Channel Infrastructure NZ Limited ($CHI)

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.