Good afternoon, ladies and gentlemen, and welcome to Channel Infrastructure's annual shareholders meeting. I'm Chris Bougen, General Counsel and Company Secretary of Channel Infrastructure. Before we begin, a few practical matters. Should the fire alarm sound at any point, please follow the instructions of the maritime room staff. We'll exit through either the main front entrance over that way, at the balcony doors, behind you, and through the Maritime Museum via the loading bay, which is out that way. We will need to congregate below St. Alice, which is just across the road on the other side of this building. Bathrooms can be found at the back of the main entrance over that way, and of course, can I please ask that you all take a moment to ensure your cell phones are switched to silent mode.
As a reminder, this is a hybrid meeting, so there are some shareholders joining us today online. For those logging in online via the Computershare online platform, if you have a question, please select the Q&A tab on the right of your screen and type your question in the box. This function can also be used to request assistance from the Computershare team online. Your question will be read out during the Q&A section of the meeting later on. For those in the room, when it comes to question time, please raise your hand and a microphone will be brought to you. Please do wait until the microphone comes for the benefit of those shareholders who are listening online.
Shortly, James will declare the meeting open and, at the same time, voting will open for those shareholders wishing to submit votes today. James will close all voting at the conclusion of the consideration of the resolution on today's agenda. For shareholders who are online, once voting opens, a tab will appear on the screen. You may select your voting direction on the resolution from the options shown on the screen. If you have any questions, please contact one of the Computershare team via the Q&A tab online. For those in the room today who are entitled to vote, you would have received voting papers on the way in. Please mark your vote as we discuss the resolution, and a member of the Computershare team will collect the voting forms at the end of voting.
Once collected, these will be combined with the votes already received ahead of the meeting and any votes received online during the meeting. These will be audited, and the results will be released to the NZX and ASX shortly after the meeting. With that, I will now hand over to James for the formal part of the meeting.
Thank you, Chris. Good afternoon, everyone, and welcome to the Channel Infrastructure shareholder meeting. I'm James Miller, and I'm Chair of the board. We have a quorum of shareholders, and the meeting is now open. This afternoon, I'll talk about the critical role Channel plays in supporting New Zealand's fuel security, our focus on growth, and the returns we have delivered for our shareholders. Chief Executive Rob Buchanan will then run through our 2025 operational and financial performance. Rob will also discuss the growth projects we are currently executing on and those that lie ahead of us. We'll then complete the voting on the resolution, as set out in the notice of meeting. Following the meeting, we invite shareholders to join the board and management team for some light refreshments. Yep.
Our board has the right mix of skills and experience aligned with our strategy, being a world-class midstream energy infrastructure company across Australasia. Joining me here today are my fellow directors. Andrew Brewer. His deep global experience in the leadership of a world-class fuel terminal and petroleum operations, and is instrumental in championing our company-wide safety culture. Andrew is Chair of the Health, Safety, Environment and Operations Committee. Angela Bull brings a strong understanding of large scale commercial land, property and infrastructure development, is crucial to our energy precinct ambitions. Andrew Holmes also brings global experience in downstream energy industry and a deep knowledge of aviation fuel supply chains, helping connecting us with our global customers. Andy is Chair of the People and Culture Committee.
Anna Molloy serves as the Audit and Risk Committee Chair, brings strong analysis and investment experience and her background as a chemical engineer. Felicity Underhill, who has deep experience in future fuels, innovation and commercialization of energy projects. We're also joined today by our Channel's executive team, including our Chief Executive, Rob Buchanan. Before I begin, I'd like to take a moment to thank the wider Channel team for, who continue to deliver outstanding results for our customers and shareholders. Channel has developed a proud reputation for its ability to deliver large and complex capital projects safely, on time and on budget. Delivering financial results in line with or above what we have promised to our shareholders.
Safely and reliably operating New Zealand's largest fuel import terminal 24 hours a day, seven days a week. Showing New Zealand, New Zealanders we can be trusted to keep them moving, particularly when fuel supply chains are under added scrutiny as they are at the moment. Recognizing the strategic opportunities ahead for the company, the board is pleased to have retained Rob as Chief Executive through the remainder of the decade to continue to lead the team's delivery of the opportunities and long-term value to shareholders. We're living in an increasingly uncertain world, the role of companies like ours in supporting national fuel security is more crucial than ever. We have seen this played out in recent months with the Iran conflict causing disruptions to global fuel supply chains that we felt for some time.
Our team takes very seriously the important part we play in keeping New Zealand's economy moving. That is why they work so hard every day to operate the critical assets safely and reliably for New Zealand. At the same time, I'd like to remind shareholders of the importance of having more fuel stored in New Zealand. This aligns with the government's own fuel security study, which was completed last year. The fuel security study found that one of the most cost-effective ways to increase New Zealand's fuel security is to increase the in-country storage of the fuels.
In recognition of the importance of Marsden Point to the New Zealand economy, we continue to advocate for a designation of the area as a special development zone alongside our neighbors, Northport Group, and others who operate in the area. As you'll know, our vision is to be a world-class energy infrastructure company. Shareholders will be familiar with this slide that shows our strategic priorities, and we are well underway executing against this ambitious strategy. I'd now like to play a short video which shows who we are today and our vision for the future.
Channel Infrastructure is a world-class operator of energy infrastructure in New Zealand and Australia. In New Zealand, we are the largest fuel import terminal, storing and distributing 40% of New Zealand's fuel, including 80% of New Zealand's jet fuel. We play a critical role in New Zealand's fuel supply chain, with over 290 million liters of storage on site and an additional 350 million L of available tanks. Of this, we are about to bring online over 120 million L of diesel and jet fuel storage to further boost New Zealand's fuel storage capacity. We also provide high-quality fuel testing services to ensure the fuel imported into New Zealand is of the standard Kiwis can rely on.
In Australia, we own a 25% share of the Somerton Jet Fuel Pipeline, a critical infrastructure asset in Melbourne's jet fuel supply chain. Since our import operations at Marsden Point began, we have added 100 million L of jet, petrol, and diesel storage. With more projects underway right now, including additional diesel and jet storage coming online shortly, Channel helps underpin New Zealand's fuel supply chain. In the last four years, we have invested over NZD 210 million in our assets, adding to our resilience and supporting future growth. We have diversified our products and customers, including the development of a new bitumen import terminal, and we are now listed on both the NZX and ASX. We aren't stopping here. Channel Infrastructure has a clear plan for growth.
The Marsden Point Energy Precinct presents an exciting new range of energy projects that will boost New Zealand's energy resilience, transform our company, local community, and New Zealand. This includes the proposed biorefinery and future fuels manufacturing to opportunities for even more fuel storage. Our commitment to world-class and proven operator capabilities positions us to grow beyond Marsden Point. This could include further value-adding fuels infrastructure acquisitions in New Zealand or Australia that add to the quality of our existing assets. We are Channel Infrastructure.
I'm pleased to report we've made great progress towards becoming an infrastructure partner of choice for our customers. Over 2025, we continue to improve the reliability and resilience of the import terminal system. We made it easier and cheaper. We continued to demonstrate strong financial discipline and to be a good neighbor and a good citizen, which is essential to our license to operate. The progress on the first and third pillar of our strategy allows us to focus on the middle pillar, which we're incredibly well-positioned to continue to execute on our growth ambition. The board is firmly focused on providing stable and growing dividends to our shareholders.
Reflecting our confidence in the business outlook alongside our growth to be efficient with shareholders' capital, last year we increased our dividend payout ratio from 60% - 70% normalized free cash flow to 70% - 90%. We're also pleased to introduce the dividend reinvestment plan during the year. This has had excellent uptake of over 20% of our investors opted to receive additional Channel shares rather than cash for their dividend entitlement. Following a stronger than anticipated normalized free cash flow generation in the second half of last year, the board was delighted to have declared a total dividend of NZD 0.13 per share in 2025. This exceeded our guidance by half a cent and represented an 18% increase in total dividends for the year.
If you had held your Channel shares since 2021 vote on the transition to a dedicated import terminal, you will have received an impressive cumulative dividend return of around 50% of the share price at the time of that decision. The board continues to focus on stable and growing dividends, as well as an equitable treatment for all shareholders, which includes having supported a fully pro rata method of capital raising in 2024. While the company has no current intentions to do so, if we raise capital in the future for a significant opportunity, the board will use its best endeavors to maintain this approach to ensure our existing shareholders can continue to have equal opportunity to share in the company's success.
Looking ahead to the 2026 financial year, we indicated back in February that we expected EBITDA of between NZ$95 million and NZ$100 million. This increase on 2025 reflects the early commencement of the Z storage process, project and the completion of the Higgins Bitumen Import Terminal, good cost control, and the PPI indexation of our storage contracts. Since we provided this guidance, we have agreed to bring online a significant amount of new diesel storage for the New Zealand government, which will provide us with additional NZD 8 million in revenue this year. The board is also pleased to announce today that the Z Energy jet tank is expected to be ready for commissioning in July 2026, six months ahead of schedule. With the revenue from this project scheduled to commence early at commissioning.
Higgins has also expanded the original scope and capabilities of their Higgins Bitumen Import Terminal, resulting in total revenue over the 15-year contract term increasing to NZ$57 million from NZ$45 million, and the total cost of the project increasing to NZ$25 million to NZ$27 million. Our business model was very intentionally set up for stable cash flows, with the customer contracts structured with an index take-or-pay mechanism and around 50% of our revenue that is completely independent of fuel volumes. This makes our company relatively resilient to significant demand or supply shocks. Uncertainty remains around New Zealand's fuel demand in the current high fuel price environment. Reflecting the additional revenue balances against an uncertain outlook, the board today slightly increased Channel's EBITDA guidance between NZ$97 million - NZ$105 million.
As I said earlier, we continue to drive performance to deliver our strategy, a testament to the hard work and dedication of the Channel team. We have continued to significantly outperform the NZX 50, delivering a total shareholder return, which includes dividend share price performance of 63% last year. Alongside significant investment in our import terminal and the execution of growth projects, we have delivered a total shareholder return of 213% since we converted to a dedicated fuels import terminal in April 2022. Channel's primary listing proudly remains on the NZX. However, late in 2025, we listed on the ASX with a foreign exempt ASX listing. This important milestone provides access to a broader pool of institutional and retail shareholders to support Channel's continued growth and reflects the significant opportunities for growth that are ahead of us.
I'll now hand over to Rob to say a few words.
[Non-English Content] Hi, everyone. Welcome. I'm Rob Buchanan, the Chief Executive of Channel Infrastructure, and it's so great to have you all here today. With me today are members of our leadership team, Alexa Preston, our Chief Financial Officer, Jack Stewart, our General Manager of Operations. Absent today, Peter van Cingel, our Business Development Manager, Steve Levell, General Manager of Independent Petroleum Laboratory, and you've already met Chris, our General Counsel and Company Secretary. Before I update you on our financial performance and growth opportunities, I'd like to talk about our continued strong safety and operational performance during 2025. We handled 3.5 billion L of fuel through Marsden Point, approximately 40% of all of the country's fuel, including 80% of the country's jet.
As many of you will have been aware, recent years have seen industry-wide aircraft engine reliability issues and maintenance delays, which have also impacted Air New Zealand and forced some of the aircraft fleet to be temporarily grounded. Despite this, we saw jet volumes up year on year, with the fourth quarter of 2025 the highest since Q1 2019. Our petrol volumes were higher than anticipated, and diesel remained stable year on year. In part, we believe this is because our customers are taking advantage of the supply chain efficiencies and scale offered by Marsden Point. This includes additional storage brought into service and our investment in world-class operations, which is helping create efficiencies for our customers' supply chains. Reflecting on the first quarter of 2026, diesel, petrol, and jet volumes were in line with or above our expectations.
Whilst the Middle East conflict significantly impacted fuel prices in New Zealand in March, during the month, throughput overall remained strong. Our team continues to work hard to ensure that the availability of our assets remains at world-class levels, and we are proud that our assets have delivered over 99% availability consistently over the past three years. Moving from our operational to our financial performance in 2025, our underlying revenue and earnings grew by 4%. This reflects the PPI indexation of our contracts with our customers, slightly higher levels of fuel going through the terminal, and the Transmix storage infrastructure which became operational in December 2024. Our free cash flow is strong and increased by 5% last year, and our free cash flow conversion ratio increased from 67% - 72%.
As James mentioned, we've proven our ability to execute on large capital-intensive projects safely, on time, and on budget. The ongoing conversion project at Marsden Point started with the conversion of Channel's operations to an import terminal back in 2021 and is now nearing the end with only bunding work remaining. The NZD 220 million project has been undertaken over six years. Throughout, we have kept everyone safe while staying on plan and to budget. I challenge anyone to find a comparable project of this scale and size that has been executed so successfully and all the while continuing to run an active and busy fuel import terminal throughout the duration. We have also embarked on four new growth projects over the past two years.
These four projects will deliver approximately NZD 180 million before PPI indexation and additional revenue over 15 years. All of these projects have either been completed or are almost completed on plan and to budget. In addition to this, we announced two weeks ago that we entered into an agreement with the New Zealand government for significant additional diesel storage. Our Channel team created a unique and expedient solution to provide additional diesel storage at massive scale in a highly compressed timeframe of two months. This project, which is close to completion, has been a heroic effort from our team and wider Northland contractor base, and is a clear demonstration of our ability to deliver when it matters.
Last year, we also completed our first strategic acquisition in Australia, acquiring a 25% interest in the Somerton jet fuel pipeline to Melbourne Airport. I'm really proud of the number of achievements outlined on this slide in such a short space of time. Due to the great work of our Channel team and contractors, the new jet storage tank will now be available in July, six months ahead of schedule. This means we receive the income from this agreement earlier than expected. Importantly, it also means a significant and much-needed boost to New Zealand's jet fuel supply chain earlier than expected and right when it's needed. The bitumen import terminal will enhance New Zealand's bitumen supply chain, providing a strategic location for Higgins to supply the wider construction industry in the upper North Island.
This is also currently under construction and on track to be finished in the 4th quarter of this year. As New Zealand's largest fuels import terminal, the critical role that we play in underpinning resilience for New Zealand has been highlighted following the recent conflict in the Middle East. For a tangible example of what Channel's resilience means, we have more than 290 million L of tank capacity in service today at Marsden Point, which represents enough fuel for about 35,000 flights between Auckland and Wellington, one and a half million average car refills, and around 1 million diesel SUV fills. This is the equivalent of around 30 days' worth of demand for Auckland and Northland, or 12 days of New Zealand's total fuel demand.
In addition, the new jet storage project will add around eight days of jet capacity in early July, and the government diesel storage project will add an additional nine days of capacity in the coming weeks for New Zealand. This highlights how Channel's infrastructure solutions help make New Zealand's fuel supply chain more secure, enhancing New Zealand's resilience to supply chain disruption, and supporting the company's, the country's economy. It's also why we've invested in our infrastructure, including new safety and product quality equipment such as firefighting systems, floating suction hoses, quick flange tanks, to ensure we meet world-class standards. Channel will continue to focus on growth, but let's be clear, this growth must add value for our shareholders, align with the company's strategy, and add to the overall quality of our business.
Our first priority is the Marsden Point Energy Precinct. Delivery of the precinct will be transformational for Channel and Marsden Point, enabling us to unlock the significant potential of our existing site and assets. It will also be transformational for our local community. With independent analysis from PwC finding that it could generate GDP of around NZD 3.3 billion and contribute around 20,000 full-time equivalent jobs in Northland over the 10-15-year construction phase. Once fully operational, the projects could generate around NZD 290 million annually in GDP and contribute around 1,150 full-time equivalent jobs. Delivering the energy precinct would cement Marsden Point as the home of New Zealand's fuel resilience. Our second growth priority is consolidation along Channel's current supply chain to Auckland Airport.
Channel already owns a premium suite of assets in the New Zealand fuel supply chain, and it makes sense to see where else we might be able to add value, particularly in aviation fuel, which is resilient to the energy transition. Our third growth priority is to look for measured growth step-outs focused on adding to the quality of Channel's assets. This may include acquisitions in New Zealand or Australia, where there is an opportunity to add value through our proven operational capability, supporting customers, or targeting growth markets. The first example of this strategy in action is the Somerton pipeline we acquired last year, servicing Melbourne Airport's jet supply chain.
The Marsden Point Energy Precinct, as shown on this slide, was never going to be static, and with market opportunity evolving, the final shape of our precinct will change over time as we pick the opportunities that bring the greatest benefit to our shareholders and New Zealand. Reflecting our confidence in the precinct, we have started the process of relocating the import terminal control room and construction of a new administration building. This will not only support the Marsden Point redevelopment plans, but will also be an important improvement to the environment our people work in every day.
Last year, Channel completed front-end engineering and design for a potential 72 MW diesel-powered electrical peaking plant. This project would be relatively fast to construct and benefits from the significant fuel reserves already stored on our site, providing for a near immediate startup as required. Channel was in advanced discussions with several parties regarding a long-term capacity contract to underwrite the development costs of the project to be funded by Channel. The project is currently paused, awaiting the outcome of the New Zealand Government's review of its previously proposed LNG terminal. Fuel supply chains have been a theme today.
The Marsden Point Biorefinery Project provides an example of potential for our site to do even more for New Zealand's long-term fuel security. The key fuel security benefit of this project, in the context of the disruption occurring in the Middle East and the Strait of Hormuz, is that the feedstock for the biorefinery is domestic, and the only body of water that feedstock would need to cross is the Waitematā Harbor. This very significant project is continuing to progress, and we continue to expect a final investment decision later this year.
Air New Zealand has now joined the project's consortium alongside Qantas, Renova, Kent, and ANZ Bank. Finally, as mentioned, Channel made its first measured step out into the Australian market last year with an AUD 14 million investment and a 25% stake in the Somerton Jet Fuel Pipeline to Melbourne Airport. The pipeline is operated by ExxonMobil, a proven safe and reliable operator of critical infrastructure. The acquisition enhances the overall quality of Channel's business while supporting existing and new customers. Melbourne Airport delivered the largest total passenger month on record in December 2025.
Further growth is expected with continued route development and the addition of a third runway in the early 2030s. The real value in this small acquisition is in the embedded growth opportunities that come along with it. Opportunities include potential consolidation along the Melbourne Airport jet fuel supply chain or through upgrading the current infrastructure. Of course, realizing these opportunities will take time and are subject to further feasibility work and investment approvals. With that, I'll hand back to James to cover the resolution voting and the general business in the meeting.
Thanks, Rob. Now we move to the formal part of the meeting, which this year is a vote on just one resolution. As a reminder, shareholders attending online can vote under the Vote tab, while those shareholders in the room who are entitled to vote today can either use the online voting or the proxy voting forms already provided to them by Computershare. As required by the NZX listing rules, all voting on the resolutions tabled at this meeting will be by way of poll. The resolution will be put to the meeting in the form set out in the notice of meeting. I'd like to move quickly through the voting on the single resolution on the agenda before we call for general business questions, which will be addressed at the end of the meeting.
For those here in the room, I ask shareholders wishing to speak, please raise your hand and a microphone will be brought to you. When asking a question, please state your name and whether you are a shareholder or proxyholder. Please do wait for the microphone as this benefits the shareholders joining us online today. For online questions, we will endeavor to group these by subject area, and if the question has already been addressed in the room, we will not be taking repeat questions. With that, so that everyone who wishes to ask a question has an opportunity to do so, please only ask one question and be mindful of everyone's time.
Resolution one relates to the authorization of the auditor's fees and expenses for the 2026 financial year. Is there any discussion or questions relating to the resolution on auditor's fees? Oh, good. Right. Got one that goes for quite a while. This one's from Steve David Maine. Under the Australian Corporations law and the ASX listings rules, there must always be a director elected at a company. Is it for now? Yes.
Yeah. At a company's AGM. New Zealand AGMs are already boring enough with few resolutions up for vote. Why didn't you at least give us a director to vote today as opposed to serving up the sparse agenda with nothing more to determine than a procedural audit pay resolution? Can the chair comment on whether our company will move to annual elections of directors at next year's AGM? There's a lot in that. Directors come up every three years under the NZX rules. Last year, I'm not sure if you were here, Steven, we had four directors up. This year there happens to be, there's only six on the board.
This year, just by coincidence, there was zero under the rotation, and there's probably quite a few more next year. I guess we could put someone up every year just to lower the boredom factor. That's not something I'd thought of. Can I take that on consideration or advisement. What's this last bit? Can the chair confirm we'll move to annual elections? We would just follow the stock exchange rules on that issue, as we should do. Yeah. Is there any other questions? Okay. Can I now ask shareholders to please vote on resolution one on their papers online? Ladies and gentlemen, that concludes our discussion on the formal items of business. Please ensure you've cast your vote on all resolutions online via the Computershare's online meeting platform.
I will now pause to allow you to finalize these votes before we close the voting system. Thank you, ladies and gentlemen. The voting is now closed. For those in the room, Computershare will come round and collect your ballot papers. Our registrar, Computershare, will act as scrutineers. Once they've completed their review, the final results of the poll will be released to NZX and posted on our website later this afternoon. Now that we've completed the formal part of the meeting, I now invite questions relating to general business that shareholders wish to raise. Yes.
My name is Michael Connor. I'm a shareholder. I have a few questions. Just one technical question. The gentleman sitting on the end, I'm sorry, I can't remember your name, who's a non-independent director, why is he non-independent, not independent?
Do you want me to answer that?
Sure.
Yeah, yeah. The stock exchange requires us to do an assessment of every director whether or not they have potential conflicts that may and there's a few other tests that we have to look at. Andrew has interests that pertain to Ampol, which is.
Sure
which is one of our largest customers and was one of our shareholders at one stage.
That's fine.
Yeah.
It's no problem.
Yeah.
When the company stopped being a refinery.
Yeah
took a very large write-off to its books, like, I don't know, NZD 500 million. It was a very big number. As time has gone by and you've started to repurpose things that were written off, then value comes back into the books. My question is, the things on the map there that aren't currently used. Can you go back to the map of the whole?
Somebody draw that?
You can see what I'm talking about. That footprint here. See some of the things in, looks like an orange. Do they have a value in the books or are they still written off at zero?
Do you wanna go? Yep.
Hi, everyone. Alexa Preston, Chief Financial Officer. The assets that were written off as part of the refinery have a scrap value in our books. I believe the number's around NZD 22 million at present.
[audio distortion]
Thank you. The microphone's now on. Thank you. Would you like me to repeat that, Carl? The assets that were written off as part of the refinery closure are in our books at about NZD 22 million at scrap at the moment. If they're brought back into service, they will be written up.
They're on the market for NZD 56 million at present time. What, how come you're valuing them at NZD 20 [audio distortion] it is worth around NZD 65 million.
The assets are in our books at scrap value because that's their current market value. If the assets are sold, they will be written back up. I might just let the other shareholder finish his question. I believe he had another one to follow.
That's exactly what I was asking. If new stuff gets repurposed, it's worth more.
It could be.
Yes.
Yeah.
Well, you would think so.
Yeah. What we do is we have an independent valuer who values the assets, and that's where it would get picked up.
Uh, well it-
When the independent valuer comes through.
In effect, something with an orange there is like an empty building with no tenants. When you put tenants in, it's gonna be worth more. Is that the right sort of logic?
Yeah, that's the plan.
Yes.
yeah. Yep.
I have another question. A lot of the larger oil company shareholders have progressively sold out.
Great.
The company's tax losses depend on the enough continuity in shareholdings to remain in place. Is the company restricted from raising more capital by issuing shares if they're going to give away tax losses? I don't know the answer to this. You're going to have to tell me.
Yeah. No, no. There's been extensive reports on this very issue. Alexa, do you wanna give the detail?
You're right. The principal test is a continuity of ownership test. That test is still met and we have good advice that that remains to be the case. In the unlikely event that test is not met, there is a secondary test, which is a same business test, and we continue to meet that. We've always operated as an import terminal during periods where the refinery was being worked on.
You're free to raise capital as you see fit.
If we have a pro-
If you need to.
If we needed it, yeah.
If you need to.
Yeah. The default setting is not to, but yeah.
Fair enough. That's good.
Yeah.
You guys are doing a great job.
Oh, thank you. That's very kind.
Sam, could you just repeat some of what he was saying? 'Cause, a lot of people didn't hear.
Yeah. I guess there was two primary questions. One was around where the assets had been written down to, and Alexa answered that it was, it's called scrap value, and it's NZD 22 million on the books. There was the question around if we develop as per the plan on the precinct, what would happen to the value of the assets going forward, and I mentioned that what we do is we have an independent valuer come in who looks at all the assets, what they're worth, cash flows, et cetera, and then comes up with a valuation. That's independent of us. Yes, Michael was 100% right that we would be writing up value at that point, if that happened.
There was an additional question on. By the way, we take extensive advice on our tax position, because the, we do have significant tax losses, and obviously we don't want to lose them. There is the question that our oil company shareholders exited the register, obviously we don't want to lose that because there's this continuity test. Sorry, let me finish. The answer that Alexa gave, which gave reassurance to everybody that we are still, we've taken advice and we still meet both tests as it currently stands with the IRD. I think we've had an audit, haven't we, as well?
We've also had an audit from the IRD as well to confirm that, so I think we're fine on that. Yep.
All the oil company shareholders are not there anymore, apart from Z Energy.
No, no, they're not there.
All the big players are not there.
No. Well, they're all gone. Including Z, by the way.
Z's still got a 100%.
Could you use the microphone when you say something please?
The shares that are held by the oil companies are not there anymore. The Z ones have gone under Ampol's name.
Which is a guy over there in here knows about it. Andrew Brewer, who used to be our CEO of the refinery, is also on Ampol's board. Are you also something to do with Z Energy as well?
No.
No conflict of interest there?
No, no. You're way off the money, mate.
Got it.
I'm not on Ampol's board.
Yeah. Z sold out. Ampol's never had a holding in us. That's incorrect. All oil company shareholders have exited the register. They don't own anything, do they?
That is right.
No. There's no shares whatsoever. They, to us, are extremely important customers. It's a customer relationship that we have with them.
You're saying Ampol's got no share in it?
Correct.
Okay.
Yeah. Yeah, it's on the. If you look in the annual report, you'll see it. Yeah. Okay. There's questions that way, but I'll just check the room one more time. Yeah, there's, you know, there's Coralie.
Yes, Coralie Van Camp, shareholder since the refinery was operating and had that massive upgrade, and we all went up there and had a lovely day.
Yeah.
First a comment. It hasn't escaped my notice that if the refinery was still running, we could get a deal with Venezuela of food for oil.
You could do what?
We could get a deal with Venezuela of food for oil.
Okay.
My question is, now I can't understand why you would pay AUD 14 million and buy 25% of the fuel pipeline to Melbourne Airport when the huge areas set aside at Marsden Point are for the still aspirational, manufacture of hydrogen and biofuel. I mean, every meeting I've come to for the last five years, I've heard about that.
Yes. Yeah.
There's still that huge big area up there. I'm just speculating, is Channel diversifying into buying overseas infrastructure in the hopes of selling later at a capital gain the way Infratil operates? I mean, why have you bought it?
Yeah, there's a lot and do you want me to answer some of that?
Yeah.
The eSAF deal, which is the biorefinery, it does take a long time putting together the consortium. Every meeting it matches forward positively, but we haven't quite got there as yet. It is a big deal for us as a company, and it's a massive deal for Northland if it comes off, so we do mention it. With respect to Melbourne, we have, you know, a strategy which we outlined before and it's centered around the precinct at Northland. That's our number one priority. As I call it, we're about making Northland great again. And we're very proudly a Northland company.
That's the area that we will always get the highest value returns if we develop at Marsden, because we already own the assets, et cetera. We have got a level of confidence that if we acquired additional assets in New Zealand, particularly down to a fuel line through to Wiri and through to the airport, which we've been very public that we've got interests in, if that was ever to come available from the joint venture that currently owns it. Thirdly, we've got I'll call it aspirations at this stage to expand in the midstream, that's the terminal pipes area of the infrastructure area of the oil and gas industry, just that narrow focus across Australasia.
We think we can be the pre-eminent play for investors that are looking for exposure in the midstream part of the market. We're particularly interested in jet and diesel as fuel types that we've got a focus on. The reason is we've got very high confidence of their long-term value for the company. The Melbourne pipeline, which is jet, through to the airport, is step one of many. If we can secure something that looks like what we currently have got through to Auckland, we would be delighted.
Well, that's a toe in the water.
Yeah, it's toe in the water.
What you're saying is that you might go to Sydney and do other things around Australia as well.
Yep, that could happen.
Well, just remember when Air New Zealand bought the second half of ANZ Airways. Make sure that what you're doing is going to actually be as wise as what Infratil does.
Yeah, I'd hope we will be. Thank you for that comment. Okay, there was another question in the room. I saw it, yeah, just here.
Hi. My name's Peter Spence. I'm a chair of an investment group that's a shareholder. I had one question which is a little bit in the weeds.
Yeah
But it really relates to safety and safety culture. I'm keen, curious to know what you guys do in relation to keeping your staff, contractor staff safe, on site. As I said, it's a little bit in the weeds.
Yeah. I actually would encourage Jack Stewart, our GM Operations, to stand up and answer that question. He's been leading a huge program of what we call world-class safety.
Thank you, Rob.
You can see in our strategy, we have committed to being a world-class operator of our infrastructure, and the safety of our people and our facilities is really at the core of that, and it's really important to our customers as well. In order to have their confidence to grow, it's a fundamental for us. Some of the work that we've been doing more recently, we've engaged with global consultants who are experts in this field. Their expertise has been developed within DuPont, who's a global industrial facility operator, well known.
We're working a really extensive program at the moment, both around safety culture with ourselves and our contractors, but also in terms of the strength of our safety systems and making sure that we operate in a way where we prevent serious injury on our facilities. Key consideration for us is also the safety, inherent safety of our facilities. Some of the products that we handle do have inherent risks. As a major hazard facility operator, we take that responsibility very seriously. A number of upgrades have been completed as part of the conversion program to make sure that the terminal operations that have been established at Marsden Point meet the best practice in that regard.
There we go. Just
My name's Michael Gervais. I'm a shareholder.
Yep.
My interest is in competition. Where are the other facilities, storage facilities in New Zealand? Is there word in the industry that not only Channel, but others will also be increasing their capacity? Perhaps the final bit of that question is, maybe groups would come together to do their own storage, and is that a real possibility?
Yeah. You may or may not know, but most ports in New Zealand have some kind of storage for their local region that have been there for a very long period of time, whether you go to Christchurch or Dunedin or Wellington. That's where and then of course, we are the bulk of it in New Zealand. You really need to be able to take the big oil tankers that come in and have, you know, a serious draft available in your harbor to be a candidate for the storage as we are in a very privileged position. They're very incumbent assets that are unlikely to get direct competition like that. I can't imagine anyone building side by side.
You'll find there are multiple terminals in Tauranga, I think, from various different operators. Each port essentially is operating to a physical constraint of how far you can drive the product that comes through that port. Our, the unique advantage is that we're directly connected to the Auckland market through the Marsden Point to Auckland Pipeline that comes out of Wiri. Yeah. Well, there was a second part, wasn't there?
Well, could other companies getting together to build the facility on the basis of what we've just been going through now, and they foresee an opportunity for storage in the future.
It's really hard to do that in this game. You've got sunk cost assets that you're competing against that would just make it impossible to do it from a new build in my view. It's unlikely. You know, never say never. Yeah. Oh, sorry. Yeah, I'll go to you first, sorry.
McLeod shareholder. My question relates to aviation fuel. An agreement was made a few years ago, both here in New Zealand and Australia, to carry sufficient fuel in both countries to cover any emergency.
Yes.
An agreement was made. It appeared everybody, well, everybody, both governments were happy of the day that this figure would be achieved. On examination, they found out it was below what they expected. Has that changed?
Yeah. Yeah, thank you. Just checking you can hear me on the microphone. Brilliant. The minimum stock holding obligation in relation to jet fuel for New Zealand is currently 24 days. I can tell you, as of the MBIE update, about one hour ago, there was around 34.4 days of jet fuel in New Zealand, and 35.1 when you add stock on the water that it's on its way. I believe the agreement you're referring to is the minimum stock holding obligations that both the New Zealand and Australian governments have separately put in place. As you've seen from the reporting from government, stocks have been consistent or with or above those levels.
Down here. Oh, there's 2, but yeah. It's just that way. Yeah.
Yes, Edmund Stranahan. I'm a shareholder. A question that I have, I understand the pipeline that goes through to Wiri, is that owned by Wiri's Oil Services Limited? Are those tanks also owned by the refinery at that end of the pipeline, or are they owned by someone else?
That was what I was talking about before. We own the tanks at Marsden and the pipeline that takes it to Wiri. For the people who don't know, just outside Auckland Airport, you can see it as you fly over, there are quite a few tanks down there. You can clearly see them. They are owned by a JV between the three oil companies. It's a separate ownership to us.
As far as the fuel going through that fuel line is concerned, is that really just for Auckland and Hamilton areas?
Do you want to go on that?
We supply 100% of the jet that Auckland Airport utilizes, so it's the first product. In respect of diesel and petrol, we provide fuel for Northland through the truck loading facility at our site, and then Auckland and sometimes the broader Waikato through the pipeline to Wiri in respect of petrol and diesel.
Another question on a different matter. There seems to be a new company that's emerged in Auckland called Tasman Fuels Limited. Is Tasman Fuels actually bringing fuel in through Marsden Point or somewhere else?
That's no, right?
Yeah.
Yeah. No. They'll be probably coming through Tauranga. Would that be correct? Yeah. Yeah.
Tauranga or Tauranga.
Those Auckland service stations are being supplied out of Tauranga?
It could well be. We don't know where they're doing it from.
Thank you.
There was another question down that way.
Yeah, there appears to be an increasing electric-
What was your name again, sorry?
Michael Bowden.
Oh, Michael. Hi.
There appears to be an increasing electrification of both public and private transport. I'm just wondering, over time, do you anticipate a reduction in demand for diesel and petrol?
Yeah. We get an independent company called Envisory to do long-term forecasts for the company, both on jet, obviously, diesel and petrol. You're correct to highlight an area. Well, first of all, you can have high confidence on jet. Diesel is more of a flat forecast that they have. Then on petrol, they forecast longer term that it will decline because of the substitution that you just talked about. How long that happens and what's the tail, no one knows. You know, Envisory, they do their best estimate for that, and we cater to that. Yeah. Okay. Yeah, Carl?
It's me. I'm back again. I'm back again. I've been on this case for four years since this place closed down in April 2022. I've been on the road since 2024 encouraging patriotic Kiwis around New Zealand to buy shares in Channel Infrastructure NZ. I've tried twice now to get on the board as a director representing those shareholders. The shareholders now are 61%, as of today, general public shareholding, with 252 million shares valued at NZD 780 million. With a capital value of the company of NZD 1.3 billion, leaves, take that NZD 750 million out, leaves NZD 540 million other shareholders. We are the major shareholders, and I've seen a video that says that.
I want to know, do the shareholders in New Zealand want to reinstate this refinery and get our fuel security back, get high quality fuel back, good bitumen and good CO2 back in this country? Worth NZD 8 billion a year turnover when we had the refinery operating. We should be bringing in the crude oil ourselves, manufacturing it and selling the finished products to the fuel retailers around New Zealand. We've got enough of them. We don't need BP and Mobil or Z Energy here. Z Energy is part of Ampol. The reason the refinery shut down was Z Energy was sold to Ampol. The conditions signed by the government, Megan Woods and Grant Robertson, was that the refinery had to shut down. This guy on the end shut down the bitumen plant to start with.
All he had to do was say, "We're gonna double the price of bitumen." We would've been a third of the price of the rubbish we've got now, which is stuffing every road in New Zealand. COVID come along. Instead of saying, "We'll fill up every tank in New Zealand and put this refinery on a maintenance mode and just supply emergency services at a low speed," and as soon as COVID was off, we would've been back into it.
In the meantime, these guys took over our refinery, our assets, paid for by taxpayers through New Zealand and fuel users through New Zealand, and have turned this thing into a joke. They want to make it into an energy precinct. This is the refinery. This is all the assets. We can buy 120 hectares of assets, including Te Mahi Hou , built in 2018 for NZD 365 million. They are trying to sell these assets for NZD 56 million, people. They are stealing our Te Mahi Hou . They're stealing our future. Without fuel in this country, what's gonna happen? I've got a few other questions.
What's the question?
Looking up Channel Infrastructure the other day, I come across another site called NZRFF, and it comes up with an American $1.62 share value at $730 million US. Are we listed on American stock exchange?
No.
Why is that? What's this company?
I've got no idea.
Well, it's under Channel Infrastructure's name. When you look it up, it comes back to you guys.
No, it's not us.
What's the fuel shipments after the middle of May? Are we guaranteed a shipping coming to this country?
Do you wanna do that one?
Yeah, the fuel companies, I think has been discussed quite extensively.
Are you watching the ships coming to this country?
Sure are.
That's what I'm asking.
Perhaps you could just let me answer the question, Carl, before you interject. I'm very happy to answer your question, but just let me finish answering it. The fuel companies, I think, has been well covered by government and the media in the context of the concerning events in the Middle East, operate a three-month forward shipment plan to match demand and supply through the import terminal system at Marsden Point. Bear in mind, we don't own the fuel. It's the fuel companies that own the fuel. It's the fuel companies that source the fuel and bring it down here. We have visibility up to the supply chain in those forward three months.
What we've seen through the fuel crisis is MBIE has released twice weekly fuel stocks in New Zealand and on the water, and at all times, those fuel stocks in New Zealand have been above the minimum stock holding obligations, and significantly above, when you add in fuel on the water. Obviously, the benefit that Marsden Point has in the context of what's going on is the very significant amount of storage that we've got that acts like a shock absorber if there was to be a delay in shipments.
Okay. Get back to the storage at Marsden Point, another issue. We've gone from big, large storage tanks that used to store 60 days of crude oil, which gave us 60 days of production. Those tanks are now full of either jet. Are they all jet fuel, or they got petrol and diesel in them as well?
We store a combination of petrol, diesel, and jet.
Okay. We've got a large storage tank. Before we had 14 days of smaller tanks, as production came out, day one, build out until day 14, about day 12, they started shipping them around New Zealand, either pumping them through the pipeline here to Auckland or carting them around New Zealand on two coastal tankers. Now we have this large tank full of petrol or jet fuel or diesel. Another shipment comes in. It goes into that same tank. What happens if that shipment arrives contaminated? It contaminates a huge amount of fuel that needs to be taken offshore and re-refined.
I can actually address that if you like.
We don't have that safety valve.
Yeah Rob.
All fuel before it comes off the ship is tested before it goes into the import terminal system. Actually, that doesn't or can't happen because IPL, Independent Petroleum Laboratory, of which Steve is the General Manager, has 25 laboratory technicians at Marsden Point that do all the fuels testing in New Zealand and actually across much of the Pacific. In respect of jet fuel in particular, that is tested around 6 x across the chain of custody between when it comes in on the ship and gets loaded in the plane. No, that can't happen.
Explain to us how often are the fuel filters being changed either at Marsden Point or at Wiri as the fuel arrives to be transported through to New Zealand's major fuel suppliers. I couldn't tell you off the top of my head, but I think the important point is that the fuel that is going into New Zealand is being tested and certified as being on spec. Well, I've been told by people in the industry that those filters were changed once a month, every six months as just a maintenance thing. Now they're being changed every Wednesday. Is that correct or incorrect?
Yeah, I couldn't give you an answer on that, Carl, but
Well, you should know. You're part of the industry
as I would say to you, the critical piece here is that every drop of fuel is tested, well, not every drop, but every shipment is tested before it comes into our storage facility, and then it's tested upon release. You can be confident that if it's come through our import terminal system, it's on spec.
I've been told by somebody that works at Auckland Airport and loads planes for the last 20 years, he's still getting fuel onto the planes that's got a stain in it. I've been told by somebody that works for, or used to be in the defense force, he said jet fuel that's got a stain is 'cause it's out, it's old stock. It's not fresh stock like came out of Marsden Point over a 14-day period.
I'd be very worried if somebody actually saw jet fuel if it was at the airport. It should always be contained in a container safely 'cause it's a highly explosive product. I just don't think that's consistent with what we see, Carl.
This chap drives the trucks that fuel the planes. Yeah. He sees what's going into the planes through the sight glass and through the filtration, the blockages. I talked to a company that deals with the petrol tankers around New Zealand. He's concerned about the contamination in the bottom of the tankers delivering fuel around New Zealand. He's never seen it before. I just, I mean, There's other issues. The other issues is how many days storage do we need in this country for our emergency services
Yeah, again, the government sized the minimum stockholding obligations for petrol, diesel, and jet off, well, a pretty significant piece of work that they did around that. That's actually a question for them because they set those minimum storage thresholds.
You should know, you have 40% of New Zealand's fuel, 80% of our jet fuel. That jet fuel is needed for our defense force, our air force.
As I said, that's something that's set by government and not Channel.
That's the cop-out. We've got a government that says it's the industry. We've got an industry that says it's the government. I want the people of New Zealand to stand up and take this refinery back.
Sir, are you asking a question or are you at the meeting?
Oh, no, I'm just telling the meeting what the concerns are to the people of New Zealand. If you're not concerned about the concerns in this country, just wait and see what happens. I'll end it there. I've started a new company called Kiwi Refining Company after last year's annual shareholders meeting, advised by one of the directors to do that. We'll raise the capital to buy these assets back and see what happens, 'cause we don't want to see this refinery destroyed. I don't think the rest of New Zealand do neither. Thank you very much.
Thank you. Best of luck. A question behind.
Hello. Just Gordon Wallace. Just to say we understand where you're coming from, but you've got to really go back to what had really happened some years ago when it was changed because of, you know yourself, we were too small. Even, you're saying the, at Marsden Point. Today, you got to realize too, like this chap here, things got a lot bigger now, massive bigger.
Yeah.
Funny thing about now is who'd ever believe we would have problems with oil in a way where you could say it all becomes connections, knowing the right people so that you can get the supply. To put another, or Marsden Point, I'd hate to think what the cost is. At this stage, you could say you're right, you go for it as a person, and I understand where you want to be. You got to say, at this stage, thank Christ these people, through the government, we are on top of it. You seem to think it's not, and you can have your own company to do so, and no one's stopping you.
Thank you for those comments. I'd have to agree. Okay. Yeah, we'll go to online.
Yep, we could.
Do you want me to read that out?
No, I'll read it.
Oh, you'll read it?
Apologies here. Given the long tenure of Ernst & Young, when did Channel last tender the external audit, and when are we next intending to tender the audit? The question is from Steven Main.
Yep. Steven, we did that six years ago. We moved from PwC to EY at that time. Also at that time, we introduced a audit independence policy, and that requires Anna, as chair of the Audit Committee, to tender the audit every 10 years. That's like four years away.
Thank you, Chair. Can I go again?
Yeah, you sure can.
Thank you. Again, from Steven Main. If one of the larger ASX-listed competitors such as Viva Energy or Ampol launched a takeover bid for Channel, what, if any, barriers would they face besides offering a compelling price? Does the chair and CEO agree that a foreign takeover of Channel would be unlikely to be supported by the New Zealand government?
Obviously, we can't really speak for the government. The one thing I have noticed, and I interact with the government regularly, is the government's understanding of the importance of the Marsden Point site and how strategic it is to the nation has got more and more amplified. That would be an understatement to say, and I would be extremely confident it is regarded as strategic to them. They're aware of, you know, what happened at Darwin and various things with foreign ownership. I think it would come to the highest levels in government before anything was to change here. Yep. Have I got anything else?
Thank you, Chair. One more.
Yep. Oh, yep, one more. Good. You have to wait, mate.
Sorry. Maybe go to the floor, Chair.
Yeah.
No more, Chair. Thank you.
Okay. Okay, down here. I'll go to you next, Carl, but there's a chap down there. Yep.
Yes. Edmund Stranahan again. You're talking about the Melbourne pipeline.
Sure.
Whereabouts does the Melbourne pipeline run from?
Yeah. Rob, do you want to do that?
Yeah. There's a Mobil terminal called Yarraville, it runs from there to the Somerton depot close to the Tullamarine Freeway at Melbourne Airport. Just to speak to that acquisition opportunity, that's the only jet pipeline that serves Melbourne Airport. If you think about growth drivers for that location, it's Australia's second largest city, but will likely become the largest city. It's growing strongly. Seeing so much aviation growth that they've committed to building a third runway at Melbourne Airport. I think it's important when you do M&A that you're not just buying something to own it, but you actually see a real long-term opportunity, we see very significant opportunity on that supply chain.
How long is the pipeline?
It's around 34 km.
Is it transporting jet fuel only?
Jet fuel only.
Thank you.
Is that coming from the port?
Oh, just wait, Carl, just for the mic.
I'll just Same question first.
Yeah.
Is it coming from Geelong or from the port?
It comes from Yarraville terminal.
It's coming from-
Yarraville terminal.
It's not coming from Geelong?
There is a connection to the Geelong Refinery, yes.
In that pipeline?
A separate pipeline.
Which you don't own?
Correct.
Thank you.
Do you want another question?
Yes, it's directed to you, James.
Yes. Yes, Carl.
Is Fletcher's still doing work at the refinery at Marsden Point?
Yeah, I know where you're going.
Fletcher's actually has done, I don't believe any work, for us. No, they've not been a contractor on our site.
They're not there anymore?
They were never a contractor at our site. We're the last three-.
Fletcher Construction weren't there?
In the last three years? No.
Oh, really?
That's right.
I thought they won the contract to build the bitumen storage facility.
No, the bitumen storage terminal is being built with Higgins as our customer.
Yeah.
Yeah.
By Fletcher's.
No, Wehry is constructing that terminal.
Wehry's are building that?
Correct.
I was just gonna ask because James is a deputy chairman on Fletcher Building's board, which seems to be a conflict of interest.
Yeah. How we handle any conflict, whether it's me or anybody else, most people on the board will have come from the industry. That's where we get our expertise. All directors are expected to disclose their conflicts to the Company Secretary, Chris down there. If there is a conflict that comes up, he will exclude that director from the meeting when it is discussed, and that includes me of course, and somebody else would chair it. Yes, you might laugh, but we take this really seriously.
Big conflict of interest, 'cause Higgins is part of Fletcher's, or was.
It was, is the answer, but yeah. Okay. Yes, another one.
A final question from Steven Main. If Xero and Fletcher Building can voluntarily put up a remuneration report for approval as law requires in Australia, will Channel Infrastructure commit to doing this next year, given that you've all recently listed on the ASX and many of the Australian shareholders would like to see such a move? New Zealand looks like a governance backwater by rejecting a say on pay, why don't you show more respect for your shareholders and get with the program by doing it voluntarily?
Thank you for that, Steven Main. We intensely respect our shareholders. I would like to just push back on that part. For the people who don't know, disclosing remuneration is part of agency theory. Stock exchanges or regulators take this very, very seriously, and so do we. I think we've got eight pages in our annual report just on Rob Buchanan's remuneration alone, which everything is outlined there in detail. In Australia, and I think it's under the Australian Corporations Act 2001, if you're an Australian company, we're a New Zealand company and so it's slightly different for us, and probably so, they have a requirement to produce a separate report.
It does take a certain amount of administration to do that, and of course, we try to focus on running a fuel crisis first and foremost. And that report can be put, is put to shareholders, I believe, in Australia, and can be voted on whether or not shareholders are happy with remuneration levels withinside the company. I think it was originally driven out of the banking sector, which had excessive bonuses, et cetera. We've not had that asked before. Just so you're clear, in New Zealand we look towards NZX who has NZ RegCo and the NZX Corporate Governance Institute, and they put out submissions on, let's say, how we should disclose on remuneration.
The likes of the Shareholders Association is also very, very active in this space. When they come back with their views, we adopt them totally. We regard that as best practice. It's better than us trying to think it up. As for adopting Australian rules, you know, that may be something that could happen down the track as we became more and more, you know, larger in Australia. I think we're getting well ahead of ourselves at this stage. Okay. Any other questions? Okay. That's the time. There seems to be no more questions, and there being no other matters of business, I'd like to thank you for attending in person and virtually today.
I'll declare the meeting closed and invite shareholders to join the board and management for refreshments. Thank you.