Contact Energy Limited · NZX:CEN
Contact Energy — Debt Investor Presentation (February 2017)
28 slides from Contact Energy's debt investor presentation, February 2017
Slide 1: Retail Bond Offer Investor Presentation
Retail Bond Offer Investor Presentation February 2017 Joint Lead Managers Co-Manager GrahamContact Cockroft, EnergyChief Financial October 2016 Officer Annual meeting of shareholders Louise Tong, Head of Treasury & Tax
Slide 2: Important Notice
Important Notice The offer of debt securities by Contact Energy Limited (Contact or the Issuer) is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA). The offer contained in this presentation is an offer of bonds that have identical rights
Slide 3: Disclaimer
Disclaimer This document does not constitute a recommendation by the Issuer, Forsyth Barr Limited (Joint Lead Manager and Organising Participant), Westpac Banking Corporation (Joint Lead Manager), Deutsche Craigs Limited (Co-Manager), The New Zealand Guardian Trust Company Limited (Supervisor), nor
Slide 4: Speaker Profiles
Speaker Profiles Graham Cockroft Chief Financial Officer Graham Cockroft was appointed as Contact Energy's Chief Financial Officer in June 2012. Prior to this he spent three years as Contact's Chief Operating Officer in which he was responsible for the operation of Contact's wholesale and generation
Slide 5: Agenda
Agenda 1 New Zealand electricity market overview (slide 6) Graham Cockroft 2 Contact overview (slide 9) Graham Cockroft 3 Business performance update (slide 16) Graham Cockroft 4 Capital structure and funding requirements (slide 21) Louise Tong 5 Bond offer information (slide 25) Fiona Doddrell, Wes
Slide 6: 1. New Zealand electricity market overview
1. New Zealand electricity market overview
Slide 7: Industry dominated by vertically integrated companies with the five largest companies all publicly listed
Industry dominated by vertically integrated companies with the five largest companies all publicly listed Retail electricity market share by customer Generation market share by volume (GWh) connections 5% 4% 10% 20% 21% 13% 16% 13% 25% 20% 34% 19% Source: Electricity Authority (as at 31 December 201
Slide 8: 84% of New Zealand's electricity consumption in 2016 came from renewable generation
84% of New Zealand’s 39,000 GWh of electricity consumption in 2016 came from renewable generation National demand by sector New Zealand electricity supply (GWh generation) 100% Coal 90% Gas 80% Wind 70% Geothermal 60% 50% 40% 30% Hydro 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200
Slide 9: 2. Contact overview
2. Contact overview Contact Energy October 2016 Annual meeting of shareholders
Slide 10: Snapshot of Contact Energy
Snapshot of Contact Energy - we are an integrated electricity, gas and LPG business 21% 82% $84/MWh $31/MWh our share of the electricity the proportion of electricity Contact the netback we received from retail the average cost to supply energy to generation market in New Zealand generated from rene
Slide 11: Contact's operations have a national focus with 11 power stations totalling 1,969 MW capacity
Contact’s operations have a national focus with 11 power stations totalling 1,969 MW capacity Name Capacity FY16 Gen Retail Contact Bond Energy Offer February Annual2017 meeting of shareholders Investor Octoberpresentation 2016 Contact Energy Limited 11
Slide 12: Connecting customers and markets to renewable resources
Connecting customers and markets to renewable resources Investments in our generation portfolio have ensured a robust business with low- cost, long-life and flexible generation assets with our focus on safety, reliability and resource utilisation Investments in core systems and capability is providi
Slide 13: Well run generation and wholesale operations currently drive most cashflow
Well run generation and wholesale operations currently drive most cashflow EBITDAF segmentation 600 » Contribution from generation has increased following $1.7bn investment programme 500 completed with the commissioning of Te Mihi in April 2014 400 EBITDAF ($m) 300 » Retail competition continues to
Slide 14: Our generation is well positioned for the long term
Our generation is well positioned for the long term Flexible thermal Strong internalised generation risk management and safety culture 01 03 Low cost renewable Balanced wholesale generation portfolio market 02 04 Retail Contact BondEnergy Offer February Annual 2017 meeting of shareholders Investor O
Slide 15: In a competitive retail market, converting improved operational performance into value remains the focus
In a competitive retail market, converting improved operational performance into value remains the focus 1H15 2H15 1H16 2H16 1H17 We’ve listened to Change in customer numbers -7,300 -1,600 -9,800 +5,380 -3,100 • New products our customers • Battery and solar trials Average time to answer 220 268 222
Slide 16: 3. Business performance update
3. Business performance update Contact Energy October 2016 Annual meeting of shareholders
Slide 17: Our financial framework
Our financial framework » Our focus is on free cash flow generation and ensuring a robust balance sheet Distributions » Ordinary dividend equal to Free cash flow Balance Sheet 100% underlying profit » Special dividend where » Operating cash flow » Investment grade imputation credits available • Less
Slide 18: Following a period of significant capital investment, operating cash flow remains strong
Following a period of significant capital investment, operating cash flow remains strong Group EBITDAF and NPAT Group operating and net investing cashflow 700 600 600 500 500 400 400 300 $m $m 300 200 100 200 0 100 -100 -200 0 FY11 FY12 FY13 FY14 FY15 FY16 1H16 1H17 FY11 FY12 FY13 FY14 FY15 FY16 1H1
Slide 19: Contact raised equity to maintain its investment grade credit rating during the period of capital investment
Contact raised equity to maintain its investment grade credit rating during the period of capital investment Total assets and liabilities Shareholders’ equity and gearing 4.0 40.0% 6.0 3.5 35.0% 5.0 3.0 30.0% Gearing ratio 4.0 2.5 25.0% $bn $bn 3.0 2.0 20.0% 2.0 1.5 15.0% 1.0 10.0% 1.0 0.5 5.0% 0.0
Slide 20: Focus continues on the reduction of both operating and capital expenditure
Focus continues on the reduction of both operating and capital expenditure Other operating expenses Capital expenditure » 1H17 other operating expenses were down $4m, 3% lower » 1H17 capex $63m, $8m lower than 1H16 than 1H16 » The reduction in thermal generation in the period has • Labour costs down
Slide 21: 4. Capital structure & funding requirements
4. Capital structure & funding requirements
Slide 22: Contact remains committed to an investment grade credit rating
Contact remains committed to an investment grade credit rating Contact has had a BBB rating since 2002 - why BBB? Solid foundation for the management of Attractive relative pricing and terms operational and financial risks A margin of safety within the investment Efficient capital structure grade ra
Slide 23: Contact's balance sheet is supported by a robust funding portfolio
Contact’s balance sheet is supported by a robust funding portfolio Funding maturity profile (at 31 December 2016) Funding sources (at 31 December 2016) 450 9% NEXI USPP Domestic bonds Bank 400 4% 350 30% 300 250 28% $m 200 150 100 29% 50 - FY17 FY18 FY19 FY20 FY21 FY22 FY23 - FY27 FY28 - FY32 Maturi
Slide 24: Contact credit highlights
Contact credit highlights Independent Leveraging Vertically Well run, board with technology integrated largely diverse investment business with renewable experience across diversified generation and large portfolio drives perspectives customer value base Diversified Significant Strong BBB S&P fundin
Slide 25: 5. Bond offer information
5. Bond offer information Contact Energy October 2016 Annual meeting of shareholders
Slide 26: Key terms of the offer
Key terms of the offer Issuer Contact Energy Limited Description Unsecured, unsubordinated, fixed rate obligations of the Issuer Negative Pledge The Supervisor, on behalf of the Bondholders, has the benefit of certain provisions of the deed of negative pledge and guarantee between Contact and certai
Slide 27: Key dates and offer process
Key dates and offer process Date Process 13 February 2017 (Monday) Offer opens 13 – 16 February 2017 Roadshow presentations in Auckland and Wellington and investor call 17 February 2017 (Friday) Offer closes – bids due 12pm 17 February 2017 Allocations and rate set post 1pm 23 February 2017 (Thursda
Slide 28: Questions?
Questions?
Contact Energy — Debt Investor Presentation (February 2017) on 6ix