2014 Full Year Results Presentation 18 August 2014 Year ended 30 June 2014 Dennis Barnes, Chief Executive Officer Graham Cockroft, Chief Financial Officer
Performance highlights
Safety through visible and active leadership and 4 supporting a learn and improve culture The health, safety and well-being of our people remains our number one priority In FY14 we have worked over four million hours on Contact…
Profit for the period up 18% to 234m 5 Underlying earnings per share up 12% Year ended 30 June 2014 EBITDAF1 587m up 9% from 541m Profit for the period 234m up 18% from 199m Earnings per share (cents) 32.0 cps up 18% from…
Key milestones completed in FY14 6 Te Mihi geothermal power station commissioned May 2014 Resumption of bi-pole operation of the HVDC supporting increased hydro generation and its flow north Final stages of Enterprise…
Reduced fuel costs supported by increased electricity sales 7 Integrated Energy segment EBITDAF: up EBITDAF Movement 49m (11%) to 551m Netback: unfavourable 22m (2%) FY13 541 Intergrated Energy unfavourable 49m favourable…
Operational Review - Dennis Barnes Results for the year ended 30 June 2014
National electricity demand down 1 % reflecting lower mass 9 market demand Year ended Year ended Variance 30 June 2014 30 June 2013 GWh GWh GWh % North Island 23,214 23,501 (287) (1%) South Island ex Tiwai 8,909 9,015 (106)…
Above mean national storage levels kept wholesale prices 10 suppressed Price and National Storage Levels 250 4500 4000 200 3500 7 Day Average Price (/MWh) 3000 National Storage (GWh) 150 2500 2000 100 1500…
Netback 22m lower (2%) to 887m 11 Netback movement Change in electricity sales mix; volume increased 101 GWh to 8,378 FY13 909 GWh C&I electricity Mass market consumption down revenue 17 215 GWh (5%) driven by warmer…
Retail market remains highly competitive 12 Electricity Market Churn 30% Contact Energy Industry Average 25% 20% 15% 10% 5% 0% Jul 12 Jul 13 Sep 13 Sep 12 May 13 May 14 Jan 13 Jan…
Cost of energy favourable 71m (17%) to 336m 13 Increased hydro generation and Te Mihi delay compensation Wholesale spot market down 21m; Cost of Energy Movement generation volumes down 623 GWh Wholesale financial market stable…
Flexibility of portfolio allows management of variable 14 operating conditions Generation by source More flexible fuel allows reduced thermal 10,000 9,879 generation while hydro volumes increase 9,255 Hydro generation was up…
Incremental efficiency gains help absorb cost pressures 15 Continuing focus on cost Other Operating Expenses 300 FY13 organisation structure redesign Procurement and ICT rationalisation 250 programmes continue to deliver…
16 Financial Review Graham Cockroft Results for the year ended 30 June 2014
Profit for the period up 18% to 234m 17 Underlying earnings per share up 12% Year ended Year ended Variance 30 June 2014 30 June 2013 m m m % Profit for the period 234 199 35 18% Earnings per share (cents) 32.0 27.2 4.8 18%…
Profit for the period up 18% from 199m to 234m 18 Underlying earnings after tax up 12% from 202m to 227m Contact's statutory profit movement 280 260 5 11 240 15 7 46 220 200 3 m 180 234 227 160 199 202…
Improved EBITDAF and lower stay in business capex 19 offset by unfavourable working capital movement Free Cash Flow Deferred Year ended Year ended Variance 400 billings 30 June 2014 30 June 2013 due to RT m m m % 350 EBITDAF 587…
Financing costs increased by 11m due to reduction in 20 capitalised interest from the completion of Te Mihi and Retail Transformation projects Year ended Year ended Variance 30 June 2014 30 June 2013 m m m % Interest income 6 2 4…
2014 refinancing programme completed, achieving 21 objectives to improve tenor and diversity Debt Facilities Balance sheet gearing level remains strong at 30 June 2014: 6% Bank debt 600m 12% Net debt 1.4bn, in line with June…
Fully imputed final distribution 22 Distributions increased 1 cps to 26 cps Free cash flow including the purchase or sale of fixed assets in FY14 was 201m compared with 92m in FY13 due to the sale of gas meters and reduced growth…
Prospects
In an environment of low growth and margin pressures 24 Contact will target greater efficiencies Leverage existing asset base Integrate Te Mihi into Wairkei operations Increase production from existing renewable assets Improve…
With the completion of the current capital programme the 25 business is focused on managing for cash flow Capital investment has positioned Capital expenditure - projected the business well for the current 600 No material change…
Retail Transformation 26 Operational change will support customer strategy and efficiency New customer billing and service system live in late April Progress since go-live remains positive The transition out of stabilisation and…
Geothermal update 27 Te Mihi commissioned 1 May Final megawatts subject to an outage planned for later in the year Plant, including hot well pumps, running well Wairkei resource optimisation will deliver efficiency…
Patient approach to gas contracting continues 28 Gas supply agreement signed for 27 PJ over 6 years significant step in contracting with a secondary supplier A number of options exist to manage our Contact's contracted gas…
Stable regulatory environment is important given the 29 long-term nature of our business Labour-Green proposed reforms Current market structure is delivering competition and security of supply Charging for water is an issue with…
Summary 30 Benefits of portfolio flexibility reflected in a solid full year result Diverse and flexible generation portfolio took advantage of increased hydro generation Te Mihi reduced cost of energy Focus on being a…
31 Supporting material Results for the year ended 30 June 2014
Non-GAAP profit measure - EBITDAF 32 EBITDAF is Contacts earnings before net interest expense, tax, depreciation, amortisation, change in fair value of financial instruments and other significant items The CEO monitors EBITDAF as…
Explanation of reconciliation between EBITDAF and 33 profit for the period The adjustments from EBITDAF to reported profit are as follows: Depreciation and amortisation: Costs decreased by 5m (3%) due to lower operating hours of…
Non-GAAP profit measure underlying earnings 34 The CEO monitors underlying earnings and believes it assists investors to understand the ongoing performance of the business Underlying earnings after tax is calculated by adjusting…
Explanation of reconciliation from reported profit to 35 underlying earnings The adjustments from reported profit to underlying earnings are as follows: The change in fair value of financial instruments that do not qualify for…
Operating cashflow after tax (OCAT) and OCAT ratio 36 Contact uses OCAT and OCAT ratio as internal measures of the cash-generating performance of the business Key difference between OCAT and statutory cash flows from operating…
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