2014 Interim Results Presentation 18 February 2014 6 months ended 31 December 2013 Dennis Barnes, Chief Executive Officer Graham Cockroft, Chief Financial Officer
Agenda 3 1 Performance Highlights Dennis Barnes 2 Operational review Dennis Barnes 3 Financial review Graham Cockroft 4 Prospects Dennis Barnes Supporting material Results for the 6 month period ended 31 December…
4 Performance Highlights Dennis Barnes Results for the 6 month period ended 31 December 2013
Improved safety performance reflects improving safety 5 culture, proving zero harm is realistic and achievable The health, safety and well-being of our people remains our number one priority A strong focus on increasing visible and…
Results 6 6 months ended Variance compared to 31 December 2013 31 December 2012 1 EBITDAF 264m up 4% from 253m Profit for the period 112m up 27% from 88m Earnings per share (cents) 15.3 cps up 25% from 12.2cps Net items…
Reducing fuel costs and increasing electricity sales 7 Holding market share and customers in one of the most competitive retail electricity markets in the world Commercial and industrial sales offset lower mass market demand…
Reducing fuel costs and increasing electricity sales 8 EBITDAF Movement: 1H14 v 1H13 Integrated Energy segment EBITDAF: up 13m (6%) to 244m 1H13 253 Intergrated Energy 13m Netback: unfavourable 9m (2%) Netback…
9 Operational Review Dennis Barnes Results for the 6 month period ended 31 December 2013
National demand down 1.6% impact of warmer weather 10 on mass market demand 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 GWh GWh GWh % North Island 11,823 12,170 (347) (2.9%) South Island ex Tiwai 4,485…
Above mean storage levels kept wholesale prices suppressed 11 Price and national storage levels 200 4,000 180 3,500 160 3,000 7 day average price (/MWh) 140 National storage (GWh) 2,500 120 100 2,000 80…
Netback 9m lower (2%) to 443m 12 Change in electricity sales mix; volume Netback movement increased 74 GWh to 4,334 GWh 1H13 452 Mass market consumption down 178 C&I elec revenue 21 GWh with average temperatures 6% warmer MM…
Retail market remains highly competitive 13 Electricity market customer loss rate 45% 40% Contact Industry 35% 30% 25% 20% 15% 10% 5% 0% Mar 11 May 11 Mar 12 May 12 Mar 13 May 13 Jul 10 Jul 11 Jul…
Net purchase cost favourable 22m (10%) to 199m 14 Renewable generation moved from 63% to 68% of production Wholesale spot market stable; price separation remained high during HVDC commissioning GWAP down 9/MWh to 47/MWh, generation…
Flexible portfolio allows management of variable 15 operating conditions More flexible fuel allows less thermal Generation by source generation while hydro volumes increase 5,000 4,738 4,761 Hydro generation was up 281GWh (15%) 98…
16 Financial Review Graham Cockroft Results for the 6 month period ended 31 December 2013
Profit for the period up 27% to 112m 17 Underlying earnings per share up 4% 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % Profit for the period 112 88 24 27% Earnings per share (cents) 15.3 12.2…
Reconciliation of statutory profit to underlying earnings 18 after tax 6 months ended 6 months ended 31 December 2013 31 December 2012 m m Profit for the period 112 88 Change in fair value of financial instruments (16) 1 Clutha…
Profit for the period up 27% from 88m to 112m 19 Underlying earnings after tax up 5% from 92m to 97m Contact's statutory profit movement 120 2 4 15 100 4 11 4 80 m 60 112 97 88 92 40 20 0 1H13 Net items…
Improved EBITDAF offset by increased gas storage 20 injections resulted in stable cash position 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % EBITDAF 264 253 11 4% Change in working capital (49)…
Financing costs increased by 6m due to higher average 21 gross debt, partially offset by a reduction in the average cost of funds 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % Interest income 3…
2014 refinancing nearing completion with retail bond 22 offer launched today Balance sheet gearing level remains strong at 31 December 2013: Net debt 1.4bn, down slightly on 31 December 2012; gearing ratio 28% 600m total…
Fully imputed interim distribution stable at 11 cps 23 Free cash flow including the purchase or sale of fixed assets in 1H14 was 85m compared with (24) in 1H13 due to the sale of gas meters and reduced growth capex. Further…
24 Prospects Dennis Barnes Results for the 6 month period ended 31 December 2013
Contact will target further efficiencies to drive growth 25 while lower capital expenditure will increase free cashflow Leverage asset base Capital expenditure - projected 600 Complete Te Mihi 70m decrease in FY14-18 capex…
Poor thermal returns require flexibility in fuel and 26 maintenance commitments Historic thermal generation shows plant running below short run marginal cost of a CCGT more than 50% of the time CCGT utilisation 41% 2011 2013,…
Average forward prices have fallen; however, there is 27 evidence the change in generation mix is impacting the price profile Generation oversupply resulted in the average forward price falling 4-5/MWh for FY15 However,…
The market value of capacity will drive gas contracting 28 decisions Gas storage allows patient approach to contracting new gas Contact has commissioned the 9km gas pipeline from Ahuroa gas storage (AGS) to the Taranaki generation…
Te Mihi update 29 Te Mihi is in the final stages of commissioning Ran successfully at 159 MW during its four week reliability test in December 2013 Commissioning tests revealed an issue with the hot well pumps Solutions are…
Retail strategy 30 Improved margins without compromising competitiveness In parallel with the Retail Transformation programme we have completed building an advanced segmentation model which will leverage the data capabilities of…
NZ Power proposal 31 Energy affordability needs to be understood and addressed Opposition parties want to remove the wholesale market to reduce electricity prices BUT Wholesale electricity prices account for less than one third…
Summary 32 Solid Half Year result Improvement in health and safety continues Organisational restructure complete Increased sales volume and stable customer numbers reflects focus on being competitive Generation portfolio now…
33 Supporting material Results for the 6 month period ended 31 December 2013
Non-GAAP profit measures EBITDAF 34 EBITDAF is Contacts earnings before net interest expense, tax, depreciation, amortisation, change in fair value of financial instruments and other significant items Management and directors…
Explanation of reconciliation between EBITDAF and 35 profit for the period The adjustments from EBITDAF to reported profit are as follows: Depreciation and amortisation: Costs decreased by 2m (2%) driven by the sale of the gas…
Non-GAAP profit measures underlying earnings 36 Management and directors monitor underlying earnings as a basis for determining dividends and believe it assists investors to understand the ongoing performance of the business…
Non-GAAP profit measures explanation of reconciliation 37 from reported profit to underlying earnings The adjustments from reported profit to underlying earnings are as follows: The change in fair value of financial instruments…
Operating cashflow after tax (OCAT) and OCAT ratio 38 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…
Financial results summary 39 Key financial information 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % Revenue and other income 1,148 1,213 (65) (5%) (1) Operating expenses (884) (960) 76 8%…
Integrated Energy segment result 40 Integrated Energy Segment 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % Mass market electricity 496 515 (19) (4%) Commercial and industrial electricity 279 258…
Net purchase cost 41 Net Purchase Cost 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % Wholesale electricity revenue 248 298 (50) (17%) Wholesale gas revenue 13 15 (2) (13%) Total wholesale revenue…
Other segment result 42 Other Segment 6 months ended 6 months ended Variance 31 December 2013 31 December 2012 m m m % LPG revenue 61 65 (4) (6%) Meter leases revenue 3 7 (4) (57%) Meter leases revenue - internal 20 17 3 18% Other…
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