Hey, welcome to the Auckland Airport Interim Results 2025. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Carrie Hurihanganui, CEO of Auckland Airport. nui ki a koutou katoa.[Foreign Language] Katoa, welcome and good morning to everyone joining the call. I am joined today by Chief Financial Officer Stewart Reynolds, and we are pleased to be able to share the interim financial results from the first half of FY25 with you. Now, during the period, demand for travel was solid and saw strong load factors, but growth has been more subdued than expected, impacted by capacity constraints and local economic conditions. The global market to attract tourists is currently highly competitive, and that's making it more challenging for New Zealand to secure additional airline routes and services than it has been historically. Our team is extremely active in the competitive global market, telling the world about New Zealand and working to develop new airline partnerships and stimulate demand from foreign visitors. We know the long-term fundamentals of New Zealand as a top tourist destination are strong, but competition is tough for that available international airline capacity. As New Zealand's gateway, strong connectivity between Auckland Airport and the world is essential for our economy, and we know international air capacity has a direct cascade effect on tourism and trade. Now, despite the current subdued market conditions, and as we look ahead, we do remain optimistic and continue to look to the long-term future. Along with working proactively in the international market to generate new air connectivity, we are making substantial progress on our aeronautical construction program, and I will jump into that in a little more detail later in the presentation. Now, lots to cover today before we get to Q&A, so let's go to slide three. The half-year results reflect the continued growth in passengers and cargo, as well as the increasing momentum in our capital investment program. You can see passenger movements increased 2% in the prior period to 9.5 million, with domestic passengers largely flat at 4.3, and an increase in international of 4.1% to 5.2 million, including transits. First-half revenue increased 13% to just under 500 million, reflecting the increase in both air pricing and increased passengers, higher commercial income, and higher interest driven from the proceeds from the $1.4 billion equity raised to support our investment program. Now, if you exclude the interest income, revenue was up 11% to just over 484 million. Operating EBITDA lifted from the prior period by 13% to 349.6 million, resulting in a first-half EBITDA margin of 69.9%. Underlying profit after tax is NZD 148.1 million, up 2%, with total reported profit after tax, including revaluations, up 58% to NZD 187.3 million. An interim dividend of NZD 0.0625 per share will be paid on the 4th of April, and total dividends declared for the period of NZD 105.1 million. Now, continued investment is making a difference to the customer experience, we are pleased to say. The introduction of new technology, upgrades in food and beverage offerings, and refreshed new assets, which is reflected in improving customer satisfaction measures and customer journey times. Capital expenditure of just under NZD 600 million is made up of NZD 461 million on aeronautical programs, with significant progress on the terminal integration program alongside new remote aircraft stands, stormwater, airfield pavement, and fuel systems. And then there was NZD 139 million on capital across the commercial projects with the completion of the Transport Hub, Manawa Bay, and the pre-leased IKEA property development. Next slide. Really calling out, we are focused and have been for some time building for the long haul. It has been a really busy six months of delivery and progress around creating capacity, increasing resilience, and improving the customer experience. Jumping to slide five, please. Our focus remains squarely on our strategy to build a better future. Now, we continue to be on track with our core aeronautical investment program. The integration, or Stitch, as we lovingly refer to it internally, is 72% complete, and the new remote stands and stormwater work is almost 67% complete, and are great examples of the progress made to enable the future integrated terminal and our focus on building in that resilience I referred to. We are focused on continuous improvement across our operational efficiencies, innovation, and technology to enrich our customer's experience, and working hard not only to make it the best experience for the future, but also today, and we're optimizing performance, and that is focused through developing a fit-for-purpose aviation precinct that drives value for New Zealand through tourism, trade, and enterprise. Now, on to slide six. We are really pleased and proud to serve as a critical gateway and enabler of economic growth for New Zealand, with NZD 35.1 billion of economic output from international and domestic travel and tourism generated by our aviation connections each year, and more than NZD 26 billion in annual trade flowing through the airport. That sits alongside NZD 1.5 billion economic output supported by the employment here at the airport precinct. Now, with the upgrade and expansion that we have underway by 2032, that economic value into the New Zealand system is expected to be 55 billion from travel and tourism and 41 billion in trade, which also supports the government's aspiration to double our country's exports over the next decade. Now, while I've done the headliners, I'm going to hand over to Stewart to take us through the financial performance in more detail before coming back to you a little bit later. To Stewart. Thank you, Carrie, and good morning, everyone. Turning to page eight of the presentation, we have once again summarized a number of key financial metrics for the period. As Carrie mentioned, the first six months of the 2025 financial year has been a very busy period for the company. The recovery in aviation activity and the proceeds from the company's equity raise undertaken in September last year have flowed into improved financial metrics across a range of key financial measures. Higher PAX movements, particularly international, combined with improved performance across all of the commercial lines of business, drove a 13% lift in revenue for the year to just under NZD 500 million. As Carrie mentioned earlier, excluding interest income, revenue rose by 11% in the period. The increase in revenue flowed through to a lift in EBITDAFI, up 13% to almost NZD 350 million in the period, with that EBITDAFI margin also up on FY24, but dropping slightly on the strong 1H24 as the business incurred additional one-off costs in the period, which I'll touch on shortly. Net profit for the year was up 58% to NZD 187 million, in part due to a NZD 51 million revaluation gain associated with the company's investment property portfolio and largely attributed to the industrial asset class. Underlying profit, that is profit excluding non-cash movements associated with the likes of revaluations and derivatives in the period, rose only 2% to NZD 148 million, as higher depreciation costs from the company's investment program, additional operating costs, and a higher effective tax charge impacted underlying profitability. Capital expenditure in the period rose to almost NZD 600 million as the business made significant headway into its investment program, and with the funding of this coming from the combination of strong operating cash flows and proceeds from the company's recent equity raise. Now, turning to page nine, we've outlined a summary of the profit and loss. With increased aeronautical activity and improved trading in the commercial lines of business, revenue, as I mentioned, was up NZD 60 million in the period, or 13% to just under NZD 500 million. It was pleasing to see the growth in revenue flowed through to a higher EBITDAFI, up to NZD 350 million in the period, with the EBITDAFI margin up to 69.9% in the half, up from 66.8% in the second half of FY24 and 68.6% in FY24. Notwithstanding this, the margin growth was constrained as operating costs rose at a rate above revenue growth, and I'll touch on some of the elements of these shortly. Looking below the line, Auckland Airport's total share of profit from associates in the period was slightly down on a profit of 4.7 million in the prior year to 3.5 million, reflecting resilient trading at both Queenstown Airport and the Novotel Hotel, partially offset by an ongoing loss at the Pullman Hotel, as that newly opened hotel continues to build its position in the Auckland market. Hotels typically take three years following opening to reach maturity, and while we're pleased with the product proposition, it is trading behind where we'd like it to be, reflecting the lack of events in the local market and tourism activity. Depreciation expense in the period increased 18% to NZD 99 million, largely reflecting a revaluation of the building and services asset class at the full year last year, new assets commissioned in the period, and the accelerated depreciation for demolished assets, while the net interest expense rose to NZD 43.9 million in the period, reflecting an increase in borrowing levels over 1H24 and a slight decrease in the average interest rate in the period to 5.76%. The tax expense has risen significantly, reflecting higher earnings, but also the impact of the recent change in the government's policy on depreciation for building structures, with the effective tax rate in the period now up to 29.4% from 26.1% in the prior year. Reported profit for the year rose to NZD 187.3 million, reflecting the improved trading and the revaluation gain I mentioned earlier from our investment property portfolio. Excluding the benefits of revaluations of investment property, fixed asset write-offs, and fair value movements and derivatives, the underlying profit in the period rose only a modest 2% to NZD 148 million. Now, turning the page to page ten, we will set out a breakdown of revenue across the different lines of business. As can be seen on this page, the increase in aeronautical activity mentioned earlier and the second year of the new aeronautical charges associated with PSE4 have resulted in a total aeronautical revenue up 15% in the period to a combined NZD 224 million. Total aircraft movements in the half were actually down 0.5% in the period to 79,000, reflecting the ongoing capacity constrained environment. The increase in international activity and the second year of higher aeronautical charges in PSE4, reflecting the uplift in investment that has occurred and the recovery of the impact of the price freeze in 2023 to support airlines during their recovery post-COVID, drove a lift in airfield income up 12% to NZD 84.5 million in the period, including NZD 3.5 million of aircraft parking charges. Despite the reduction in aircraft movements in the half, passenger movements rose 2% in the period to 9.5 million, with international passenger movements making up virtually all of this increase as domestic activity remained flat. The significant rise in international travelers, combined with the uplift in aeronautical charges, drove the passenger service charge income increasing 17% to a touch under 140 million in the period. This increase in international passenger activity also was a key driver to improve performance across our commercial lines of business, with retail and car parking income up 4% and 6% respectively. Retail income rose 4% in the period to NZD 94 million as the increase in international travelers combined with improvements in the retail offering in the international terminal and promotional activity resulting in increased shopping engagement during the year. Improvements were seen in retail performance across a number of our categories in the terminal, including duty-free, specialty, and destination. These resulted in a slight lift in PSR and a 2% lift in income per passenger to NZD 10.16 for the period. Notwithstanding this, we saw weakness in some of the luxury segments as consumer patterns changed in the period, reflecting the current economic climate. In car parking, following the opening of Park & Ride South in June last year and the Transport Hub later or late in the first half of the year, the number of spaces available to the public has increased by 58%. With the Transport Hub added that much-needed proximate covered parking right next to the international terminal, and we're now seeing the migration of people to this new facility from the more remote parks where they've been for the last couple of years. As we grow into the step change in capacity, ARPS decreased by 20% on the prior period, and paying exits were only up 2% on the prior period, with the growth in total exits moderated by weakness seen in our domestic parking business. The reduction in the domestic business travel continued to weigh on demand for domestic parking compared with our expectations going into the year. Domestic exits were down 7% on the prior period, reflecting this weakness in domestic business travel, but we also saw a shift in consumer behavior in parking becoming more price conscious in the period, with exits up 95% at our more remote price-related park and ride facilities. Property and other rental income from investment property rose by NZD 11 million in the period, or 13%, driven by a combination of newly completed developments in the year, which contributed NZD 4.2 million alongside the rental growth from the existing portfolio. And finally, Auckland Airport booked NZD 4 million of income in the year associated with insurance proceeds for the January 2023 flooding event and almost NZD 16 million in interest income as a result of the equity raise that was undertaken during the period. Now, turning to page 11, reflecting on the increase in both aviation activity and also commercial and construction activity in the period, operating expenses rose 15% in the six months to NZD 150 million as the airport experienced continued cost pressures across a number of categories, while also investing in the airport precinct and enhancing the traveler experience. Staff costs increased by NZD 6 million, or 6% in the period, as employees at Auckland Airport rose 14% to 683 at December. This increase in employee headcount helped the company deliver on its important strategy of building a better future. The increase in staff costs has been undertaken to accommodate the ongoing recovery in aviation activity and resourcing to manage the airport operations during the ongoing investment program, as well as operate some of the new commercial activities that have commenced in the period. Asset management, maintenance, and airport operation expenses increased by just over NZD 13 million, or 26% in the period, similarly reflecting a scaling up of activity based to support baggage handling, parking, cleaning, and lounge operations, as well as a number of one-off items, including the transition to a new provider of outsourced baggage services, as well as costs to manage the opening of Manawa Bay and the Transport Hub. Rates and insurance expenses increased by NZD three million, or 18% in the period, reflecting higher council rates and also insurance costs associated with the increase in the asset base of the business. Carrie will touch on this shortly, but marketing and promotional activity increased significantly in the period, as well as Auckland Airport continued to stimulate the markets it operates in, including supporting airline connections into Auckland, the opening of the Transport Hub, and Manawa Bay, which, despite the tough retail environment, is trading in line with our expectations. Other expenses increased by a touch under NZD 4 million, reflecting a non-recurring SAS charge that was incurred as part of the upgrade of several critical key aeronautical systems that operate the airport. Last year, total operating costs rose from NZD 130 million in 1H24 to NZD 150 million in the second half of the year. While costs in the first half were in line with the second half of FY24 at circa NZD 150 million, recognizing the ongoing great focus of the team on effective cost management and reducing the one-off costs that have occurred during the first half of the year that I've mentioned earlier, we expect costs in the second half of the year to drop on that seen in the first half. As mentioned earlier, depreciation rose almost NZD 15 million, or 18% to NZD 99 million in the period, reflecting new assets commissioned, the full year effect of assets commissioned in prior years, and the increase in the book value of assets as a result of the revaluation of buildings and services at June last year. In addition, we incurred accelerated depreciation of NZD 2.5 million during the period, associated with the reduction in useful life of assets that were demolished due to the need to commission new assets. Finally, gross interest expense rose in the period to almost NZD 75 million, an increase of NZD 17.5 million, or 31% on the prior period, reflecting the funding of the airport's investment program and the significant ramp-up in debt over the previous 12 months, partially offset by the lower average cost of funding I touched on earlier. The increased capital investment drove an increase in capitalised interest, which rose to NZD 30.7 million in the period, and this compared to only NZD 24 million in the equivalent period last year. As a result, net interest expense for the six months was just a touch under NZD 44 million, up NZD 10.8 million on the prior period. Now, turning to page 12, where we've outlined a bridge in the underlying profit between the 1H24 and what we've gone through in 1H25. As you can see on the chart, the increase in aeronautical activity in the period, together with the parking revenue contributions from Manawa Bay and the transport hub, helped drive an increase in underlying performance in the business. This improvement was partially offset by ongoing cost pressures seen across the business and additional operating expenses to support the increased activity, as well as increased depreciation on the asset base. As mentioned at the full year results, the increase in the effective tax rate in the first half of the year, reflecting the change in government policy on depreciation, has resulted in an increase in depreciation, and this, combined with the cost pressures that we talked about earlier, has resulted in a modest 2% lift in underlying profit. As we look to the second half of the year, we will see the benefit from a full six months' worth of revenue from the recent commercial investments and lower operating expenses. Now, turning to page 13, the first half of 2025 was another pivotal period in the company's investment program, with, as Carrie mentioned, a touch under NZD 600 million of capital expenditure incurred spanning right across a precinct in both the aeronautical and commercial pillars. This investment occurred right across the precinct, as I mentioned, with the majority of the spend on key aeronautical upgrades, including terminal integration, airfield works, and the substantial expansion going on to the north of Pier B, a series of related infrastructure projects, including utilities, roading, and important digital and system upgrades. In complementing this, the airport continued to invest across a range of commercial projects which are completed in the period. Carrie will touch on some of these shortly. Now, turning to page 14, as outlined on the page, the increase in aeronautical activity alongside the commercial growth drove an improvement in operating cash flows, up 19% to a touch over NZD 310 million. As can be seen from the chart, the significant investment in infrastructure and the new commercial lines of business, totaling almost NZD 600 million in the period, was funded in part by this uplift in operating cash flow alongside the proceeds from the equity raise that we also used to partially pay down some of the debt. Finally, before I hand back to Carrie, on page 15, we outline our credit metrics. On this page, you will see that despite the significant capital expenditure that was incurred in the period, reflecting the capital management initiatives that the company has undertaken, Auckland Airport maintains a strong liquidity position and robust credit metrics at the half year. Total drawn debt at 31 December amounts to circa NZD 2.5 billion, with undrawn bank facility headroom of NZD 625 million and cash in the bank of NZD 789 million at this date, setting the balance sheet up well for the elevated capital expenditure over the coming years. At 31 December, Auckland Airport's key credit metrics remain strong, with its FFO interest cover and FFO to net debt on a spot basis remaining well above their respective tests of 2.5 times and 11% respectively. Auckland Airport has declared an interim dividend of NZD 0.0625 per share, down on the NZD 0.0675 per share paid in the equivalent period last year, reflecting the 14% increase in shares following the September 2024 capital raise. This dividend declared equates to a payout ratio of roughly 71% and retains the company's capital settings paying out at the bottom of its current dividend policy range. In addition, Auckland Airport is turning on its dividend reinvestment plan for the half year and will offer those shares at a 2.5% discount, consistent with what we've done previously. Now, with that, I'll hand back to Carrie, who will take us through how we're building a better future. Carrie. Excellent. Thank you, Stewart. And I am on slide 17. I think what's become apparent over the last year is New Zealand's tourism recovery and the rate of that. It is now at a point that it is lagging international peers with growth softer than expected, particularly for inbound visitors. Capacity growth in both the domestic and international markets remained flat over the first half of FY25, impacted by capacity constraints and other factors such as Air New Zealand's fleet issues and the challenging local economic conditions. Now, international air capacity is still sitting at 91% of 2019 levels, and that is in line with last year. Outbound tourism by Kiwis, however, has almost fully recovered, but we are seeing inbound tourism still sitting at 84%, and Australia is one of the key drivers of that shortfall. Now, despite the subdued growth in seat capacity overall, airlines are benefiting from stronger load factors, and you are seeing that both internationally and domestically. Internationally, it was positive to see the load factors strengthen on Auckland-China routes to 81%, as you might recall. Their borders opened later, so very good to see that starting to recover. Now, the key areas of focus remain on growing supply, stimulating demand, removing friction, and ensuring the right infrastructure is in place at the right time to deliver growth. As you might recall, each daily widebody flight to New Zealand delivers annual tourism spend of NZD 150 million and NZD 500 million in high-value freight. Moving to slide 18, when we look at international passenger movements in the first half, as we've said, those are sitting at 89% of 2019, with international passenger growth primarily driven out of Asia. In the period, there were 26 airlines operating to 42 destinations, and that remains flat. Same period last year, there were also 26 airlines. However, comparatively, we are seeing that pace of growth of acceleration that I was just referring to a little bit behind. If we look and take Australian Airports as just a benchmark example, airline seat capacity is now exceeding 2019 levels in a number of the ports. And a key factor driving this is that we are seeing Australian travelers looking beyond New Zealand and choosing other destinations, particularly seeing destinations like Bali and Japan featuring more up the list of preferred locations. We certainly welcome the government's commitment to boosting international tourism, including the new campaign to encourage visitation from Australia that was announced earlier this week. Slide 19. It was a similar story in the domestic market. Capacity was flat at 88% during the first half of FY25, constrained by Air New Zealand's fleet issues and, again, that local economic environment. And we know that Air New Zealand is facing difficult fleet challenges, which is constraining their ability to grow. It's a tough environment for them at the moment, and we certainly see that. I think the question or the challenge New Zealand has is that there are now 1.5 million fewer seats flying per year in the domestic network versus 2019. That's equivalent to 29,000 fewer seats per week, and you're hearing regions talk about that and feeling the pain, and as we step back to say, well, if New Zealand, Inc. is looking to grow tourism and stimulate tourism, we also need to ensure that those tourists, as they come into Auckland, have access to schedules and capacity to get out to those regions. Now, with the capacity down, flights are very full with an average load factor of 85% on domestic flights, and that is meaning higher airfares. Slide 20. We are investing in driving efficiency and improvements across the precinct and the customer journey, and travelers are already experiencing tangible improvements in their travel experience. Now, this extends from the Transport Hub opening and the upgrade of the plaza area to replacing traditional check-in counters with self-service kiosks and automated bag drops, to the introduction of technology and digitization across key platforms and working with all airport partners to optimize the ecosystem that we operate in. Now, delivering infrastructure improvements in a 24/7 airport is highly complex, and our focus is on making traveler journeys as seamless as possible throughout, and I'm certainly very appreciative of the patience of both travelers and our airport partners as we undertake construction in a live operating environment. Now, we still have more improvements to deliver to our targeted experience both for today and in the future, and that is why our airport upgrade is just so important. Slide 21. Now, we know we've stated before, as New Zealand's primary gateway, it is critical that we do continue to invest, and the infrastructure development program continues to make very good progress from transport and roading to enabling works and now construction for the integrated jet terminal and upgrades to the airfield and stormwater systems, and we are tracking to plan. Moving to slide 22, the terminal integration program is gaining momentum. We've reached some really significant milestones in the past couple of weeks, with the 21-meter high structural steel columns going into place as part of the vertical construction as that gets underway. The terminal integration project is now 31% complete, with more than 1,000 people currently working on the project, and it would be one of the biggest private infrastructure investments underway in Auckland. The new integrated jet terminal is the most significant portion of the infrastructure program, but by no means is it the only. There's a very interconnected program of work across terminals, transport, and airfield underway. On slide 23, the 250,000 square meter airfield expansion is on track to deliver important capacity and resilience. That airfield expansion, alongside major stormwater improvements, is expected to be completed in the second half of this calendar year. Across the airfield expansion, there's more than 3.5 kilometers of stormwater pipes going into the ground, with around half of those being 1,800 meters in diameter. That stormwater feeds into a coupled wetland biofilter system, the first treatment pond of its type in Auckland, New Zealand, which ensures water flowing into the Manukau is treated to remove any contaminants. Moving to slide 24. Now, in retail, Stewart did touch on these. Certainly, the increase in passenger numbers, along with new store concessions and the improved performance of duty-free retail and single operator, have all contributed to a positive result for the half-year period. I won't run through the financials again, as Stewart has already done that, but I am sure there are a few questions around duty-free. It is a key component of our retail strategy, and following the completion of the full retender that is underway, we remain on track for announcement on the successful operator in the second half of this financial year. Slide 25. Now, the opening of Manawa Bay as a new premium outlet shopping center offers something new and different to the New Zealand market. Now, airport outlet centers themselves are fairly common and successful overseas. Manawa Bay opened in September last year and is now home to 109 retail tenancies, with a weighted average lease term of just under five years at 4.8 years and includes 20 new stores that are first in New Zealand and new entrants to the local market, which is something that we are incredibly proud of. The shopping centre has created employment for more than 500 people across a range of retail and hospitality roles and is providing shopping amenities for around the 75,000 people who engage with the airport every single day, including airport workers and the Auckland community. Slide 26. If we're looking from a car park perspective and the capacity, we did see a step change with both the capacity and the customer experience with the opening of the Transport Hub and Park & Ride South. Again, I won't repeat Stewart's summary around the revenue and what we've seen in that. You'll see that in the presentation, but we were really pleased, alongside that, to deliver key transport projects that enable smoother journeys and a net 4,200 additional car parking spaces across the precinct. Our new Park & Ride South facility opened and has created easier travel connections for traffic from the south. They actually make up 40% of all precinct traffic, so an important opening up of capacity and access. The new facility offers convenient parking options with over 3,000 spaces and easy connections to the terminal via bus services, and all of those buses transition from fossil fuel to electric in January this year. The completion of the Transport Hub during the half-year period delivered improvements in parking options for travelers, returning car parking to the front door of the international terminal and having a new pickup and drop-off area that's undercover and protected from the weather. It also saw the introduction of a new car park access solution with full license plate recognition across international parking facilities, making for a much smoother customer journey. On slide 27, we have seen the investment property rental growth momentum continue, and that has been through income growth and diversification, which really reinforces the key role that the airport plays as a trade hub for New Zealand. Recent property developments include the construction of just over 49,500 square meters of new warehousing, one being IKEA that is now completed and the other being DHL, which is underway at The Landing Business Park. Rental income of NZD 83.4 million for the period and saw an increase of 3.9% in the rent roll in the period to NZD 168.8 million off the back of growth in the existing portfolio and the Manawa Bay leasing. Now, the investment property portfolio value is now sitting at NZD 3.3 billion, and occupancy rates remain strong at 99%. Hotels across Auckland have seen softer occupancy in the region in the period, and we have seen the same. Stewart touched on those in regards to occupancy sitting at 78% compared to 91% the prior year, and that excludes the Pullman in those numbers. Slide 28. I guess stepping back and across it all, we remain committed to our role in tackling climate change and building a resilient future. We continue to progress our Scope 1 and 2 decarbonization pathway to achieve a 90% reduction against our 2019 baseline by 2030, and so far have achieved 25% reduction. The transport hub has sustainability at the forefront with a giant 1.2 megawatt solar array that is now operational and reduces the airport's energy needs, and we are building additional climate resilience into our infrastructure with the airfield expansion currently underway, including the major stormwater upgrade at the western end of the airport that I mentioned earlier, and this is designed to manage any future extreme rainfall deluges that may come. Finally, in this space, we are focused on reducing waste and have several initiatives underway, including incorporating it into the design of the new integrated domestic jet terminal and working with MPI or biosecurity on improving the way that waste from relevant flights, airline lounges, and airside waste is managed, separating low-risk, clean recyclables, and diverting these from biosecurity treatment and disposal and landfill. Moving to slide 29. Now, Auckland Airport's aeronautical charges remain among some of the lowest in the region and average 4%-6% of the overall cost of an airfare. As you'll be aware, aeronautical returns are exposed to industry volatility, and when you see that in the PSE forecast, which is showing lower passenger numbers, particularly in domestic, driven by airline capacity constraints and the weak domestic economy. Stewart also touched on some of the costs that we've incurred to improve the customer journey and mitigate disruption during the significant infrastructure program that's underway. Now, the Commerce Commission continues to progress its review of Price Setting Event 4, with the final review expected still to be released by the end of quarter one of this calendar year. You might recall in its draft report in July last year, the Commission's conclusion was that we had undergone extensive consultation with airlines on the capital plan and that the airport's planned expenditure appeared reasonable and had significant rigour applied to it and benchmarked well internationally. The Commission in that draft report also indicated that Auckland Airport is targeting a weighted average cost of capital that's higher than what it considers to be reasonable. In particular, they shared a different perspective regarding how the effects of the pandemic should be accounted for. They did, however, recognize that there were legitimate reasons to reflect that risk of pandemics in our WACC, and we had calculated ours with reference to the methodologies established by them. Following us setting those prices, the Commerce Commission updated the WACC methodologies to reflect pandemic risks but adopted a different approach. Now, we have subsequently provided further information to the Commission about why we think the basis for our WACC is appropriate. However, if the final report continues to say our WACC is too high, we have said previously that we will adjust our pricing consistent with the approach we took in the previous pricing review. Now, alongside this, an appeal is underway with the High Court for judicial review and the 2023 IMs following a decision by the Commerce Commission. Auckland Airport joined, alongside other regulated airports and the New Zealand Airports Association in that appeal. And finally, on slide 30, as we look ahead to the remainder of the financial year, we expect aeronautical and commercial activity to be resilient but acknowledge that uncertainty remains around seat capacity, particularly domestically and New Zealand's subdued local economy in the short term. So reflecting this, we have narrowed the guidance of underlying profit after tax to between NZD 290 million and NZD 320 million, reflecting the anticipated domestic passenger numbers of 8.4 million and international passenger numbers of 10.5 million. With the ongoing significant investment across the airport precinct and continuing momentum that we have, we are reconfirming guidance on capital expenditure between NZD 1 billion and NZD 1.3 billion. And as always, this guidance is subject to any material adverse events and other criteria, as summarized on the slide that you will be looking at. But at this stage, let's open it up to any questions you might have. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. One moment for questions. Our first question comes from Andy Bowley with Forsyth Barr. You may proceed. Thanks, Operator, and good morning, guys. A couple of questions from me. The first one around the capital plan, I recognize there's a lot of different projects going on, and Carrie, you made the comment in your remarks there that you're tracking to plan, but keen to hear your thoughts as to where the program is versus what you anticipated at the time of pricing. And by that, I mean both in terms of dollars spent and also what's in the ground. And I guess by that, I also infer what variances in cost inflation have you witnessed versus expectations? Thanks, Andy, and good to hear from you. And I'll kick off, and I'm sure Stewart will add because it was a multifaceted question, Andy. If I start with talking about the capital and how we're progressing against plan and where we thought we would be, there is certainly somewhat, probably slang, but overs and unders, and I don't mean that to sound flippant. What I mean is we have elements that we've known we've been able to accelerate because of either timing or access. We know that there's other elements that we've discovered things or re-sequenced them because that suits the efficiency of the program. But overall, if we step back to say, well, what is it that we wanted to be doing on the enabling works and what is it we want to be doing on transport hub, roading and otherwise, those are tracking well. But I also acknowledge, Andy, there are, if you double-click into it, there's some movements of that both forward and back, which is not unusual for these types of program. In terms of timings and cost against that, Stewart, have you got that? I don't have that in front of me in terms of comparative of the pace of that. Yeah, so if you go to page 29 of the presentation, Andy, we sort of outlined a bit of a bridge in terms of our returns, and we disclosed some of this material as part of the information disclosure last year. And it's fair to say the overall program elements, as Carrie mentioned, some of them are moving within that program, but we still remain comfortable with the direction of travel and, importantly, the timing of some of the critical aspects to it. So things like the airfield expansion that Carrie talked about, we will commission, and I think it's sort of first quarter next financial year as opposed to things like, I think originally in pricing it was June when we originally had it. So it's slipping in like a quarter. Notwithstanding that, we still remain comfortable around the costs of it. And so whilst we're getting some unders and overs in each of the projects, overall, we're still comfortable with the direction of travel and the commissioning profile that we talked about with pricing. Great. So from a kind of cost inflation basis, that's broadly on plan versus where we were at the time of pricing? It's a constant challenge, Andy. It costs. I think it will always be whilst we have it underway just to make sure that we keep the costs of the build under control. And with that, as the market environment changes, ensure we take advantage of that where we can and pass that on to our airline customers and the lower cost of the build. And so the overall inflation factors that we built in terms of pricing at the time of PSE4, we're still comfortable with that, that we're remaining within that. Great. Second question around the duty-free tender. I recognize you'd be down to the final phase, and I assume final bids have come in. Can you give us any color as to what the outcome of that tender may mean financially for you? Thanks, Andy. We're not in a position to do that yet. We are still going through with the shortlist and haven't kind of concluded those go rounds. So unfortunately, we're not in a position yet to comment on that, although I am very keen. We are targeting, as I said, we will land on that and make an announcement in this last quarter. Great. And then in terms of when that concessionaire takes on the new contract, what's the specific timing of that? And I guess there could be some transition into that as well. Yes, certainly that we've been engaging in terms of kicking off in the new financial year as the targeted timeframe. But again, as we get into the final, the pointy end of those elements, there will be considerations around transitions and anything else that may be required. But we're aiming for the new financial year. Great. Thanks, guys. Thanks, Andy. Thank you. Our next question comes from Grant Lowe with Jarden. You may proceed. Oh, hi, team. Thank you for the presentation. Just in terms of the OpEx side of things, it was a bit higher than I had in my numbers. Just wanted to sort of understand that a little bit better. In terms of the one-offs that you called out, there's a few with Manawa Bay and Transport Hub, etc. What was the sort of quantum of that in the first half? And secondly, are there any sort of one-offs that you would expect to see in the second half? Yeah, so in effect, becoming two-offs or something, Grant. So look, go to your first question. The overall quantum, if you sort of including things like the SAS costs, the marketing costs, some of the duplication associated with transition and baggage handlers, etc., and some of the investment that we've done in relation to the passenger journey, you can say it's around NZD 10 million would be a good number. And so as we look to the second half of that, it's fair to say I would anticipate there will always be things when we're building infrastructure that we will have to do that are outside of plan to deal with some of the disruptions or improve the passenger experience as they're interfacing with construction. So I would like to see that sort of rough NZD 10 million number come substantially down. But at where we sit today, I'm not aware of anything significant in the second half. And I think if I could just add to that. Sorry, Grant, if I could just add to that, Stewart's done a great job of summarizing it. And that's a little bit of the element of kind of what we plan for and a laser focus on cost management on the one side of the ledger. On the other side of the ledger is we need to ensure we're undertaking open heart surgery with the patient awake. And so as these things are interfacing, we are going to need to make the right decisions for the customer in that journey. And so we're conscious of that, but certainly very actively managed. Yeah. Okay. So we should expect to see maybe some low single-digit millions bucks per half during the construction phase. Is that sort of what I'm hearing? Sure. Yeah, I think it'd be fair. There'll always be, if we want to call it 911 s, that will come up. And we need. There is some component of one-off related to the SAS, etc., that you talked about. Yeah. That's right. Then just in terms of the depreciation side of things, so you've called out accelerated depreciation of NZD 2.5 million. I haven't got the numbers in front of me. I think that's down on the last period. What sort of thinking on the go forward for depreciation? Yeah. So in terms of the depreciation, we're not anticipating there's any significant increase in depreciation charge associated with revaluations this year. But as we move into the second half, you should expect a sort of mid-single digits increase in the second half of the year as you get a full period effect of what's being commissioned during the period flowing into depreciation, but also a reduction in some of this accelerated depreciation going forward. Okay. So that'll be a fairly small number going forward. Just in terms of the retail income, final question for me. Retail income per passenger, can you just it is up on the first half last year, but it is down on the second half, so some sort of softening. Can you just give us a bit more color on where we're seeing that pressure on spend rates and income per passenger, whether that's New Zealanders versus foreigners? And could you give us a bit more color around the luxury that you sort of called out? Yeah. So there's a couple of areas I'll just call out, Grant, that's sort of impacting that sort of net income per passenger. What we're seeing, one is I think a byproduct of where we are in the economic cycle. People are still looking to reward themselves when they travel, and that halo effect is there. And the team and our retailers are doing a great job providing those products and services to the traveling public. But what we're seeing is that customer behavior changing. So some of the more luxury end of our offering is effectively it's harder for the team. And also what we're seeing is some of the industry change that Auckland Airport's not immune to in areas like FX, where you're moving to sort of digital wallets effectively. Those sort of things are impacting sort of volumes, and so as we've gone through the period, we've seen that acting as a sort of a bit of a headwind to the improvement in retail performance, and I think it'd be fair to just call out on that FX thing in particular, Stewart, that it's not a blip as you talk about digitization, the view of kind of understanding the pressure on that line because it is a kind of a structural change with digitization as opposed to a six-month bump in the road, so to speak. Yeah, understood. Okay. Thank you. That's very helpful. Thanks, Grant. Thank you. Our next question comes from Wade Gardiner with Craigs Investment Partners. You may proceed. Hi. A few questions from me. First of all, of the retail, you said that the overall PSR was up 0.3%, but international was down 1.5%. So what does that imply for domestic given the weighting is more towards international. Yeah So domestics had a good period. Effectively, what was seen as improved trading and the food and beverage reflecting some of the work that the team's done there with the retailers. We've seen improvements in some of the specialty as well. And so with that, it's sort of offset what's happened in international. Can you give a percentage of what that PSR was? For the DTB? No, I wouldn't like. For the domestic. No. Okay. So in terms of the retail revenue in the current contract, I mean, I know that this contract's coming to an end, but how leveraged is retail revenue to the PSR relative to, say, just trading on a MAG? It's a lot more leveraged than what it used to be. So you'll recall, obviously, back when we last did a duty-free tender, sort of pre-COVID, airports were used to sort of essentially receiving quite high MAGs from retailers. And I think COVID has really changed the structure of that. So airports are taking on much more volume risk and with that, retailing risk in terms of the effectiveness of retail in terms of providing those right products and services to the traveling public. So a lot more sensitive. Okay. In the guidance that you've given for underlying earnings, how have you allocated the equity contribution relative to debt? In other words, what should we assume for the interest costs in that guidance? I think you should assume going forward in relation to interest that the business will look to spend a lot more of that cash on hand and prioritize that rather than effectively drawing new debt. So the interest income should drop materially effectively in the second half, albeit that will be offset by the full period effect of that interest income because in the first half, we obviously only had it for a couple of months. So you should see that interest income, which was a sort of touch under NZD 16 million, probably get closer towards NZD 10 million in that regard. And then offsetting that, you'll see that our interest expense on the other side effectively also drop away in the second half. And so I think in the first half, our interest expense was much more sort of like NZD 44 million, and that would be more closer to 30. Okay. In the calculation of the underlying, there's sort of NZD 11 million in tax at sort of abnormal. What does that relate to? I think that's essentially the difference between sort of the tax paid that's gone through the tax expense and the way that it's reflected in the change in the depreciation policy. So part of it is also attributed to IP revals as well. So there's a tax effect of that. Okay. That's all from me. Thanks. Thanks, Wade. Thank you. Our next question comes from Suraj Nebhani with Citigroup. You may proceed. Oh, thank you. Just one question, Carrie, for you. I think in your prepared remarks, you mentioned that you have been trying to get more airlines and air capacity back into New Zealand given capacity does seem to be lagging versus other airports. Can you just touch on that and how you're going there? And I guess, how do you see things evolving on that process? Yes, absolutely. So I mean, it's not a. I should state it's not a new thing. Obviously, our business development team has been and continues to be very active in the markets of building and curating a new route. It's not unusual. It can take five years from idea to go to get a new route started up. So there's kind of this constant cycle we have. So again, that development team and at times myself will head out for key meetings and engagements. And part of that's about showing the business case for New Zealand and sharing with them everything from the number of residents, students, visitors over indirect routes, for example, if we're trying to get a direct route to create that picture. Obviously, we've got good base cases in years gone by where we've introduced a direct point-to-point and the stimulatory effect of that that's therefore grown the market. So a lot of engagement on that front. So again, we continually head out to all of the regions, both to continue to build the relationships with existing carriers on existing routes, but also explore new routes, new airlines wherever possible. If your question is kind of leading towards is there anything we can expect in the second half, that new capacity second half would be kind of lower expectation to evolving. Part of that is because it is interconnected with the broader challenge of fleet capacity constraints globally coming out of Boeing and otherwise. And so our job, when we know that the industry is generally a little bit fleet short, is to get out there to try and bump ourselves up the list. The positive thing we are hearing is the interest in New Zealand as a destination remains strong, but we sometimes get the playback going, "When we get our next deliveries of X, Y, Z, then we'll look at New Zealand." Our job is to try and get in there to say, "How do we bump ourselves up that priority list, so to speak?" So we will continue working there both in the short, medium, and long term. Got it. And just one, I guess, related question there. We've seen a bit of activity in Australia from an airline perspective. Obviously, Qatar Airways getting close to taking, I guess, partnering up with Virgin. I don't know if you can talk to similar activity or likelihood of further routes opening up to New Zealand as a result of that. Where I'm getting at is, obviously, Auckland Airport is undergoing a new pricing discussion with the Commerce Commission. Part of the reason where Auckland Airport is not able to make the returns it can is because fleet capacity is not up to pre-COVID levels. So just trying to think of potential solutions there. Yes, absolutely. And whilst you've got, yes, you're absolutely right. Virgin and Qatar, I think, are getting to the final pieces on that. That feels like there's opportunity in that, and we will certainly be exploring that with them. And our team looks at it from a number of fronts, kind of going. One is sometimes with airlines; it's the adding capacity over Australia into New Zealand. And sometimes that's a starting point to then transition into direct. Clearly, our preference is direct because passengers' preference is direct. But we think through those elements as well as a number of other engagements we're having with airlines; we will see international routes and frequency grow. So we're very optimistic on that front. The timeframe, I think, is the interesting question, particularly in the next six months. We're heading into low season and otherwise, but we are optimistic and working very hard to try and secure some additional flying for next summer peak. And thank you. And just one other one on the outlook for domestic passengers, not just next six months, but maybe looking forward into FY26. I'm not asking for guidance in any way or projections, but we've seen a rate-cutting cycle in New Zealand. Would you say the, how do you guys think about the outlook going forward and the impact to domestic passengers? Yeah, absolutely. And as you say, whilst it's not guidance, our outlook, I guess, is current state and steady. And what I mean by that is in the domestic market, just by the way that it's structured, the lead really comes out of Air New Zealand and what they're saying. And they've certainly indicated through some of the challenges they've got that there isn't a huge amount of growth. So I'd say if I was going to have to use a word, I would use the word steady. Okay. Thank you. Thanks for that. Thank you. Thank you. Our next question comes from Marcus Curley with UBS. You may proceed. Good afternoon. Just a few from me. So could we just start with the domestic terminal timing? I took some encouragement from the comment that things are on track. Would that include the opening of the domestic terminal? I just wonder if you can give us an update of when you expect that to occur. Yeah, Marcus, 2029 is what we have talked about previously, and that is still what we are aiming for, and things are lining up to deliver to that. My caveat, Marcus, is that we've got four years of delivery and continuing to deliver as we have done in the last one to two years in that capital program. But yes, at this point, we are on track as we've previously advised for 2029 completion. Is that calendar or FY financial year? Calendar. Secondly, you mentioned in some of your remarks around the structural issues in foreign exchange. I just wondered if you can give us a little bit of color in terms of what, yeah, the percentage of retail revenue that segment represents these days. Marcus, regrettably no because we then start talking about the arrangements with a very limited number of parties or one in some respects. So I can't in that regard. Okay. You talked about Manawa starting in September. I just wondered if you could talk to what level of contribution you saw and what you're expecting for the second half. Obviously, I think that's probably why you're referring to full year or second half uplift in commercial. Yes, that's right, Marcus. So in the first half, we had sort of. I wouldn't call it mid-single digits. It's under that. But then as we move into the second half, you start to get effectively that full period effect of it. So it doubles. And so you can add sort of anywhere from sort of NZD 3 million additional revenue in the second half. Okay. Great. And then just finally, if my calculations are right, it feels like the dividend payout was sub-60% in the first half relative to underlying earnings. I just wondered if you can comment around, A, is that sort of right? And B, is the full year payout likely to be different or higher in particular? Obviously, anything in that first half dividend that we should be aware of? The quick answer, Marcus, is no. We're still committed to a dividend policy of paying out underlying profit between 70% and 90%. And so I think we'll just have to check the numbers there. But obviously, the absolute dollars paid out over the full period should be closer towards the bottom end of that range. And so I'll be intrigued as to why it's in the 60s. Okay. Maybe it's my spreadsheet. Thank you. Thank you. Our next question comes from Owen Birrell with RBC. You may proceed. Hey, good morning, guys. Look, just further to Marcus's question around that commissioning date around calendar 2029, just acknowledging the fact that the New Zealand construction market is relatively subdued at the moment, suggesting that you've probably got better access to materials and trades and contractors, is there any opportunity to accelerate the build-out of that domestic hub? I love that line of questioning. Thank you. And that is an internal conversation we have all the time. I think the—so yes, in terms of we constantly look at that. I guess the element, though, is that we have more programs underway than just the integrated terminal. There's the thing that always kind of makes it more challenging that we have to look holistically across all of the interfaces from the integrated terminal to the routing. Obviously, we've now completed the Transport Hub, but there's lots of programs underway. The interface and not creating disruption that is untenable from a customer experience and ensuring operational readiness. If we could deliver it, we'd love to. It is a constant challenge that we give ourselves internally about efficiencies and re-sequencing to do exactly that. But at this point, the 2029 calendar year is the view of taking all of those things in with comprehensive planning that we believe is realistic across the entire portfolio of programs that we're delivering. Okay. Just, I guess, somewhat related, you've provided that reconfirmed capital guidance of NZD 1 billion-NZD 1.3 billion for the group for the full year. Can you give us a sense of, I guess, what you're expecting for group CapEx into 2026 and 2027? Not at this stage, do you want to land on that? Not at this point. I think you can take a good steer from aeronautical pricing, and that will form the lion's share of essentially our CapEx or group CapEx, as you called it, for 2026 and 2027. As I mentioned, I think it might have been to Andy's comment, the timing of some of those may move between a year forward or back, but overall, the envelope should stay the same, and then what we've tended to do is guide commercial CapEx at being roughly between NZD 100 million and NZD 150 million a year. So that's basically effectively non-aero CapEx? Yes, that's right. So that's largely commercial property, a little bit of transport and retail. Sure. That's perfect. Thank you. Thank you. I would now like to turn the call back over to Carrie for any closing remarks. Well, thank you. Thanks, everyone, for your time today, and probably the key outtake from today, there are some subdued market conditions in the short term that we know that we are navigating, but we remain optimistic and continue to look to the long-term future and our investing and our program to deliver that and to deliver growth, so we look forward to connecting with many of you over the coming weeks of investor meetings, both here in New Zealand and Australia, and with that, have a great afternoon.