Contact Energy Limited · NZX:CEN
Contact Energy — Investor Presentation (August 2015)
24 slides from Contact Energy's investor presentation, Aug 4, 2015
Slide 1: Investor presentation
Investor presentation 4 August 2015 Dennis Barnes, Chief Executive Officer Graham Cockroft, Chief Financial Officer
Slide 2: Important information
Important information This presentation has been prepared by Contact Energy Limited (Contact Energy). Information: This presentation contains summary information about Contact Energy and its activities which is current as at the date of this presentation. This presentation has been prepared in conne
Slide 3: Important information
Important information Not an offer: This presentation is not a prospectus, investment statement or product disclosure statement or other offering document under New Zealand law or any other law (and will not be lodged with or approved by the Registrar of Financial Service Providers or any other regu
Slide 4: Presentation team
Presentation team Dennis Barnes Chief Executive Officer Dennis Barnes was appointed Chief Executive Officer in April 2011. Prior to joining Contact, he was General Manager Energy Risk Management at Origin, based in Sydney. Dennis started with Origin in 1998 and over that time has led sales, systems
Slide 5: 1. New Zealand electricity market overview
1. New Zealand electricity market overview
Slide 6: New Zealand Electricity & Gas Industry Structure
New Zealand Electricity & Gas Industry Structure Geothermal G Large Business C E Gas U N S E T R Small Hydro Business O A Wholesale electricity Electricity retailers Transmission Distribution M T market* E I Coal R O Residential S N Wind Generation Wholesale Electricity Market Electricity Retailers
Slide 7: Industry dominated by highly hedged, vertically integrated companies
Industry dominated by highly hedged, vertically integrated companies with the five largest companies now all publicly listed Retail electricity market share by customer number Generation market share by volume (GWh) Other Other 4% 7% Trustpower Contact 6% Contact 22% 23% Trustpower 12% Meridian Meri
Slide 8: Key features of the New Zealand Electricity Market
Key features of the New Zealand Electricity Market • Hydro, geothermal and wind provide over 80% of generation High level of renewable generation • New Zealand is highly pluvial with thermal generation balancing intermittency of renewable generation • Contact and its four main competitors (Mighty Ri
Slide 9: New Zealand has added subsidy free renewable generation
New Zealand has added subsidy free renewable generation, which in a period of flat demand, has displaced fossil fuels National electricity demand* New Zealand energy supply * (based on GWh of generation) 40 100% Coal 90% Gas 80% 30 Wind 70% 60% Geothermal TWh 20 50% 40% 30% Hydro 10 20% 10% 0 0% 200
Slide 10: 2. Contact overview
2. Contact overview
Slide 11: Our net assets are worth $3.5b
$3.5b Our net assets are worth $3.5 billion at 31 December 2014 12 Contact owns and operates 12 power stations throughout New Zealand 23% Contact generates around a quarter of New Zealand's electricity $307m Special dividend paid to shareholders June 2015 560k Contact has over 560,000 customers acro
Slide 12: Contact is one of New Zealand's largest listed companies and a leading integrated energy company
Contact is one of New Zealand’s largest listed companies and a leading integrated energy company Upstream FuelFuel Generation Wholesale/Retail Retailer Generator Flexible and diverse fuel Flexible generation portfolio Leading retail customer portfolio base in NZ • Hydro and geothermal generation • 2
Slide 13: Contact's operations
Contact’s operations National focus with 12 power stations totalling 2,359 MW capacity Otahuhu 400 MW 1,699 GWh Ohaaki 50 MW 269 GWh Te Rapa 44 MW Te Mihi Clyde Whirinaki Ahuroa 201 GWh 166 MW 432 MW 155 MW 17.0 PJ 218 GWh 1 GWh 2,246 GWh 11.2 PJ TCC 377 MW 691 GWh Te Huka 28 MW 174 GWh Peakers Poih
Slide 14: Business set up to deliver stable cash flows
Business set up to deliver stable cash flows Focus on efficiency and lower capital expenditure expected to increase free cash flow Second largest gas and electricity Flexible portfolio allows management of retailer in New Zealand variable operating conditions Contact electricity sales Contact genera
Slide 15: Earnings and cash flow
Earnings and cash flow Group EBITDAF and NPAT Group operating and investing cashflow 700 600 600 500 500 400 400 $m $m 300 300 200 200 100 100 0 0 FY10 FY11 FY12 FY13 FY14 1H14 1H15 FY10 FY11 FY12 FY13 FY14 1H14 1H15 Prof it f or the period EBITDAF* Investing cash outf low Operating cash inf low • N
Slide 16: Contact's capital investments have positioned it well for the New Zealand market
Contact’s capital investments have positioned it well for the New Zealand market … Upstream FuelFuel Generation Wholesale/Retail Retailer Generator Largely renewable fuel Flexible generation portfolio Significant retail customer • Renewable generation increased • Peakers and gas storage provide base
Slide 17: A number of important events are now behind us
A number of important events are now behind us Aug 2015 – Tiwai contract extended June 2015 – $367m special dividend paid May 2015 – Review of international growth options completed; $367m special dividend announced Jan 2015 – New, flexible gas contract signed for 26 PJ Dec 2014 – Contact legacy gas
Slide 18: 3. Business performance update
3. Business performance update
Slide 19: 1H15 free cash flow up 51% reflecting strong cash generating business
1H15 free cash flow up 51% reflecting strong cash generating business • Statutory profit down 54% to $51m primarily due to an unfavourable movement in the fair value of financial instruments and transitional costs from the Retail Transformation project • Underlying earnings per share down 21% reflec
Slide 20: 1H15 business performance
1H15 business performance • Retail volumes remained stable; increased share of growing small business market offset residential customer losses » National demand increased 2.9% with increased irrigation load and cooler temperatures offsetting efficiency gains • Continued intensity of retail competit
Slide 21: Contact has completed a review and has announced a revised distribution policy
Contact has completed a review and has announced a revised distribution policy 100% UEAT • Distribution policy revised to reflect the expectation that Contact will have long term limited capital requirements in the near term. average dividend policy Potential • In the event that free cash flow excee
Slide 22: Updates
Updates Results for the year ended 30 June 2014
Slide 23: Contact to supply a portion of Tiwai's electricity; ASX listing
Contact to supply a portion of Tiwai’s electricity • On 3 August 2015 Meridian Energy announced that it had extended the existing Electricity Agreement with New Zealand Aluminium Smelters Ltd (NZAS) » Contact also announced it had signed a financial contract with Meridian Energy which forms a portio
Slide 24: FY15 earnings guidance
FY15 earnings guidance • Contact will report its results for the year ended 30 June 2015 on 17th August 2015 » EBITDAF1 for FY15 is expected to be approximately $525m » Underlying Earnings after Tax1 expected to be approximately $161m » Free Cash Flow2 for FY15 is anticipated to approximately $363m