Meridian Energy Limited · NZX:MEL
Meridian Energy — FY2013 Earnings Presentation
31 slides from Meridian Energy's earnings presentation, Aug 12, 2013
Slide 1: Results Presentation for the year ended June 2013
RESULTS PRESENTATION for the year ended June 2013
Slide 2: Disclaimer
Disclaimer The information in this presentation was prepared by Meridian Energy with due care and attention. However, the information is supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, completeness or reliability of the informatio
Slide 3: Highlights
Highlights Highlights Significant financial performance $M EBITDAF and Net Profit - last 3 financial years improvement from the record dry FY12 700 660 12 months to 30 Jun 11 12 months to 30 Jun 12 NPAT +296%, EBITDAF1+23%, Underlying NPAT1 600 585 12 months to 30 Jun 13 +53%, Operating cash flow
Slide 4: Highlights
Highlights Return to average inflows from record dry FY12 Significant financial performance $M 1,000 Financial measures 916 12 months to 30 Jun 12 improvement from the record dry FY12 900 12 months to 30 Jun 13 800 763 EBITDAF1+23% 700 Underlying NPAT1 +53% 600 585 529 477 500 417 Operating cash f
Slide 5: Safety and health remain a critical focus
Safety and health Safety and health remain a critical focus Continuous focus to ensure safety and EEA industry period ended Lost time injury frequency rate average health is a core part of all operations J 2013 Jun 00 0.0 Meridian continues to develop individual safety behaviour and accountability
Slide 6: Return to average inflows from record dry FY12
Wholesale Return to average inflows from record dry FY12 GWh Combined inflows into Meridian's catchments Inflows at 101% of historical average 14,000 12,000 Significantly g y higher g inflows in 1H FY133 than 1H FY12 10,000 Dry 2H FY13, bookended by two large inflow 8,000 events in early January 1
Slide 7: Market disruptions drove volatility in generation market share and prices
Wholesale Market disruptions drove volatility in generation market share and prices HVDC outages islanded Meridian generation and NZ generation market share (weekly) 45% high impacted market share inflows 40% high inflows 35% Resulted in periods of significant inter island high 30% inflows price sep
Slide 8: Continuing retail financial improvement
Retail Continuing retail financial improvement Segment earnings improvement GWh Monthly national demand 3,800 EBITDAF1 per MWh (at fixed input price) increased 3 600 3,600 by $1.20 (63%), even with increased corporate cost 3,400 allocations 3,200 Contracted revenue ggrew byy 2.6% despite p a 1% 3,
Slide 9: Development pipeline reshaped
Development Development pipeline reshaped New Zealand Maungaharuru Pipeline rationalised in response to soft market 94MW (consents held) conditions No further development expected for 3-5 years Focus on a smaller, more deployable set of future Central Wind 120MW options with attractive cost profil
Slide 10: Agreement reached with the owners of New Zealand Aluminium Smelters (NZAS)
New Zealand Aluminium Smelters Agreement reached with the owners of New Zealand Aluminium Smelters (NZAS) After a year of negotiations, agreement has been reached with New Zealand Aluminium Smelters (NZAS), effective 1 July 2013 The agreement sees a reduction in the smelter’s electricity charge The
Slide 11: Financial performance
Financial performance p f RESULTS PRESENTATION for the year ended June 2013 12 August 2013 PG | 11
Slide 12: Earnings
Financial performance Earnings Financial Year EBITDAF1 Significant growth in Net Profit after Tax due to ended 30 June higher EBITDAF1 and gains on the Macarthur sale 2013 584.8 EBITDAF +$108m (23%) from higher NZAS 2012 476.6 contracted revenue, increased generation and 2011 659.9 lower acquired ge
Slide 13: New Zealand Energy Margin
Financial performance New Zealand Energy Margin 1 $M New Zealand Energy Margin 2,400 Contracted Revenue Acquired Net Spot Exposure Market 2,200 Generation $87m Related $1 055m $1,055m 2,000 Costs Costs -$283m $6m 1,800 225 Other revenue & 1,600 costs including EA levies & 1 400 1,400 ancillary -921
Slide 14: New Zealand Energy Margin movement vs FY12
Financial performance New Zealand Energy Margin 1 New Zealand Energy Margin $M movement vs FY12 1,200 Contracted Revenue Acquired Net Spot Exposure Market 1 100 1,100 Generation +$6 +$6m Related +$76m $76 Costs Costs 1,000 +$48m -$5m 900 -5 -3 +48 800 +15 +64 700 -324 +407 600 500 -77 865 400 740 30
Slide 15: Costs
Financial performance Costs Financial Year Transmission Costs Transmission costs +33% from increased HVDC ended 30 June charges 2013 115.3 2012 86.7 Operating costs +8% from one-off items relating 2011 84.2 to development and IPO costs 2010 78.9 Excluding the one-off items, costs are 4% higher 2009
Slide 16: Operating cash flow and investment expenditure
Financial performance Operating cash flow and investment expenditure Net cash flow from operations increased 29% Financial Year Operating Cash Flow ended 30 June from improved operating profit 2013 416.7 Investment expenditure includes spend on the 2012 322.2 completion of the Macarthur wind farm (V
Slide 17: In summary
Summary In summary Return to average level of inflows from the record low levels of FY12 Inflow levels during the dry summer were lower than FY12 Significant uplift in NPAT, EBITDAF1 and Underlying NPAT1 Uplift achieved while managing increased transmission costs and the impact of residual FY12 dry
Slide 18: Additional information
Additional information f RESULTS PRESENTATION for the year ended June 2013 12 August 2013 PG | 18
Slide 19: EBITDAF to NPAT reconciliation
Additional information EBITDAF and Net Profit $M EBITDAF to NPAT reconciliation 650 600 550 500 -220 450 400 +19 350 -25 -1 -61 300 -114 114 +107 107 585 -19 250 200 -71 +94 150 295 100 163 50 - EBITDAF* Dep & Net Finance Premiums on Taxation Underlying Fair Value Gain on Sale Impairments Other Prem
Slide 20: Energy Margin
Additional information Energy Margin Energy Margin is a non-GAAP financial measure Financial Year Energy Margin ended 30 June representing Energy Sales Revenue less Energy Related Expenses and Energy Distribution Expenses 2013 915 8 915.8 Energy Margin is used to measure the vertically 2012 763.2 in
Slide 21: Funding
Additional information Funding Debt maturity profile Calender Year Total borrowings as at 30 June 2013 of $1,180.2m, as at 30 June 2013 2019 down $645.4m from 30 June 2012 + 452 83 2018 187 106 Committed bank facilities of $1,277.8m of which $957.5m were undrawn at 30 June 2013 2017 98 220 2016 157
Slide 22: Fair value movements
Additional information Fair value movements Meridian uses derivative instruments to manage Financial Year ended 30 June Fair Value of Financial Derivatives commodity price, interest rate and foreign 2013 93 8 93.8 exchange risk 2012 53.3 As forward prices and rates on these instruments 2011 -103 103
Slide 23: Income statement ($m)
Additional information Income statement ($m) 2013 2012 2011 2010 2009 Group Energy Margin 915.8 763.2 950.3 941.6 785.3 Dividend and Other Revenue 29.7 27.3 31.9 29.5 23.8 Energy Transmission Expense (115.3) (86.7) (84.2) (78.9) (78.2) Gross Margin 830.2 703.8 898.0 892.2 730.9 Employee Costs and Ot
Slide 24: Underlying net profit after tax (reconciliation) ($m)
Additional information Underlying net profit after tax (reconciliation) ($m) 2013 2012 2011 2010 2009 Group Net Profit After Tax 295.1 74.6 303.1 184.0 89.3 Net Change in Fair Value of Financial Instruments (42.7) 68.0 14.2 23.3 32.5 Net Change in Fair Value of Electricity, Aluminium and Foreign Exc
Slide 25: Balance sheet ($m)
Additional information Balance sheet ($m) 2013 2012 2011 2010 2009 Cash and Cash Equivalents 382.8 214.4 368.2 54.4 47.9 Accounts Receivable and Prepayments 261.9 298.1 240.9 199.1 188.2 Other 121.4 58.3 18.1 18.1 30.8 Current Assets 766.1 570.8 627.2 271.6 266.9 Property, Plant and Equipment 6,769.
Slide 26: Wholesale segment performance ($m)
Additional information Wholesale segment performance ($m) June 2013 June 2012 % Change Energy Sales Revenue 2,061.2 1,985.1 + 3.8% Energy Related Expenses (1,289.3) (1,306.6) + 1.3% Energy Distribution Expense (1.1) (23.5) + 95.3% Wholesale Energy Margin 770 8 770.8 655 0 655.0 + 17 17.7% 7% Dividen
Slide 27: Retail segment performance ($m)
Additional information Retail segment performance ($m) June 2013 June 2012 % Change Energy Sales Revenue 1,166.5 1,156.6 + 0.9% Energy Related Expenses (674.8) (701.4) + 3.8% Energy Distribution Expense (403.0) (380.7) - 5.9% Energy Margin 88 7 88.7 74 5 74.5 + 19 19.1% 1% Dividend and Other Revenue
Slide 28: International segment performance ($m)
Additional information International segment performance ($m) June 2013 June 2012 % Change Energy Sales Revenue 51.4 23.3 + 120.6% Energy Related Expenses (0.6) (0.5) - 20.0% Energy Distribution Expense (0.1) - International Energy Margin 50 7 50.7 22 8 22.8 + 122.4% 122 4% Dividend and Other Revenu
Slide 29: Other segment performance ($m)
Additional information Other segment performance ($m) June 2013 June 2012 % Change Energy Sales Revenue 9.7 20.9 - 53.6% Energy Related Expenses (4.6) (10.0) + 54.0% Energy Distribution Expense - - - Energy Margin 51 5.1 10 9 10.9 - 53.2% 53 2% Dividend and Other Revenue 0.4 1.6 - 75.0% Energy Relat
Slide 30: Unallocated segment performance ($m)
Additional information Unallocated segment performance ($m) June 2013 June 2012 % Change Energy Related Expenses 0.5 - Energy Margin 0.5 - Dividend and Other Revenue 2.6 3.6 - 27.8% Energy Related Expenses (Non-core) (Non core) - - - Gross Margin 3.1 3.6 - 13.9% Employee Expenses (22.5) (19.6) - 14.
Slide 31: Segment reporting
Additional information Segment reporting The Chief Executive considers the business from the perspective of three reportable segments; Wholesale, Retail and International Meridian Segment Composition New Zealand Wholesale Retail International Other Segments1 Unallocated Wholesale Meridian Retail Aus