Contact Energy Limited (CEN.NZ) Earnings Call Transcript & Summary

[Foreign Language] I have the privilege this morning of opening our meeting with a short acknowledgment and blessing. Following that, we will -- the team will come forward [Foreign Language] And I now invite the team to come forward to provide Contact [Foreign Language] [Presentation]

[Foreign Language] Good morning, everyone, and welcome to Contact's Annual General Meeting. My name is Rob McDonald, and I'm the Chair of the Contact Board. On behalf of the Contact Board and all our people across Aotearoa, New Zealand, for which the first time includes our people from Manawa Energy, now 100% owned by Contact. I would like to welcome you to the 2025 Annual Shareholder Meeting held today at the Maritime Room in Auckland. This meeting is being webcast live for shareholders who have not been able to attend in person. And I also extend a warm welcome to those who are watching online. For those guests who are here in person in the unlikely event of an emergency, if the alarm sounds, the duty manager of the venue will announce over the PA that all guests should leave through the marked exits. Venue staff will help to evacuate guests through the front main entrance. There is an alternative exit through the loading dock bay at the rear. The assembly point is outside the Wildfire restaurant, which is accessed to the left of this building or below St. Alice directly across the street or the Via car park, which is a 5-minute walk on Lower Hobson Street away from the Wharf. As a quorum is present and due notice of this meeting has been given, I declare the meeting duly constituted and open for business. Firstly, I would like to introduce others to me -- with me on the stage. To my left is our Chief Executive, Mike Fuge; and my fellow Board Directors, Deion Campbell, Rukumoana Schaafhausen, Elena Trout, David Small, Sandra Dods, John McDonald and David Gibson. Other members of Contact's senior leadership team are also here today as well as representatives from our auditors for 2025, EY. As you have noted, today's meeting started with a greeting from Rukumoana, followed by Contacts [Foreign Language] which is customarily sung to support the greeting. We do this because it's important we acknowledge our relationship with our EV stakeholders and the fact we use New Zealand's natural resources to generate energy, of which our EV partners have an interest of. Today's meeting will commence with addresses from me as Chair and from the Chief Executive, Mike Fuge. Then we will move on to the resolutions that are outlined in the notice of meeting. We have 3 resolutions to put to the meeting today, and these resolutions will be decided by taking a poll. There will be an opportunity for shareholders and proxy holders to ask questions relating to these resolutions and to raise any additional matters they may wish to discuss. EY audit partners are present at today's meeting should shareholders have any questions to put to them. Only shareholders and proxy holders can ask questions. Once the resolutions are introduced, we will invite questions. We have some microphones available. If you wish to speak, please put your hand up and wait for a microphone to be brought to you so that we can all hear your question. We have a large number of shareholders here in the room and online. Can I please ask you to limit your question to 1 or 2. Please state your name before and it would be useful if you wish a particular person to answer your question, if you could state that upfront. All questions -- sorry, all shareholders participating online can ask questions during this meeting, and I would encourage you to send through your questions as soon as you can. This will allow us to answer these questions at the appropriate time in the meeting. To ask a question, click on the box that says ask a question and follow the instructions on screen. Please note the questions may be moderated or if we receive multiple questions on the same topic, they may be amalgamated together. If we can't answer the question in the meeting, we'll answer it in due course by e-mail. I'll provide you with further instructions in relation to voting as we progress through the meeting. For those joining online, if you encounter any issues, please telephone the help line on 0800-2220. Now the housekeeping is done. Let's get underway. On behalf of the Contact Energy Board of Directors, I would like to start by thanking our people, our customers and you, our shareholders, for what has been one of the most significant years in Contact's history. We have delivered a strong performance underpinned by our long-term investment in renewable generation. As I share my reflections and insights of the past year, I want to acknowledge and talk about the challenges and opportunities in the energy sector and how Contact is focused on supporting New Zealand's economic growth aspirations. Our Contact26 strategy is to be a leader in New Zealand's decarbonization. We have continued to deliver strongly against the strategy through renewable investment, growing electricity demand, continuing to decarbonize our own generation portfolio and creating outstanding customer experiences. We are taking bold steps to support the country's energy transition to a renewable future. In the past 4 years, Contact has committed to more than $2.3 billion building critical energy infrastructure, and we are accelerating that investment for the long-term benefit of New Zealand. We have completed $1.2 billion of new renewable generation with Tauhara and Te Huka 3 coming online. Together, these have brought an additional 1 terawatt hours of annual generation on stream, enough energy to power the equivalent of 260,000 homes. Projects totaling another $1.1 billion are currently under construction, spanning geothermal, solar and grid scale batteries. These investments will extend our operations in the Wairakei steamfield, delivering renewable power for future generations. They bring a further 0.6 terawatt hours of net new generation and 100 megawatts of new storage on stream. Our new long-term energy agreements have created new energy demand in iconic companies such as New Zealand Steel, Fonterra, OG Fiber Solutions, supporting their long-term future and demonstrating the part we play in the economy. It is almost a year to the day since Contact announced the proposed acquisition of Manawa Energy. Following the regulatory approvals, this transaction was completed on the 11th of July. The combination of our 2 companies is an important step forward in New Zealand's energy transition. It will enable a greater investment in future renewable generation, enhance market security and ultimately contribute to reducing wholesale prices long term. I look forward to reporting on our future progress as we integrate Manawa into Contact. We remain on target to meet our ambition to be net zero in our generation operations by 2035. In the past decade, Contact's generation emissions have reduced by 50%. With the planned closure of our Taranaki Combined Cycle plant at the end of this year, it will increase to 75%. Our Contact26 strategy has served us well. We are now turning to the next strategic horizon and are undertaking a review to ensure that we are well positioned for the future. Geopolitical, economic and environmental uncertainty continues to be felt here and internationally. Yet in this is opportunity. The electricity sector has a key role to support New Zealand through these challenges and underpin a pathway to sustainable growth and energy independence. As a country, we are in the midst of a renewable investment boom. In the past 18 months, almost 4.5 terawatt hours of total new renewable generation has come online. To put this in context, that is more than 10% of our nation's annual generation, and there is more to come. According to Bloomberg Global Energy data between '21 to '24, New Zealand is a global leader, investing $240 per person per year in renewable infrastructure, greater than the U.S., China, U.K. and Australia, and Contact is leading the way. For those who say nothing has been done, this is the data. The market is not broken. Those that who call the market broken failed to come with a solution. The solution to lower energy prices is more capacity and that comes with investment. Investment is occurring at pace insofar as we can get consents. Notwithstanding ongoing challenges with the upstream gas market, gas will remain an important peaking fuel in the medium term and supports security of supply. We have long-term gas supply contracts to support the availability of our remaining Peakers. And more importantly, to ensure households and commercial gas customers have access to this energy source while we help them transition to renewable energy over time. The abrupt gas decline has hit the country faster and with more impact than could have been foreseen. What we see today is the result of a fuel supply cut. The change in government policy with the oil and gas ban led to unintended consequences. We need to be careful such mistakes do not occur and are repeated. Contact remains focused on providing competitive value and innovation while providing support for those facing energy hardship. We recognize our role in ensuring New Zealand's electricity remains affordable, reliable and renewable, the energy trilemma. The World Energy Council continues to rank New Zealand as one of the top 10 countries globally against these benchmarks. We are committed to playing our part to support New Zealand security of supply. This winter, we extended the operating hours of the Taranaki Combined Cycle plant. It will close later this year, a year later than planned. We are party to the Huntly strategic firming agreement, a strategic energy reserve to be used as a buffer when required and open to all electricity market participants. Renewable generation investments deliver benefits to the community for decades. As a result, infrastructure investments always seek reasonable long-term certainty. I acknowledge the work of the government and the regulators are doing to explore ways of continually improving and evolving the electricity market as we all navigate the energy transition. However, we need policies that both encourage growth in electricity demand and support new investment in renewable energy. We welcome the government's initiatives to improve resource consenting to accelerate renewable development. However, calls for fundamental but undefined market reform and its potential impact on investment confidence is of concern. We need stable market settings that support investor confidence. Investment in renewable energy generation gives decades of benefit, a legacy for generations. Contact's investment, growth and success would not be possible without the hard work of our CEO, Mike Fuge, and the entire Contact team. To you, I say thank you. I also want to take this opportunity to thank my fellow directors and acknowledge, in particular, Elena Trout, who after 9 years of invaluable service is stepping down from the Board. Elena has made a significant contribution, not just to Contact, but to the wider New Zealand energy sector. Now as we look to the year ahead, one where Contact and Manawa Energy become one, we will continue to accelerate investment in the electrification efforts and together with all our stakeholders, help build a more sustainable, thriving New Zealand for all. I'd now invite Contact's CEO, Mike Fuge, to share a few words.

[Foreign Language] It is my pleasure to be here today and to share my reflections on the past financial year, a year that has been characterized by bold aspiration backed by [indiscernible] and resulting in significant achievement. Through intensive focus and unwavering commitment to our Contact26 strategy, we have delivered outcomes that will help shape New Zealand's energy future for generations. As Rob has outlined, we have delivered growth, invested heavily and played our part in supporting New Zealand's economic development. Before I get into the detail, I do want to acknowledge our people and welcome our new Manawa colleagues to their first Contact Annual Shareholder Meeting. I am incredibly proud of our collective team and what they have achieved. They are a group of high-performing professionals who come to work every single day focused on the role they have in supporting the energy transition. In the last year, Contact has delivered a very strong financial performance in the 2025 financial year. Our EBITDAF of $774 million was up 17% on the previous year, and profit after tax was $261 million on an underlying basis. This result excludes the release of the Ahuroa Gas Storage provision of $98 million before tax, but includes the $18 million Manawa transaction and integration costs. If you adjust for these one-off Manawa related costs, EBITDAF was $792 million. Market conditions were impacted by the accelerated decline in gas availability. With 2 historically dry periods as well as periods of intense hydro inflows, hydro storage was highly volatile. These conditions made significant volatility of wholesale prices. In this context, our financial performance reflects our resilient risk management as well as the benefits of our $1.2 billion investment in new geothermal capacity at Tauhara and Te Huka3. Contact also supported the market and played our part in New Zealand's energy security. We managed through dry conditions by securing gas in the short term from Methanex. We also ran our Taranaki Combined Cycle plant and use flexible gas storage at Ahuroa to support economic thermal generation. This was the first year our new geothermal power stations, Tauhara and Te Huka3 were both operational. In a challenging year, Contact's baseload generation, geothermal generation increased to 4.5 terawatt hours, up 34% on the previous year. It has reinforced the importance of geothermal and our commitment to delivering a secure and reliable electricity supply for New Zealand. We, as Contact, delivered the right projects at the right time. In light of our financial results, we will pay shareholders $0.39 per share annual dividend, up 5% from the previous financial year. We are now 4 years into our Contact26 strategy to grow demand, grow renewable development, decarbonize our portfolio and create outstanding customer experiences. In this short time, we have committed more than $2 billion to build the critical energy infrastructure our country needs. Now more than ever, we must continue to play a leading role in ensuring secure, sustainable and affordable energy for New Zealanders. The FY '25 year saw a significant investment in growth and continued focus on project delivery with our entire net profit and some reinvested in developing renewable energy projects. As Robert said, according to Bloomberg Global Energy Data between 2021 and 2024, New Zealand has been a global leader in investing $240 per person per year in renewable infrastructure. greater than the U.S., China, U.K. and Australia. And in that, Contact is leading the way. It is our profound belief that our role is to enable the electrification of the economy. We are working alongside our commercial, industrial and residential customers to help them in the energy transition. And we will continue our orderly investment in renewable generation to support this. Robert has spoken about the combination of Contact and Manawa being an important step forward in the country's energy transition. Together, we have highly complementary geographically diverse hydro generation. Contact's hydro assets in the South Island produce more energy in the summer following the summer melt. Manawa's sites produce more energy in the winter. The 2 combined are outstanding. Our leadership team and I have spent the last 2 months visiting the Manawa sites and spending time with our new colleagues as we have integrated the 2 new businesses. We have been delighted with what we have seen. We expect to be operating as one company by Christmas this year. We were delighted last November to host alongside the Tauhara Hapu, the Prime Minister for the opening of Tauhara, the world's largest single shaft geothermal power turbine. In the same month, Te Huka3 also came online. Following behind this, our 2 new geothermal power stations, the Co-fi solar farm and the Glenbrook-Ohurua grid-scale battery are expected to come online next March. Te Mihi2 binary plant that will partially replace the 60-year-old Wairakei plant is also well underway with an onstream date of mid-2027. This level of activity is unprecedented in our history. Not only is it fulfilling an urgent need for renewable energy in New Zealand today, it is supporting the transition and creating new opportunities for the nation's economy. You only need to walk through Taupo and you witness the impact such investment is having on Heartland Kiwi communities. This is partly why we were so disappointed when the Southland Wind Farm Fast Track Resource consent was declined in March. And while we have now been accepted to lodge an application under the new Fast Track legislation and have done so, the simple reality is an exorbitant amount of time and expense has been consumed with the previous planning regime with little or if I'm honest, no productive outcomes for society at large. We have hoped that projects such as Southland Wind Farm will be built at pace for the benefit of all. This project alone would bring more than $200 million to the Southland economy and generate more renewable energy to power the equivalent of 150,000 homes. The team have also lodged a consent application to extend the Glenbrook-Ohurua grid-scale battery to 500 megawatts and lodged a consent application to build an additional 500-megawatt grid-scale battery at Stratford. We are also working on several projects to improve the efficiency, safety and reliability of our hydro assets. This will help improve energy supply in dry years and during peak winter demand. We are acutely aware that we have a responsibility to ensure reliable, secure energy supply for the country while we manage the energy transition. The rapid and unexpected decline in gas availability has now got to the point where some hard choices are having to be made. That with dry hydrological conditions led to a short period of high spot prices last year in August 2024. Our response was swift and comprehensive. We signed gas agreements with Methanex last August and again in May this year to ensure winter periods of high demand recovered. We also extended the operation of TCC until the end of the year when it will be decommissioned. And along with the other major gentailers, we have signed the Huntly strategic firming agreement to keep the lights on for the future. Contact has also recently secured a 7-year gas agreement from Greymouth Gas Limited. Contact will now be able to support hundreds more New Zealand businesses, critical gas customers such as schools, hospitals and thousands of Kiwi households as they transition in a managed orderly way away from fossil fuels to a renewable energy future. Our commitment to decarbonization remains resolute. We have taken pragmatic steps to ensure reliability of supply as we transition, helping bridge the gap while we scale up renewable development. Turning now to the customer. Home is everything. It's where life happens. Connections are made and futures are built. Our financial year finished with 650,000 customer connections across energy, broadband and mobile, a growth of 21,000 connections from the previous year. As of this morning, we have well over 650,000 customer connections. We recognize that creating outstanding customer experiences is more than growth. This is also about fronting into the challenges ordinary New Zealanders face at a time of increasing pressure on household budgets. More than 1/3 of our customers are now on our time-of-use plans, receiving free power in return for off-peak use. Since it was launched in August 2021, Kiwis have received more than 260 million hours of free energy. These tools where we engage with ordinary Kiwi households help navigate supply challenges, help with budgets and have transformed energy peaks, reducing the reliance on fossil fuels. In August 2024, we removed disconnection and reconnection fees for nonpayment of all contact customers, resulting in disconnection rates dropping 30% year-on-year. Earlier this year, the Commerce Commission reviewed lines and transmission charges. These charges are passed on to consumers accounting for up to 40% of the average bill. We recognize that these pass-on charges have and will put pressure on consumers. Finally, to our people. I would like to thank everyone at Contact for their outstanding work and focus throughout the year. I'm proud of you all and the contribution you have made, not just to Contact, but to the difference we are creating. I would like to also acknowledge and welcome our new Chief Retail Officer, Carolyn Luey, who joined Contact in July. Carolyn was appointed following Matt Bolton's appointment to Transition Director last year. I would also like to recognize Matthew Forbes in his appointment as CFO, and that was an internal appointment. We're delighted to welcome you both to the leadership team. Looking ahead, one thing is clear. Progress will require both visionary aspiration and the ability to remain responsive to New Zealand's energy needs. We are excited about the future and the leading role that we play in New Zealand's energy transition. [Foreign Language] thank you.

Thank you, Mike. We will now move to the formal resolutions for the meeting. These are outlined in the notice of meeting sent to all shareholders in August. Voting on the resolutions will be by poll. Each resolution will be put to the meeting. For those of you here with us in Auckland, you will be able to cast your vote by filling in our voting card -- sorry, your voting card you received at the registration desk on the way in and which will be collected at the end of the formal part of the meeting. If you're a shareholder or proxy holder and did not register on arrival and wish to vote, please make your way to the registration desk and staff from our share registry will assist you. If you're both a shareholder, a proxy holder or a shareholder company representative or have more than one holding, you would have received a separate voting card for each holding. When you vote on the resolutions, please complete all voting cards given to you at registration. For those attending the meeting online to vote, you will need to click Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking for, against or abstain on the voting card. Once you've made your selection, please click Submit Vote on the bottom of the card to lodge your vote. Please refer to the virtual meeting online portal guide or use the help line specified if you require assistance. Voting will remain open until 5 minutes after the conclusion of the meeting. Each resolution set out in the Notice of Meeting is to be considered as an ordinary resolution and as such, to be approved by a simple majority of the votes cast by the shareholders entitled to vote and voting on the resolution. For the information of shareholders, the proxy votes received for all 3 resolutions will be displayed on the screen as we discuss and then vote for each resolution. Our first resolution today relates to the election of a new director, Deion Campbell. It is my pleasure to move that Deion be elected as a non-independent Director of Contact. Deion was appointed to the Board in July '25. Under the NZX listing rules, Deion is required to retire at the first annual meeting following appointment by the Board and is now standing for election by shareholders. A brief biography for Deion is set out in the Notice of Meeting. The Board warmly and unanimously recommends that shareholders vote in favor of Deion's election. I'd now like to invite Deion to speak in support of his election.

Thank you, Rob, and good morning, everyone. I'm very happy to be here today seeking election to the Contact Energy Board. I believe that Contact has worked hard to gain the position of the best-performing company in the New Zealand energy sector. A broad and diverse asset base, combined with strong customer offering has resulted in a resilience that is not mirrored in other key market participants. Recent transactions and project development outcomes have enhanced this position. It was, therefore, my pleasure to be appointed to the Contact Board in July, following the successful completion of the acquisition of Manawa Energy by Contact. Until then, I was the Chair of Manawa Energy. I believe my skills and experience will be complementary and reinforcing to the existing Contact Board. I've spent my entire career in the electricity sector as a professional electrical engineer, including roles focused on developing, delivering and operating large-scale renewable generation and hydropower projects, along with more than 10 years as a senior executive in publicly listed electricity companies. My most recent executive role was that of Chief Executive of Tilt Renewables, which was based in Melbourne until its sale in 2021. I, therefore, have a solid background in operational risk management, setting and executing strategy, public and private equity raising and M&A transactions, health and safety, global procurement, team performance, remuneration structure design, asset management, efficient capital allocation and project delivery. I also have experience in adjacent sectors such as mining and civil construction. In addition to my role as Director of Contact, I am a Director of Origin Energy in Australia. I'm an operating partner at Morrison, a global infrastructure manager based in New Zealand. My work at Morrison means I am Chair of Longroad Energy, a renewables developer and operator in the United States. And I'm a Director of Pastoral Partners Australia, which is focused on vegetation-based carbon sequestration. I confirm that I have the capacity to dedicate the time required to be an effective Director of Contact. And as I said earlier, I'm confident that Contact is well positioned to create shareholder value as New Zealand's energy market transitions from fossil fuels. And I'm excited to join the Board and work with management to make the most of the opportunities ahead. So thank you for considering my election to the Board. I appreciate your support.

Thank you, Deion. Is there any questions in respect of Deion's election? Are there any questions online?

No, we have no questions online.

Given there are no questions from shareholders, please now complete your voting card beside Resolution 1. Please select any of for, against or abstain in the appropriate place on the voting card. Our second resolution today relates to directors' remuneration. I now move the proposal that the maximum aggregate annual remuneration payable by Contact to directors be increased by $350,000 from $1.5 million per annum to 1.5 -- sorry, 1.85 million plus GST, if any. Again, the background to this resolution is set out in the Notice of Meeting, but to highlight some key points. The last fee pool increase was 17 years ago in 2008. The increase is supported by independent experts Mercer that have benchmarked Contact against contemporaries and recommended an increase of between $1.85 million and $2 million. This proposal is an increase at the lower end of the range. The Mercer report was referenced in the Notice of Meeting and is available on the Contact website. The Board consider the increase appropriate. In the past 5 years, Contact has increased significantly in size and complexity. Importantly, we have delivered solid returns to shareholders and have been a leader in New Zealand's decarbonization. We want Contact to have the ability to attract strong and experienced directors from a wide pool across New Zealand and Australia. And that may mean that Contact is paying above the median peer group. We also like the ability to increase the number of directors on our Board from time to time to support orderly succession planning. At present, we do not have sufficient headroom in the director fee pool to pay 8 directors. Contact is a large and complex organization. It operates in a highly regulated environment. It is in the interest of shareholders to be able to attract strong directors who have unique and broad range of skills needed. I would also highlight that it is the intention of the Board only to increase the base directors' fees and committee fees in line with inflation. I hope you can see such statements are not made lightly. There may be the occasion where the circumstances in the year do not warrant an increase. That will be a matter for the Board at the time. I now invite discussion on the resolution. Are there any questions that shareholders present or online would like to ask?

Mr. Chairman. My name is [ Alan Best ] and I'm a shareholder, but I'm also the proxy holder for the New Zealand Shareholders' Association. Firstly, I'd like to say that we appreciated the chance to engage with the company over the resolution. We have decided that we must vote against it, and there are various reasons for this, but it is a marginal call. And we feel that the current level of directors' fees is at the high end of the New Zealand averages that we have worked out with -- in this industry and its associated parameters. The second thing is that we understand that the fees have not been raised for a very long time. And actually, as a policy, New Zealand Shareholders' Association likes to see regular reviews of directors' fees rather than very large reviews at the end of a long time. We feel that the review conducted did actually emphasize the Australian comparators. And because this is a local company, Contact is a local company, producing locally and selling locally, we don't think that, that is particularly relevant because from the guy who signs the obviously road signs to the Chief Executives of New Zealand companies, New Zealand pays less than Australia. We'd like to see it pay more, in fact. But like all New Zealanders, we have to recognize that Australia is paid well above the New Zealand averages. So we're opposing the motion, but I'd like to hear what others say.

Well, perhaps I could just make some comments there because you did say the directors' fees. And I just, again, just reiterate and clarify, we're talking about the director fee pool. You also talked about regular increases. And in fact, that's what we're trying to achieve here because we're up against the cap. And so as I mentioned in the he opening remarks to this resolution. The intention is just to move with regular increases, and that may not always occur. I do want to touch on the matter around feeling like or having a director fee that is sufficient to at least attract interest from Australia. We are a large and complex organization. We look for particular skills. Our first port of call is always New Zealand. So I'll just make that call or make that clear. But in some occasions, and particularly, if you can imagine, you're trying to create a diverse Board that often to get a bigger and deeper pool of talent in certain areas that we feel it's necessary to go wider.

[Foreign Language] Shareholder. You mentioned in the report, the integrated report that progress would require vision and aspirational -- and be aspirational. Does the Board makeup, it's not on your skills metrics. Do they actually have those skills to be benchmarked against?

Sorry, vision and aspiration?

Vision and aspiration. It's in your integrated report.

Yes. Well, I'm not sure a vision and aspiration is necessarily a skill as a behavior -- personality behavior. And -- but I can assure you the directors have tremendous aspiration for the success of Contact. And in terms of vision, I think down to every director, they have a very clear vision of what they see Contact contributing to the New Zealand economy and the decarbonization of New Zealand. So to answer your question is, yes, I believe all the directors do have both a vision for Contact and certainly aspiration for a success. Are there any questions online?

Yes, we do have one coming through. This is a question from Ross Carlson. Is the proposed increase the average rate of inflation since last done?

Significantly below the rate of inflation since we're talking 17 years of inflation. So yes, it is definitely below the rate of inflation.

We have one more question. This is a question from Stephen Mayne. Which proxy advisers issued a report ahead of today's meeting? And did any of them recommend a vote against any of the items, including the proposed increase to directors' fees cap.

Glass Lewis, ISS and PIRC, all issued proxy reports. Glass Lewis and ISS have voted in favor of the resolutions. PIRC recommended opposing Resolution 3 on the basis that the level of the nonaudit fee raises concern about the auditor independence. EY is the auditor for the company, non-audit fees represent 6.78% of the audit fees during the year under review and 5.62% on a 3-year aggregate basis. The fees cited are by and large relating to assurance work for climate data. So we just have a different view about that than PIRC, but that relates to audit fees.

There's no more online questions.

Thank you. Now we will turn our mind to the auditors. Please now complete your voting card beside Resolution 2. Please indicate your vote by marking any of the for, against or abstain in the appropriate place on the voting card. The last resolution to be considered relates to the auditor. I now move that the directors' fees be authorized to fix the fees and expenses of the auditor. EY is Contact's auditor. This resolution proposes that the Board be authorized to fix the remuneration of the auditor, which is the conventional practice of New Zealand companies. It reflects the fact that the level of the auditor's workload, and therefore, fee may need to change from time to time to take into account of changes in the company's size or complexity or changes to the law. I now invite discussion on the resolution. Is there any questions online?

We have one online question. At last year's AGM -- this is from Stephen Mayne, asked, what would happen if shareholders voted down strange resolution that pops up every NZX listed company to approve the authority for the Board to approve payments to the external auditor. At the time, Chair, you said that the government was looking at a review, which would hopefully end this requirement. This is still realistic.

The requirement for this resolution, I described as one of life's mysteries. And -- but law reform does take time. And as far as we know, the Companies Act review is still on the government's agenda. EY was appointed the auditor in the financial year beginning July 1, 2022, acknowledging that regular audit firm review is best practice. The lead audit partner retired in 2024. And obviously, that's a recent appointment. So there's no proposals to retender at this point. Okay. Please now complete your voting card beside Resolution 3. Please indicate your vote by marking any of the for, against or abstain in the appropriate place on the voting card. Staff from the share registry will now collect your voting papers. Please place your voting paper in the ballot box as they are passed around. Shareholders participating via the virtual meeting should now submit their votes online. Voting will remain open until 5 minutes after the conclusion of the meeting. We'll just pause for a moment as those boxes move around. Okay. The votes will be counted, and the results be announced to the NZX and ASX later this afternoon. We now move to general business. This is your opportunity to discuss anything we have not already covered or ask questions of the Board or the management team. Before I open the floor to questions from those present and online, we have one question submitted prior to this meeting. I will wait for that question to come up online. But I'll go to the floor. Are there any questions shareholders would like to ask, sir? Could you state your name?

Michael Bouton, shareholder. You indicated that you would assist householders transitioning from gas to renewables or presumably electricity. Can you outline what steps should you can take in that way? And one thing I am aware of is how costly it is for people to disconnect from gas -- can cost hundreds of dollars. So just wondering what your plans are in that respect.

Yes, both. Mike particularly talked about what we have done to shore up our gas supply so we can continue to provide supply to retail and also commercial. But I'll ask actually Mike, why don't you talk in more depth about what we're doing around gas and particularly in retail.

I think it's important to recognize that a lot of Kiwi households have invested significantly in gas appliance and the like. And we want those gas appliances, obviously, people would like to see them use but then at the end of their natural life. And when people are ready to transition or when new homes are built, obviously, we have the good plans, which allow people to shift their load into the free hours, which reduces the cost of the electricity. We have products like the hot water sorter, which enable load to be managed, and we're looking at products like virtual power plants and the like. So the idea is that you obviously help households transition. And there are other products out there at the moment like heat pump hot water cylinders which as we work through it. But the important thing is, is that, particularly at this time when households are doing it tough, that people aren't shocked into suddenly having no gas. And so just easing that transition is a very important part of the transition. And with the deal that we have done, we can continue to support ordinary Kiwi households for a pretty significant period to come. For gas -- sorry. We have signed the gas deal up to 2032, and we expect gas suppliers to go on beyond that.

So well into the next decade. I think, look, what Mike talked about is we're not running away from gas. Question online.

We have one question online. This is actually a question from Stephen Mayne, but it is to Elena Trout. Elena is leaving as a director, we announced it on August 18. The time said, Elena, was a resignation, but Elena, you're retiring at the end of your 3-year tenure. It's always useful for shareholders to have access to some exit perspective from a long serving independent director. In your final contribution as Contact Director, could you comment on what you see as probably the best 2 decisions that have been made during your time on the board?

Perhaps I'll just address the first part of that is -- that's the way we did it or do it in New Zealand, but Elena?

Yes. I've actually got a croaky voice, so my apologies. Reflecting on my time at Contact, I think, it is 2 standouts for me. One of them is influencing management and the Board of the importance of firming products. And in the case of Contact, that was to encourage the investment of a large battery site, which will be commissioned in 2026. And the other one was to reconsider the utilization of our gas facilities in Stratford and for them to remain as part of our portfolio for longer than originally -- was originally considered and not to retire them as quickly as the original plan. It provided again another firming product for New Zealand as it transitioned into a renewable environment, which is very reliant on the conditions of rain and sun and wind. Thank you for asking [ of my intention ].

Do we have any more questions?

Alan Best, again. I've got a pretty long-term sort of question. I've been reading about the long-term forecast for renewable energy in the world. And the general theory is that because SWB, solar, wind, battery, will be quite disruptive to existing players in the industry like yourselves, because the demand for security of energy will mean that, that particular type of energy is going to be produced in surplus. And I note that Mike has been talking about the orderly transition, and I'm afraid markets are not orderly, nor is competition. And so I would expect that the cost of the production will result in quite significant surpluses even in a country like New Zealand, which is more orderly and more government controlled than the rest. This means that we're going to get the marginal cost of electricity pretty much dictating the play as opposed to the cost of the last piece of generation capacity, which will have all been told is what the prices have been based on in the past. So this long-term outlook is -- and it's not too long term, it's within the next 10 years. So it's actually quite reasonable medium term. This is going to depress the price of electricity to the marginal cost of electricity. And the marginal cost will mean that producers will obviously be accelerating their capacity all the time because if you're operating on marginal cost you've got to increase the resource that you're managing. So I wondered if you could make some comments, perhaps, Mike, perhaps on your new director, Deion.

Yes, I'm sure they are very keen to make comments as I do. I think what you've raised is really a very insightful question in that what we see is more volatility going forward. And that volatility comes from that growth and intermittent. And intermittent, you're largely talking about wind and solar. You see our investment in batteries. That is to capture that volatility and the value that can be created there. And Elena just talked about firming. The ability to firm will become more important as we go forward with more intermittent. New Zealand has been fortunate compared to some other countries, and they're not too distant away from us where there's been heavy, heavy subsidy into rooftop solar, which is very disruptive into the market and has caused quite a lot of volatility right through as you look in Australia. As a Board and a management team, we actually take time to go and study and look at those markets to understand them better, and we're always looking for a lens out into the future of things that might occur. But I think for us, that volatility, potentially, if we continue with building the right renewables and storage that can be an opportunity for us going forward. But we'll start with Mike. I'm sure Deion [ say something specific ].

A couple of things in there. As Robin and Elena alluded to, when you're faced with volatility, the key trait is flexibility and that ability to firm. I think the more immediate challenge in New Zealand is that the transmission and consenting constraints mean it's a problem we can't even get to at the moment. We cannot build the renewable energy projects we would like to build. And so that flexibility when the time comes, with the hydro assets we now have with the investment of Manawa, with battery investments, and with demand-side participation, the flexibility in the smelter, the flexibility in the New Zealand Steel deals. Look, Kiwi's when they see low-priced electricity, they won't miss an opportunity and they will look to become flexible enough to also participate in that. So as long as the market remains free and flexible, as long as we are allowed to build through resource consenting and transmission constraint, we believe this company is very prepared for that future, which you outlined, Alan.

We've had 1 -- 2 more questions come in relating to previous resolutions and comments. The first one is from Stephen Mayne. A 9.5% shareholding is pretty low to warrant Infratil being given a board seat. Deion, can you comment why Infratil wanted a seat? And could the Chair explain why been given 14.3% of board seats after the retirement of Elena, reduces your Board to just 7? Shouldn't we just at least appoint 2 additional directors to better align Infratil's voting power on the Board with its Board representation?

I'll answer that question. And I'll go back to when the request for a Board seat for the Manawa Chairman came during negotiations. It's something we considered as a board at Contact, and it wouldn't be -- have been something we would have considered if it wasn't Deion. What we saw was, as Deion described in has address that, a deep, deep experience in renewable energy and probably -- very important for us his familiarity with the Manawa assets, and there's 26 diverse across the country. So we felt someone on the board that was quite attractive for us. Infratil has no right of appointment. That appointment was made as part of the transaction. It merely said we would appoint them to the Board and then Deion would stand for election from all the shareholders and that has occurred. So as I just reiterate, there's no right of appointment there.

We've had a question resubmitted that came in just prior to the meeting. This is from Bruce Walker. At a time of huge expense and household uncertainty, the directors' fees move as have seen. The directors are also involved with other companies and received more than one director's fee. Being a director should be a full-time job with one company. What is your comment?

Well, I expect to differ. And if it's a full-time job with one company, then it's called an executive. And I don't know, you probably don't have the board at that point. But the one thing I would say to this observation perhaps, not a question as -- the directors at Contact have deep backgrounds in there, both executive experiences and professional experiences. And they bring that to the Board for the various things that we do to assist and support the executive as the strategy of the company goes forward. So we bring challenge. I hope we bring wisdom as well, which is an often used word. And it's -- being a director is very different to being an executive.

Rob, this is a question for you from William White. You said in your speech that you will need to ensure that the mistake and brackets, made by Jacinda's captain's call of banning any new oil and gas explanation is not repeated. How are you planning to do that? Bearing in mind, labor have already stated they intend to reintroduce the ban. Should they be elected in the next election?

I'll give the personal view. I think that train has left the station. In terms of oil and gas, I think as Mike described it, hard decisions now. I'm not convinced at all that we'll see any scale exploration going forward. So New Zealand is going to prepare for a different world of gas and how we may go forward. My point wasn't so much about the gas ban going away or being restored and any change that would make was simply that any decisions regarding electricity or energy markets are well thought through, and people understand the consequences and we don't get unintended consequences.

There's just one last one around gas, and then we'll go back to the floor. What is the reason for shutting down the Taranaki Combined Cycle plant?

There's 2 reasons. One, it is absolutely now at the end of its life that would require a very substantial overhaul. It's 30-something years old now. 30 years old, which is -- makes it very much in its twilight years. It served us incredibly well. The bigger issue is we have no confidence in the upstream gas supply to service it from year to year. So that is the reason it's closing or 2 reasons it's closing.

Gordon Wallace, shareholder. It's really just in house really. And I love coming to these meetings or shouldn't I say love come because we see you personally. And I just don't understand your PR people making it so early. I know I'm getting old. But I mean, you try and get here. Yourselves most probably -- you must probably have a hotel or hotel somewhere close and you get a taxi here. I'm just saying, think of others because timing to get here, next time you have a meeting, maybe in about 5 years when you come to Auckland, I might be around, let us think of others. Now one other thing, sorry, I know you want to get on. Everybody's hungry. What I was going to say is, you've got these big screens here. Why not utilize them for -- we're town people. You've got these big projects all around the country, you'd be good to see them. It's -- I'm a country guy and state really, so I'm just saying, you've got the screens, try and make us with them with your PR people.

Well, thank you for those observations, and we'll certainly note the time. Also, I love watching the videos of these -- particularly the geothermal plants when they're getting built. So that's good food for thought. And particularly as we're -- we're building one of those plants as we speak. So thank you for that. Are there any other questions? Any other questions online?

Jenny Miller, again. Mr. Chair, it's a question for Jon Macdonald, who is the Chair of the HR and Peoples Committee. He acknowledges in the integrated report that it's slow to close the gender pay gap, and there's a few pages about it. But in your words, Jon, what are the actual issues, please?

Thank you for the question, Jenny. And first, I just want to clarify that when we're talking about the gender pay gap, that is not people of different genders being paid differently for the same role. We're talking about where we look in the entirety of all of the female employees and their remuneration relative to male employees. And so it comes down to the seniority of the different groups that we have within the different genders. And in the case of Contact, that's mostly due to a large number of senior male engineers who are long tenured at Contact and have been well paid, and also a large number of females and our customer support teams, in particular, where the remuneration is less than some of those engineers. That same dynamic is true a little bit in technology as well with our -- a great number of male technologists. When it comes to your question though for what we're doing about that, the main thing that we look to do is where we can grow people into especially those areas where women are underrepresented. So that means things like our [indiscernible], where we look to bring people -- bring them women into the generation. Similarly, our internship programs when we looked at technology with say, [indiscernible] and with Summer of Tech. We appreciate, though, this is a very -- it's a slow dynamic and it tests all of our patients, but we do dedicate that effort to it.

Sorry, just a little bit more. Given that it's today a week, what are we doing for the [ Maori Wahine ] and progressing them through?

There will be people here also who are able to fill in more detail on that specific question. But one of the things we do especially with our work around Taupo is look to make employment opportunities available to [indiscernible]. And so that does include Wahine Maori.

Yes. Look, we have a very active program across the full spectrum as it were. We obviously have a great graduate intake, which is invariably at least 50% female and a significant number also [indiscernible]. In the Taupo region itself, we have the Ka Hiko program, which is directly linked to our investment in the area, which is designed around tangata whenua development in particular. It is too good an opportunity with that level of investment and that level of technology being plowed into the Taupo region not to take our partners with us and that. And so we're quite proud of the progress we made. That is not to acknowledge there is more we could do, and we will continue to step into that space with pride.

Okay. Any other questions?

We have one last question general business from Stephen Mayne. Rob, New Zealand is regarded as a governance backwater by some Australian investors for refusing to mandate annual voting on remuneration reports, which is standard in many countries. At last year's AGM you dismissed following the laid of 0 and voluntarily giving shareholders a nonbinding vote on our remuneration policies. Is that still your position? And are you able to summarize what board discussions of any have occurred on the matter?

Well, firstly, I don't agree New Zealand as a governance backwater. And I think our remuneration report is fulsome and complies with New Zealand and we get New Zealand law and we get very good feedback from our institutional shareholders that they find that report very useful, particularly where we publish future or KPIs for the coming year. So I don't see we have an issue with shareholders around the remuneration report.

That was the last online question.

Okay. If there are no further questions, I now declare the meeting closed. For those present in the room, I'd like to invite you to stay and join us for morning tea. Please feel free to talk to my fellow directors and members of Contact's senior management and wider team who will be wearing name badges and look very -- very much look forward to the opportunity to talk to you. If you have a customer service query or would like to sign up as a customer, some members of our retail team are also here and more than happy to help. Thank you very much for your attendance and continued support of Contact. I wish you a safe journey home. [Foreign Language]