Stewart Hamilton: [Foreign Language], everybody. Welcome to Mercury's presentation of our full year results for FY '26. My name is Stew Hamilton. I'm the Chief Executive of Mercury. I'm joined here today with Richard Hopkins, who is the Chief Financial Officer; and Paul Ruedige, who is our Head of Business Performance and Investor Relations. I'll cover off this year's performance and our growth outlook. Richard will talk to our financials and our capital settings. And then together, we'll answer your questions at the end of this presentation. The theme you'll see throughout today in this morning's presentation is one of a year of execution in which we have turned our strong earnings performance into outcomes. Three things that really define our FY '26 are listed on this first slide. We firstly are demonstrating resilient earnings. We're pleased to show disciplined growth, and we're backing that up with a balance sheet that is strength -- is strong. Covering off resilient earnings, first of all, our EBITDAF for the year was up 36% to $1,068 million, driven primarily through higher renewable energy generation and cost discipline. That cost discipline showed up through our operational expenditure being held at our $370 million target that we committed to deliver. That's down $26 million from FY '25 or 10% in real terms, really demonstrating our focused operational execution. We now have about 41% of our customers that hold 2 or more products with the churn being 5% below market average at about 13%. We also delivered our stay-in business CapEx target of $150 million. That's in line with our 10-year plan. We committed to a $590 million hydro refurbishment program that's within that window. From a disciplined growth perspective, very pleased to see our 3 gen dev projects being delivered on time and on budget throughout the year, contributing to an additional 1.1 terawatt hour of energy per year. Also, I'm really pleased today to announce that our next wind project at Puke Kapo Hau, which is part of the Mahinerangi wind farm, that's reached final investment decision and is coming in at a cost of $2.6 million per megawatt, really demonstrating our capability to drive down the cost from our recent projects that we're up around the $3.7 million per megawatt. Overall, we're still on track to hit our 3.5 terawatt hour target by 2030 with the projects I've just discussed, but also with another terawatt hour of geothermal that's advanced feasibility through our $75 million committed drilling program. If you look at our balance sheet, 2/3 of our FY '26 EBITDAF has been reinvested either back into current operating assets or new assets reflecting our continued drive to grow investment within balance sheet guardrails and the fact we continue to hold our debt to EBITDAF within those guardrails. It's just around 2.0x at the moment and comfortably inside our BBB guardrails. Today, we're announcing that we have got 18 consecutive years of ordinary dividend growth, which is a fantastic track record. Our FY '26 total dividend is up 13% to $0.27 per share and also announcing that our dividend settings are under review. That reflects the future earning base that we can see and also the completion of our first major investment cycle. Overall, today, through the pack, you can see some new information around our EBITDAF delivery, the fact that we're guiding for FY '27 to $1.075 billion. We've also lifted our FY '30 EBITDAF bottom of our range up. So it's now targeting $1.2 billion to $1.25 billion announcing the final investment decision of Puke Kapo Hau and also increasing our dividend to $0.27, guiding to FY '27 dividend of $0.29 per share. So overall, we funded and delivered a record investment year without stretching the balance sheet. Every number on this page is at or ahead of what we told you. I'll start with the EBITDAF number. I've spoken to that previously, up 36% on FY '25, mainly driven by new renewable generation and increased generation for our current fleet. Our operating expenditures, very proud of delivering that cost reduction over the year. It was a challenging stretch at time, but we've delivered on that and intend to sustain that for FY '27. We delivered just over 9,000 gigawatt hours for the year, up 15% from FY '25. Some of that was due to water and a bit of it was also due to 3 projects that are generating, all of them bringing on stream electrons through the financial year. Our capital expenditure was also a positive note, up 46% since FY '25. That represents only 2/3 of our EBITDAF being invested into new or current assets. One of the areas I'm most proud of over the year, though, is over in the safety box where our total recordable injury frequency rate dropped to 0.31. There is no success without safety. And so that result is a true demonstration of our execution ability. Overall, we have proven delivery. We've definitely got credible future growth options, and that means we can continue to grow shareholder returns. I'll hand over now to Richard.
Richard Hopkins: Thanks, Stew. Look, the delivery that you just talked through is showing up very clearly in the financials. At the half year, we said cash conversion points and the full year results really demonstrates that. As you mentioned, the EBITDAF increased to $1.068 billion with generation the biggest driver. We had the water available, but this was not simply a good hydro year. The team have really delivered a strong operational performance with higher hydro, geothermal, and wind generation, lifting total generation to 9.1 terawatt hours, up 15% on FY '25. Pleasingly, we also started to see the contribution from the new wind and geothermal generation we've been building. And at the same time, we held the line on costs at $370 million. So that translated into $762 million of operating cash flow. We reinvested $710 million, 66% of EBITDAF, into new and existing assets, increased the dividend by 13%, and still finished at around 2x debt to EBITDAF. So stronger earnings, stronger cash conversion, and record investments with the balance sheet preserved. The $370 million OpEx result matters because that's the commitment we made, and we've delivered it. Operating costs were $26 million lower than FY '25, so around 7% down nominally and more than 10% in real terms. About half of that reduction came from people costs, particularly focused in generation and customer, as we simplified our operating models. Maintenance was $10 million lower, but that predominantly reflects the $8 million reduction in non-recurring geothermal well repairs. So not every dollar of the reduction is structural, but more importantly, the operating model changes are now in place and position us well to maintain this cost discipline over the next few years. For me, the key point is productivity, getting more out of the platform while continuing to grow and invest. Next slide. And cost discipline doesn't mean that we underinvest in our asset base. We invested $150 million in stay-in business capital, and that's really important. The mix is now moving from geothermal drilling campaign towards the major hydro rehab program and resilience work at Arapuni. That protects reliability, improves efficiency, and supports the long-term cash-generating capability of the assets. So we're controlling the cost base while continuing to invest properly into the assets that underpin it.
Stewart Hamilton: All right. I'll cover off, basically, how we're executing to create value. So if you ask me about what has changed most at Mercury over the year, it's pretty much on this slide. At OEC5, we strengthened the capability in our Geo platform that I'll talk to in a moment. We delivered baseload renewable energy on time, under budget. We've now built 5 of the 6 last wind farms to be built in New Zealand and 2 of those are being delivered now through Kaiwera Downs 2. It's -- all the turbines are erected and energized there. And at Kaiwaikawe, the first generation of New Zealand's tallest turbines has been started. There is some work at Atamuri now to enable the extraction of full output from that station, and that will be completed in the next few months. There's also work over the next few months on the substation at Kaiwera Downs 2 to unlock its full potential, but it will still be delivered in line with our plan. In the retail part of our business, we've seen now 4 years of bundling growth with nearly 41% of our customers having 2 or more products. This drives retention with our churn of 13.7% being 5% better than the industry average. And in a market where churn is a major margin risk, this supports value. Our total connections are up 35,000 to 936,000 connections. That includes telco at 242,000 connections. And during July, we passed over 50,000 mobile connections. We've delivered OpEx improvements. They're now 17% below FY '24. We've implemented time-of-use fixed rates, which also grow customer control.
Richard Hopkins: Okay. So look, the new generation Stewart covered, is important context for an issue we know that's on investors' mind, which is El Nino. Current forecasts point to a potential for a strong El Nino and more active westerly conditions. These conditions tend to support higher South Island inflows, but the relationship is not simple enough to make a single call on the outcome. What we can do is be much clearer about the position that we enter FY '27 from. So national storage was 141% of historical average at 31st July, and Taupo started the year above average. That's very different from FY '25 when low national inflows coincided with constrained gas supply. We now have the Huntly Firming Option in place. We have about around 1.1 terawatt hours of additional wind and geothermal generation coming through and FY '27 and FY '28 sales are substantially contracted, which reduces our near-term sensitivity to wholesale price movements. If stand island inflows are strong, national spot prices tend to be lower. For us, the key is knowing what our Waikato water is worth. Spot prices are below the value of our water, we can buy from the market, reduce hydro generation, and conserve water in Taupo. That gives us the opportunity to use that water later when its value is higher. We're also watching the increasingly -- the increasing impact of solar, particularly through the summer. More low-price daytime periods can create further opportunities to buy from the market, preserve hydro, and deploy it when the system values it more. And when wind is volatile, hydro gives us the flexibility to respond. So we're not making a call on the El Nino is good or bad for Mercury. We're entering it with more generation, stronger firming, a fully covered '27 sales position, and much more portfolio flexibility than we had in FY '25. And that really is the largest strategic point. We've talked before about Mercury moving broadly towards 1/3 hydro, 1/3 geothermal, and 1/3 wind. That's not a hard target. It's short end for the much more balanced portfolio we have built over a number of years now. And each technology plays a different role. Geothermal gives us firm, reliable renewable generation, and strong price capture. Wind gives us scalability, low-cost renewable generation, and is one of our repeatable growth platforms. And hydro remains incredibly valuable as increasingly its role is flexibility. It lets us store water, choose when to generate, respond to price, and manage variability from wind. So increasingly, the value of hydro is about when we generate, not simply how much water we get. Then we layer contracting and firming around that physical generation portfolio. The [ Manawa buy ] CfD provides additional volume and price cover through its remaining term and its roll-off is already incorporated into our portfolio planning. By FY '30, about 87% of our generation is covered by retail and demand that's already contracted, giving us significant earnings visibility while retaining some exposure to market prices. On demands, long-term customer contracts give us visibility, while new generation remains staged rather than build ahead of the market. So El Nino is one example. The bigger point is that we have built a much more balanced generation and sales portfolio with different assets doing different jobs. That gives us multiple levers across weather, across price, and across demand outcomes and greater earnings resilience across the cycle.
Stewart Hamilton: And talking about that growth cycle, one of the key aspects that determines what our future pipeline is worth is the demand forecast. Our mid-case has demand growing through to 2030 by about 10% and then a further 10% beyond that up to 2035. There could be other significant electrification moments along the way, including material opportunities with sectors like data centers. So the critical point for us here is that we don't need high demand for value-accretive growth. Our wind and geothermal platforms give us the flexibility to advance the right projects at the right time. We've built optionality now, not necessarily obligation. You can see from this slide -- should be able to see from this slide, some of our capability in the geothermal and wind space that's been developed and executed across 20 years. Our share of New Zealand's generation from these 2 platforms has grown from 0% 20 years ago to now over 12% of New Zealand's power. The point here is that these are not just individual projects, they are platforms to grow from. Our Geo platform now provides New Zealand's largest diversified opportunity set of geothermal options with deep partnerships and expertise. Our wind platform is large. It's regionally diverse and our delivery is proven. And both these platforms are why our ability to execute on time, under budget, and to sufficient quality is strong, and we continue to deliver steady growth. We have a deep pipeline of over 17 terawatt hour opportunities, of which nearly is basically -- if we did that, it would increase New Zealand's total demand by another 50% or generation by 50%. Of that, we have 6 live opportunities ahead of us. Each with clearly defined gate processes. I'm excited to share today that the first of those, Puke Kapo Hau or PKH, has reached final investment decision. I'll talk to that in a moment. Our Whakamaru Battery Energy Storage Solution or BESS will head towards a potential final investment decision later in this financial year. Waikokowai is a strong prospect for one of our next wind farms. We're targeting a consent application for that sometime over the next 12 to 18 months. Our geothermal expansion is under further feasibility with appraisal set of wells ready to start drilling in the early part of next year. Our hydro rehab project is well underway and Puketoi continues to be detailed -- continue to have detailed exploration and feasibility of that project. We have multiple pathways ultimately through this to hit our FY '30 target. We will choose the best option in which to deliver on that. So final investment decision has been reached for Puke Kapo Hau, and this really continues to demonstrate our capability in growing wind pipeline in New Zealand. This is Stage 2 of the Mahinerangi wind farm. And together with Stage 1, it will be New Zealand's largest wind farm. The project ahead of us with PKH is to deliver 40 turbines. It adds another 192 megawatts and approximately $506 million capital investment. Our engineering and procurement teams have done an outstanding job now. They'll deliver a project cost of $2.6 million per megawatt down from the KD2 and Waikokowai projects. This is our first project to go through fast track, and we've been equally fast to convert it from consent into an investment decision. We're expecting civil works to start this spring or into summer with first generation in mid-2028. This will produce South Island generation that supports South Island demand, which could include data centers. In May, we presented our geothermal investment platform or geo platform. There's 4 numbers that frame that. 5 terawatt hour geo-platform pipeline, 1 terawatt hour of projects under feasibility, a $75 million approved appraisal drilling program for the next 2 years and aiming for a 2031 generation. The near-term focus or Horizon 1 is on brownfield expansion that's underway with that $75 million drilling commitment. Beyond that, and Horizon 2, we're building greenfield options at places like Wairamaru and we're also supporting Horizon 3 with the government's Geothermal Superhot project. And that's way, geothermal gives us reliable baseload energy with robust price capture and it best complements our wind assets and our hydro assets and pipeline. Our strategy and our strengths fly in building and operating power stations. And one of the best ways to enable confidence to execute on that and to continue to deliver our pipeline is in growing demand. New Zealand has been building power stations at a faster rate than ever, and our renewability in our grid is now well over 90%. So the next phase or our next opportunity really exists in building for growth and building for affordability. Data centers represent a significant growth opportunity for New Zealand and the most advanced prospects in New Zealand for an AI data center is that with data grid. We've made an initial equity investment to support the progress of this potentially material long-term demand growth option to enable the value to be delivered and firming our pipeline. And the project has begun with horizontal groundworks being announced today, early procurement is underway with transformers, and we're looking forward to supporting this project to proceed through the final investment decision. So Mercury's growth story has progressed significantly in this last financial year. In fact, we've built the most of anyone over the last 6 years in New Zealand grid. We have proven platforms. We have a strong pipeline, and we're committed to progress that and we'll scale it and scale our options to meet demand. To summarize our growth story, we choose to engage with demand. We're developing the best projects, and we're pushing those right projects through at the right time. Our growth case is a portfolio of choices. It's not a single bit.
Richard Hopkins: Thanks, Stew. The next slide, please. Look, the depth of the pipeline you've just shown gives us a lot of choice. But a pipeline really has value if you can turn it into operating assets. What gives us confidence is our delivery record. At the half year, we described that simply, deliver and then deliver again. And the project Stewart just covered are the evidence of that. At geo day, we talked about 4 lenses we use to allocate capital. value, timing, risk, and funding. Those apply across the whole portfolio, value comes first. We're not chasing megawatts for their owners sake. Timing means we're investing against visible demand rather than building ahead of the markets. The 17 terawatt hour pipeline is optionality not a commitment to build 17 terawatt hours. If demand develops more slowly, we can defer capital and preserve returns. Risk is managed through a clear technical, commercial, and investment gates before major port is committed and funding discipline matters. Every project needs to fit within our balance sheet guardrails and earn the right to proceed. So confidence comes from delivery, but the discipline doesn't change. Projects proceed when demand and returns and execution readiness, all line up together. We enter the next growth cycle from a strong balance sheet position. Debt-to-EBITDA finished at around 2x. We also have $610 million of liquidity headroom and drawn committed bank facilities, net of commercial paper on issue, even including the current growth burn, leverage picks at around 2.6x before declining. So we have the capacity to fund stage growth on balance sheets within our guardrails while maintaining a strong investment-grade credit profile. We have also continued to grow shareholder returns through a very significant investment cycle. The FY '26 ordinary dividend is $0.27 per share, up 13% and $0.02 up on our previous guidance, reflecting the strength of the results. That's our 18th consecutive year of ordinary dividend growth. For FY '27, we're guiding to $0.29. Over that same period, we have invested heavily in value-accretive growth while maintaining balance sheet strength. So we continue to grow the dividend of funding the belt. And that leads to the question of what the right balance is for next phase. The question for us now is how we strike the right balance between continuing to invest for growth and returning cash to shareholders. The context has changed. Earnings and cash flow have stepped up materially. The first major investment cycle is nearing completion. And the balance sheet remains well within our guardrails. Our current payout settings are also lower from those of our utility peers. So we think it's the right time to review whether the current settings remain at appropriate for the next phase of Mercury. That means looking at 2 separate questions: First, whether the 70% to 85% is the right power range for Mercury including whether that range should change. And second, where Mercury should normally operate within whatever range we ultimately determine is appropriate. That includes considering peer practice, including the potential to lift our dividend settings as high as our peers alongside growth requirements, liquidity and credit settings and the role of DRP and the broader capital management tools that we have. The objective is not simply to maximize dividend. It's to find the right balance between returning cash to shareholders and retaining the capacity to invest in attractive growth opportunities. There are some important constraints value-accretive growth remains a priority. We intend to fund that growth on balance sheet within our guide rails, maintaining a strong investment grade credit rating remains important. And progressive dividends remain a core part of shareholder returns. So that there is no predetermined anthem and the current policy remains in place while we undertake the review. We do not expect to provide a further update until next calendar year as we build further confidence in our near-term development pipeline.
Stewart Hamilton: So looking forward now, our investment in renewables remains essential, not just for Mercury but for New Zealand. We continue to engage in market settings that are evolving to support this investment. There are 3 broad policy settings and changes underway. First relates to build settings with the resource management changes and consenting supporting renewable supply. The second relates to security of supply, where dry year firmly becomes critical, that's really vital to enable the lowest cost firming to support renewable build. The third aspect that we're involved in looking at is affordability, to enable customers to have access and choice to products, providing transparency to enable scrutiny. And we welcome all of those as answers exist in the areas of innovation, flex, and productivity. For the dry year and the affordability initiatives that are underway need to preserve and investable market signals and stable rules with the net private capital fund of the transition.
Richard Hopkins: Thanks, Stew. So a couple of final slides from me. And let me -- I'm going to start off with the FY '27 guidance and then look at FY '30. So for FY '27, we're guiding to EBITDAF of $1,075 million based on 4.1 terawatt hours of hydro generation. We also guided to $0.29 of ordinary dividends and $150 million of stay-in-business CapEx. The important comparison is with the normalized FY '26 earnings base. So we reported FY '26 EBITDAF was $1,068 million, normalizing primarily for generation, trading volatility, and favorable one-offs gives us a base of around $1,050 million. From there, new win contributes about $33 million and new geothermal around $10 million. That more than offset the around $18 million of yield and portfolio impacts. Importantly, the 4.1 terawatt hour hydro assumption is slightly below mean. So the underlying growth in the bridge is being driven by delivered generation, not by hydro. And that's the key point. The assets that we've already delivered are now contributing to earnings growth. And now looking to FY '30, we now have greater confidence in the pathway to FY '30. That supports lifting the lower end of the EBITDAF target by $50 million to $1.2 billion, while retaining the upper end at $1.25 billion. As we build further confidence in the pathway, there is scope to lift the upper end. As I've said before, we prefer to under-promise and over-deliver. So looking at the bridge, we start from $1,050 million normalized '26 earnings base. The approximately 1.1 terawatt hours of generation, we've already delivered adds around $100 million by FY '30. The range assumes a long-term power price of $120 to $130 per megawatt hour in real FY '27 dollars. So the lower long-term price environment that the market is focused on is already reflected in the target at FY '30. The portfolio and cost headwinds are already in the bridge. Puke Kapo Hau is the next material step contributing around $50 million and around $60 million is from our next highest confident development options, and that supports the $1.2 billion lower end. And further, approximately $50 million of generation development supports the $1.25 billion upper end. Those future projects remain subject to FID, timing, and return thresholds. And importantly, the range does not depend on us building the whole pipeline. If demand develops more steadily, we could defer capital rather than building ahead of the market. If demand develops faster, we have a deep set of projects and demonstrated ability to execute them. So our confidence has increased more because we have the earnings pathway, which is supported by assets or delivered and the next steps are becoming increasingly visible. The confidence has increased, but the capital discipline has not changed. We have a higher earnings base, a clearer pathway to FY '30 and our balance sheet with the capacity to fund it. So look, we enter FY '27 with a higher earnings base, with a clearer pathway, and we think that the opportunity here us a significance. So Stew, back to you to wrap up before we head into Q&A.
Stewart Hamilton: Thanks, Richard. So if I summarize '26 is really 3 core messages: First is around delivery. We've delivered a record EBITDAF result. We've got great operating cash flow. We delivered OpEx improvements to $370 million. Our 3 generation development projects are generating electricity, and we've delivered 18 consecutive years of ordinary dividend growth. Everything you see we do, we did. Second message, higher earnings base. We have a superior portfolio with 2 leading platforms that are diversified in growth from a wind and geothermal perspective. We've increased our generation base by 1.1 terawatt hour. 87% of our load is -- generated loads is contracted out to FY '30. We've gone to a final investment decision for Puke Kapo Hau our next wind prospect and our FY '30 EBITDAF target has raised on the back of growing generation volumes. And thirdly, we have staged growth options ahead of us. We'll stage those against visible demand. We've got a great pipeline of 17 gigawatt hour of wind and geothermal options. But we also had the freedom to accelerate defer or hold those options, and we are underway in our review of our dividend policy settings. So we have a strong earnings base, a resilient portfolio, disciplined capital allocation, and that's what supports durable growth and growing shareholder returns. Thank you very much, and we'll hand over to questions and answers.
Paul Ruedige: Thanks, Stew. [Operator Instructions]. First, we'll start with Josh Dale from Craigs bring you online now. Josh?
Joshua Dale: Well done on a great year. The first question, I know guiding based on P50 is the dumb thing in the sector. But when setting your FY '27 guidance, what was the debate internally as to whether assuming close to P50 was sensible in light of El Nino. I appreciate your hydro assumptions below mean but only slightly.
Stewart Hamilton: Yes. Look, so we've had some really good discussions and debates around all this, Josh. We think we've ended up with a really balanced forecast for next year. I think we look at the whole portfolio. We look at where the lake was. We look at what hydrology looks like and try and take a balanced approach. So we've not just got one route to the $1,075 million. We've got multiple routes to get there. And that balanced portfolio and that sort of really strong hedging that we've got in place mean that we think that's very deliverable.
Joshua Dale: Okay. And just on Slide 29, looking at your FY '30 EBITDAF targets. In that column titled additional generation development, you need $60 million to get to the bottom end of that FY '30 range and another $50 million to get to the top end. Looking at the build-up to that the battery won't contribute enough on its own in FIDs on the Nga Tamariki and Rotokawa look like they might come in too late FID on those as the first half of '29 at the earliest. So all signs seem to point to Waikokowai. Two things on that. Do you have demand for that one locked in? And do we read that range is really reflecting the pace of why Waikokowai's contribution in the FY '30 year?
Stewart Hamilton: Yes. Look, I think that's -- you've sort of worked that through pretty well. Yes, look, we're making some really good progress on Waikokowai that's got -- we think a good chance of blending. The other one that we would like to see -- which could be part of it as well as what happens with our geothermal drilling and exactly the timing of when all of those lands. So what we've really got there is sort of effectively a probability weighted view of what we think is a reasonable base case to get to the bottom end of the range, but we just need to run through the process. But effectively, we're in a strong position, but there's still a long way to go to get through all the consenting, get the bill done, and deliver it on time. But look, we've got a good strong track record now and we think we can do it.
Joshua Dale: And on the demand for Waikokowai, do you need data grid to come through? Or can you get there with other options?
Stewart Hamilton: We believe we can get with other options. But we -- as you can see with Puke Kapo Hau, even we take the projects through a pretty disciplined and rigorous review process, make sure that long-run marginal costs for those projects come in under what we think the price is likely to be in the long term. So we assess all those projects against the long run marginal price of what we think will happen. And if the project doesn't meet it, then the project won't get through the gate. So it's nice to have the demand come on stream, so we can build into it, but it's not necessary.
Joshua Dale: And final question just on wind build costs, Mahinerangi at $2.6 million per megawatt. What's made that achievable? And is it a reasonable indication at all of what you might be able to build like Waikokowai for? Or is that far too aggressive?
Stewart Hamilton: I'll tell you on the first part of your question, there's been -- we've got a team now that's match-fit, running really strongly. So we've built 5 out of the last 6 wind farms in New Zealand, and this will be the sixth out of the last 7. So we've got a really strong internal capability and we also have very strong relationships with OEMs and suppliers. So that puts us in a very strong position to bring those projects on stream and have confidence to bring them on stream at very efficient prices. So it's kind of a key driver of that $2.6 million. I wouldn't necessarily look at using a similar number for Waikokowai. It's a different part of the country. Different wind prospects and probably a different type of technology. So it's early to say, but what I can say is that we've got a really good team in place that will make sure that when that project comes to file on this decision. That's really been taken through the ringers and it's been considered against our previous projects.
Richard Hopkins: Sorry, Josh, I guess we have -- you'll see that PKH is going with the Nordex technology. And that's pretty important and significant from an Australasian perspective is actually -- we've got a history of going with Vestas, and we still think Vestas are fantastic. But Nordex have come through, they're actively winning some projects in Australia now that's created some real tension in the procurement process for us and made -- and really helped us get what we think to really sharp price for that. So I think there's another significant player in the market. And each of the sort of wind resources that you have, have different characteristics or comes that can benefit from the setup that the different suppliers have. And so what we think is, yes, look, it really gives just more options and choices as we look through the future, and we've obviously built a good relationship with Nordex now. We've got a great relationship with Vestas, and we expect to make sure that we've -- can bring a lot of our wins knowledge to that new project, but also really complete the different technologies to get the best outcomes for shareholders as well.
Joshua Dale: Okay. So it might be fair to say that Mahinerangi 2 has potentially the last project we see in the 2s in terms of cost per megawatt and others might come in the 3s?
Richard Hopkins: Look, it's -- honestly, it's too early to speculate on that. I think all we can do is -- we can just sort of play our own game, and we should be really proud of what we've achieved here. We'll make sure we do a great job for shareholders for any future projects as well.
Paul Ruedige: Next, we have Vignesh Nair from UBS.
Vignesh Nair: Congrats on the great outcome. A couple of questions. Firstly, just on the balance sheet and kind of appetite for dividend growth, notwithstanding the fact that it's under review. Sort of $0.27 this year, next year's guide sort of 7% ahead of probably what the market was expecting. Feels as though the guide implies a pull forward of DPS by about a year. I just wanted to get a bit more color on what kind of the pathway could look like into FY '30. The way I read it is that the balance sheet potentially is deployed potentially too conservatively thus far. You guys haven't really reached the top end in the last 13 years. Is that a fair comment? That's the first question.
Richard Hopkins: Yes. No, look, I think it's a fair, Vignesh. That's why we're just going to have a really good -- this is now the time now we've got good visibility through to 2030 of what we could build. We've been banging on this 2.6x for quite some time, been trying to hurry Stew and the team up to build some more if we consider the demand as well. We've delivered one for you. You do it quite a bit and for the shareholders. But look, we've just got choices there. And so what we want to do is have a real good look at what choices we have. There's no predetermined outcome of what we're going to do. But we thought it was a question that we should be getting from shareholders, and so we wanted to signal that we're already thinking about it, and we will do some really careful work about it and work out what makes sense for -- through to 2030 and beyond.
Vignesh Nair: And so just extending that, like should the market read this as an intention that at sort of DPS growth over the next 2 to 3 years, should, in theory, exceed your historical leverage of, call it, 7% per year? Or is that premature?
Richard Hopkins: I think that's a bit premature, yes. But I think there's -- all the analysts should be doing their own modeling and really looking through it at what we can afford to and what you think is reasonable and thinking about that. We can see that the dividend yield is clearly an important part of how investors look at that. we can see we're a bit different to others. And we just need to make the choice of where we want to set, what the prospects look like, and what the right setting are for us.
Vignesh Nair: And I suppose by extension, just commenting on the balance sheet overall. I think, Richard, in the past, you've mentioned your sort of internal modeling just peaked at 2.6x net debt to EBITDAF, is that still the case?
Richard Hopkins: That's the case, yes. Correct.
Vignesh Nair: And the second sort of set of questions around Datagrid. Obviously, one of your peers clearly opting for a similar co-investment strategy. I just wanted to get your read in terms of what you think the potential size of the DC market could be in FY '30. And really, that's just to get comfort on whether or not the announcements we've got so far, from the range of operators are additive or potentially peer projects, I suppose, limits the pace of Datagrid's full 360 megawatts being delivered at the pace that you wanted to?
Richard Hopkins: Yes, I think certainly had the opportunity to talk to the global players in the space, whether it's hyperscalers, the AI companies, the developers, and there is a social appetite for compute demand. So I don't think that there is a limiting factor, especially with a couple of projects that have been announced so far. I think you will find that most limiting factor will be our ability to build new power stations at a rate that support that. And so certainly from our perspective, we welcome the announcement around Stratford as much as we do Datagrid. We think they're both a big role to play in it. There might be some others. But I think you'll probably find that with those 2, maybe another one big data center that will probably consume our ability to build power stations over the next 5 to 10 years, I would think.
Paul Ruedige: Next, we have Andrew Harvey-Green from Forsyth Barr.
Andrew Harvey-Green: Have got the technology working this time. That's a good start. A couple of questions for me. Just I guess, first all starting with a following on from what Vignesh was asking around Datagrid. And just looking at timing of that particular project. So I think you've called out here that the Transpower GXP is supposed to be really by the end of 2027. Is that a sort of a signal for when if all things fell in line, you're looking at potential live data center down there as well? Or is that just the first thing that needs to get in place?
Richard Hopkins: It's definitely one of the key milestones on the critical path is the GXP differently. So there's obviously a number of the milestones we need to get through first. But certainly, that GXP is a critical factor. And once you get through that, it's kind of the last thing you really want to get going before you start to use a full compute. So certainly, you can look at that milestone and think about the target of a 2028 kind of coming on stream. And that we're lining that up pretty closely with our ability to deliver for Puke Kapo Hau.
Andrew Harvey-Green: Yes, yes, es. That's -- I did recognize the time frames there. Second question, I guess, is, I mean, we saw with context announcement now that was really, I guess, leveraging the Stratford site. Just thinking about your old Southdown site, which I think you still have some ownership of. Is that a potential future site, which has similar characteristics to what we've seen at Stratford?
Richard Hopkins: Not really, no. We've actually sold part of that site off now. But before we did that, we did a pretty detailed assessment of the site, and it just is not big enough for the sort of scale that's needed for these AI factories or data centers. So, yes. So that site wasn't advantaged for the current data centers. But there are some others that we're thinking of that could be advantaged. And the work that we've done with investing -- and that it was actually a collaboration with contacting ourselves to look around New Zealand and a number of potential sites has identified some of those. And it's fair to say that we're considering what they could be and how they might fatten our future portfolio.
Andrew Harvey-Green: Okay. Great. Next question is just around PKH. And just -- there's 2.6 in the headline number, sounds very impressive, but sort of recognizing per gigawatt hour basis, it's actually pretty similar to cover against a lower capacity factor. So I guess the question I had is in terms of that really low 2.6 number, how much of it is due to, I guess, the site specific and I guess, therefore, a lower spec, for want of a better word, turbine lower -- a cheaper turbine? And also, I guess, what potential discounts you may have received from Nordic. So how much of it, I guess, is site-specific versus getting Nordic centers this being the, I guess, launch project in New Zealand?
Richard Hopkins: I'd say it's not a lower spec technology at all. This is still a really good turbine that is equally as good as some of the other technology that we've seen, including business. So it's not a lower spec turbine to deliver on the cost. There's been a lot of great work that's gone on in the procurement process. And so it really comes down to the site as a really advantaged site, and there has been some really good procurement work, and as Richard mentioned, tension that's going in and the procurement process between the different suppliers. And it hasn't been because we've gone for our lowest spec turbine.
Andrew Harvey-Green: Okay. Okay. That's all good. right. And last question for me was just around dividend and just thinking about imputation going forward. Are you able to give us any sort of color on what you're expecting there, Richard? Are we going to be fully imputed going forward? Or are you going to start having a few headwinds given the level of CapEx and some of the depreciation benefits that you get?
Richard Hopkins: Yes. So, no. We're all good on imputation credits out to FY '30. So with this, it's not a big worry for us if we sort of significantly changed our dividend or something, then that would be different. If we accelerated our build program even more, then actually, there's -- you start to get into a piece where just the way that the tax depreciation is calculated that matters. And actually, the sort of government policy helping us to build faster, it's also reducing our tax band. But as you currently look at 2030 with everything that we've got planned, we're expecting to continue to fully improve.
Paul Ruedige: Next, we have Grant Swanepoel from Jarden.
Grant Swanepoel: Three quick questions. First one, just on retail pricing outlook. I see you have your yield going down but not for reasons of not putting up residential pricing. It was a good year in FY '26, what's FY '27 looking like on residential pricing from your perspective?
Richard Hopkins: Yes. We will consider what residential pricing looks like as we get towards our February assessment. Certainly, as we look out, one of the big factors in residential prices will be, as you'll be familiar with, transmission and distribution pricing. So our principle is to largely pass that through. From an energy component we typically seen and thinking about price rise, which is leased in CPI. And so looking at ahead, as the wholesale prices do come down, we sort of continue to build that into our thinking around what the residential prices will be. but it's more of a smooth effect. So we expect that over the next few years, price rises will be at or under CPI, but we'll still continue to pass through the lines of distribution costs.
Grant Swanepoel: And then you've got your costs broadly flat this year. Now that the Manawa Trustpower acquisition is fully into your business, where are these inflationary cost cuts coming through from?
Richard Hopkins: Yes. So during the last few years, the Trustpower integration has very much been about setting us up to kind of be fit for now. And so there was some great work that went on to get the synergies out of the initial part of the integration. Now we've got the opportunity to really leverage that size and scale over the next few years. So we're calling it sort of fit for future. So there's still a good amount of work that can be conducted to look at what our duplicate systems are, how we take it further. And so there's still, we think, good efficiencies to be bought from that combined business.
Grant Swanepoel: Okay. So that's all from that area. And then my final question is on the $75 million drill program. Are we still looking at March when you can let the market know how successful that drill program has been?
Richard Hopkins: No. So we're -- we've got the drill program in place. I think spudding, which is when they first start to do the drilling won't actually happen until the first quarter of next year. We were the first well that gets underway. So we'll start to see those results flow through towards the latter end of this FY, in the middle of next calendar year. And that's when we'll start to get a better understanding of what the results look like, firm up some of our data, and then it will flow into what we expect for those next 1 or 2 projects. So it's more likely next year, I'd say, Grant.
Paul Ruedige: Next, we have Steve Hudson from Macquarie.
Stephen Hudson: Just a couple more on Datagrid. It's obviously kind of topic to you at the moment. Can you just give us the sort of the summary view on why you need to own equity in the SPV?
Richard Hopkins: Yes. So fundamentally, I mean, we're right back to the beginning. We believe that data centers have a strong potential to be one of the once-in-a-generation transformation in terms of demand in New Zealand. We've been looking carefully at how we get involved in that sector because the desire for that sector to have power is strong, and that's a key thing of what we do and how we bring value. So we wanted to work out how we get involved at the lighter end that was sitting on the sidelines cheering as you go through into a more engaged process that's providing PPAs, which we have involved. You kind of keep heading along that potential pathway of being involved in that sector, and it is through equity all the way through to ultimately be a developer of data centers. So we've been sort of stepping our way along that curve and understand what's the best place for us to play. And as we look at a project like Datagrid, we believe it is New Zealand's most prospective project. It's got the consent. It's been progressing really well. And as we looked at it and put in place a PPA with Datagrid, it became clear that one of the things that would be very useful as an early-stage investment of a very small amount. That basically enables it to get going and get some of the horizontal works underway because as we're finding out from a lot of the consumers of compute overseas, time matters. Thereafter, the scale of these data centers, but they're after it at pace. And so our investment enables that pace to be kicked off, it means that it can affect bring it forward. So that was kind of our reason was providing, I guess, a seed money in there so that they can get the project going, demonstrate, I guess, progress so it can get the ultimate tenant engaged. And that means that the project is much more likely to be successful. And that means that the power demand will come along, which means we can build into it.
Stephen Hudson: Just a follow-up. I mean, the -- should we read very much into the amount? I mean sort of grosses up to $430 million. I guess the obvious question is how much of that is sunk costs. So in other words, land, prepurchase transmission, consenting costs and how much of it is sort of an intangible?
Richard Hopkins: Yes. There's clearly a bunch of intangible in there. Ultimately, the value will show up through signing the tenancy agreement and the cash flows that flow from that. So at the moment, our investment was very much linked to the physical components that are needed to be purchased and to start the civil works on site. And so it's kind of what we've invested into is the physical work upfront that will deliver value in the long term in terms of cash flow through to the entity.
Stephen Hudson: So the $400 million is kind of what we should think of as the joint transmission investment that's going on?
Richard Hopkins: No. I think that $400 million is also representative of some inherent intangible value that comes with the value of a project like this. So if you were to take this project and go away to some large developers overseas, what were a large developer pay for a consented site that has potentially a tenant lined up has the power purchase agreements in place and has the land ready to go.
Stephen Hudson: Okay. No, that's clear. Hey, they've been sort of talk that the transmission assets when they are fully built out down there may only get that project to kind of 300 megawatts. What's your view on that?
Stewart Hamilton: It definitely -- the first phase is at 300 to 360 megawatts that that's what we've been focused on for the moment. And so we're providing that 140 megawatts as part of that. I think as you go in Southland, going much further, there's definitely some constraints on the grid and transmission. And so that's better have to be considered during the next stage of that project if that goes ahead.
Stephen Hudson: Thanks, Stew. And PKH, I know everybody's had a crack at this one, but just interested in Nordics, that sounds as if it's their first project here in New Zealand. Are they offering a full EPC contract, I guess, is the first question. And second question is around Siemens and whether or not they're still hanging around in New Zealand?
Richard Hopkins: Yes. So just on your first question, so with Nordex. Nordex provide the equipment and install it. But the actual way we will deliver that project is very similar to how we've delivered the last couple of wind farms. So we line up the balance of plant contractors, and we have through relationships with them, and then we expect -- relationship with Nordic. So we utilize our in-house capability to manage to hold that project and connect the different contractors and suppliers together. It has been very successful for us in the last few projects. And so we intend to file the same model for PKH. And what note do that, they'll provide the full operations and maintenance of that wind farm when it's up and running all the way through for the 30 years, so we've built that into our project. And the second part of your question?
Stephen Hudson: Just whether or not Siemens were still in New Zealand.
Richard Hopkins: So there's -- there have been a number of suppliers that we're taking through this process that includes the name -- the sort of common names we're familiar with as well as some others, more perspective. But when it came down to it, we're currently building 2 wind farms with Vestas, and we rate their platform and the technology very highly. And this is an opportunity to bring in a player who is significant in the European market. I think be one of the dominant in the European market. they've been building in Australia, and this is a good chance for them to launch their platform into New Zealand.
Stephen Hudson: Got you. And last one, sorry, the long-term $120 million to $130 million, you give sense and not [ a who ] number. So presumably, you're saying long-term futures are kind of add to your long-term assumption. I think that was what I took from Richard's comment.
Richard Hopkins: Yes, that's spot on.
Paul Ruedige: That's the end of Q&A. Thanks for all your great questions. Passing it to you, Stew.
Stewart Hamilton: Yes. Thanks, Paul. Thanks for your questions. As I mentioned, it's been a very -- a great year, a great set of results. We've delivered strongly in FY '26, and we're sitting business up for an exciting few years ahead. And so I look forward to sharing that as we go through over the coming months. Cheers.
Richard Hopkins: Thanks, everyone.