Infratil Limited · NZX:IFT
Infratil — Trustpower — H1 FY2020 Earnings Presentation
38 slides from Infratil's earnings presentation, Nov 7, 2019
Slide 1: Investor Presentation – H1-FY20
Investor Presentation – H1-FY20| 7 November 2019
Slide 2: Investor Presentation – H1-FY20 | 7 November 2019
2. Investor Presentation – H1-FY20 | 7 November 2019
Slide 3: Contents
Contents • FY-20 first half performance • Market overview • Generation • Retail • Outlook • Additional information 3. Investor Presentation – H1-FY20 | 7 November 2019
Slide 4: Investor Presentation – H1-FY20 | 7 November 2019
4. Investor Presentation – H1-FY20 | 7 November 2019
Slide 5: Investor Presentation – H1-FY20 | 7 November 2019
5. Investor Presentation – H1-FY20 | 7 November 2019
Slide 6: Investor Presentation – H1-FY20 | 7 November 2019
6. Investor Presentation – H1-FY20 | 7 November 2019
Slide 7: Investor Presentation – H1-FY20 | 7 November 2019
Investor Presentation – H1-FY20 | 7 November 2019
Slide 8: Market overview
Market overview The electricity and telecommunications industries are both dynamic and changing rapidly. Market dynamic Trustpower’s position Hydro storage will help manage peaks caused by increased intermittent Forecast for a material increase in generation. renewable generation as New Trustpower h
Slide 9: Investor Presentation – H1-FY20 | 7 November 2019
9. Investor Presentation – H1-FY20 | 7 November 2019
Slide 10: Generation volumes – 6 months
Generation volumes – 6 months Generation volumes significantly impacted • Highbank out for three months (43 GWh by hydrology. reduction). Generation volumes (incl KCE) • NI inflows down 23% against H1 FY-19 (down 11% 140 on 10-year averages). 120 • Volumes down 178 GWh (15%) total vs FY-19 100 (in l
Slide 11: NZ wholesale prices above average
NZ wholesale prices above average Average wholesale electricity prices Apr - Sept 160 Highbank Outage 140 120 100 Wholesale prices in $ / MWh 80 FY-20 materially 60 above same period in FY-19. 40 20 0 Apr May Jun Jul Aug Sep FY-18 FY-19 11. Investor Presentation – H1-FY20 | 7 November 2019
Slide 12: Trustpower storage
Trustpower storage Trustpower controlled storage 150 140 130 Trustpower storage 120 has recovered well, Storage (GWh) 110 creating a strong 100 position to capitalise on above average 90 wholesale prices. 80 70 60 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Total Storage Mean Storage 12.
Slide 13: Highbank Outage
Highbank Outage Trustpower’s diverse Generation portfolio highlights resiliency during unplanned outage. • Damage to the guide bearing of Trustpower’s fourth largest machine, located at Highbank Power Station, resulted in a three-month forced outage. • This was the worst single machine point of fail
Slide 14: Highbank Outage
Highbank Outage • The outage represented a 43GWh loss during this time which while significant, represented only ~2% of total annual Trustpower output. • There were no health and safety incidents during the 4,750 hour refurbishment period. Bearing Housing put in place ready for alignment 14. Investo
Slide 15: Building capability for the future
Building capability for the future Asset enhancements are a key strategic priority and help to fill the expected long-term NZ energy gap. Trustpower is implementing a structured generation enhancement programme with a dedicated team focused on increasing Trustpower’s long-run potential value from th
Slide 16: 16. Investor Presentation – H1-FY20 | 7 November 2019
16. Investor Presentation – H1-FY20 | 7 November 2019
Slide 17: Bundled strategy continues to add value
Bundled strategy continues to add value Current Connections Electricity Only vs Multi-Product Churn 25% Electricity 266,000 Gas 40,000 20% Telco 100,000* 15% 2+ product customers 111,000 *NOTE: 100,000 telco customers with ~157,000 connections 10% 5% Consistently >80% of all new customer 0% acquisit
Slide 18: Simple digital solutions delivering great outcomes
Simple digital solutions delivering great outcomes Cancellations Trustpower vs. Industry 25.0% We beat the industry when it comes to Fibre 20.0% cancellations by a wide margin. Our Track and Trace, a customer centred 15.0% release on the Trustpower App, helps our customers 10.0% navigate the complex
Slide 19: Simple digital solutions delivering great outcomes
Simple digital solutions delivering great outcomes Digital Billing Growth 60% 56% 50% 47% 39% 41% Digital billing has mitigated 5.9 million posted bills 40% since FY-17. 30% Good for the planet and delivering significant cost 20% efficiencies. 10% 0% FY 2017 FY 2018 FY 2019 YTD FY 2020 19. Investor
Slide 20: Customer choice driving significant digital engagement
Customer choice driving significant digital engagement 0 20 40 60 80 100 • Over 1.1 million (72%) of the customer Phone contacts this year have been handled via Email digital channels, with satisfaction ratings on 2020 YTD par with those enjoyed by our staffed Webchat channels. Virtual Agent • The T
Slide 21: Trustpower is one of the fastest growing Telco's in New Zealand
Trustpower is one of the fastest growing Telco's in New Zealand • Over the last five years Trustpower has lifted its telco customer numbers by over 65,000 100,000 Telco (13,000 p/a). • Trustpower is tied fourth equal for broadband Customers market share and has been one of the fastest growing Telco'
Slide 22: Purposeful investment into our ISP network
Purposeful investment into our ISP network We are continuing to strengthen our ISP network to deliver a premium service to customers. Some of the work we have undertaken over the last six months includes: • Forming Strategic partnership with Hawaiki. • Upgraded Akamai caches to 100G to support addit
Slide 23: Additional network capacity improves customer experience
Additional network capacity improves customer experience The additional capacity to support the anticipated load on the network during the Rugby World Cup was successful - providing a fast, high quality internet and customer experience during peak traffic times. We now have a platform that we can le
Slide 24: Trustpower ISP outperforms
Trustpower ISP outperforms Trustpower’s ISP has ranked 1st on the Netflix speed index for 19 of the last 22 months, including the last eight consecutive months. Netflix ISP Leaderboard scores 4.4 4.3 Trustpower’s continued 4.2 investment in ISP 4.1 is evident in our performance, and provides Mbps 4.
Slide 25: AIMing high - Leveraging our ISP network to benefit the community
AIMing high - Leveraging our ISP network to benefit the community • We continue to build partnerships in the communities we operate in to achieve shared value. • In September we provided streaming services for the Anchor Aims Games production company, enabling the games to be streamed internationall
Slide 26: Growth ambitions in retail continue
Growth ambitions in retail continue • Trustpower launched Wireless Broadband offerings in market in August. • Mobile offering coming soon. • Our smart metering deployment programme continues with >30,000 meters deployed so far. 26. Investor Presentation – H1-FY20 | 7 November 2019
Slide 27: Investor Presentation – H1-FY20 | 7 November 2019
Investor Presentation – H1-FY20 | 7 November 2019
Slide 28: Financial performance comparison
Financial performance comparison • The first half of FY-20 was impacted by lower generation volumes and higher generation operating costs, reflective of plant outages and materially lower inflows. • Continued investment into capability and customer acquisition and service also weighed on the result.
Slide 29: Retail performance comparison
Retail performance comparison Accounting adjustments Timing of transfer Continued price increases investment NOTE: *EBITDAF is a non-GAAP measure. Please refer to slide 37 for more details. 29. Investor Presentation – H1-FY20 | 7 November 2019
Slide 30: Debt capital management & dividend
Debt capital management & dividend Funding sources ($M) Facility utilisation and maturity $135m 400 $200m 300 $M 200 $436m 100 - 0-1 1-3 3-5 5-7 7+ Bank Senior Bonds Unutilised Bank Bank Senior Bonds Unutilised Bank Interim dividend declared of 17cps – fully imputed. All ordinary dividends are expec
Slide 31: Outlook
Outlook Trustpower is well positioned for the Trustpower has previously indicated it expects FY-20 second half of FY-20 due to: EBITDAF* guidance to be at the bottom end of its • Current levels of water storage. guidance range ($205m - $225m). Trustpower confirms • Forecast firm prices. that it expe
Slide 32: Additional information
32. Investor Presentation – H1-FY20 | 7 November 2019
Slide 33: Trustpower key facts
Trustpower key facts • Tauranga based national electricity generator and retailer of energy and telco. • History dates back to 1915 as the Tauranga Electric Power Board. • Market capitalisation circa ~$2.6B • Key Shareholders Infratil (51%) and TECT (26.8%). • NZ generation capacity (hydro) of 487 M
Slide 34: Trustpower adds shareholder value
Trustpower adds shareholder value 34. Investor Presentation – H1-FY20 | 7 November 2019
Slide 35: Netback
Netback FPVV Netback 160 140 120 100 $/MWh 80 60 40 20 - 2015 2016 2017 2018 2019 Total Netback Excluding CTA ASX benchmark 35. Investor Presentation – H1-FY20 | 7 November 2019
Slide 36: Value-led bundles provide superior value
Value-led bundles provide superior value Customer persistence Value-led retail bundles demonstrate higher customer value than non-bundled, or price-led 100% 90% 80% campaigns: • Better customer retention. Customers remaining 70% 60% • Higher average electricity volumes. 50% • Higher-value telco plan
Slide 37: Non-GAAP measures
Non-GAAP measures • Underlying Earnings is a non GAAP (Generally Accepted Accounting Principles) financial measure. Trustpower believes that this measure is an important additional financial measure to disclose as it excludes movements in the fair value of financial instruments which can be volatile
Slide 38: Disclaimer
Disclaimer While all reasonable care has been taken in the preparation of this presentation, Trustpower Limited and its related entities, directors, officers and employees (collectively "Trustpower") do not accept, and expressly disclaim, any liability whatsoever (including for negligence) for any l