Meridian Energy Limited · NZX:MEL
Meridian Energy — FY2015 Earnings Presentation
29 slides from Meridian Energy's earnings presentation, Sep 18, 2015
Slide 1: Annual results roadshow presentation
For personal use only Annual results roadshow presentation 18 September 2015 Meridian Energy will be giving a presentation from today at a series of investor meetings during September 2015. ENDS Mark Binns Chief Executive Meridian Energy Limited For investor relations queries, please contact: For me
Slide 2: Better energy future
Better energy future For personal use only MERIDIAN ENERGY LIMITED 2015 Annual results roadshow presentation
Slide 3: Disclaimer
SEPTEMBER 2015 Disclaimer For personal use only The information in this presentation was prepared by Meridian Energy with due care and attention. However, the information is supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, complete
Slide 4: Meridian and the New Zealand market
Meridian and the New Zealand market For personal use only MERIDIAN ENERGY LIMITED 2015 Annual results roadshow presentation
Slide 5: About Meridian
SEPTEMBER 2015 About Meridian For personal use only Vertically integrated renewable generator, retailing electricity to over 330,000 customers in New Zealand and Australia New Zealand’s largest generator from purely renewable sources Seven hydro stations Flexible plant with New Zealand’s largest sto
Slide 6: The New Zealand electricity market
SEPTEMBER 2015 The New Zealand electricity market For personal use only 5 Major generators 1 Transmission grid operator 29 Distribution businesses 26 Electricity retail brands 2 Million consumers MERIDIAN ENERGY LIMITED 2015 Annual results roadshow presentation 5
Slide 7: 2015 highlights
2015 highlights For personal use only MERIDIAN ENERGY LIMITED 2015 Annual results roadshow presentation
Slide 8: Profitability and yield
SEPTEMBER 2015 Profitability and yield For personal use only Great financial result Free cash Underlying EBITDAF NPAT flow1 NPAT $398m $618m $247m $209m +6% on FY2014, +6% on FY2014, +7% on FY2014, +7% on FY2014, +8% on PFI2 +5% on PFI +17% on PFI +17% on PFI And delivering to investors Ordinary Speci
Slide 9: The last year
SEPTEMBER 2015 The last year For personal use only More rational political views on the sector Transmission pricing progressed NZAS immediate future is clearer NZ demand has grown Announcement of thermal plant retirement Review to the Renewable Energy Target completed Powershop Australia gaining mom
Slide 10: Operational highlights
SEPTEMBER 2015 Operational highlights For personal use only A year of average inflows The now familiar late summer dry spell was well managed Rapid resolution of Manapōuri transformer issues Wind investment has driven record level of NZ generation (Tekapo adjusted) Retail sales volume growth with a s
Slide 11: Health and safety
SEPTEMBER 2015 EMPLOYEE TRIFR1 Health and safety 16 INCIDENTS PER MILLION HOURS For personal use only Preparing for changes to health and 14 12 safety legislation later this year 10 That work has re-evaluated high areas 8 6 of risk and the processes to manage 4 those risks 2 Particular emphasis on m
Slide 12: The New Zealand market
SEPTEMBER 2015 The New Zealand market NATIONAL DEMAND GWh 45,000 For personal use only year on Positive demand growth returned in -0.5% -1.9% -0.6% +2.8% year change 40,000 the last year, but caution needed Provincial led, with some weather 35,000 driven growth but genuine underlying 30,000 increase
Slide 13: The Australian market
SEPTEMBER 2015 NEM ELECTRICITY CONSUMPTION The Australian market TWh 275 For personal use only Declining demand at the market level 270 -2.3% RET1 agreed but mixed political 265 -2.6% 0.0% sentiment on renewables 260 A lot of permitted wind options, but 255 nearly all are short dated 250 Appetite fo
Slide 14: Tiwai Point smelter contract
SEPTEMBER 2015 Tiwai Point smelter contract For personal use only Contract terms (other than price) similar to those previously agreed Price on 400MW unchanged from 2013 variation, higher price on 172MW from 1 January 2017 Window to give 12 months notice to reduce to 400MW extended to 1 April 2016,
Slide 15: Transmission pricing
SEPTEMBER 2015 Transmission pricing For personal use only June 2015 TPM options paper is a considerable evolution from 2012 Beneficiaries pay approach is retained, with residual costs allocated to load Goes a long way to solving the inequities of HVDC cost allocation and SI consumers paying for NI in
Slide 16: Meridian Retail
SEPTEMBER 2015 Meridian Retail For personal use only Segment EBITDAF up +$3m (+17%) adjusted for the sale of Arc Innovations A year of operational improvement: Lift in customer retention rate $3m less bad debts written off with 44% less disconnections 70% reduction in vacant site consumption 20% decr
Slide 17: Powershop New Zealand
SEPTEMBER 2015 Powershop New Zealand For personal use only Customer satisfaction above 90% for 7 years in a row Industrialisation of processes for ease of use at scale Which supports growth in Australia and potential new market opportunities Maintaining market share on low marketing spend Lifting lo
Slide 18: Powershop Australia
SEPTEMBER 2015 Powershop Australia For personal use only Viable business with strong sources of competitive advantage: Customer control Renewable profile Fair pricing Differentiated service Promotional spend needed to support customer acquisition POWERSHOP AUSTRALIA CUSTOMERS FRMP Brand position has a
Slide 19: Concluding remarks
SEPTEMBER 2015 Concluding remarks Over the next year, NZ focus will be on: For personal use only Positioning for upcoming thermal contraction Lifting retail profitability Improving quality and cost effectiveness of customer experience Achieving more from existing assets Operating and capital cost mana
Slide 20: 2015 financial performance
2015 financial performance For personal use only MERIDIAN ENERGY LIMITED 2015 Annual results roadshow presentation
Slide 21: Financial performance
SEPTEMBER 2015 Financial performance For personal use only FINANCIAL PERFORMANCE AGAINST PRIOR YEAR $M 1,200 12 months to 30 June 2015 12 months to 30 June 2014 1,000 954 924 800 618 585 600 440 433 467 400 316 334 238 237 247 230 209 195 200 147 123 129 0 Energy Trans- Operating EBITDAF NPAT Underl
Slide 22: Dividends declared
SEPTEMBER 2015 DIVIDENDS DECLARED Dividends CPS 20 Ordinary dividends Special dividends For personal use only Ordinary final dividend of 8.08 cps, 15 5.35 55% imputed 2.00 10 83% FCF Brings full year FY2015 ordinary 75% FCF payout 12.88 payout dividend to 12.88 cps, representing 5 11.01 83% of free c
Slide 23: Energy margin and EBITDAF
Results for the year ended 30 June 2011 include the Tekapo SEPTEMBER 2015 power stations, which were sold to Genesis Energy in June 2011 ENERGY MARGIN1 Earnings $M 1,200 +3% For personal use only ‘Like for like’ EBITDAF (excluding 1,000 insurance proceeds and IPO costs) 800 increase of $20m (3%) in
Slide 24: Operating costs and capital asset additions
Results for the year ended 30 June 2011 include the Tekapo SEPTEMBER 2015 power stations, which were sold to Genesis Energy in June 2011 OPERATING COSTS Costs $M Retail segment Wholesale Corporate/Elims +3% 300 International IPO Costs For personal use only Adjusting for IPO costs, Operating costs 25
Slide 25: Net profit after tax
Results for the year ended 30 June 2011 include the Tekapo SEPTEMBER 2015 power stations, which were sold to Genesis Energy in June 2011 NET PROFIT AFTER TAX Below EBITDAF $M 350 +7% For personal use only Additional depreciation +$19m (+9%) 300 250 from the Mill Creek and Mt Mercer 200 Net finance co
Slide 26: Latest operating information
Latest operating information For personal use only MERIDIAN ENERGY LIMITED 2015 Annual results roadshow presentation
Slide 27: Market data
SEPTEMBER 2015 NATIONAL DEMAND Market data GWh 3,800 For personal use only Demand in the 2015 calendar year has 3,600 3,400 slowed to be 2.0% higher than the same eight month period last year 3,200 3,000 Switching remains high with the 12 2,800 month average switching rate for all 2,600 retailers at
Slide 28: New Zealand customer numbers
SEPTEMBER 2015 NEW ZEALAND CUSTOMER NUMBERS New Zealand retail ICP (000) Meridian North Island Meridian South Island -0.3% 350 Powershop For personal use only 287 Small decline in ICP numbers since June 300 48 272 277 277 275 250 51 55 56 56 2015, reflecting aggressive residential 200 sales activity
Slide 29: Hydrology
SEPTEMBER 2015 MERIDIAN'S COMBINED CATCHMENT INFLOWS Hydrology GWh 2,500 For personal use only July and August 2015 monthly inflows 2,000 together were 117% of average 1,500 Storage at the end of August 2015 was 1,000 134% of historical average 500 To date this financial year Meridian’s 0 New Zealand