Contact Energy Limited · NZX:CEN
Contact Energy — Non-Deal Roadshow (May 2016)
24 slides from Contact Energy's roadshow presentation, May 26, 2016
Slide 1: 2016 Investor Roadshow
For personal use only 2016 Investor Roadshow Dennis Barnes – Chief Executive Officer Graham Cockroft – Chief Financial Officer International Roadshow Presentation May/June 2016 Contact Energy Limited 1
Slide 2: Disclaimer
Disclaimer For personal use only 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 an
Slide 3: Profiles
Profiles For personal use only Dennis Barnes Chief Executive Officer Dennis Barnes has been Chief Executive Officer of Contact Energy since 2011. Dennis has completed Contact’s NZD2bn investment programme in renewable energy, flexible generation and companywide systems. Over his time at Contact Denn
Slide 4: Why invest in Contact?
Why invest in Contact? For personal use only » Diverse and flexible portfolio requiring minimal investment provides strong free cash flow » Significant investment in systems and capability now in place supported by a clearly articulated customer strategy » 58 years geothermal development and operati
Slide 5: About Contact
About Contact For personal use only $2.9b 166 MW (gross) 1,066 1 Our net assets are of geothermal generation We employ 1,066 New Zealand’s only $2.9 billion (at commissioned May 2014 people from underground gas 31 December 2015) Auckland to Invercargill storage facility 11 556k 5 22% Contact owns an
Slide 6: The New Zealand economy continues to show resilience
The New Zealand economy continues to show resilience For personal use only Leading indicators support near-term annual GDP Gross domestic product 5% 5% growth around 2.5% 4% 3% 3% • Current supportive factors include: 2% • Historic high net migration 1% 1% 0% • Strong tourism growth -1% -1% Quarterl
Slide 7: The New Zealand electricity market
The New Zealand electricity market For personal use only 5 Major generators 1� Hourly 2 wholesale spot market 1 State-owned national transmission grid operator 29 Distribution businesses 26 Electricity brands 2 Million consumers Investor Roadshow Presentation May/June 2016 Contact Energy Limited 7
Slide 8: 80% of New Zealand's electricity consumption came from renewable generation
80% of New Zealand’s 39,000 GWh of electricity consumption in 2015 came from renewable generation For personal use only National demand by sector New Zealand electricity supply (based on GWh generation) 18,000 100% Coal 16,000 Industrial 90% NZ electricity demand (GWh) 14,000 Gas 80% Wind 12,000 70%
Slide 9: Industry dominated by vertically integrated companies
Industry dominated by vertically integrated companies with the five largest companies now all publicly listed For personal use only Retail electricity market share by customer number Generation market share by volume 8% 21% 4%5% 13% 23% 17% 13% 26% 18% 19% 33% Investor Roadshow Presentation May/June
Slide 10: Contact connects renewable resources to customers
Contact connects renewable resources to customers For personal use only Portfolio is well hedged with options around thermal operation » Renewable portfolio … FY15 cost of FY15 electricity 10 energy $35/MWh netback $93/MWh • Hydro and geothermal long-life renewable assets CCGT Losses and CfDs • Fast
Slide 11: Key market and regulatory update
Key market and regulatory update For personal use only » Customer churn Electricity churn • Retail competition expected to continue, despite high costs of churn 25% • Contact starting to recover customer losses 20% • Distributed generation not a major part of NZ market Annualisied churn 15% » Transm
Slide 12: The Contact story
The Contact story For personal use only Investor Roadshow Presentation May/June 2016 Contact Energy Limited 12
Slide 13: Where we operate
Where we operate For personal use only Investor Roadshow Presentation May/June 2016 Contact Energy Limited 13
Slide 14: For the first time in years Contact doesn't have a majority shareholder
For the first time in 20 years Contact doesn’t have a majority shareholder For personal use only Three new directors add valuable skills and experience, joining 1996 1999 2004 2015 two existing directors on the Board State owned Contact privatised Origin Energy Origin Energy enterprise - Edison Miss
Slide 15: Contact has been executing on a change programme
Contact has been executing on a change programme over a number of years For personal use only Supporting our business Finding, developing and Understanding, winning and generating the energy the keeping customers Ownership and capital market requires Health and safety structure » Cost of energy impr
Slide 16: Contact is well setup to deliver stable cash flow
Contact is well setup to deliver stable cash flow For personal use only Second largest gas and electricity retailer in New Zealand Flexible portfolio allows management of variable operating conditions » Second largest electricity retailer in New Zealand based on » Generation spread across hydro, geo
Slide 17: Positioning the customer business to win is the current strategic focus
Positioning the customer business to win in an intensely competitive environment is the current strategic focus For personal use only Technology and customer expectations require acceleration of our plans and transformation Core activities Insight Products Sales Service Cloud and partner Customer 3.
Slide 18: Improvements are being sought across all customer metrics
Improvements are being sought across all customer metrics For personal use only Net gain in customers over past quarter, debt collection indicators continue improvement 1H15 2H15 1H16 Jan–Mar 16 Net promoter score n/a -2% -4% -3% Change in customer numbers -7,300 -1,600 -9,800 +1,500 Average time to
Slide 19: Why invest in Contact?
Why invest in Contact? For personal use only » Diverse and flexible portfolio requiring minimal investment provides strong free cash flow » Significant investment in systems and capability now in place supported by a clearly articulated customer strategy » 58 years geothermal development and operati
Slide 20: Supporting material
For personal use only Supporting material
Slide 21: Earnings and cash flow
Earnings and cash flow For personal use only Group EBITDAF and NPAT Group operating and net investing cash flow 700 600 600 500 500 400 400 $m 300 300 $m 200 200 100 0 100 FY10 FY11 FY12 FY13 FY14 FY15 1H15 1H16 -100 0 -200 FY10 FY11 FY12 FY13 FY14 FY15 1H15 1H16 NPAT EBITDAF Investing cash outflow
Slide 22: Balance sheet
Balance sheet For personal use only Total assets and liabilities Shareholders' equity and gearing 7.0 4.0 40% 3.5 35% net debt/(net debt + equity) 6.0 3.0 30% 5.0 2.5 25% 4.0 $ bn $ bn 2.0 20% 3.0 1.5 15% 2.0 1.0 10% 1.0 0.5 5% 0.0 0.0 0% FY10 FY11 FY12 FY13 FY14 FY15 1H15 1H16 FY10 FY11 FY12 FY13 F
Slide 23: April 2016 operating statistics
April 2016 operating statistics Data Measure The month ended The month ended The month ended Ten months ended April Ten months ended April For personal use only April 2016 April 2015 March 2016 2016 2015 Netback Mass market electricity sales GWh 284 296 279 3,111 3,161 Commercial & industrial electr
Slide 24: Reference material and contact details
Reference material and contact details For personal use only Reference material » Contact website https://www.contact.co.nz/corporate » Electricity Authority website www.ea.govt.nz » Sector overview https://www.ea.govt.nz/about-us/media-and-publications/electricity-nz/ » Industry news www.energynews