Good afternoon, everyone, welcome to the annual shareholders' meeting of Channel Infrastructure. For those of you who don't know me, my name is Chris Bougen. I am Channel Infrastructure's General Counsel and Company Secretary. Before we begin, just a few points of housekeeping. Firstly, in the event of a fire alarm, please make your way to the exits from which you entered, and follow the directions of the SkyCity staff. Secondly, the bathrooms are located at the back of the room, of the foyer from which you entered. Finally, if I could ask that you please turn your mobile phones to silent, that would be very much appreciated.
I'm sure you're all now familiar with hybrid meetings, but as a quick reminder, for those online, you can submit questions using the Q&A tab on the right half of your screen, at any time throughout the meeting. However, we will address your questions later once we get to the resolutions and general business. James Miller, our chair, will open voting at the start of the meeting to allow those online enough time to vote. You can cast your vote under the Vote tab on screen. Should you require any assistance, you can type your query into the chat function on screen, and one of the Computershare team will assist you. James will also give everyone fair warning before voting closes at the end of the formal business of the meeting. Shareholders will have two opportunities to ask questions.
The first opportunity will come when we discuss the two resolutions before the meeting today. The second will come at the end, when shareholders will be welcome to ask questions of our CEO, chair, or board members. Following a discussion of general business, we invite shareholders to join our board and management team for further discussion over refreshments in the room next door. With that, I will now hand over to James to formally begin the meeting.
Thank you, Chris, welcome, ladies and gentlemen, to Channel Infrastructure's annual shareholder meeting. My name is James Miller, I'm the Chairman of the board. I'm pleased to confirm we have a quorum of shareholders, therefore, I can declare the 2023 annual shareholder meeting open. On behalf of your directors, the CEO, and all the people from Channel Infrastructure, I extend a warm welcome to you either here with us at SkyCity or online. We do value the opportunity for board and management to meet shareholders in person, I'm delighted to be moving back to the hybrid format for today's meeting. Joining us here today are my fellow Channel Infrastructure directors, Anna Molloy, Andrew Holmes, Lucy Nation, Vanessa Stoddart, and Paul Zealand. Lindis Jones is joining us online as he needed to be in Australia for operational reasons.
As you'll remember from last year's annual meeting, with the transition to Channel Infrastructure and to the import terminal business, we recognized the need for a different skill set on the board going forward. We began a board refresh. At the same time, we saw our former chair, Simon Allen, announce his intention to step down. He subsequently finished his chair as Channel chair on the 1st of July. I want to take a moment to acknowledge Simon for his eight years of service, leading the company through a significant period of change for the business. At last year's ASM, we also saw Lindis Jones step down. We welcomed Anna Molloy and Andy Holmes to our board.
I'm confident we have a strong and capable board who have the right skill set to support our management team to drive our strategy forward, providing the infrastructure to support New Zealand's decarbonization and lowering our cost of capital. We'll continue to focus on planned board succession and renewal to maintain a strong independent board with the right skills to take the business into its exciting future. Our resolutions, today's resolutions, sorry, include no director nominations as there is no retirement by rotation this year. We're also joined by our new CEO, Rob Buchanan, and members of the management team, as well as the representatives from our external auditors, Ernst & Young. Legal advisors, MinterEllisonRuddWatts, and share registrar, Computershare. Moving on to today's agenda.
Ahead of the formal resolutions, I'll talk to our 2022 achievements, our focus on delivering a sustainable business model and driving future returns for you. Importantly, our CEO transition. I'll then welcome the new CEO, Rob Buchanan, to talk to the 2022 operating performance focus for this year and future growth opportunities. Online voting is now open, and shareholders attending online may cast their vote at any time until I close the voting later in the meeting. Let's move to the formal address. Two years ago, you voted overwhelmingly in favor of the transition to an import terminal, with the commitment from us that this would be the best way forward, best way to deliver sustainable returns.
2022 has provided you the proof that this was the right direction, and I'm proud that the team has delivered all that was promised to you. Channel Infrastructure has had an incredible year. With the transformation of the business, the financial results we have delivered, and the sustainable business model we now have in place, we have delivered against all of the 2022 priorities. We safely completed the shutdown of the refinery operations and transitioned to an import terminal on the 1st of April last year. The conversion project, which includes the decommissioning of the refinery, as well as the transitioning of our workforce, continued to track to plan and to budget, and is now significantly de-risked. A large portion of the work is complete, and the budget is locked in.
The commissioning of contracted new private storage is also progressing well, with circa 45 million liters of additional private storage capacity due to be commissioned in the third quarter of this year. We have successfully supported our workforce through significant change with an extensive program of workforce transition support. I'm proud to say 97% of those who left the business in 2022 have been supported into their next opportunity. Alongside this work, we have been successful in retaining key talent and developing talent through a significant period of change. Our refinancing program was successfully completed. The refinancing of our bank debt increased the lender group from two to five banks. Together with a successful 100-million-dollar bond issue, this shows strong support from the capital markets for our new business model.
This has diversified our funding sources, extended our tenure, and lowers our cost of capital to align with that of an infrastructure business. Our new business model is already delivering growth, with additional private storage revenue contracted. We have delivered the first profit in over three years, and this, along with strong cash flows, has meant a return to dividends for shareholders within one year of conversion, earlier than the one-two years we had anticipated at the time of the shareholder vote. By now, our shareholders would have received a fully imputed dividend of NZD 0.07 per share, comprising a NZD 0.05 ordinary dividend and a NZD 0.02 special dividend. This represented an annualized dividend yield of some 6.5% for the first 9 months of terminal operations. Our improved financial and risk profile has been reflected in our share price.
In a year when the New Zealand market declined 12%, and our previous refinery peers delivered a total shareholder return of -10%, it is extremely pleasing that our new business model and delivery of strategic initiatives resulted in a 52% increase in share price in 2022. This followed the 71% increase we experienced in 2021 and saw us return to the NZX50 in March this year. Over the past year, Channel Infrastructure has made a number of changes to its board and governance processes to align with the new business operations and strategy. We have also committed to climate disclosure and reporting and made significant improvements in our climate change governance through 2022.
We chose to make our first act as Channel Infrastructure the publication of the company's first sustainability report, which was aligned to the recommendations of the Task Force on Climate-related Financial Disclosures and was published more than one year ahead of mandatory reporting. We have an ongoing commitment to climate action and to ensuring a long-term sustainable future for our business. A few weeks ago, we published an updated governance statement which reflects a revised health, safety, environment, and operations board subcommittee. This new structure allows our directors with specialist expertise in these areas to increase their time and focus on the continued improvement of health, safety, and environmental risk at Channel. In November last year, we announced a change in CEO.
As with all of the change we navigated over recent years, this too was carefully planned for, with the Board approving a three-year business plan ahead of Naomi's departure, and Naomi and Rob worked together for two months to ensure a smooth and seamless handover. Naomi James, our previous CEO, finished with Channel at the end of March. Naomi's leadership during the most difficult time in the company's history was nothing short of first class. I join with the entire Board in thanking Naomi. Naomi joined us at a time of immense uncertainty in the business and leaves us with a long-term sustainable business model in place, a range of exciting growth and opportunities ahead, and a talented and committed team at Marsden Point. Rob joined the team at the end of January and took over as CEO from the sixth of March this year.
Rob has deep experience in the energy and infrastructure sector. Along with the team at Marsden Point, will continue to execute and deliver on the Channel Infrastructure strategy and plan to drive the business forward. Let's hand over to Rob now.
Thanks, James. Welcome everyone. I'm delighted to be joining Channel at this important time, and it's great to be here for my first ASM as the new CEO. Also joining us here today is Jarek Dobrowolski, our CFO. Jack Stewart, our GM Operations. Caz Jackson, our Chief People Officer, hiding down the corner there. Peter van Cingel, Business Development Manager and Phil Jones, GM Projects. You've already been introduced to Chris Bougen, our General Counsel and Company Secretary. Steve Lavelle, who heads up our IPL team is not with us today, but that rounds out our management team. Since joining at the end of January 2023, I have been impressed with the clear vision and highly capable team who are working hard to deliver on our plans for the future.
The business is in great shape, and it's a real tribute to our former CEO, Naomi James, and the wider team at Channel Infrastructure who have worked hard to transform the company during an extremely challenging period of time. Let me start my address by talking about the year that was, and then jump straight into opportunities for your company. As a high hazard business, Channel has always had a firm focus on health, safety, and protecting the environment, and of course, supporting our people through the change that has impacted them. This was even more important through the period of the refinery closure and intensive decommissioning that was undertaken in the first half of 2022. The team have done a superb job of delivering on an extremely complex transition safely and with great care for the protection of the environment around our site.
With 0 process safety incidents throughout the time of intensive and hazardous work, it is a pleasing result and goes to show the emphasis on safety that is a feature of Marsden Point. Alongside the work that remains underway to decommission the refinery plant in a way that minimizes our impact on the environment, a huge focus for the business in recent years has been the remediation of known contamination on our site. It is pleasing that due to the investment the business has made, we are seeing a notable decrease in the legacy contamination of the groundwater beneath our site. The contamination plume has shrunk by 30% over the past six years. As part of our recently renewed resource consent, we will continue to operate our network of groundwater remediation wells as long as required to remediate this historic contamination.
It is also a source of great pride for the business that throughout the transition, and with the large step down in staff numbers, 97% of those who left the business in 2022 were actively supported into new roles, training, or opportunities within six months, exceeding our company target of 90%. As you'll be aware, Channel has three sustainability targets around supporting employees seeking new employment, net zero Scope 1 and 2 emissions by 2030, and supporting the decarbonization of the wider transport sector. More detail around these can be found in our sustainability report. These targets remain a priority for the business going forward. I would note for shareholders that our assets came through Cyclone Gabrielle well, with limited impacts to our site and the pipeline.
This reflects the work done over the past few years and the efforts of the Marsden Point team, who prepared well ahead and managed continuous operations throughout. With the new business model comes a significantly improved financial profile, which we see very clearly with the 2022 financial results. Our long-term customer contracts with our three customers, BP, Mobil, and Z Energy, each with an initial 10-year term, include take-or-pay commitments to support debt funding of conversion costs and provide revenue security. All fees are indexed to PPI, which provides an additional protection in the current inflationary environment and earnings upside with our strong operating margins. The strength of these contracts was demonstrated in 2022, with 94% of our revenue underpinned by take-or-pay or fixed revenue commitments and 88% of our revenue indexed.
These contracts, together with the extensive debt hedging profile we have in place to manage interest costs, deliver a high degree of certainty in our cash flows. These strong cash flows funded a significant portion of conversion costs in 2022, with leverage at 3.4x at the end of 2022. In terms of the conversion project, we remain on track and to budget with the decommissioning and workforce transition largely complete and the focus now on completing terminal upgrade projects and embedding our new terminal systems and processes. At the end of March 2023, we had spent or committed some 74% of the conversion budget. The project is now substantially de-risked. As a result, we have projected stable earnings, strong cash flows, and a strong balance sheet. We have now returned to dividends.
It was important to us that we are clear with our investors how we intend to grow shareholder value, which is why last year we released our capital allocation framework. With the stability that comes from our long-term contracts, we now return to dividends with a dividend policy to pay out 60%-70% of normalized free cash flow, which leaves the other 30%-40% of cash flow available to allocate to deleveraging and growth. We're continuing to target net debt to EBITDA 3-4x , consistent with the shadow investment grade rating of BBB+. Finally, we have a number of growth opportunities available to us with the new business model.
Our key investment criteria will be an above-WACC return on investment and customer contracts that provide a good level of revenue certainty, as you have already seen us do with the private storage growth opportunities contracted to date. If we get this right, that in turn generates more cash flow to fund dividends and growth, driving long-term shareholder value. In February this year, we released our results. We also released a new long-term fuels demand outlook provided by industry experts, Hale & Twomey. We covered this in great detail in our results presentation and the annual and sustainability reports which shareholders will have access to. However, I will just spend a moment summarizing the key findings and how they relate to Channel's future. Hale & Twomey's outlook shows that petrol demand is peaking and then declining as previously expected as the light vehicle fleet electrifies.
Diesel demand is expected to stay stronger and transition much more gradually, particularly for agriculture, industry, and heavy transport. The point I wanted to draw shareholders' attention to today, and which is also included here on page 15 of our presentation, shows the expected growth and demand for jet fuel. Auckland International Airport expect the recovery and passenger numbers to reach pre-COVID levels by 2025. Hale & Twomey have said they expect jet demand to have recovered by 2026. As we saw in the five years pre-COVID, jet fuel demand increased at a rate above passenger growth due to the increase in long and ultra-long haul flights, as well as premium travel. Hale & Twomey expect these trends to continue to drive growing jet fuel demand.
Given the shift in the fuel mix in New Zealand and our supply route for jet fuel to Auckland International Airport, the new long-term product demand outlook shows us that jet fuel will underpin the long-term utilization of Channel's assets. Combined with our renewed financial profile, this provides a strong platform for us to consider new growth opportunities. The final point I'd like to draw your attention to is that over time, the proportion of renewable fuel throughput at our facilities is expected to increase. This is based on increasing use of biodiesel in industry, as well as gradual uptake in transition to sustainable aviation fuel. These drop-in or second-generation fuels are able to utilize existing facilities, including our jetty, tanks, and pipeline to Auckland. This shift to increasing renewables has already started with New Zealand's first shipment of sustainable aviation fuel passing through our facilities in 2022.
The decision to shift our operations to an import terminal model was made following an extensive and public 18-month strategic review, involving significant consultation across government, customers, the local community, as well as approval from you, our shareholders. As part of the process, the government assessed New Zealand's fuel security and resilience and is considering measures to ensure a minimum level of fuel stocks are held in country to ensure a resilient fuel supply chain. New Zealand has always relied on imports for its fuel, but with the conversion from refinery to import terminal last year, crude oil imports have been replaced by imported refined fuel products, which now come from a range of refineries across the Asia-Pacific region.
At the same time, and as a result of this transition, there are new and different resilience risks that come from an import supply chain. With that in mind, last year, the New Zealand government released its fuel security policy, which has two parts. The first is government procurement of 70 million liters of strategic diesel reserve, and the second is a new minimum onshore fuel stockholding obligation for fuel wholesalers. Both of these represent opportunities for Channel's business and allow us to continue playing an important role in supporting our customers and the government in respect of New Zealand's fuel security.
With the business now reset, our return to profit and dividends, and having passed the milestone of our one year of successfully operating as an import terminal on one April, our focus is on pursuing the exciting future growth opportunities we have in front of us, which build on the capabilities of our team and the assets we have at Marsden Point. Channel Infrastructure owns highly strategic jetty storage tanks and pipeline infrastructure with significant opportunity for greater utilization of our assets. We have over 400 million liters of unutilized tank capacity and 177 hectares of land. We have world-class people who over the past two years have proven they can execute highly complex projects with precision and safety at the fore. We are constantly innovating by adapting the latest in technical and innovation from abroad.
I'd like to show shareholders an exciting example of this via a short time-lapse video of a recent conversion of one of our crude tanks to jet fuel storage. This project involved the replacement of a floating roof with a geodesic dome roof manufactured offshore and constructed inside the tank at Marsden Point in a matter of weeks. This is a great example of the significant repurposing potential of our facilities. In this case, to support our customers in providing Greater New Zealand fuel security and resilience. I'm sure you agree, an impressive example of what we can do. I wanted to give shareholders a picture of where our company could be positioned in the future. Today, we are a critical part of New Zealand's fuel supply chain, and we are taking responsibility for our role in supporting New Zealand's decarbonization.
That includes utilizing our assets to support our customers to bring down their Scope 3 emissions with the shift to lower carbon fuel options. Longer term, ensuring we are supporting the delivery of new liquid fuel options that will help New Zealand overcome some of the decarbonization challenges that we face as a country. We will also continue to support our customers and the government with their requirements for increased fuel storage and resiliency through the significant capacity we have at the Marsden Point site. Beyond this, our strategic position in the liquid fuels industry, strong financial profile, and reset cost of capital, for the first time, provides an opportunity for our company to play a much greater role in providing liquid fuels infrastructure across New Zealand, leveraging our strong operating capability as a terminal business.
This includes, for the first time, considering stepping out beyond Marsden Point, where opportunities for growth present themselves. Our longer term growth initiatives are focused around further leveraging our highly strategic site at Marsden Point to support New Zealand's energy transition and decarbonization. The Fortescue Future Industries study, which is focused on the opportunity to convert renewable electricity to hydrogen and eSAF at Marsden Point, is an example of one of these initiatives. These longer term opportunities are not just positive for our business, but they also offer us the opportunity to play an important role in decarbonization from sustainable aviation fuel and hydrogen to renewable electricity storage or firming. Our long-term growth opportunities are good for business and good for New Zealand.
In November of last year, following the announcement of the Producer Price Index, which is an inflation measure our customer contracts are linked to, and successful additional terminal storage we contracted, we upgraded our 2023 financial guidance. We now expect EBITDA of some NZD 82 million-NZD 86 million. Working this through, what it means for you is an indicative dividend range for next year of NZD 0.09-NZD 0.11 per share. We released our Q1 conversion update a few weeks ago, which confirmed the permanent decommissioning of the refinery process plant is now in the final stages, and we will be completed in Q2 2023.
The terminal upgrade works and private storage tank conversion works are ongoing and progressing well, with over half of the contracted private storage capacity now commissioned and a further 45 million liters of jet private storage expected to be commissioned during Q3 of 2023. As part of this update, we also confirmed that the updated and lower transmission costs from 1 April have now been agreed and are in line with the assumptions we factored into our 2023 cost guidance. Turning to our priorities for this year. It is my immediate priority to continue delivering on the strategy set up for the company, which is, of course, to grow shareholder value through continuing optimization of our business, while delivering on our aspiration to be a world-class operator of our import terminal assets.
Our priorities this year will be to continue to be New Zealand's leading fuel infrastructure company by ensuring we deliver safe, reliable, and cost-efficient terminal operations and the on-budget and on-time completion of remaining conversion works. We're continuing to work hard with our customers to optimize the fuel supply chain and building greater supply chain resilience in the system, which is good for New Zealand. We will also work hard to deliver on the near-term growth opportunities that we've talked about here today, and ultimately, to deliver increasing returns to shareholders through dividends in an inflationary environment. I believe the opportunities for Channel Infrastructure to leverage its unique and highly strategic asset base to facilitate New Zealand's energy transition are significant, and I'm really excited about the future of our company. With that, I'll hand back over to you, James.
Thanks, Rob. Now to move to the formal part of the meeting, resolutions and voting. As a reminder, online attendees can vote under the Vote tab, while those in the room can use either the voting proxy form that was sent to you with the notice of meeting or an alternative voting form given to you via Computershare when you entered the meeting. Please ensure you sign your form. If anyone is unsure how to complete the voting form or hasn't got a form, if you can go to the registration desk, someone will be able to help you. We will also have time for questions. I will call for questions on each of the resolutions as we address these 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, 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 proxyholder. Resolution 1 relates to the authorization of the auditors' fees and expenses for the 2023 financial year. Is there any discussion or questions relating to this resolution? No. Okay. There seems to be no questions. I put the motion that the directors be authorized to fix the fees and expenses of Ernst & Young as auditors to the company for the financial year ending 31st of December 2023. I now ask shareholders, please vote on Resolution 1 on their papers or online.
We now move to resolution 2, which is the total amount of directors' fees that may be payable annually to all directors taken together be increased with effect from the commencement of the current financial year by 3% from NZD 900,000 to NZD 927,000. Such sum to be divided among directors as directors deem appropriate. I want to take a moment to explain why we are proposing to increase the director fee pool. Firstly, the fee pool was last increased five years ago, despite an extremely high workload during the strategic review and business transformation, including 159 board and committee meetings over the three y ears. The board considered it was not appropriate to increase fees, recognizing the uncertain financial position and workforce changes that were occurring. Secondly, we have revised the Health and Safety Subcommittee.
The chair and members of this committee should receive additional remuneration for this committee work, as is consistent with the market practice for companies operating in the high-hazard industries and with our other board subcommittees. Thirdly, as is the norm for the market, we wish to maintain a level of headroom in the fee pool to manage any board succession that might occur and to pay directors for significant additional work on ad hoc committees for special projects. The proposed new fee pool would maintain the current headroom at approximately the current level. Finally, the proposed increase is modest relative to the inflation of around 7%. This is why, after our review, the board is recommending shareholders vote in favor of Resolution 2. Is there any discussions or questions relating to this resolution? Okay. Coralie.
Hi. Coralie van. I can hold it. Thank you. Coralie van Camp, shareholder. I find it very disconcerting from the meeting two years ago, Mr. Chair, that you're the only familiar face here. If all the work was done before these people came on the board, I think they need to prove themselves before they get a raise.
Thank you, Coralie. Not 100% true. Vanessa's been here much longer than me. So has Paul.
I've been here four years
We've been here six years.
Yeah.
You were stationed in Australia.
I wasn't. I'm a Kiwi through and through.
Me too.
We hear you. Like there's obviously quite a few reasons. Primarily the reason is we want to refocus our health and safety committee to a specialized committee, and we do need to pay for that, for that, as they're currently not paid.
Okay, yes. Thanks. Malcolm Tweed, New Zealand Shareholders Association. Would I be correct to assume that in the proposed increase, the words headroom mean contingency? Right. We're not expecting you to spend it all
Oh, yeah, no.
Yeah, no, or yeah, yes.
Sorry. It does mean contingency. You have a certain extra amount that's available that if something additional comes up, such as a special project that you may pay for or alternatively you have board succession that you need to have an additional director on for a short period of time, those types of things. They happen from now and then. We wanted to keep that amount the same as it currently is today.
Yeah, 'cause some would argue that the change in the business model, all right, has a new or a different set of skill bases, in large part as compared to what we as shareholders were investing in via fees in the past.
Yeah, for sure. We did benchmark that, so we've got a reasonable handle on that.
Thank you. Online?
No. Okay. I now ask shareholders to please vote on Resolution Two on their papers or online. Ladies and gentlemen, that concludes our discussion on items of formal business. In a couple of minutes, I will close the voting system. Please ensure that you've cast your vote on all resolutions online via the Computershare online meetings platform. I'll now pause to allow you time to finalize these votes. Yeah, you're good to go. Thank you, ladies and gentlemen. The voting is now closed. For those in the room, the Computershare team will come round to collect the ballot papers.
Our auditors, Ernst & Young, will act as scrutineers, and once they've completed their review. The final results of the poll will be released to the NZX and posted on our website later in the afternoon. That we've completed the formal part of the meeting agenda, I now invite any questions relating to general business that shareholders wish to raise, including in relation to my address or Rob's presentation earlier in the meeting. Are you? Yeah.
Yes. Malcolm Tweed again from New Zealand Shareholders' Association . Rob, would it be useful to get a general view from you as to the step up in EBITDA that you're forecasting for the year, where you're taking essentially a 50% increase up to the NZD 82 million-NZD 86 million range. If you can build a sort of a bridge that sort of gives us a sense as to how well you've sung for your supper.
Sure. Good question. Shareholders might be reminded that last year we transitioned to become an import terminal on one April. We spent the first quarter of last financial year still operating as a refinery. What you're seeing there from last year's EBITDA to this year's EBITDA is effectively the step up in two things. One, a step up in the fact that, last year was three-quarters of a year of operation as a terminal, and this year it's a full year as operation of a terminal. Secondly, the PPI indexation taking place.
I'm more interested in how we get to 82-86 from the 52-55.
Yeah. The large part of that, so you're referring to the financial-.
The forecast now.
Yeah. The forecast is for this full financial year, the 2023 financial year, which is a full year of terminal operations. Last year was only three-quarters of a year of terminal operations. A large part of that jump is operating as a terminal for a full year, vis-à-vis operating as a terminal for three-quarters of a year. The second part is the PPI indexation.
Mr. Chairman, am I correct in remembering at that special meeting two years ago, which was very poorly attended, today's meeting is much better, that it was actually the four major oil companies that needed to be convinced to switch to an import terminal, and Mobil were hanging out till the end? They were the major shareholders who voted overwhelmingly for to approve it. Are they still the major shareholders today?
Okay, I'll break it down. They are still the major shareholders that are on the register. You know, slightly diluted from where they were when we did the capital raise. No change from then. When the resolution was put forward, obviously the major shareholders didn't vote. That's correct, of course?
Correct.
Yeah. Yeah. We got that right. That was a decision made by all the minorities, not the major shareholders, 'cause they have obviously a conflict with, you know, their commercial position. No, the first part's wrong. Yeah.
Okay. Thank you. The second question is about security of supply. It was reported, I think in The Herald not terribly long ago, that you received one shipment of bad fuel. I thought that the policy might be to send it back, but the report said that it got mixed in with other fuels. How did that go for you?
Rob, or somebody. Jack.
Do you wanna take that?
In December, we received at Marsden Point a cargo of aviation fuel, which was tested on arrival, as all product is. As part of that testing, we detected a problem with it. Some of the fuel was corrected at Marsden Point, was used in the supply chain. The majority of it was actually sent back for reprocessing elsewhere. We do have limited ability to correct fuel at Marsden Point, the majority of it was sent for reprocessing.
David Grieve. In the annual report, I was looking through to look at the directors' shareholding list. I couldn't find it anywhere in the annual report. The list of shares held by the directors. It's always fascinating to see how much vested interest they have. The second question, on the sustainability report, I was very, very surprised to have a 90-page report on sustainability. I'd be interested as a shareholder what that cost the shareholders to produce, and if it's your plan in the future to extend the report to that length.
Okay. just checking, did we have the shareholder? No. Yeah, but it's disclosed. It's to the stock exchange, right? It is.
On the website.
Yeah, yeah. It's on the website. Yeah.
It's on the website.
Yeah. The shareholding is in the annual report. I think it would be an improvement to put it into
I'm just checking. Yeah. Sorry.
Chris? Is it in there or not?
No, it's on the website, but.
It's on the website. Anyway, either way, it's a good spot, so thank you. It has been all disclosed to the NZX as per normal requirements. Now, with respect to the sustainability report, obviously there's, yeah, we're trying to reset the business so that a wide range of stakeholders are confident in our long-term sustainable future, particularly in a carbon-constrained world. Our first position is an opening statement where we set our case that we believe we've got a sustainable story.
As you saw with the Hale & Twomey report, that we've been able to articulate that we think that there's a sustainable business model based on jet fuel alone, but also with the other fuels maintaining probably longer than we anticipated, but also at a higher volume. All of that's pretty good for the business. Before that report was done, I can remember many a report that would be showing significant reductions happening in the thirties and forties in New Zealand. Some of them out of the Crown, the Twomey report, et cetera, along those lines. We've been able to articulate our case with the help of experts with Hale & Twomey, in conjunction with Auckland Airport, and get an aligned view that gives us confidence about that.
Yes, the initial view, there's, you know, a lot of people who need to convince on this. We took our time and effort to articulate our case in that sustainability report. We wouldn't anticipate that it would be that long in the future. You know, these things you always want to shorten down. It's easier for shareholders to read. As for cost, Jarek, can you give me any idea what that costs?
I think the cost overall, the price we pay for the sustainability report is not significant in the context of it being a main medium for us to clearly articulate to our shareholders and stakeholders what our role is in decarbonizing New Zealand. I think from memory, we're paying something like NZD 30,000-40,000 per annum for the cost to print and prepare the report. Although going forward, the report may not be as lengthy as it has been, it is going to be a requirement in New Zealand to report emissions associated with our business and the supply chain. There will be a requirement for us to continue that practice in terms of, like, the content and length. It may change over time, obviously.
You know, you probably need to remember that there are certain financial institutions who can't invest in assets that are involved in the carbon sphere. As you've probably noticed, when I mentioned earlier on, we increased our number of banks from two to five, which is really good. That, you know, that just shows the confidence from the market in us. Also, there's certain equity shareholders that, you know, want to see a clear plan from companies how we're gonna reduce emissions going forward. That's part of that story that's in that report. Yeah. Yeah.
Roy Taylor, shareholder.
Sorry, what was your name?
Dealing with the rejection ship, who paid the return costs on the commodity that went back? Secondly, the testing that was done here, is this different to the testing done at the point of origin? Why did it fail here if it got out of wherever it came from?
Okay, I'm gonna go to Jack on that one.
As to the cost, our customers are responsible for cost of freight of product to our location at Marsden Point, and we're responsible for cost of returning that for reprocessing. Without getting into the technical details, the particular quality that it failed on was one that was associated with some additive dosing. It was, if you like, the response of the product to that additive that was dosed that created the issue. Again, that's as far as we know as the operator of infrastructure rather than the owner of the product and the cargo, which was one of our customers.
I'm just gonna check online. No. Okay. yeah. No, you're fine. Okay. There being no other matters of business, I thank you for attending in person and virtually today. I'd like to thank shareholders for making the time to connect with us today. For those in the room, please join us for some refreshments. We'll be able to have the opportunity to talk to board and management team on a one-on-one basis. I now declare the meeting closed. Thank you.