Contact Energy Limited · NZX:CEN
Contact Energy — 9M to 30 June 2005 Earnings Presentation
37 slides from Contact Energy's earnings presentation, Aug 17, 2005
Slide 1: 2005 Financial Result
2005 Financial Result For the Nine Months Ended 30 June 2005 17 August 2005
Slide 2: Disclaimer
Disclaimer This presentation may contain projections or forward looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking stat
Slide 3: Technical Note
Technical Note Contact Energy has moved to a financial year end 30 June. This presentation therefore reflects a nine month annual result for the period ended 30 June 2005. The analysis in this presentation compares this against the unaudited financial results for the same nine month period last fina
Slide 4: Highlights for the year
The nine month result highlights the benefits of the integrated energy business model... Highlights for the year • EBITDA of $363.5m - up 14% on the same 9 month period last year. Core earnings continue to show the benefits of an integrated energy business model: – Consolidation of the retail positi
Slide 5: Overview of financials
Overview of financials contact
Slide 6: Financial result summary
…with the net surplus growth supported by lower financing costs and a reduction in the effective tax rate from 40% to 33%, EBITDA shows a clearer view of underlying performance. Financial result summary Nine months ended Nine months ended % 30 June 2005 ($m) 30 June 2004 ($m) Revenue 998.3 907.5 10%
Slide 7: Net surplus after tax and EBITDA
Contact performed strongly in the last nine months - net surplus of $138.2m, up 37% from the previous comparable period. EBITDA was 14% higher on the same period last financial year at $363.5m for the 9 months ended 30 June 2005. Net surplus after tax EBITDA 200 500 450 400 150 350 300 $m 100 $m 250
Slide 8: Dividends
The Board has reviewed the dividend policy and has resolved to pay a fully imputed final dividend of 10 cents per share for the nine months ended 30 June 2005. Dividends 30 • A 10 cent per share fully imputed final dividend will be paid on 14 September Special and Final 2005. This takes the total di
Slide 9: International Financial Report Standards
From 1 July 2005, Contact Energy will report under International Financial Reporting Standards (IFRS). International Financial Report Standards • Contact has elected early adoption of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS). • Due to the higher level of compl
Slide 10: Trading operations
contact Trading operations 10
Slide 11: Wholesale electricity market
Spot prices in nine months to 30 June 2005 averaged $54.72/MWh, compared with $39.67/MWh in the nine months to 30 June 2004. This was the result of lower hydro inflows and storage levels... Wholesale electricity market DAILY AVERAGE HAYWARDS PRICE, SOUTH ISLAND STORAGE & INFLOWS $350.00 4000 3500 $3
Slide 12: Contact generation
...Contact’s generation responded to higher wholesale prices, with significant increases in thermal generation more than offsetting the reduction in hydro generation... Contact generation 9,000 • Total generation was 7,970 GWh for the nine months ended 30 8,000 June 2005. 7,000 • The increase in tot
Slide 13: Wholesale electricity revenue
…wholesale electricity revenues were higher than the previous comparable period - reflecting higher wholesale electricity prices and higher levels of generation. Wholesale electricity revenue Wholesale Electricity Revenue • Wholesale electricity revenue rose for the nine months to 30 June 2005. 500
Slide 14: Retail electricity revenue
While gross retail electricity revenue was 6% higher on last year at $728.4m, net retail electricity revenue fell 9% to $407.5m as a result of higher purchase costs owing to higher wholesale electricity prices. Retail electricity revenue • Gross retail electricity revenue was $728.4 Retail Electrici
Slide 15: Change in customer numbers
We have consolidated our electricity retail position, though gas customer numbers have continued to decline reflecting the increased opportunity cost of gas and high levels of competition. Change in customer numbers 5000 4000 4000 3000 2000 1000 1000 Customers 0 0 0 -1000 -2000 -2000 -2000 -2000 -30
Slide 16: Gas usage
Contact’s gas use for generation increased during the period due to a reduction in hydro inflows. Wholesale volumes were also higher than the same period last financial year... Gas usage Gas Use 45 • Overall gas use was higher this year at 42.5 PJ. 40 35 • Higher volumes were used for 30 Wholesale i
Slide 17: Gas revenue
..the retail and wholesale gas businesses also made solid contributions to the result. Gas revenue • Retail gas revenue increased to $92.6 million for the 9 months ended 30 Gas Revenue June 2005 from $83.1 million for the 9 100 months ended 30 June 2004. 90 80 • Gas customer numbers fell a further 2
Slide 18: Operating expenses
Operating expenses rose by 8% for nine months ended 30 June 2005, driven mainly by increased gas use... Operating expenses • Operating expenses were $634.8 million for the nine months to 30 June Operating Expenses 2005, an increase on the $589.2 million 700 for the nine months ended 30 June 2004. 60
Slide 19: Interest, depreciation and amortisation
…depreciation has increased as compared to the same period last financial year as a result of the revaluation of Contact’s assets at 30 September 2004. Interest, depreciation and amortisation • The increase in depreciation and amortisation reflects the Depreciation and Interest result of the revalua
Slide 20: Taxation
Contact’s effective tax rate in the nine months ended 30 June 2005 was 33% as a result of the TCC outage and adjustments for income tax over provided in previous years. Taxation • Contact’s effective tax rate for the Effective Tax Rate 45% 9 months to 30 June 2005 fell to 33%, compared with 40% for
Slide 21: Strategic Issues
contact Strategic Issues 21
Slide 22: Fuel developments
contact Fuel developments 22
Slide 23: Gas - supply and demand outlook
New Zealand’s developed and committed gas supplies are running down. This means… Gas - supply and demand outlook 23
Slide 24: Strategic imperatives for upstream gas developments
…the strategic imperatives remain strong for the company to be engaged in upstream developments. • Strategic drivers – We continue to see gas fired generation as an essential part of New Zealand’s energy future. – We see real value in better understanding indigenous and imported supply options and i
Slide 25: Contact Energy gas supply position
We have responded to gas market conditions in the short term by bringing forward some gas from the portfolio to meet demand… • Our forward gas contracted position remains largely Contact Energy Gas Supply - as at 1 July 2005 unchanged over that 70.0 previously reported. 60.0 • This profile is based
Slide 26: Securing supply in the medium to long term
….and are focusing our efforts on securing supply in the medium to long term. ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 Refine site studies Site selection Mid 05 Final investment Site decision access 2007-8 Consent studies consultation Imported RMA process +1? gas work programme (Contact and Genesis) FEED Ten
Slide 27: Generation Development
contact Generation Development 27
Slide 28: Competitive generation market and new renewables
The competitive generation market has altered in the last 2 years as price signals have driven investment in previously uneconomic generation alternatives... GWh of New Renewables (5 year moving average) 1,400 Wind Base Geothermal Energy required 1,200 Hydro to meet 2% High Wind demand growth Low Wi
Slide 29: Otahuhu C
…we consider that Otahuhu C represents an unique opportunity for adding efficient thermal capacity to the system. Otahuhu C • We continue to see gas fired thermal generation as critical to the New Zealand market to provide balance and back-up as more renewable generation is added to the system. • Ot
Slide 30: Progress on 100MW of additional capacity
In the meantime good progress has been made on investment in 100MW of additional planned capacity... Wairakei Binary • Commissioned in June 2005. • Initial operation has the plant operating at 16MW rather than the 14MW planned. TCC • Major maintenance outage successfully completed approximately 10MW
Slide 31: Other capacity enhancements
….and work on our other capacity enhancements continues... • Ti Mihi Steam: – Four new production wells at Ti Mihi to supply the Wairakei and Poihipi power stations (drilling on 3 has been completed) – Expected to add about 18MW of renewable generation capacity – Each well is around a kilometre deep
Slide 32: Certainty on consents for existing assets
…and Contact has also gained certainty on consents for existing assets. Wairakei • Contact had its consents renewed on its Wairakei assets in October 2004. However, they are subject to appeal. Clutha • On 22 July 2005 the Environment Court released its interim decision on the Clutha resource consent
Slide 33: Retail
contact Retail 33
Slide 34: Retail
Within a competitive retail environment we are pleased to see our electricity customer growth is consolidating - a testament to our brand and marketing strategies... Retail • Electricity customer growth has consolidated with 513,000 customers for the period ended 30 June 2005. • Gas customer numbers
Slide 35: Retail business maturing: market churn
...Contact’s retail business is maturing concerted effort is now required to grow the value of the business focus is now turning to service delivery and cost to serve. Market Churn • Retail market churn is above average 14.00% when the two brands are combined owing to Empower brand churn. 12.00% How
Slide 36: Conclusions
contact Conclusions 36
Slide 37: Highlights for annual result
We are pleased that 2004/05 represents another solid financial result for Contact Energy. Highlights for annual result • The annual result for the nine months represents another solid return. • Good progress has been made on key strategic intiativies. These give increased opportunities across the co
Contact Energy — 9M to 30 June 2005 Earnings Presentation on 6ix