Contact Energy Limited · NZX:CEN
Contact Energy — Non-Deal Roadshow (June 2016)
24 slides from Contact Energy's roadshow presentation, June 2016
Slide 1: 2016 Investor Roadshow
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 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: Profiles
Profiles 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 Dennis has provided indust
Slide 4: Why invest in Contact?
Why invest in Contact? » 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 operations experience » Gas s
Slide 5: About Contact
About Contact $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 and operates Contact has
Slide 6: The New Zealand economy continues to show resilience
The New Zealand economy continues to show resilience 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% Quarterly growth Annual growth
Slide 7: The New Zealand electricity market
The New Zealand electricity market 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: NZ electricity demand (GWh)
80% of New Zealand’s 39,000 GWh of electricity consumption in 2015 came from renewable generation 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% Residential 60% Geoth
Slide 9: Industry dominated by vertically integrated companies, all five largest now publicly listed
Industry dominated by vertically integrated companies with the five largest companies now all publicly listed 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 2016 Contact Energy L
Slide 10: Contact connects renewable resources to customers
Contact connects renewable resources to customers 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-start gas peakers sup
Slide 11: Key market and regulatory update
Key market and regulatory update » 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% » Transmission and distributio
Slide 12: The Contact story
The Contact story Investor Roadshow Presentation May/June 2016 Contact Energy Limited 12
Slide 13: Where we operate
Where we operate Investor Roadshow Presentation May/June 2016 Contact Energy Limited 13
Slide 14: For the first time in 20 years Contact doesn't have a majority shareholder
For the first time in 20 years Contact doesn’t have a majority shareholder 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 Mission acquired Edison se
Slide 15: Contact has been executing on a change programme over a number of years
Contact has been executing on a change programme over a number of years 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 improved from » SAP go-liv
Slide 16: Contact is well setup to deliver stable cash flow
Contact is well setup to deliver stable cash flow 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, geothermal and thermal fu
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 Technology and customer expectations require acceleration of our plans and transformation Core activities Insight Products Sales Service Cloud and partner Customer 3.0 Energy as a based Se
Slide 18: Improvements are being sought across all customer metrics
Improvements are being sought across all customer metrics 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 answer 220 268 222 11
Slide 19: Why invest in Contact?
Why invest in Contact? » 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 operations experience » Gas s
Slide 20: Supporting material
Supporting material
Slide 21: Earnings and cash flow
Earnings and cash flow 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 Operating cash inflow
Slide 22: Balance sheet
Balance sheet 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 FY14 FY15 1H15 1H16 Tot
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 April 2016 April 2015 March 2016 2016 2015 Netback Mass market electricity sales GWh 284 296 279 3,111 3,161 Commercial & industrial electricity sales GWh 361 37
Slide 24: Reference material and contact details
Reference material and contact details 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.co.nz » Wholesale spo