Contact Energy Limited · NZX:CEN
Contact Energy — Debt Investor Presentation (February 2019)
28 slides from Contact Energy's debt investor presentation, February 2019
Slide 1: Retail Bond Offer Investor Presentation
Retail Bond Offer Investor Presentation Dorian Devers, Chief Financial Officer Louise Tong, Head of Capital Markets & Tax Retail Bond Offer February 2019 Investor presentation Contact Energy Limited Joint Lead Managers February 2019
Slide 2: Important Notice
Important Notice The offer of debt securities by Contact Energy Limited (Contact) is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA). The offer contained in this presentation is an offer of bonds (Bonds) that have identical rights, priv
Slide 3: Disclaimer
Disclaimer This document does not constitute a recommendation by the Issuer, ANZ Bank New Zealand Limited, Bank of New Zealand and Deutsche Craigs Limited (together, Joint Lead Managers), The New Zealand Guardian Trust Company Limited (Supervisor), nor any of their respective directors, officers, em
Slide 4: Speaker Profiles
Speaker Profiles Dorian Devers Chief Financial Officer Dorian joined Contact in December 2018 as Contact’s Chief Financial Officer. Dorian has led successful transformations in both the UK and South Africa. He has successfully delivered a number of acquisitions including transactions in the Australi
Slide 5: Agenda
Agenda 1 Electricity market overview 2 Contact overview Dorian Devers 3 Business performance update 4 Capital structure and funding Louise Tong 5 Bond offer information Joint Lead Managers Retail Bond Offer February 2019 Investor presentation Contact Energy Limited 5
Slide 6: Electricity market overview
Electricity market overview Dorian Devers CFO Retail Bond Offer February 2019 Investor presentation Contact Energy Limited
Slide 7: New Zealand electricity market
New Zealand electricity market Hourly State-owned 5 Major generators 1/2 wholesale 1 national 29 Distribution businesses 31 Retailers 2.1 Million consumers spot transmission (36 brands) market grid operator Retail Bond Offer February 2019 Investor presentation Contact Energy Limited 7
Slide 8: The five largest energy companies are all vertically integrated and publicly listed
The five largest energy companies are all vertically integrated and publicly listed Generation market share by volume Retail electricity market share by customer connections Other Other Todd 8% 8% Contact Todd Contact Trustpower 2% 22% 4% 19% 4% TrustPower 13% Mercury 16% 16% Genesis 24% Genesis 18%
Slide 9: New Zealand electricity supply is over 80% renewable
New Zealand electricity supply is over 80% renewable Electricity generation mix New Zealand electricity supply Source: MBIE quartely electricity generation and consumption survey 12 months ending 30 September 2018 100% Other Other 1% Gas 90% Coal 80% Wind Gas 70% 14% Geothermal Coal 3% 60% 50% Wind
Slide 10: Industry risks are balanced with potential for growth, strong capital discipline to continue
Industry risks are balanced with potential for growth, strong capital discipline to continue Long term prices impacted by the fundamental supply and demand balance » Estimated population growth » The Tiwai fourth potline provides » Consented and scalable » New products and services of over 200k by 2
Slide 11: Contact overview
Contact overview Retail Bond Offer February 2019 Investor presentation Contact Energy Limited
Slide 12: Snapshot of Contact
Snapshot of Contact We are an integrated electricity, gas and LPG business 903 475K 64K 3.5K 0 5 EMPLOYEES CUSTOMERS SHAREHOLDERS BONDHOLDERS TRIFR GEOTHERMAL SAFETY STATIONS INJURIES $ 4 2+1 8.6TWh 7.9TWh 2.8b 82% THERMAL HYDRO GENERATION CONTRACTED NET RENEWABLE STATIONS STATIONS / PRODUCED & ELEC
Slide 13: Our strategy
Our strategy Optimise the Customer and Wholesale businesses to deliver strong cash flows CUSTOMER WHOLESALE A service and value focused retailer, An innovative, safe and efficient generator connecting customers and communities to working with business customers, partners and smart solutions that mak
Slide 14: Well run generation and wholesale operations currently drive most cashflow
Well run generation and wholesale operations currently drive most cashflow EBITDAF segmentation ($m) Customer business provides important contribution to overall operations, but 397 generation 587 drives high proportion of total 525 cashflows 523 501 481 Corporate overheads well managed 76 32 -2
Slide 15: Business performance update
Business performance update Retail Bond Offer February 2019 Investor presentation Contact Energy Limited
Slide 16: Execution of the strategy will capture value
Execution of the strategy will capture value Customer Wholesale » Move to a simple, lean operating model centred on » Sustainable cost reduction balanced against risk the customer experience reinventing key customer experiences and processes » Strengthen geothermal capability to remain as a recognis
Slide 17: ..and deliver continued operational improvement
..and deliver continued operational improvement MAINTAINING FINANCIAL SAFE AND ENGAGED EMPLOYEES DISCIPLINE CONTROLLABLE OPEX AND CAPEX COSTS ($m) TOTAL RECORDABLE INJURY FREQUENCY RATE Recordable injuries per million hours worked 397 391 357 292 275 5.2 3.3 3.2 1.9 0.0 FY15 FY16 FY17 FY18 FY19 targ
Slide 18: Operating cashflow remains strong and balance sheet gearing managed within BBB metrics
Operating cashflow remains strong and balance sheet gearing managed within BBB metrics Group operating and net investing cashflow Balance sheet & gearing 800 7.0 40% 600 6.0 35% 30% 400 5.0 25% 200 4.0 $bn 20% $m 3.0 0 15% FY14 FY15 FY16 FY17 FY18 1H18 1H19 2.0 -200 10% 1.0 5% -400 0.0 0% -600 FY14
Slide 19: Capital structure & funding requirement
Capital structure & funding requirement Retail Bond Offer February 2019 Investor presentation Contact Energy Limited
Slide 20: Contact remains committed to a BBB credit rating
Contact remains committed to a BBB credit rating Contact has had a BBB rating since 2002 - why BBB? Contact's S&P Debt / EBITDAF Ratio is now Solid foundation for the management of operational comfortably back within BBB band and financial risks 4.0 Efficient capital structure 3.5 S&P Debt / EBITDAF
Slide 21: Contact's balance sheet is supported by a robust funding portfolio
Contact’s balance sheet is supported by a robust funding portfolio Funding maturity profile (at 31 December 2018) Funding sources (at 31 December 2018) Contact benefits from a funding portfolio that is flexible, efficient, diverse and has a manageable maturity profile: • As at 31 December 2018, $4
Slide 22: Green Borrowing Programme
Green Borrowing Programme In August 2017, Contact obtained green certification from the Climate Bonds Initiative for all debt in the funding portfolio – the “Green Borrowing Programme” The proceeds of the Green Borrowing Programme are used to finance existing and future renewable generation assets
Slide 23: Retail Bond Offer Investor presentation February 2019
Retail Bond Offer February 2019 Investor presentation Contact Energy Limited 23
Slide 24: Contact credit highlights
Contact credit highlights Independent Well run, Leveraging Vertically technology board with largely Significant integrated investment diverse renewable positive business with across experience generation free cash diversified large and drives flow portfolio customer perspectives value base Diversifi
Slide 25: Bond offer information
Bond offer information Retail Bond Offer February 2019 Investor presentation Contact Energy Limited
Slide 26: Key terms of the offer
Key terms of the offer Issuer Contact Energy Limited Description Unsecured, unsubordinated, fixed rate obligations of the Issuer Purpose The proceeds from the issue of the Bonds will be used by the Issuer for the financing of renewable generation and other eligible assets (Green Assets) in accordanc
Slide 27: Key dates and offer process
Key dates and offer process Date Process 18 February 2019 (Monday) Offer opens 18 – 19 February 2019 Roadshow presentations in Auckland and Wellington and investor call 22 February 2019 (Friday) Offer closes – bids due 12pm 22 February 2019 Allocations and rate set 1 March 2019 (Friday) Issuance and
Slide 28: Questions?
Questions? Retail Bond Offer February 2019 Investor presentation Contact Energy Limited
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