Contact Energy Limited · NZX:CEN
Contact Energy — Debt Investor Presentation (March 2009)
40 slides from Contact Energy's debt investor presentation, Mar 3, 2009
Slide 1: ASX cover note: Contact Energy $300 million bond issue presentation
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 3 March 2009 From Bill Hundy Pages 40 Subject CONTACT ENERGY $300 MILLION BOND ISSUE PRESENTATION Attached herewith is a copy of a presentation released to the NZX by Contact Energy today. Origin En
Slide 2: Contact Energy $300 million Bond Issue Road Show Presentation
For personal use only Contact Energy $300 million Bond Issue Road Show Presentation March 2009
Slide 3: 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 4: Today's discussion
Today’s discussion For personal use only 1. Overview of Contact Energy 2. Overview of Interim Financial Results 3. Short to Medium Term Context 4. Growth and Strategic Initiatives 5. Strengthening Financial Position 6. Bond Issue Structure and Terms © Contact Energy Limited March 2009 Contact Energy
Slide 5: Overview of Contact Energy
For personal use only Overview of Contact Energy References to Contact include Contact Energy Limited and its subsidiaries. Contact Energy is the issuer of the Bonds and the sole obligor in respect of the Bonds. The Bonds are not guaranteed by any of Contact Energy’s subsidiaries. © Contact Energy L
Slide 6: Contact is often referred to as a diversified, integrated generator/retailer
Contact is often referred to as a….. For personal use only • Diversified • Integrated • Generator/Retailer © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 5
Slide 7: Diversified (fuels, products, geography), Integrated (generation/retail)
Diversified (fuels, products, geography), Integrated (generation/retail) For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 6
Slide 8: The value of Contact's generation diversity has been clearly demonstrated
The value of Contact’s generation diversity has been clearly demonstrated For personal use only • Reasonably predicable earnings – Despite significant volatility in wholesale electricity prices © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 7
Slide 9: The model has resulted in market outperformance
The model has resulted in market outperformance For personal use only • Annual average TSR of 13% since listing • Dividends have continued to grow – consistently outperformed the NZX50 2005 was a nine month period and has been annualised © Contact Energy Limited March 2009 Contact Energy $300 millio
Slide 10: Short to Medium Term Context
For personal use only Short to Medium Term Context © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 9
Slide 11: August-September 2008 hydrology conditions at opposite ends of the scale
August-September 2008, hydrology conditions in the North and South Island were at opposite ends of the scale For personal use only South Island North Island Taupo inflows were at their highest ever Actual Average Average Actual Clutha inflows were near their lowest ever April May June July Aug Sept
Slide 12: Transmission constraints affecting half-year performance
Overview of transmission Transmission constraints constraints affecting half-year performance For personal use only • If two HVDC cables (poles) were in service, more power would have been able to move from the north to the south in August and September – Pole 1 was unexpectedly removed from service
Slide 13: No significant investment in transmission for decades
No significant investment in transmission for decades… For personal use only Source: Transpower © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 12
Slide 14: Despite significant increases in demand
…despite significant increases in demand For personal use only Source: Transpower © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 13
Slide 15: Strong South Island demand growth, majority of new generation North Island
Strong South Island demand growth – majority of new generation North Island For personal use only Sources: MED Data files (2008 and 1998) for generation statistics and total retail volume SCADA data (an industry reference database) for split between North and South Island retail volume © Contact Ene
Slide 16: The South is increasingly dependent on the Cook Strait cable
The South is increasingly dependent on the Cook Strait cable For personal use only 98 99 00 01 02 03 04 05 06 07 08 © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 15
Slide 17: Wholesale electricity prices
Wholesale electricity prices For personal use only South Island North Island © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 16
Slide 18: Absence of two HVDC poles results in a minor supply risk for the South Island
The absence of two HVDC poles results in a minor supply risk for the South Island (in the lowest 20% of inflow sequences during mid-winter) For personal use only In the high inflow sequences during summer and into autumn there is a reasonable probability of South/North constraint About 70% of histor
Slide 19: The recent conditions in historic context
The recent conditions in historic context For personal use only January and February 09 starting storage were at the top 15% of recorded storage April to Sept 2008 were in the bottom 5% of recorded storage for that time of the year © Contact Energy Limited March 2009 Contact Energy $300 million Bond
Slide 20: Implications for Contact's earnings profile
Implications for Contact’s earnings profile For personal use only Two poles One pole © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 19
Slide 21: South Island tariff changes help mitigate the downside risk
South Island tariff changes help mitigate the downside risk For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 20
Slide 22: Other retailers are also adjusting tariffs
Not unsurprisingly, other retailers are also adjusting tariffs For personal use only Christchurch prices Dunedin prices © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 21
Slide 23: South Island tariff changes mitigate the downside risk
South Island tariff changes mitigate the downside risk For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 22
Slide 24: Stratford peakers and gas storage will provide upside potential
Stratford peakers and gas storage will provide upside potential For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 23
Slide 25: Return of the second pole will narrow the distribution but provide upside
The return of the second pole will narrow the distribution but provide continued access to upside For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 24
Slide 26: Growth and Strategic Initiatives
For personal use only Growth and Strategic Initiatives © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 25
Slide 27: Outlook for trading conditions
Outlook for trading conditions For personal use only • Transmission constraints until pole 1 is replaced – Periods when the islands operate as separate markets – Contact has implemented strategies to help mitigate future transmission risks • Demand growth will continue – But at a slower rate in the
Slide 28: Energy and carbon policies
Energy and carbon policies For personal use only • The Government is reviewing the Emissions Trading Scheme – A carbon price signal is highly likely – But its introduction may be delayed from 1/1/10 • The Government has repealed the moratorium on thermal generation – However, base-load gas-fired gen
Slide 29: Long-term energy prices
Long-term energy prices For personal use only • Gas supply/price uncertainty and carbon pricing continues to support Contact’s strategy – Developing and executing geothermal options which are cost effective under any market conditions Based on current exchange rates © Contact Energy Limited March 20
Slide 30: Strategic initiatives are progressing well
Strategic initiatives are progressing well For personal use only • Under construction – Tauhara geothermal (phase 1, 23 MW): $100m – Stratford gas-fired fast-start peakers (2x100 MW): $250m – Ahuroa gas storage: Gas injection underway: $250m – All three projects expected to be operational in 2010 •
Slide 31: Strengthening Financial Position
For personal use only Strengthening Financial Position © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 30
Slide 32: Contact is committed to maintaining a strong financial position
Contact is committed to maintaining a strong financial position For personal use only • Net debt as at 31 December 2008 was $1,031m – NZD equivalent of borrowings, net of FX hedging and short- term deposits – 26% higher than as at 31 December 2007 ($821m) – Net debt to net debt plus equity was 26% •
Slide 33: Bond issue increases funding diversity
Bond issue increases funding diversity For personal use only Assumes a $300 million bond issue © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 32
Slide 34: Current Funding Maturity Profile
Current Funding Maturity Profile For personal use only • A maturity profile to align with long term nature of investments is important • Current weighted average maturity duration is 4.1 years © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 33
Slide 35: Bond Issue Structure and Terms
For personal use only Bond Issue Structure and Terms © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 34
Slide 36: Bond Issue Summary Terms
Bond Issue Summary Terms For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 35
Slide 37: Bond Issue Summary Terms
Bond Issue Summary Terms For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 36
Slide 38: Timetable
Timetable For personal use only © Contact Energy Limited March 2009 Contact Energy $300 million Bond Issue 37
Slide 39: Important Information
Important Information For personal use only This document does not constitute a recommendation by First NZ Capital Securities Limited (the “Arranger"), ANZ, part of ANZ National Bank Limited, ABN AMRO New Zealand Limited, First NZ Capital Securities Limited and Forsyth Barr Limited (the “Joint Lead
Slide 40: For personal use only
For personal use only © Contact Energy Limited © Contact Energy Limited
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