other topics concerning the governance or management of your company or any other matters that can be lawfully considered at this meeting. And again, those shareholders online, you are able to ask questions through the virtual meeting website. Do please keep your questions reasonably short and clear. And if you don't, those of you here, get a chance to get your question fully answered, as I said before, we've got a whole team here, particularly executives who are very happy to sit down with you and talk them through one-on-one. You will be able to easily identify the Board to do that because we've all got some black labels on. And the leadership team has some blue labels, but that is people in the front here. Okay. I can now formally ask for questions, and I had a hand over here. Have you got a microphone? There you go, right behind you. And if you can just state your name, that will help.

Thank you. My name is Jane Arnott and [Foreign language] good morning to all esteemed shareholders and the Board. My question relates to the ethical underpinnings, governance and risk. In particular, I'm interested in the Board's performance, and I encourage you to just review some aspects. If we look at the NZX Corporate Governance Code, Principle 1, ethical standards and recommendation 1.1. It is under the comply and explain regime necessary for you to report on training, which should be provided regularly against the code of ethics. There was no reporting against this measure. And I put it to you that in challenging times, your employees, many of whom may not have the grasp of English that we all have that others have, sorry, will benefit from the guidance and leadership and the training. I also put it to you that 70% of the NZX50 have CEOs that neither personally nor formally championed their code of ethics. When the highest paid executive does not champion and lead the culture of the company, I find it disappointing. I encourage your CEO with no disrespect to actually look at the code and lead and state how important it is for the company. That leadership is important. And I also put it to you that discretionary judgment based on values as per best practice codes of ethics is another important consideration. Values will provide guidance under very testing situations.

Yes. No, it's a great -- thank you very much and very clearly put. And look, it's close to our hearts, and I could speak for the Board and management. And we will look at our reporting against our code of ethics policy, et cetera, and the wide diversity of the people we have -- your comment about people with other languages native. It's all good. And I just acknowledge the points you've made, and I think we live and die those as much as we can. And where is Mel? Mel, if you can just stand up for a minute and perhaps over a coffee, it would be great to talk through that with you. You obviously understand it very well. So thank you for the question, a very good one. Next question. Don't be shy. There's one down here and an old friend, how are you? Microphone is coming.

It's [indiscernible], shareholder. Is something I don't understand from all your descriptions of your upgrading. Will I ever be able to go and park with an easy walking distance of the international terminal to pick my family up when they come and visit at Christmas?

Yes. And with Mark Thompson there. Mark will come and talk to you afterwards, but that massive monstrosity going up called Pudo, which is why you have to park a bit further at the moment, that has how many floors are parking in it? 4. So right beside, but underneath it, the bottom level is a pickup and drop-off facility where private cars can go in and drop people. So Mark will explain it to you, that's the $300 million investment, which will be opened next year. And I apologize that in the interim, you have to walk through the containers and things because we do have to build it.

Patrick, you said drop. What about collect?

Pickup and drop.

I go in and wait for them to come through the doors in the international terminal when you haven't seen them for so long.

No, no. It's pickup and drop off, Pudo's out. And look, so we've got...

So When?

When does Pudo start opening?

End of next year.

So the pickup, drop off, the bottom 4 will be opened in April. Those of you who didn't hear, all of parking and fully open at the end of next year. Now all that will just lead to the next problem that the whole arrivals hall will need expansion at some point, but that's down the line a bit with...

One other quick one.

Yes, sure.

While the dust is settling on the election and trams are no longer likely to run down Dominion Road? Do you see any hope for the connection with heavy rail between Puhinui and the airport?

I'm going to give you my personal view. Auckland, we did -- I mean, everybody can have their own views on light rail to the airport and we have made facility that anybody ever wants to build it, we can accommodate it. A key part of our excess is actually from the east and the south Puhinui Road, several -- a few years ago now, actually, Auckland Transport upgraded the Puhinui Rail station. Have you been through it? It's pretty racy. There's a dedicated transit lane along Puhinui road, and we're going to have to upgrade that bridge, and you'll see a lot of road works all the way into the airport. And I think under the new government, and I'm not speaking officially here, I mean the thing to enable that heavy rail link to Puhinui, really to make it seeing as a third and possibly fourth rail line south from the port really to Pukekohe at least. And I do hear from KiwiRail that, that will be on the agenda again. It is -- look, transport to the airport, sort of one-stop transport is important. You've probably been through Heathrow as kids, we all rode the Piccadilly line out Heathrow like rail or a bit more with about 13 stops, nobody ever rode it. Then they put a heavy rail into Heathrow and it's hugely occupied.

It's because the Botany one that [indiscernible] are promising, the trends are like -- that buses, isn't it?

Yes, but that is very important to us. Huge quite a lot about -- people don't just come from downtown. I don't know the number, 17% or something of journeys start in Downtown. So employees and travelers, particularly employees, a lot come from Botany area. So we're apolitical about a door, but we really see that transit corridor being built. We'll do everything to help them on that and do our way and it's quite important. I will say one success over the last few years, you don't notice it now, but we redid all roading. For those of you coming from the city and the George Bolt drive, the whole new loop round and out again. You sort of don't notice it, but it's a massive improvement and credit to the team on that. And I was walking over to the offices yesterday from the international terminal, the amount of traffic going through the international terminal at about 6 in the morning is massive, and it's just flowing. It's great.

It's all very promising. Thank you.

Another question here from the floor -- Perhaps, over here. Microphone right over to the window.

Yes. Just given the considerable expenditure this company is engaged and then and the borrowings that it has to undertake to do that expenditure. Should the company be paying a dividend?

Yes. Look, it's -- we are capable of all that of paying a dividend. It's perfectly appropriate. Now the dividend this last year was seemed small typically compared with history, but of course, it was only for 6 months of the year. Yes. No. And we have a new dividend policy. Phil, do you want to comment on basically a cash flow type dividend policy. We'll turn it over to Phil.

Thanks, Patrick. Yes. So the Board looked closely at dividend policy back in June. And we also looked at infrastructure businesses across Australia and New Zealand and found that the sweet spot is 70% to 90% of profit. And so we have moved the dividend policy from 100% of underlying profit to that range of 70% to 90%. And for the time being, it's likely to be maintained at 70%. While we judge the cadence around the infrastructure delivery and credit metrics.

Okay. Any more on the floor? There's one right behind you.

Robert Keane, shareholder. You were talking about the January 27 floods. And in the annual report, It was talking that as at June 30, the balance date -- there were just estimates from independents to strike what they thought were the best write-off amounts for expenses and impairment in assets. So has there been any update since balance date as to how the actuals compared to the estimates? And also, I just noted there was a $5 million recovery from the insurers. And has there been any further receipts from the insurers to cover those costs?

Who's got the answer, Phil?

Yes. So we continue to work through the discussions with the insurers. We can't comment on where that's landed just yet. It's commercially sensitive, but it will be a number that's significantly larger than the $5 million to date. And what you tend to experience with these sorts of disasters is actually once you've been through insurance that actually boosts profit ironically because the insurance pays to replace those assets, but they're somewhat depreciated over time in the current state. So -- yes, there's more to come, and it's likely that the impact in FY '24 will be net positive.

Good question. Any more from here. Perhaps here we go, one in the front.

Good morning, John, shareholder. As a follow-on from the question was just asked. How much is your insurance premium increased was the latest billing?

Who shall I ask on the premium? Mel, over to you. You might need a microphone.

The answer is right at this minute, we don't know. We're in the process of our renewal for our insurance for that particular policy as we speak.