Half Year 2026 Channel Infrastructure NZ Ltd Earnings Call

August 27, 2026

Speaker #2: Thank you for standing by, and welcome to the Channel Infrastructure half-year results 2026 call. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.

Operator 2: Thank you for standing by, and welcome to the Channel Infrastructure Half Year Results 2026 call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Rob Buchanan, Chief Executive. Please go ahead.

Operator: Thank you for standing by, and welcome to the Channel Infrastructure Half Year Results 2026 call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Rob Buchanan, Chief Executive. Please go ahead.

Speaker #2: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Rob Buchanan, Chief Executive.

Speaker #2: Please go ahead.

Speaker #3: Good morning, everyone, and thank you for joining us. I'm here today with our Chief Financial Officer, Alexa Preston, and we'll speak to the presentation disclosed on the NZX and ASX earlier this morning.

Rob Buchanan: Good morning, everyone, and thank you for joining us. I am here today with our Chief Financial Officer, Alexa Preston, and we will speak to the presentation disclosed on the NZX and ASX earlier this morning. There is a lot of detail in the presentation pack, but Channel's story is actually pretty straightforward. Our business continues to perform well. We are delivering the projects we said we would, safely, on time, and on budget. And we are finding new ways to put the infrastructure we already own to work. That is delivering growth for Channel and increasingly helping strengthen New Zealand's fuel supply chain resilience. The past 6 months have been another fantastic demonstration of what this business can do. If you have the presentation pack in front of you, I will start on slide 3. I am not going to take you through every line on this slide.

Speaker #3: There's a lot of detail in the presentation pack, but the channel story is actually pretty straightforward. Our business continues to perform well. We're delivering the projects we said we would, safely, on time, and on budget.

Speaker #3: And we're finding new ways to put the infrastructure we already own to work. That is delivering growth for Channel, and increasingly helping strengthen New Zealand's fuel supply chain resilience.

Speaker #3: The past six months have been another fantastic demonstration of what this business can do. If you have the presentation pack in front of you, I'll start on slide 3.

Speaker #3: I'm not going to take you through every line on this slide. There are really three things I'd like you to take away. First, we continue to see strong performance from the business.

Rob Buchanan: There are really 3 things I would like you to take away. First, we continue to see strong performance from the business. We continue to operate our assets at world-class levels. Fuel volumes have held up well despite global fuel supply disruptions, and financially, we have delivered another strong result. Second, we continue to execute with excellence. We delivered 93 million liters of diesel storage for the government in just 9 weeks. We completed Z Energy's jet fuel storage project 6 months ahead of the original schedule and within budget. The Higgins Bitumen Terminal is on track to complete late in Q4 of this year. And just this morning, we announced a significant new jet and diesel storage project with our valued customer, bp, that will generate a further NZD 130 million of revenue over 15 years. Third, the delivery of projects is now translating into earnings growth.

Speaker #3: We continue to operate our assets at world-class levels. Fuel volumes have held up well despite global fuel supply disruptions, and financially, we've delivered another strong result.

Speaker #3: Second, we continue to execute with excellence. We delivered 93 million litres of diesel storage for the government in just nine weeks. We completed Z Energy's jet fuel storage project six months ahead of the original schedule and within budget.

Speaker #3: The Higgins-Bitcherman terminal is on track to complete late in the fourth quarter of this year. And just this morning, we announced a significant new jet and diesel storage project with our valued customer, BP.

Speaker #3: That will generate a further $130 million of revenue over 15 years. Third, the delivery of projects is now translating into earnings growth. We've created good commercial outcomes for shareholders while solving a genuine infrastructure need for the country.

Rob Buchanan: We've created good commercial outcomes for shareholders while solving a genuine infrastructure need for the country. That's a combination we like and will keep doing as we move forward. Moving to slide 4, you'll see the key financial highlights for the half. Alexa will take you through the numbers in detail, but I'll just highlight. Revenue is up, EBITDA is up, and the board has declared a NZD 0.0725 per share interim dividend. This is up an impressive 16%, reflecting our strong free cash flow generation and successful execution of growth. Normalized free cash flow and free cash flow conversion are down slightly, a reflection of the phasing of maintenance CapEx. We're investing considerably more into growth. That is growth with a contracted revenue stream and above WACC returns, which is exactly how we want to grow this business.

Speaker #3: That's a combination we like, and we'll keep doing it as we move forward. Moving to slide 4, you'll see the key financial highlights for the half.

Speaker #3: Alexa will take you through the numbers in detail, but I'll just highlight: revenue is up, EBITDA is up, and the Board has declared a 7.25 cent per share interim dividend.

Speaker #3: This is up an impressive 16%, reflecting our strong free cash flow generation and successful execution of growth. Normalised free cash flow and free cash flow conversion are down slightly, a reflection of the phasing of maintenance capex.

Speaker #3: And we're investing considerably more into growth. That is growth with a contracted revenue stream and above WEC returns, which is exactly how we want to grow this business.

Speaker #3: Disciplined capital, contracted earnings, and assets—we know how to operate at world-class levels. On slide 5, we turn to safety and operational performance. There is a lot more activity happening at Marsden Point right now.

Rob Buchanan: Disciplined capital, contracted earnings, and assets we know how to operate at world-class levels. On slide 5, we turn to safety and operational performance. There is a lot more activity happening at Marsden Point right now. More projects, more contractors, and a lot more moving parts. So maintaining our operating standards through that increased level of activity is massively important to our world-class aspiration. It's also critically important, at a time when fuel supply chains are under pressure, that New Zealanders know they can rely on us to keep our facilities working safely and reliably. Pipeline and tank availability remained at 99% in the period. We handled 30 ships during the half, with a large number reflecting smaller fuel parcels coming in during the fuel crisis. We also continued our strong process safety track record with no tier 1 or tier 2 process safety events.

Speaker #3: More projects, more contractors, and a lot more moving parts. So, maintaining our operating standards through that increased level of activity is massively important to our world-class aspiration.

Speaker #3: It's also critically important, at a time when fuel supply chains are under pressure, that New Zealanders know they can rely on us to keep our facilities working safely and reliably.

Speaker #3: Pipeline and tank availability remained at 99% in the period. We handled 30 ships during the half, with the larger number reflecting smaller fuel parcels coming in during the fuel crisis.

Speaker #3: We also continued our strong process safety track record, with no Tier 1 or Tier 2 process safety events. We did have two recordable injuries, and we're not satisfied with that.

Rob Buchanan: We did have two recordable injuries, and we're not satisfied with that, noting the significant construction activity on our site. Our expectation remains very simple: to get everybody home safely every day. But overall, the team has done an excellent job managing a very high standard of operational performance while delivering a much larger program of work. Turning to slide 6, this looks specifically at jet volumes where we saw some good growth across Q1 prior to the start of the Middle East conflict. First half throughput was broadly where we expected, and the strong quarter reflects growth of international services at Auckland Airport. As you would expect, Q2 was affected by higher fuel prices and reduced schedules, particularly from some Middle Eastern carriers. But those services were already beginning to return towards the end of the quarter.

Speaker #3: Noting the significant construction activity on our site, our expectation remains very simple: to get everybody home safely every day. Overall, the team has done an excellent job managing a very high standard of operational performance while delivering a much larger program of work.

Speaker #3: Turning to Slide 6, this looks specifically at jet volumes, where we saw some good growth across Q1 prior to the start of the Middle East conflict.

Speaker #3: First-half throughput was broadly where we expected, and the strong quarter reflects growth of international services at Auckland Airport. As you would expect, Q2 was affected by high fuel prices and reduced schedules, particularly from some Middle Eastern carriers.

Speaker #3: But those services were already beginning to return towards the end of the quarter. As you know, Air New Zealand has had a number of their aircraft grounded over the past few years due to engine availability issues.

Rob Buchanan: As you know, Air New Zealand has had a number of their aircraft grounded over the past few years due to engine availability issues, which has impacted jet volumes over this period. So it was pleasing to see the early return to service of Air New Zealand's full wide-body fleet in June. This will support international capacity and growth in jet demand going forward. Finally, for now, slide 7 covers petrol and diesel volumes, which have remained stable. This is broadly in line with the advisory outlook. Given where fuel prices have been, that's worth highlighting, as it reflects the resilience and cost efficiencies associated with our Marsden Point import terminal supply chain system.

Speaker #3: Which has impacted jet volumes over this period. So it's pleasing to see the early return to service of Air New Zealand's full widebody fleet in June.

Speaker #3: This will support international capacity and growth in jet demand going forward. And finally, for now, slide 7 covers petrol and diesel volumes, which have remained stable.

Speaker #3: This was broadly in line with the advisory outlook. Given where fuel prices have been, that's worth highlighting, as it reflects the resilience and cost efficiencies associated with our Marsden Point import terminal supply chain system.

Speaker #3: Clearly, transport will change over time, but the transition won't happen overnight. And New Zealand will continue to require reliable fuels infrastructure for a very, very long time yet.

Rob Buchanan: Clearly, transport will change over time, but the transition won't happen overnight, and New Zealand will continue to require reliable fuels infrastructure for a very, very long time yet, as demonstrated by the fact that diesel and petrol fleet has remained stable since 2017. Our advantage is that the assets we have in operation today can continue to evolve as that demand changes, and we are focused on building out contracted revenues that are independent of fuel throughput. That is exactly what we are doing with the Marsden Point Energy Precinct, which I'll touch on a little bit later on. I'll now hand over to Alexa to take you through the financials before we come back to the precinct and our wider growth plans.

Speaker #3: As demonstrated by the fact that the diesel and petrol fleet has remained stable since 2017, our advantage is that the assets we have in operation today can continue to evolve as that demand changes.

Speaker #3: And we are focused on building out contracted revenues that are independent of fuel throughput. That is exactly what we are doing with the Marston Point Energy Precinct.

Speaker #3: Which I'll touch on a little bit later on. I'll now hand over to Alexa to take you through the financials before we come back to the precinct and our wider growth plans.

Speaker #1: Thanks, Rob, and good morning, everyone. As Rob has outlined, this has been another strong half for Channel. Starting on slide 9, with the profit and loss.

Alexa Preston: Thanks, Rob, and good morning, everyone. As Rob has outlined, this has been another strong half for Channel. Starting on slide 9 with the profit and loss. Revenue for the half was NZD 72.9 million, up 4% on the prior period. EBITDA was NZD 48.8 million, up 1% on HY25, and our EBITDA margin was 67%. On an underlying basis, excluding the impact of the legacy lease release, revenue was up 5% and EBITDA up 3% on HY25. Overall, another strong and stable result that provides a good base for the additional contracted revenue coming through in the second half from the Z Energy jet storage project and government diesel storage. Turning to slide 10 and looking more closely at revenue. Variable terminal fees increased 5%, reflecting PPI indexation and higher wharfage revenue with 30 import vessels received during the half.

Speaker #1: Revenue for the half was $72.9 million, up 4% on the prior period. EBITDA was $48.8 million, up 1% on HY25. Our EBITDA margin was 67%.

Speaker #1: On an underlying basis, excluding the impact of the legacy release, revenue was up 5% and EBITDA up 3% on HY25. So overall, another strong and stable result that provides a good base for the additional contracted revenue coming through in the second half from the Z Energy jet storage project and government diesel storage.

Speaker #1: Turning to slide 10 and looking more closely at revenue. Variable terminal fees increased 5%, reflecting PPI indexation and higher wharfage revenue, with 30 import vessels received during the half.

Speaker #1: Contracted storage revenue increased 15% due to PPI indexation and the first revenue contribution from the government diesel storage contract. Other operating revenue increased and includes the revenue contribution from the Somerton Pipeline Joint Venture.

Alexa Preston: Contracted storage revenue increased 15% due to PPI indexation and the first revenue contribution from the government diesel storage contract. Other operating revenue increased and includes the revenue contribution from the Somerton Pipeline joint venture. These increases more than offset the loss of the legacy lease release and the contracted reduction in fixed terminal fees. We are seeing the benefit of the investment we've been making in building out new contracted revenue streams. Moving to slide 11. Operating costs increased 11% to NZD 24.1 million. However, excluding the addition of the Somerton joint venture expenses, underlying costs increased by around 6%. That reflects cost inflation across the board with efficiencies in the admin and other cost line offset by significant increases in energy and utility costs, and increases in materials and labor expenses where we filled vacancies and added capability to deliver world-class resilient operations.

Speaker #1: These increases more than offset the loss of the legacy we release and the contracted reduction in fixed terminal fees. We are seeing the benefit of the investment we've been making in building out new contracted revenue streams.

Speaker #1: Moving to slide 11. Operating costs increased 11% to $24.1 million. However, excluding the addition of the Somerton Joint Venture expenses, underlying costs increased by around 6%.

Speaker #1: That reflects cost inflation across the board, with efficiencies in admin and the admin and other cost line offset by significant increases in energy and utility costs.

Speaker #1: And increases in materials and labour expenses, where we've filled vacancies and added capability to deliver world-class, resilient operations. We remain very focused on cost discipline across our controllable cost base as the business grows, whilst ensuring a resilient supply chain for New Zealand, which includes world-class asset availability and reliability.

Alexa Preston: We remain very focused on cost discipline across our controllable cost base as the business grows, whilst ensuring a resilient supply chain for New Zealand, which includes world-class asset availability and reliability. On slide 12, you can see the increased level of investment going into the business. Total capital expenditure was NZD 41.5 million for the half, compared with NZD 19.1 million in HY25. Maintenance CapEx includes investment in terminal control systems, scheduled jetty and pipeline upgrades, and statutory tank inspections. For the full year, we remain on track for maintenance CapEx of between 8% and 10% of revenue. Growth CapEx includes Z Energy jet storage project, the government diesel storage conversion, and the Higgins Bitumen Terminal. We are investing in the resilience of the existing asset base while also investing in projects that grow contracted revenue. Turning to slide 13.

Speaker #1: On slide 12, you can see the increased level of investment going into the business. Total capital expenditure was $41.5 million for the half.

Speaker #1: Compared with $19.1 million in HY25. Maintenance capex includes investment in terminal control systems, scheduled jetty and pipeline upgrades, and statutory tank inspection. For the full year, we remain on track for maintenance capex of between 8 and 10% of revenue.

Speaker #1: Growth capex includes the Z Energy jet storage project, the government diesel storage conversion, and the Higgins Bitumen terminal. We are investing in the resilience of the existing asset base, while also investing in projects that grow contracted revenue.

Speaker #1: Turning to slide 13, the business continues to generate strong operating cash flow, supporting stable and growing dividends. Normalised free cash flow from operations was $33.6 million, representing an EBITDA to free cash flow conversion of 69%.

Alexa Preston: The business continues to generate strong operating cash flow, supporting stable and growing dividends. Normalized free cash flow from operations was NZD 33.6 million, representing an EBITDA to free cash flow conversion of 69%. That was slightly below HY25, largely reflecting the phasing of maintenance CapEx during the half. The board is pleased to have declared an interim dividend of 7.25 cents per share, a significant increase of 16% on HY25, reflecting their commitment to a stable and growing dividend for shareholders. Moving to slide 14, our balance sheet remains strong. Net debt at the end of June was NZD 346 million, with NZD 93 million of liquidity headroom. Leverage was 3.8x net debt to EBITDA, which remains within our target credit metrics, consistent with a shadow BBB to BBB+ credit rating, and comfortably within our bank and bond covenant requirements. Interest cover remains strong at 5.7x.

Speaker #1: That was slightly below HY25, largely reflecting the phasing of maintenance capex during the half. The Board is pleased to have declared an interim dividend of 7.25 cents per share, a significant increase of 16% on HY25, reflecting their commitment to a stable and growing dividend for shareholders.

Speaker #1: Moving to slide 14. Our balance sheet remains strong. Net debt at the end of June was $346 million, with $93 million of liquidity headroom.

Speaker #1: Leverage was 3.8 times net debt to EBITDA, which remains within our target credit metrics, consistent with the shadow BBB flat to BBB plus credit rating.

Speaker #1: And comfortably within our bank and bond covenant requirements. Interest cover remains strong at 5.7 times. We are also reviewing options for refinancing the $100 million retail bond ahead of its maturity in May 2027.

Alexa Preston: We are also reviewing options for refinancing the NZD 100 million retail bond ahead of its maturity in May 2027. We retain balance sheet capacity to fund the growth opportunities ahead of us, while remaining disciplined around our target credit metrics. Finally, on slide 15, as you will recall, we upgraded our guidance in May at the annual shareholders' meeting to NZD 97 to NZD 105 million of EBITDA. With the benefit of eight months of trading behind us and greater certainty around fuel throughput volumes, we have further upgraded that guidance today to NZD 103 to NZD 108 million of EBITDA. In addition to greater certainty around fuel volumes, the upgraded results also reflects the successful on-time delivery of the government diesel storage contract and the earlier-than-planned completion of the Z Energy jet storage project. Maintenance, CapEx, and normalized free cash flow conversion guidance remain unchanged.

Speaker #1: We retain balance sheet capacity to fund the growth opportunities ahead of us, while remaining disciplined around our target credit metrics. Finally, on Slide 15, as you will recall, we upgraded our guidance in May at the Annual Shareholders' Meeting.

Speaker #1: To $97 to $105 million of EBITDA. With the benefit of eight months of trading behind us, and greater certainty around fuel throughput volumes, we have further upgraded that guidance today to $103 to $108 million of EBITDA.

Speaker #1: In addition to greater certainty around fuel volumes, the upgraded results also reflect the successful on-time delivery of the government diesel storage contract and the earlier-than-planned completion of the Z Energy jet storage project.

Speaker #1: Maintenance capex and normalised free cash flow conversion guidance remain unchanged. In wrapping up, we've delivered another strong result, continued to generate good cash flow, and maintained a strong balance sheet while increasing our investment in contracted growth.

Alexa Preston: In wrapping up, we have delivered another strong result, continued to generate good cash flow, and maintained a strong balance sheet while increasing our investment in contracted growth. Importantly, a number of our investments are now moving from capital spend into revenue. 2027 will benefit from a full-year contribution from the Z Energy jet storage and Higgins Bitumen contracts, as well as a full-year contribution from the government diesel storage contract. Inflation continues to be a feature of the New Zealand economy, and this will likely be reflected in the PPI indexation factor that applies to our revenues next year. Over the last three months, Channel has increased the in-service contracted storage volume at Marsden Point by 40%.

Speaker #1: Importantly, a number of our investments are now moving from capital spend into revenue. 2027 will benefit from a full-year contribution from the Z Energy jet storage and big Higgins Bitumen contracts, as well as a full-year contribution from the government diesel storage contract.

Speaker #1: Inflation continues to be a feature of the New Zealand economy, and this will likely be reflected in the PPI indexation factor that applies to our revenues next year.

Speaker #1: Over the last three months, Channel has increased the in-service contracted storage volume at Marston Point by 40%. Reflecting this significant expansion, the material new BP contract we have just announced, and acknowledging the significant pipeline of potential growth opportunities ahead of the business, Channel will invest an additional $700,000 to $900,000 per annum in operating expenditure to support resilient import terminal operations and the execution of our growth pipeline.

Alexa Preston: Reflecting this significant expansion, the material new bp contract we have just announced, and acknowledging the significant pipeline of potential growth opportunities ahead of the business, Channel will invest an additional NZD 700 to NZD 900,000 per annum in operating expenditure to support resilient import terminal operations and the execution of our growth pipeline. I will now hand back to Rob to take you through the growth opportunities in more detail.

Speaker #1: I'll now hand back to Rob to take you through the growth opportunities in more detail.

Speaker #2: Thanks, Alexa. I want to spend the next few minutes talking about growth. You’ve seen slide 17 before, but let me remind you of the three key areas of growth we’re focused on.

Rob Buchanan: Thanks, Alexa. I want to spend the next few minutes talking about growth. You've seen slide 17 before, but let me remind you of the three key areas of growth we're focused on. The first is Marsden Point with the energy precinct, with the bp deal today, another great example of what we can do there. The second is opportunities along our existing supply chain, particularly around Auckland Airport. The third is selective acquisitions in New Zealand and Australia. We're very focused on growth, but selective and disciplined growth. It needs the right customer proposition, the right risk allocation, and the right return for our shareholders. Where we have an advantage is that we bring genuine operating capability to the table. We understand high hazard fuels infrastructure. We know our customers, and we have a demonstrated ability to get projects delivered.

Speaker #2: The first is Marston Point, with the energy precinct— with the BP deal today, another great example of what we can do there. The second is opportunities along our existing supply chain, particularly around Auckland Airport.

Speaker #2: And the third is selective acquisitions in New Zealand and Australia. We're very focused on growth, but selective and disciplined growth. It needs the right customer proposition, the right risk allocation, and the right return for our shareholders.

Speaker #2: Where we have an advantage is that we bring genuine operating capability to the table. We understand high-hazard fuels infrastructure. We know our customers, and we have a demonstrated ability to get projects delivered.

Speaker #2: That gives us a strong platform to grow from. The next slide is probably my favourite slide in the deck, because it shows just how much optionality and opportunity there is at Marsden Point.

Rob Buchanan: That gives us a strong platform to grow from. The next slide is probably my favorite slide in the deck because it shows just how much optionality and opportunity there is at Marsden Point. There is operating infrastructure here today. There are assets being repurposed right now, and there are projects under construction. There is land available for even more new development, opportunities in fuel security, future fuels, and other energy infrastructure. The deepwater port access, pipeline, tanks, land, and operating and development expertise already exist. This is very difficult to replicate, and it provides significant opportunity for us to create further value for shareholders and New Zealand. I'll just take a moment to point out some of the key changes to this slide since you saw it last.

Speaker #2: There is operating infrastructure here today, assets are being repurposed right now, and there are projects under construction. There is land available for even more new development—opportunities in fuel security, future fuels, and other energy infrastructure.

Speaker #2: The deep-water port access, pipeline, tanks, land, and operating and development expertise already exist. This is very difficult to replicate, and it provides significant opportunity for us to create further value for shareholders and New Zealand.

Speaker #2: I'll just take a moment to point out some of the key changes to this slide since you saw it last. Firstly, you can see how much room we will create from the sale and removal of the CCR platformer.

Rob Buchanan: Firstly, you can see how much room we will create from the sale and removal of the CCR Platformer, which forms critical enabling works for the biorefinery. Secondly, you can see we have identified 45 hectares of land available for greenfields fuel storage. We've now completed a scoping study into the feasibility of conversion of existing tanks and construction of new greenfields tanks, reflecting increased opportunity for strategic storage in New Zealand. Thirdly, we have added 123 million liters of diesel and jet storage in just the last three months, significantly increasing the total in-service capacity of our site. Just today, we announced another new and material contract with bp to deliver significant new jet and diesel storage.

Speaker #2: This forms critical enabling works for the biorefinery. Secondly, you can see we have identified 45 million hectares of land available for greenfields fuel storage.

Speaker #2: We've now completed a scoping study into the feasibility of conversion of existing tanks and the construction of new greenfields tanks, reflecting increased opportunity for strategic storage in New Zealand.

Speaker #2: Thirdly, we have added 123 million litres of diesel and jet storage in just the last three months, significantly increasing the total in-service capacity of our site.

Speaker #2: And just today, we announced another new and material contract with BP to deliver significant new jet and diesel storage. Slide 19 is probably the best evidence of what six months of delivery looks like for our business.

Rob Buchanan: Slide 19 is probably the best evidence of what six months of delivery looks like for our business. Z Energy identified supply chain efficiencies in improving the volume of jet storage on our site. To meet this need, we converted existing infrastructure and delivered it for them six months ahead of schedule. The government needed additional diesel storage at incredibly short notice following the outbreak of the Middle East conflict. We identified a solution in three weeks and delivered 93 million liters of storage, nine days of New Zealand's diesel demand, just nine weeks later. This was the only option in New Zealand that could be provided at such short time frame due to Marsden Point's existing assets and capabilities and our connection with the existing fuel supply chain. This project highlighted our proven infrastructure turnaround capability and how we are well-positioned to respond quickly to unplanned conversion opportunities.

Speaker #2: Z Energy identified supply chain efficiencies in improving the volume of jet storage on our site. To meet this need, we converted existing infrastructure and delivered it for them six months ahead of schedule.

Speaker #2: The government needed additional diesel storage at incredibly short notice, following the outbreak of the Middle East conflict. We identified a solution in three weeks, and delivered 93 million litres of storage—equivalent to nine days of New Zealand's diesel demand—just nine weeks later.

Speaker #2: This was the only option in New Zealand that could be provided within such a short time frame due to Marsden Point's existing assets and capabilities, and our connection with the existing fuel supply chain.

Speaker #2: This project highlighted our proven infrastructure turnaround capability and how we are well positioned to respond quickly to unplanned conversion opportunities. Our team has some unique skills and capabilities for delivering complex projects at pace.

Rob Buchanan: Our team have some unique skills and capabilities for delivering complex projects at pace. I am incredibly proud of the way they rallied together to provide this resilience for New Zealand at a critical time of need. In relation to Higgins, they needed a more resilient bitumen import terminal solution. That project is on track and, in fact, has been expanded. Taken together, these projects show the progress we have made towards the Marsden Point Energy Precinct. Find the customer problem, use our infrastructure advantage, contract the revenue, and deliver the solution. That has become the formula for what we do best here at Channel. Importantly, we still have plenty more to come, as you can see on slide 20. There remains more than 350 million liters of existing storage capacity potentially available for repurposing. We have also identified 45 hectares of land available for new greenfield storage development.

Speaker #2: And I'm incredibly proud of the way they rallied together to provide this resilience for New Zealand at a critical time of need. In relation to Higgins, they needed a more resilient bitumen import terminal solution.

Speaker #2: That project is on track, and, in fact, has been expanded. Taken together, these projects show the progress we have made towards the Marston Point energy precinct.

Speaker #2: Find the customer problem, use our infrastructure advantage, contract the revenue, and deliver the solution. That has become the formula for what we do best here at Channel.

Speaker #2: And importantly, we still have plenty more to come, as you can see on slide 20. There remains more than 350 million litres of existing storage capacity potentially available for repurposing.

Speaker #2: We have also identified 45 hectares of land available for new greenfield storage development. There are opportunities around SAF and biofuels. One exciting development is the Memorandum of Understanding we have signed with LanzaJet, who are a US-based sustainable fuels technology company focused on producing sustainable aviation fuel from ethanol.

Rob Buchanan: There are opportunities around SAF and biofuels. One exciting development is the memorandum of understanding we have signed with LanzaJet, who are a US-based sustainable fuels technology company focused on producing sustainable aviation fuel from ethanol. They are at very early stages of considering an alcohol-to-jet facility at Marsden Point. Then there are further energy security opportunities and potentially other infrastructure uses. I often get asked, will every one of these things happen? The short answer is no, and they do not need to. One of the benefits of having a large opportunity set like we do is that we can choose the projects that make sense strategically and commercially at the right time for us and our shareholders. That discipline is important to us. Moving to slide 21 and the potential biorefinery.

Speaker #2: They are at very early stages of considering an alcohol-to-jet facility at Marston Point. Then there are further energy security opportunities, and potentially other infrastructure uses.

Speaker #2: I often get asked, will every one of these things happen? And the short answer is no—and they don't need to. One of the benefits of having a large opportunity set, like we do, is that we can choose the projects that make sense strategically and commercially at the right time for us and our shareholders.

Speaker #2: And that discipline is important to us. Moving to slide 21, and the potential biorefinery: at over $1 billion of proposed investment, this would be a significant project for Northland and for New Zealand, producing 400 million litres of biofuels annually.

Rob Buchanan: At over NZD 1 billion of proposed investment, this would be a significant project for Northland and for New Zealand, producing 400 million liters of biofuels annually. The proposed project has been expanded and is now expected to include biodiesel, sustainable aviation fuel, and fertilizer production. Channel's role remains to provide the consortium with the site and the infrastructure, operating as the landlord and infrastructure services provider. The sale of the decommissioned CCR platform enables the redevelopment of that part of the site. You would have seen that indicated on the earlier precinct image slide. The consortium's equity raise process is taking a bit longer than originally anticipated. It is an incredibly complex process, but credible potential equity providers remain actively engaged, and due diligence is very well progressed. At this stage, we continue to see the proposed biorefinery as the highest and best use of the decommissioned hydrocracker assets.

Speaker #2: The proposed project has been expanded and is now expected to include biodiesel, sustainable aviation fuel, and fertilizer production. Channel's role remains to provide the consortium with the site and the infrastructure, operating as the landlord and infrastructure services provider.

Speaker #2: The sale of the decommissioned CCR platformer enables the redevelopment of that part of the site. You would have seen that indicated on the earlier precinct image slide.

Speaker #2: The consortium's equity raise process is taking a bit longer than originally anticipated. It's an incredibly complex process, but credible, potential equity providers remain actively engaged, and due diligence is very well progressed.

Speaker #2: At this stage, we continue to see the proposed biorefinery as the highest and best use of the decommissioned hydrocracker assets. That said, the equity raise is a key condition precedent to the final investment decision, and our current assessment is that the completion of that process will likely delay the final investment decision into 2027.

Rob Buchanan: That said, the equity raise is a key condition precedent to the final investment decision, and our current assessment is the completion of that process will likely delay the final investment decision into 2027. If it proceeds, the benefits extend well beyond Channel. It has the potential to bring substantial investment into Northland, create skilled employment opportunities, support lower carbon fuels, and importantly, strengthen domestic supply chains. In times of crisis or a constrained fuel supply, it would provide an important backup source of fuel for the domestic market. Of course, it would provide another productive long-term use for Marsden Point's infrastructure. By any measure, that would be a fantastic outcome. Slide 22 is about accountability. We set ourselves targets at the beginning of each year, and this is how we are tracking against them in 2026.

Speaker #2: But if it proceeds, the benefits extend well beyond Channel. It has the potential to bring substantial investment into Northland, create skilled employment opportunities, support lower-carbon fuels, and, importantly, strengthen domestic supply chains.

Speaker #2: And, in times of crisis or a constrained fuel supply, it would provide an important backup source of fuel for the domestic market. And, of course, it would provide another productive, long-term use for Marston Point’s infrastructure.

Speaker #2: By any measure, that would be a fantastic outcome. Slide 22 is about accountability. We set ourselves targets at the beginning of each year, and this is how we're tracking against them in 2026.

Speaker #2: I won't read the table out, but there are two numbers that are important. We've added around $22 million of incremental contracted revenue from the government diesel storage announced in the first half of this year, and today announced the new BP contract.

Rob Buchanan: I will not read the table out, but there are two numbers that are important. We have added around NZD 22 million of incremental contracted revenue from the government diesel storage announced in the H1 of this year and today announced the new bp contract. We have upgraded FY 2026 EBITDA guidance again. Those are good outcomes for shareholders. Let me finish with some closing remarks on slide 23. We have delivered a strong operational and financial performance in the H1, alongside continued progress on project development and delivery. The contracted revenue associated with the jet and diesel storage projects we have now completed will support revenue growth in the H2 of 2026 and into 2027. At the same time, we are continuing to monitor the impact of high fuel prices on demand.

Speaker #2: And we have upgraded FY26 EBITDA guidance again. Those are good outcomes for shareholders. So, let me finish with some closing remarks on slide 23.

Speaker #2: We've delivered a strong operational and financial performance in the first half, alongside continued progress on project development and delivery. The contracted revenue associated with the jet and diesel storage projects, when completed, will support revenue growth in the second half of '26 and into '27.

Speaker #2: At the same time, we're continuing to monitor the impact of high fuel prices on demand. The broader backdrop remains one of geopolitical uncertainty and pressure on global supply chains, which continues to highlight the importance of the infrastructure we operate.

Rob Buchanan: The broader backdrop remains one of geopolitical uncertainty and pressure on global supply chains, which continues to highlight the importance of the infrastructure we operate. We are seeing renewable fuels projects, including the Marsden Point Biorefinery, increasingly viewed through a security of supply lens as well as a sustainability lens. We continue to evaluate both organic and acquisition opportunities in New Zealand and Australia. We believe Channel is really well-positioned for continued growth while playing an important role in strengthening New Zealand's energy resilience. With that, we will take some questions that you may have. Thank you.

Speaker #2: We're seeing renewable fuels projects, including the Marston Point biorefinery, increasingly viewed through a security-of-supply lens as well as a sustainability lens. And we continue to evaluate both organic and acquisition opportunities in New Zealand and Australia.

Speaker #2: We believe Channel is really well positioned for continued growth while playing an important role in strengthening New Zealand's energy resilience. With that, we'll take any questions you may have.

Speaker #2: Thank you.

Speaker #1: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.

Operator 2: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Andrew Harvey-Green with Forsyth Barr. Please go ahead.

Operator: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Andrew Harvey-Green with Forsyth Barr. Please go ahead.

Speaker #1: If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Andrew Harvey-Green with Forsyth Barr.

Speaker #1: Please go ahead.

Speaker #3: Morning, Rob and Alexa. Great result in there. Good to see another contract being signed. A couple of questions from me. I guess I'm not quite sure how to phrase this, to be honest, but it's probably around the biorefinery. And, I guess, just given your past sort of experiences, Rob, with these sorts of processes, is there anything in there we should be getting concerned about with the equity raise process? Or do you think it's just a function, very much?

Andrew Harvey-Green: Morning, Rob and Alexa. Great result today. Good to see another contract being signed. A couple of questions from me. I guess, I am not quite sure how to phrase this, to be honest, but it is probably around the biorefinery. I guess just given your past experiences, Rob, with these sorts of processes. Is there anything in there we should be getting concerned about with the equity raise process? Do you think it is just very much a function of, I guess, the increased scope and complexity, and we should not be particularly concerned about the financial side of the project?

Speaker #3: Function of, I guess, the increased scope and complexity? And we shouldn't be particularly concerned about the financial side of the project?

Speaker #2: Yeah, very much the latter, Andrew. So look, again, having seen the returns on offer, we think it's a financially attractive proposition for folks to invest in.

Rob Buchanan: Yeah, very much the latter, Andrew. Look, again, having seen the returns on offer, we think it's a financially attractive proposition for folks to invest in. I can't speak to names, but there are some very large and significant international investors that are doing a comprehensive diligence on that project. So far, that's validated everything that we've seen in it, which is great. But we don't control the timing of when they get there on that. Ultimately, we're signaling that risk that the FID moves into 2027 on the basis that those guys will need to take the time they take to get to close.

Speaker #2: I can't speak to names, but there are some very large and significant international investors that are doing comprehensive diligence on that project. So far, that's validated everything that we've seen in it, which is great.

Speaker #2: But we don't control the timing of when they get there on that. So ultimately, we're signaling that risk that the FID moves into '27, if, on the basis that those guys will need to take the time they take to get to close.

Speaker #3: Yeah, okay. That's good, thanks. Next question I just had is, I guess, following on from the year-round conflict and particularly seeing what's happened in Australia, there is an expectation, I guess, that MSO obligations may step up.

Andrew Harvey-Green: Yeah. Okay. No, that's good. Thanks. Next question I just had is, following on from the Iran conflict, and particularly seeing what's happened in Australia, an expectation, I guess, that MSO obligations may step up. Is there anything going on, any sort of initial discussions around that? Or should we effectively expect this to be parked until post-election?

Speaker #3: Is there anything going on—any sort of initial discussions around that—or should we effectively expect this to be parked until post-election?

Speaker #2: Look, I think so we've all seen what the Australian government has done around fuel security and fuel resilience, and that's significantly led minimum stockholding obligations as well as looking to put in place a strategic reserve.

Rob Buchanan: Look, we've all seen what the Australian government has done around fuel security and fuel resilience, and that's significantly left minimum stockholding obligations as well as looking to put in place a strategic reserve. I think we maintain a watching brief on that here in New Zealand. We are going into an election. I know it's something that's on the mind of ministers and the government, but I probably won't speak to it much more than that.

Speaker #2: I think we've maintained a watching brief on that here in New Zealand. We are going into an election, and I know it's something that's on the mind of ministers and the government, but I probably won't speak to it much more than that.

Speaker #3: Yeah, okay. All good. Next question I just had was just around the CAPEX side of things, staying business CAPEX, and if you're comfortable with what's going on there.

Andrew Harvey-Green: Yeah. Okay. All good. Next question I just had was just around the CapEx side of things. Stay in business CapEx, and are comfortable with what's going on there. Growth CapEx, I guess, was a little bit lower than what I was expecting in the H1. Is there more to come? I guess, is there going to be weighted more H2? Or I'm just sort of wondering if you can give us a little bit more color about what we should expect on the growth CapEx side of things.

Speaker #3: Growth CAPEX, I guess, was a little bit lower than what I was expecting in the first half. Is there more to come, I guess?

Speaker #3: Is it going to be weighted more to the second half, or—I’m just sort of wondering if you can give us a little bit more colour about what we should expect on the growth CAPEX side of things?

Speaker #4: So, Andrew, the growth CAPEX actually includes the conclusion of the Z Energy growth CAPEX, so all of that's in the first half. Bitumen is progressing as planned, and so that should all conclude in the second half.

Alexa Preston: Andrew, the growth CapEx actually includes the conclusion of the Z Energy growth CapEx. All of that is in the H1. Bitumen is progressing as planned, and that should all conclude in the H2. Otherwise, it is largely government diesel storage. From our perspective, as signaled.

Speaker #4: And otherwise, it's largely government diesel storage, though from our perspective, it's as signalled.

Speaker #3: Yeah, okay. Okay. And last question I just had was, just thinking about sort of OPEX going forward—you just signaled a little bit of an increase coming through.

Andrew Harvey-Green: Yeah. Okay. Last question I just had was just thinking about OpEx going forward. You just signaled a little bit of an increase coming through. It kind of looks like if we think about probably FY 2027 and the new contracts coming in circa NZD 50 million, is that a reasonable ballpark to be working with as underlying OpEx going forward?

Speaker #3: It kind of looks like, if we think about probably FY27 and the new contracts coming in, circa $50 million—is that a reasonable sort of ballpark to be working with as underlying OPEX going forward?

Alexa Preston: I have probably got three things, three pieces of color to add to the OpEx. One is we are continuing to see those cost lines where we do not have any control, like our transmission and distribution charges experience significant inflationary pressure. The cost increases that we have signaled today is really the magic of the model that we are running here. We have added NZD 130 million today of contracted revenue over the contracted term and increased the storage capacity of the site by 40% in the last three months, and that is a very modest increase in our cost base that we have signaled today. You will recall also that when we announced the bitumen terminal, we indicated that would come with some direct OpEx as well, the NZD 200,000. Again, very modest. Those are sort of the three trends that we are seeing that add to the cost base.

Speaker #4: I've probably got three things, three pieces of colour to add to the OPEX. One is we're continuing to see those cost lines where we don't have any control, like our transmission and distribution charges, experience significant inflationary pressure.

Speaker #4: The cost increases that we've signaled today is really the magic of the model that they're running here. We've added $130 million today of contracted revenue, over the contracted term, and increased the storage capacity of the site by 40% in the last three months, and that's a very modest increase in our cost base.

Speaker #4: That we've signaled today. And you'll recall also that when we announced the bitumen terminal, we indicated that would come with some direct OPEX as well, at $200,000.

Speaker #4: Again, very modest. So those are sort of the three trends that we're seeing that add to the cost base. We do continue to be incredibly disciplined on the cost lines that we do have control over, though.

Alexa Preston: We do continue to be incredibly disciplined on the cost lines that we do have control over, though.

Speaker #2: Probably just the other element I'd add to that, in terms of colour, Andrew, you'll see we completed a scoping study this year, or this half, which indicates 500 to 700 million litres of greenfield storage capacity on the site.

Rob Buchanan: Probably just the other element I would add to that in terms of color, Andrew. You will see we completed a scoping study this year or this half, which indicates 500 to 700 million liters of greenfield storage capacity on the site. We have the existing brownfield conversion opportunity. As you have seen with the bp contract today and the government contracts, which frankly we did not expect to be doing when we started this year, there is a pretty significant opportunity ahead of us, and we need to make sure that we have the ability to execute on that. We are running the total business with a little over 100 heads, and we are seeing significant growth come at us into delivering projects really well. We need to be able to continue to do that.

Speaker #2: And obviously, we've got the existing brownfield conversion opportunity. And as you've seen with the BP contract today, and the government contract, which, frankly, we didn't expect to be doing when we started this year, there is a pretty significant opportunity ahead of us, and we need to make sure that we've got the ability to execute on that.

Speaker #2: And so we've got to—we're running the total business with around a little over 100 heads, and we're seeing significant growth come at us and delivering projects really well.

Speaker #2: But we need to be able to continue to do that.

Speaker #3: Right. Okay, thanks for that colour. That's all from me.

Andrew Harvey-Green: Great. Okay, thanks for that color. That is all from me.

Speaker #1: Your next question comes from Wade Gardner with Craigs Investment Partners. Please go ahead.

Operator 2: Your next question comes from Wade Gardiner with Craigs Investment Partners. Please go ahead.

Operator: Your next question comes from Wade Gardiner with Craigs Investment Partners. Please go ahead.

Speaker #5: Hi there. Just a few questions first up on the BP contract. What's the split between jet and diesel? And is the diesel essentially—should we view that as that lift in the MSO from 21 to 28 days?

Wade Gardiner: Hi there. Just a few questions. First up on the bp contract, what is the split between jet and diesel? Is the diesel essentially, we should view that as that lift in the MSO from 21 to 28 days? How many days would that add?

Speaker #5: And how many days would that add?

Speaker #2: Yeah, look, I think one of the things that's important that we do, given we've got three highly competitive customers, is that we protect their confidential information.

Rob Buchanan: Yeah, look, I think, one of the things that's important that we do, given we've got three highly competitive customers, is that we protect their confidential information. So, that information is frankly sensitive to them. It's a combination of jet and diesel. My suspicion is there's a portion of it to help that customer's MSO requirements. But ultimately, that's a matter for them.

Speaker #2: So that information is, frankly, sensitive to them. It's a combination of jet and diesel. My suspicion is there's a portion of it to help that customer's MSO requirements.

Speaker #2: But ultimately, that's a matter for them.

Speaker #5: So, you'd still expect potential MSO deals to be done? This doesn't necessarily change that outlook?

Wade Gardiner: So you'd still expect potential MSO deals to be done. This doesn't necessarily change that outlook?

Speaker #2: Well, I think every six months at the results, I get the question about whether there's going to be MSO deals. And we talk to the fact that, actually, the commercial opportunity is as significant as the MSO opportunity.

Rob Buchanan: Well, I think, every six months, at the results, I get the question about whether there's going to be MSO deals, and we talk to the fact that actually, the commercial opportunity is as significant as the MSO opportunity. And we've kind of highlighted it again, actually, on the last page of our investor presentation, where we've said in writing, we continue to see a strong pipeline of storage opportunities. So yeah, there's MSO opportunity, but there's also commercial and strategic opportunity, and I think it's important to not lose the context of the other two, because if you think about the jet storage we've delivered for Z Energy, and obviously the bp deal includes jet storage as well, that's commercial opportunities.

Speaker #2: And we've kind of highlighted it again, actually, on the last page of our investor presentation, where we've said in writing that we continue to see a strong pipeline of storage opportunities.

Speaker #2: So yep, there's MSO opportunity, but there's also commercial and strategic opportunity. And I think it's important to not lose the context of the other two, because if you think about the jet storage we've delivered for Z, and obviously, the BP deal includes jet storage as well.

Speaker #2: That's commercial opportunity.

Speaker #5: Yeah. Are there any rights of extension on this, beyond the 15 years?

Wade Gardiner: Yeah. Are there any rights of extension on this beyond the 15 years?

Speaker #2: Yep. Yes, there are.

Rob Buchanan: Yep. Yes, there are.

Speaker #5: And can you provide color on that?

Wade Gardiner: Can you provide color on that?

Speaker #2: No, no further colour on that, but on the same terms.

Rob Buchanan: No. No further color on that, but on the same terms.

Speaker #5: Okay. And I notice on your capex numbers on page 12—was it that whatever your guidance was, you didn't have anything in there for the BP contract?

Wade Gardiner: Okay. I notice on your CapEx numbers on page 12, was it, wherever your guidance was that you did not have anything in there for the bp contract, I do not think.

Speaker #5: I don't think.

Speaker #4: No, that's right. So, in terms of the outlook for CapEx, is that your question?

Alexa Preston: No, that is right. In terms of outlook for CapEx, is that your question?

Speaker #5: Yeah, yeah. You say growth CAPEX includes Z, new government diesel, and Higgins. But I assume there is some—given that you're kicking it off in September—there will be some in there for BP as well?

Wade Gardiner: Yeah. You say growth CapEx includes Z, new government, diesel, and Higgins. I assume given that you are kicking it off in September, there will be some in there for bp as well.

Speaker #4: There will, going forward, that's right. The growth CAPEX that we've reported year to date doesn't include costs associated with the—.

Alexa Preston: There will going forward. That is right. The growth CapEx that we have reported year to date does not include costs associated with the-

Speaker #5: No, no. I'm more talking about the second half.

Wade Gardiner: No, I am more talking second half.

Speaker #4: Second half, yes. We're kicking that project off straight away—absolutely, yeah.

Alexa Preston: Second half. Yes, we are kicking that project off straight away. Absolutely. Yeah.

Speaker #5: How much should we assume in the second half?

Wade Gardiner: How much should we assume in the H2?

Speaker #4: Well, there's only sort of three or four months in which to really get after that project, and so it will be a very small portion of the overall cost, with the largest component of that capex for BP being spent next year.

Alexa Preston: Well, there is only three or four months in which to really get after that project. It will be a very small portion of the overall cost with the largest component of that CapEx for bp being spent next year.

Speaker #5: Okay. Can you give some colour on the Somerton contribution?

Wade Gardiner: Okay. Can you give some color on the Somerton contribution?

Speaker #2: Yeah. So, again, this is one where we have to be a little bit careful about exactly what we disclose, because we've got counterparties there, and we're kind of one part of a joint venture.

Rob Buchanan: Yeah. This is one that we have to be a little bit careful about exactly what we disclose because we have counterparties there, and we are one part of a joint venture. What I would say is, the business has performed as we would expect it to. The only point is, Melbourne Airport is quite exposed to the Middle Eastern routes. Throughputs and volumes during Q2, in particular, were a little bit off where we had thought they would be, largely attributable to those Middle Eastern carriers. I think, importantly again, it is a 50-year asset. From our perspective, we are pretty relaxed about that given what we have also seen at Auckland Airport.

Speaker #2: What I'd say is the business performed as we would have expected it to. The only point is that Melbourne Airport is quite exposed to the Middle Eastern routes.

Speaker #2: And so throughputs and volumes during the second quarter in particular were a little bit off where we had thought they would be, largely attributable to those Middle Eastern carriers.

Speaker #2: But I think, importantly, again, that's a 50-year asset. So, from our perspective, we're pretty relaxed about that, given what we've also seen at Auckland Airport.

Speaker #5: Okay, yeah, that's all for me. Thanks.

Wade Gardiner: Okay. Yeah, that is all for me. Thanks.

Speaker #1: Your next question comes from Cameron McDonald with E&P. Please go ahead. Cameron McDonald, your line is live. Please proceed with your question. We'll move on to Vignesh Nair with UBS.

Operator 2: Your next question comes from Cameron McDonald with E&P. Please go ahead. Cameron McDonald, your line is live. Please proceed with your question. We will move on to Vighnesh Nair with UBS. Please go ahead.

Operator: Your next question comes from Cameron McDonald with E&P. Please go ahead. Cameron McDonald, your line is live. Please proceed with your question. We will move on to Vighnesh Nair with UBS. Please go ahead.

Speaker #1: Please go ahead.

Speaker #5: Good morning, Robin, I think. Can you hear me?

Vignesh Nair: Good morning, Rob. I was saying, can you hear me?

Speaker #2: Yes, absolutely.

Rob Buchanan: Yes, absolutely.

Speaker #5: Amazing. Congrats on the strong results. Sort of two follow-ons from me. First, on the BP contract, I just wanted to get some understanding of the exact work required.

Vignesh Nair: Amazing. Congrats on the strong results. Two follow on for me. First on the bp contract, just wanted to get some understanding of the exact work required, I suppose, on-site to facilitate the longer-term deal. Also the follow-on to that, if you are starting works immediately and you do end up completing a touch ahead of schedule, will that mean the customer in terms of bp would be willing to start that contract ahead of time, before Q3 2028?

Speaker #5: I suppose on-site to facilitate the longer-term deal. And also as a follow-on to that, if you're starting works immediately, and you do end up completing a touch ahead of schedule, will that mean that sort of the customer in terms of BP would be willing to sort of start that contract ahead of time before Q3 28?

Speaker #2: Yeah, thanks for your questions. So the nature of that work will be brownfields conversion, so exactly along the lines of what we've done before.

Rob Buchanan: Yeah, thanks for your questions. The nature of that work will be brownfields conversion, exactly along the lines of what we have done before, across a range of tanks. We feel really comfortable with the scope of work. We have got a contractor that has performed really well on our site and delivered well for us, and it is work that we know well and understand, and we obviously have a really good understanding of the assets. That is probably the first part of the question. I think the second part is, I think from your perspective, the market's perspective, you should be expecting this one sort of on budget and on schedule rather than ahead of schedule.

Speaker #2: Across a range of tanks. And so we feel really comfortable with the scope of work. We've got a contractor that's performed really well on our site and delivered well for us, and it's work that we know well and understand. We obviously have a really good understanding of the assets.

Speaker #2: So that's probably the first part of the question. I think the second part is, like, I think from your perspective—the market's perspective—you should be expecting this one sort of on budget and on schedule, rather than ahead of schedule.

Speaker #2: We've got to manage some tank outages and contracted terms on some of these tanks, and so I see that project being delivered on budget and on time, rather than ahead of schedule.

Rob Buchanan: We have got to manage some tank outages and contracted terms in some of these tanks. I see that project being delivered on budget and on time rather than ahead of schedule.

Speaker #5: Okay, that's helpful. And I suppose, just sort of loosely following on from that, I think historically you've mentioned one of the operators was previously using 50-megalitre MR tankers instead of the larger LRs.

Vignesh Nair: Okay, that's helpful. I suppose just loosely following on from that, I think historically you've mentioned one of the operators were previously using 50-megaliter MR tankers instead of the larger LRs. Are discussions with that operator still ongoing, or have they now concluded?

Speaker #5: Are our discussions with that operator still ongoing, or have they now concluded?

Speaker #2: Oh, look, again, I won't speak to the kind of commercial rationale behind the storage opportunities that we deliver. That's a matter for our customers, and we keep those discussions confidential.

Rob Buchanan: Well, look, again, I won't speak to the kind of commercial rationale behind the storage opportunities that we deliver. That's a matter for our customers, and we keep those discussions confidential. So, I'll probably leave it at that.

Speaker #2: So, I'll probably leave it at that.

Speaker #5: Okay. And just one more I suppose just on the news around Exxon exiting New Zealand, I suppose just wanted to get some colour on sort of potential interest and the worry terminal and some more sort of details around potential timing if sort of the deal does sort of go through.

Vignesh Nair: Okay. Just one more, I suppose just on the news around ExxonMobil exiting New Zealand. I suppose just wanted to get some color on potential interest in the Wiri terminal and some more sort of details around potential timing if the deal does go through, if you've got any comments.

Speaker #5: If you've got any comments.

Speaker #2: Well, I think the important place to look is slide 17 in our deck. And basically, if it's on that page, we'll be doing it.

Rob Buchanan: Well, I think the important place to look is slide 17 on our deck, and basically, if it's on that page, we'll be doing it, and if it's not on that page, we won't be doing it. I won't speak to specific acquisition opportunities because you can understand that I can't and wouldn't do that. But I think that page gives you a pretty good guidance of the things we're looking at and where we would look to deploy capital and M&A.

Speaker #2: And if it's not on that page, we won't be doing it. I won't speak to specific acquisition opportunities, because you can understand that I can't, and wouldn't, do that.

Speaker #2: But I think that page gives you pretty good guidance on the things we're looking at, and we would look to deploy capital in M&A.

Vignesh Nair: Yeah. That is helpful. That is all from me. Thanks.

Speaker #5: Yeah, that's helpful for me. Thanks.

Speaker #1: Once again, if you wish to ask a question, please press star one on your telephone. We will now pause momentarily to allow any final questions to register.

Operator 2: Once again, if you wish to ask a question, please press star one on your telephone. We will now pause momentarily to allow any final questions to register. You have another question from Cameron McDonald with E&P. Please go ahead.

Operator: Once again, if you wish to ask a question, please press star one on your telephone. We will now pause momentarily to allow any final questions to register. You have another question from Cameron McDonald with E&P. Please go ahead.

Speaker #1: You have another question from Cameron McDonald with E&P. Please go ahead.

Speaker #3: Hi, guys. Sorry, I was just trying to get off mute before. Just in terms of that BP contract, can I just confirm—the slides sort of nuance in that the $130 million is prior to BPI indexation?

Cameron McDonald: Hi, guys. Sorry, I trying to get off mute before. Just in terms of that bp contract, can I just confirm the slight sort of nuance in that? The NZD 130 million is prior to PPI indexation. So if we roughly take NZD 8.7 million in the first year, that will then be increased with PPI every year after that. So the nominal value is actually a lot more than the NZD 130 million?

Speaker #3: So if we roughly take $8.7 million in the first year, that will then be increased with PPI every year after that. So the notional nominal value is actually a lot more than the $130 million?

Speaker #4: That's exactly right, Cam. Yeah.

Alexa Preston: That is exactly right, Cam. Yeah.

Speaker #3: Okay, thank you. And Alexa, just in terms of—well, and even for Rob, actually—talking about the decision on the dividend, you haven't actually increased your dividend payout ratio as a percentage of the normalised free cash flow.

Cameron McDonald: Okay. Thank you. Alexa, just in terms of, well, and even for Rob, actually, talking about the decision on the dividend, but you haven't actually increased the dividend payout ratio as a percentage of the normalized free cash flow. The normalized free cash flow for the period was actually slightly down on the PCP, and yet the dividend is up 16%. How do we feel about or think about the dividend payout going forward with that change that's occurred in this period?

Speaker #3: The normalised free cash flow for the period was actually slightly down on the PCP, and yet the dividend is up 16%. How do we feel about, or think about, the dividend payout going forward with that change that's occurred in this period?

Speaker #4: So, the Board's stated dividend policy is very clear, and it's to pay a dividend of 70 to 90% of normalised free cash flow, and to provide shareholders with a stable and growing dividend.

Alexa Preston: The board's stated dividend policy is very clear, and it's to pay 70% to 90% of normalized free cash flow, and to provide shareholders with a stable and growing dividend. I think what you're seeing there is an acknowledgment from the board that 2027 has a material uplift in contracted earnings that we know will come. The Z Energy jet storage contract is now in service, and that year we'll see a full-year contribution from that, government storage, et cetera. Then obviously we've announced bp today, so the long-term contracted revenue profile is growing materially. The free cash flow result for the first half is associated with the phasing of maintenance CapEx, and so I think you can read through from that to full-year cash flow.

Speaker #4: I think what you're seeing there is an acknowledgment from the Board that 2027 has a material uplift in contracted earnings that we know will come.

Speaker #4: The energy jet storage contract is now in service, and this year we'll see a full-year contribution from that. Government storage, etc. And then, obviously, we've announced BP today.

Speaker #4: The long-term contracted revenue profile is growing materially. The free cash flow results for the first half are associated with the phasing of maintenance capex.

Speaker #4: And so I think you can read through from that to full-year cash flow.

Speaker #2: I think probably the other bit to add to that, Cam, is if you think about the balance of the year, we were doing the work to complete the jet storage project and the diesel storage project. Both those things are done, and now we've got the revenue to benefit from for the rest of the half.

Rob Buchanan: I think probably the other bit to add to that, Cam, is if you think about the balance of the year, we were doing the work to complete the jet storage project and the diesel storage project. Both those things are done, and now we've got the revenue to benefit from it for the rest of the half and the full year of it next year.

Speaker #2: And the full year of it next year.

Speaker #3: Okay. Thank you. That's great.

Cameron McDonald: Okay. Thank you. That's great.

Speaker #1: Your next question comes from Nathan Lead with Morgan's. Please go ahead.

Operator 2: Your next question comes from Nathan Lead with Morgans. Please go ahead.

Operator: Your next question comes from Nathan Lead with Morgans. Please go ahead.

Speaker #5: G'day, team. Just two or three for me, if you don't mind. So, on the bio-refinery, you were talking about how the equity raising's taking a bit longer than expected.

Nathan Lead: Good day, team. Just two or three from me, if you don't mind. On the biorefinery, you were talking about how the equity raising is taking a bit longer than expected, but can you just talk about the debt funding. Is that secured, or are we still waiting for that to be locked down?

Speaker #5: But can you just talk about the debt funding? Is that secured, or are we still waiting for that to be locked down?

Speaker #2: So, look, I think the way I would articulate that is: if the equity funding gets in place, the debt funding will follow. And so, it will be there, presuming that the equity gets there, if that's the right way to answer it or help you with that.

Rob Buchanan: Well, I think the way I would articulate that is if the equity funding gets in place, the debt funding will follow. It will be there presuming that the equity gets there, if that's the right way to answer it or help you with that.

Speaker #5: Yep. Okay, great. Second question is, on the government storage contract, is that capacity available for release elsewhere post-Dec '27, or is there some sort of contract tie-up that means it's always got to sort of remain available if needed?

Nathan Lead: Yep. Okay, great. Second question is on the government storage contract. Is that capacity available for re-lease elsewhere post December 2027, or is there some sort of contract tie-up that means it's always got to remain available if needed?

Speaker #2: No, so the reason that the tenor of that contract is to December 27 is because there was some work that we needed to do on those assets to extend their life beyond December 27.

Rob Buchanan: No. The reason that the tenure of that contract is to December 2027 is because there was some work that we needed to do on those assets to extend the life beyond December 2027, so compliance-based work. To answer your question, yes, they are available in the future for re-leasing or recontracting to others, but noting that whatever contract we put in place would need to cover the costs that we would incur to extend the service life of those assets.

Speaker #2: So, compliance-based work. And so, to answer your question, yes, they are available in the future for releasing or re-contracting to others. But noting that whatever contract we've put in place would need to cover the costs that we would incur to extend the service life of those assets.

Speaker #5: Okay, and then the third question from me, I suppose—just interested in the continuation of the DRP. I mean, you're cranking up the dividend a lot.

Nathan Lead: Okay. Then third question for me, I suppose I'm just interested in the continuation of the DRP. You're cranking up the dividend a lot. Why not retain more cash flow and not have the DRP and dilute share on issue?

Speaker #5: Why not retain more cash flow and not have the DRP in dollar share on issue?

Speaker #4: So, the DRP was introduced by the Board just over a year ago now, from memory. And it's seen as an important lever, or an important acknowledgment, of the large retail base that we have.

Alexa Preston: The DRP was introduced by the board just over a year ago now, from memory, and is seen as an important lever for, or an important acknowledgement of the large retail base that we have. They are very partial to a DRP. The discount is very modest at only 1%, and the option with each dividend payment is to retain the DRP for that payment or not.

Speaker #4: They are very partial to a DRP. The discount is very modest, at only 1%. The option with each dividend payment is to retain the DRP for that payment or not.

Speaker #5: Okay. Great. Thank you.

Nathan Lead: Okay, great. Thank you.

Operator 2: Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.

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Half Year 2026 Channel Infrastructure NZ Ltd Earnings Call

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