Meridian Energy Limited · NZX:MEL

Meridian Energy — H1 FY2013 Earnings Presentation

35 slides from Meridian Energy's earnings presentation, Feb 25, 2013

  1. Slide 1: Interim results for six months ended 31 December 2012

    MERIDIAN ENERGY LIMITED Interim results for six months ended 31 December 2012 RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 25 FEBRUARY 2013

  2. Slide 2: Disclaimer

    MERIDIAN ENERGY LIMITED 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

  3. Slide 3: Highlights

    MERIDIAN ENERGY LIMITED HIGHLIGHTS Highlights  Return to higher profitability with $M EBITDAF and Net Profit - last 3 six month periods p improved inflows followingg record dryy year y 350 6 months to 31 Dec 12 294 6 months to 30 Jun 12 300  Higher operating cash flow, stable 277 6 months to 31 De

  4. Slide 4: Delivering improvement in Meridian's core business

    MERIDIAN ENERGY LIMITED HIGHLIGHTS Delivering improvement in Meridian’s Meridian s core business  $11 per MWh increase in Retail EBITDAF (at $M Financial measures 500 fixed input price) 435 441 6 months to 31 Dec 12 6 months to 31 Dec 11 400  Access to Lake Pukaki’s lower emergency 294 300 277 lev

  5. Slide 5: Staff health and safety remains a critical focus

    MERIDIAN ENERGY LIMITED HEALTH AND SAFETY Staff health and safety remains a critical focus EEA industry  Continuous focus to ensure health and period ended Lost time injury frequency rate average Dec 2012 0.0 safety is a core part of how Meridian operates Jun 2012 0.9  Particular emphasis on embed

  6. Slide 6: Improved inflows after the record dry 2012 winter

    MERIDIAN ENERGY LIMITED WHOLESALE Improved inflows after the record dry 2012 winter  Six month inflows to December 2012 were 14,000 GWh Combined inflows into Meridian's catchments 104% of 80 year historical average 12,000  21% higher than six month inflows to 10,000 December 2011 8,000  Large L i

  7. Slide 7: Higher generation market share with reduced wholesale prices

    MERIDIAN ENERGY LIMITED WHOLESALE Higher generation market share with reduced wholesale prices NZ generation market share (weekly) 45%  Lower wholesale prices in 1H FY13 40%  Significant disruption with multiple HVDC 35% 30% outages successfully managed 25% 3 day  Increasing generation market sha

  8. Slide 8: Strong retail performance in a competitive environment

    MERIDIAN ENERGY LIMITED RETAIL Strong retail performance in a competitive environment GWh Monthly demand 2008 to 2012  Demand below last year driven by weak 3,800 p / corporate/industrial activityy 3,600 3,400  Strong competitive pressures with monthly 3,200 market ICP1 churn above 18% 3,000  Con

  9. Slide 9: Continuing retail financial improvement

    MERIDIAN ENERGY LIMITED RETAIL Continuing retail financial improvement  Retail segment EBITDAF per MWh (at fixed Consumer NZ input price) increased by $11 customer satisfaction rankings (Sep 12) P Powershop h 95%  11% increase in average retail contracted Energy Online 87% EDNZ 85% sales price, mo

  10. Slide 10: Continuing profitable investment in Australia

    MERIDIAN ENERGY LIMITED AUSTRALIA Continuing profitable investment in Australia  Positive regulatory environment for renewable generation development  Climate Change Authority recently recommended retention of Australia’s renewable energy target  Macarthur construction is on track, with revenue f

  11. Slide 11: Financial performance

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  12. Slide 12: EBITDAF impacted by Transpower costs and dry winter insurance

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE EBITDAF impacted by Transpower costs and dry winter insurance Financial Year EBITDAF1  Significant lift in Net Profit after Tax due to ended 30 June 2013 277.1 non cash fair value movements (($173.3m, up from $9.2m) 2012 294.3 182.3  $17m decline in EB

  13. Slide 13: NZ Energy Margin is stable despite lower wholesale prices

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE NZ Energy Margin is stable despite lower wholesale prices $M New Zealand Energy Margin 1,200 Contracted Revenue Acquired Net Spot Exposure Generation 1,000 Costs (Sales to residential, (Cost of (Spot revenue received in excess of business and industrial

  14. Slide 14: Higher acquired generation costs offset contract revenue growth

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE Higher acquired generation costs offset contract revenue growth $M New Zealand Energy Margin movement vs 1H FY12 800 Contracted Revenue Acquired Net Spot Exposure Generation G ti 700 (Sales to residential, Costs (Spot revenue received in business and (Co

  15. Slide 15: Transmission costs have increased significantly

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE Transmission costs have increased significantly Financial Year Transmission Costs  $14m (33%) increase in transmission costs ended 30 June  Disruptive market conditions due to HVDC 2013 54.7 outages 2012 41.0 45.7  27 days where outages were experienc

  16. Slide 16: Operating costs are stable

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE Operating costs are stable  Continuing pressure on customer support Financial Year Employee and Other Operating Costs ended 30 June costs 2013 116 3 116.3  Higher insurance costs 2012 114.1 113.1  Both have been absorbed byy improved p cost 2011 114.9

  17. Slide 17: Large positive NPAT movement due to fair value accounting

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE Large positive NPAT movement due to fair value accounting Large, $M EBITDAF to NPAT reconciliation 300 250 -108 173 +8 200 +6 +0 -31 150 -44 277 +102 -8 100 -29 173 50 88 - EBITDAF Dep & Net Finance Premiums Taxation Underlying Fair Value Gain on Other P

  18. Slide 18: Growing operating cash flow and lower capital investment

    MERIDIAN ENERGY LIMITED FINANCIAL PERFORMANCE Growing operating cash flow and lower capital investment  Focus on the operational efficiency of the Financial Year Net Cash Flow from Operations ended 30 June business reflected in solid operating cash 2013 172.9 fl flow 2012 135.5 186.7  Operating ca

  19. Slide 19: Business Update

    oe, a Business Update an meridian

  20. Slide 20: Global conditions continue to impact industrial demand

    MERIDIAN ENERGY LIMITED BUSINESS UPDATE Global conditions continue to impact industrial demand  Electricity demand growth remains Cumulative Electricity Consumption Growth from 1990 subdued Growth 80% Commercial 70% Industrial (excl RTANZ)  Industrial demand has declined Total consumption (excl RT

  21. Slide 21: New Zealand development pipeline is now fully reshaped

    MERIDIAN ENERGY LIMITED BUSINESS UPDATE New Zealand development pipeline is now fully reshaped  Focus on a smaller, more deployable set of p future options with best in class cost profile Maungaharuru 94MW  Resulting organisation changes are (consents held) complete, l ongoing i costs are signific

  22. Slide 22: In summary

    MERIDIAN ENERGY LIMITED SUMMARY In summary  Challenges from uncertainty on future level of industrial demand and soft economic conditions  Core business improvement is being d li delivered d  Improved inflows after the record dry 2012 y year  Pole 3 commissioning will significantly improve inter

  23. Slide 23: FY13 outlook

    MERIDIAN ENERGY LIMITED SUMMARY FY13 outlook  Catchments are well positioned  Demand D d conditions diti are expected t d to t remain i flat  Assumingg normal inflow levels from now,, a significant improvement on FY12 EBITDAF is expected  Timing of HVDC Pole 3 commissioning and possible further

  24. Slide 24: Additional information

    WZ. Additional information AN meridian

  25. Slide 25: Fair value movements

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Fair value movements Financial Year Fair Value of Financial Derivatives  Meridian uses derivative instruments to ended 30 June manageg commodityy price, p interest rate and 2013 (interim) 102.1 foreign exchange risk 2012 53.3  As forward prices and ra

  26. Slide 26: Funding

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Debt maturity profile Funding Calender Year as at 31 December 2012 2018 457 83 484  Total borrowings at 31 Dec 2012 of + 2017 246 132 $1,626m, up slightly from 31 Dec 2011 2016 157 244  Committed bank facilities of $1,077m 2015 135 206 (excluding proj

  27. Slide 27: Income statement

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Income statement 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Group Energy Margin 434.9 440.5 763.2 Dividend and Other Revenue 13.2 8.9 27.3 Energy Transmission Expense (54.7) (41.0) (86.7) Gross Margin 393.4 408.4 70

  28. Slide 28: Underlying net profit after tax (reconciliation)

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Underlying net profit after tax (reconciliation) 6 Months Ended 6 Months Ended 12 Months Ended Six months ended 30 December ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Group Net Profit After Tax 173.3 9.2 74.6 Net Change in Fair Value of Financial Instruments 0.

  29. Slide 29: Balance sheet

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Balance sheet 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Cash and Cash Equivalents 72.6 173.0 214.4 Accounts Receivable and Prepayments 211.3 267.5 298.1 Other 68.0 25.6 58.3 Current Assets 351.9 466.1 570.8 Propert

  30. Slide 30: Wholesale segment performance

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Wholesale segment performance 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Energy Sales Revenue 858.1 930.1 1,985.0 Energy Related Expenses (497.2) (530.5) (1,306.6) Energy Distribution Expense (8.6) (15.3) (23.4) Who

  31. Slide 31: Retail segment performance

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Retail segment performance 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Energy Sales Revenue 580.4 579.2 1,156.6 Energy Related Expenses (311.9) (340.8) (701.4) Energy Distribution Expense (202.2) (199.0) (380.7) Ener

  32. Slide 32: International segment performance

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION International segment performance 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Energy Sales Revenue 11.6 11.9 23.3 Energy Related Expenses (0.3) (0.3) (0.5) International Energy Margin 11.3 11.6 22.8 Dividend and Othe

  33. Slide 33: Other segment performance

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Other segment performance 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Energy Sales Revenue 9.7 10.3 20.9 Energy Related Expenses (4.6) (5.1) (10.0) Energy Distribution Expense - - - Energy Margin 5.1 5.2 10.9 Dividen

  34. Slide 34: Unallocated segment performance

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Unallocated segment performance 6 Months Ended 6 Months Ended 12 Months Ended ($m) 30-Dec-12 30-Dec-11 30-Jun-12 Energy Margin - - - Dividend and Other Revenue 0.6 1.8 3.6 Energy Related Expenses (Non-core) - - - Gross Margin 0.6 1.8 3.6 Employee Expens

  35. Slide 35: Segment reporting

    MERIDIAN ENERGY LIMITED ADDITIONAL INFORMATION Segment reporting We view the business from the perspective of three reportable segments, being Wholesale, Retail and International Meridian Segment Composition New Zealand Wholesale Retail International Other Segments Unallocated Wholesale Meridian Ret

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